[2015] 1 LNS 68 Legal Network Series

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

CIVIL DIVISION
[SUIT NO: 22NCC-311-08/2014]

BETWEEN

HT MALTEC CONSULTANTS … PLAINTIFF

AND

1. MALAYSIAN RESOURCES CORPORATION

BERHAD
2. MALAYSIAN RESOURCES DEVELOPMENT
SDN BHD
3. PERBADANAN KEMAJUAN NEGERI PERAK
4. STAR CAREER SDN BHD
5. DATO SAHRIL RIDZA RIDZUAN
6. DATUK AHMAD ZAKI ZAHID
7. GANESAN SUNDARAJ
8. SYUKRAN JEYA ABDULLAH … DEFENDANTS

GROUNDS OF JUDGMENT
(Court enclosure nos. 10, 12, 14, 16 and 22)

A. Introduction

1. This case raises the question regarding the right of a partnership to

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file a suit and whether such a right is barred or restricted by s. 8 of the

Registration of Businesses Act 1956 (RBA).

2. The plaintiff in this case (Plaintiff) is a partnership which has sued

the following defendants:

(a) the first defendant company (1 st Defendant), a public listed

company;

(b) the second defendant company (2 nd Defendant), a wholly owned

subsidiary of the 1st Defendant;

(c) the third defendant (3 rd Defendant), a statutory corporation

established under the Perak State Development Corporation
Enactment 1967;

(d) the fourth defendant company (4 th Defendant), a private limited

company and a wholly owned subsidiary of the 3 rd Defendant;

(e) the fifth defendant (5 th Defendant), an individual who was the

chairman of the 1 st Defendant’s board of directors at the material
time;

(f) the sixth defendant (6 th Defendant), an individual who was the

1 st Defendant’s managing director at the material time; and

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(g) the seventh (7 th Defendant) and eighth defendants (8 th

Defendant) are individuals.

B. Nature of Plaintiff’s claim

3. In this suit (This Suit), the amended statement of claim (ASOC)

pleads as follows:

(a) paragraph 10 - the 1 s t Defendant requested the Plaintiff to

prepare a technical proposal to be submitted by the 1 s t
Defendant to the Malaysian Government for the design,
construction and operation of a new toll expressway between
Ipoh and Lumut through Seri Iskandar (Highway Project);

(b) paragraph 11 - approval in principle was given by the Malaysian

Government to the 1 st Defendant to carry out the Highway
Project with the 3 rd Defendant;

(c) paragraph 12 - the 1 st and 3 rd Defendants entered into a joint

venture with each other whereby:-

(i) a private limited company, Kejuruteraan Dan Pembangunan

Seri Lumut Sdn. Bhd. (KPSL) was incorporated;

(ii) KPSL would be appointed to carry out the Highway Project;

and

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(iii) the 1 st Defendant would control 70% shares in KPSL which

would be held by the 2 nd Defendant and the 3 rd Defendant
would control 30% shares in KPSL which would be held by
the 4 th Defendant;

(d) paragraph 13 – a concession agreement was signed between

KPSL and the Malaysian Government whereby the Malaysian
Government appointed KPSL to design, construct, maintain,
operate and manage the Ipoh-Lumut Expressway on a “build-
operate and transfer” basis under a concession for a period of
35 years. The total cost of the Highway Project was projected to
be RM1,194,552,325;

(e) paragraph 14 - a consultancy agreement was signed whereby

KPSL appointed the Plaintiff as consultant for the Highway
Project;

(f) paragraph 15 - disputes arose between the Plaintiff and KPSL

over the payment of the Plaintiff’s professional fees (Fees) and
on 22.12.2000, KPSL terminated the Plaintiff’s services;

(g) paragraphs 16 and 17 - the disputes between the Plaintiff and

KPSL were referred to arbitration in 2003. On 27.8.2003, the
arbitrator made an award in favour of the Plaintiff (Arbitral
Award) wherein KPSL was ordered to pay the Plaintiff as follows:-

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(i) 75% of the Fees of RM19,318,796 less the sum of

RM3,397,028.53 (which had been already paid);

(ii) RM417,200 as specific loss and damages suffered by the

Plaintiff as a result of wrongful suspension and/or
termination of the Plaintiff’s services; and

(iii) interest of 8% per annum on the above amounts from the

date of the letter of termination of the Plaintiff’s services
until full settlement;

(h) paragraphs 18 and 19 - the Plaintiff applied to the Kuala Lumpur

High Court (KLHC) to recognise the Arbitral Award. On
27.8.2009, the KLHC recognised the Arbitral Award (KLHC’s
Judgment);

(i) paragraphs 20 and 21 - on 18.9.2009, the 1 st Defendant made a

general announcement to Bursa Malaysia that the 1 st
Defendant’s subsidiary, the 2 nd Defendant, has entered into an
agreement to dispose the 2nd Defendant’s entire 70% equity
interest in KPSL to the 7 th Defendant for the sum of RM70.
Around the same time, the 3 rd Defendant also disposed the 3 rd
Defendant’s entire 30% equity interest in KPSL to the 8 th
Defendant for the sum of RM30;

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(j) paragraphs 22, 23, 27 and 28 (Plaintiff’s Pleading on Lifting of

Corporate Veil) - KPSL was at all times under the control and
direction of the 1st and 3 rd Defendants, in particular, the 1 st
Defendant provided the directing mind and will for KPSL.
Particulars of the 1 st Defendant’s control of KPSL have been
pleaded;

(k) paragraphs 24 to 26 (Plaintiff’s Pleading on Tort of

Conspiracy) - the 1 s t to 8 t h Defendants unlawfully and
fraudulently conspired and agreed together to cheat and to
defraud the Plaintiff and to prevent the Plaintiff from recovering
the amounts due to the Plaintiff under the KLHC Judgment by
way of execution, any other process for enforcement and/or
recovery of KLHC Judgment (Conspiracy). The following
particulars have been pleaded:-

(i) particulars of fraud;

(ii) particulars of overt acts committed by the 1 st to 8 th

Defendants pursuant to the Conspiracy; and

(iii) particulars of loss and damage suffered by the Plaintiff due

to the Conspiracy, including particulars of special damages
amounting to RM32,418,055.80; and

(l) paragraphs 24, 27 and 29 (Plaintiff’s Pleading on Fraud) - the

Plaintiff pleads that it is in the interest of justice to lift KPSL’s

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corporate veil and to impose personal liability for damages for

fraud directly against the 1 st to the 4 th Defendants and the 5 th and
6 th Defendants as directors of the 1 st Defendant. The Plaintiff
prays for, among others, a declaration that the disposal of the
entire shareholding of KPSL to the 7 th and 8 th Defendants for a
nominal sum of RM100 was a fraud and the 1 st to 4 th Defendants
should be liable to the Plaintiff for the satisfaction of the KLHC
Judgment.

C. Applications by 1 st to 6 th Defendants

4. This judgment concerns the following applications (These

Applications):

(a) 4 notices of application filed by the 1 st , 2nd, 5 th and 6 th Defendants

in Court enclosure nos.10, 12, 14 and 16 respectively to:-

(i) strike out the writ of summons (Writ) and the ASOC in this
case; and

(ii) dismiss This Suit

- against the 1st, 2 nd , 5 th and 6 th Defendants pursuant to Order

18 rule 19(1)(a), (b) and/or (d) of the Rules of Court 2012
(RC) and/or the court’s inherent jurisdiction; and

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(b) 1 notice of application in Court enclosure no.22 filed by the 3 rd

and 4 th Defendants to strike out the Writ and ASOC against the
3 rd and 4 th Defendants pursuant to Order 18 rule 19(1)(a), (b)
and/or (d) RC and/or the court’s inherent jurisdiction under
Order 92 rule 4 RC.

D. One striking out application suffices

5. Before I discuss the merits of These Applications, the 1 st , 2 nd , 5 th and

6 th Defendants are represented by the same firm of solicitors but 4
separate striking out applications have been filed for each of the 1 st ,
2 nd , 5 th and 6 th Defendants.

6. I do not think it is necessary or desirable for the 1 st , 2 nd , 5 th and 6 th

Defendants to file 4 separate striking out applications:-

(a) when these 4 applications applied for the same orders based on
the same grounds;

(b) the 1 st , 2 nd , 5 th and 6 th Defendants are represented by the same

solicitors;

(c) suffices for the 1 st , 2 nd , 5 th and 6 th Defendants to file one striking

out application so as to save time, effort and costs; and

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(d) if separate striking out applications are filed, there may be a

possibility that these applications may be heard separately which
will further delay the disposal of the suit in question.

E. Submissions by 1 st to 6 th Defendants

7. The 1 st , 2 nd , 5 th and 6 th Defendants forwarded the following grounds in

support of their striking out applications:

(a) the Plaintiff has no locus standi to file This Suit as the KLHC’s
Judgment has been obtained on 27.8.2009 when the Plaintiff’s
business registration under RBA has expired on 27.11.2008; and

(b) the ASOC does not disclose a reasonable cause of action

because:-

(i) KPSL is a legal entity which is separate from KPSL’s holding

company, the 2nd Defendant;

(ii) the 2 nd Defendant as a shareholder in KPSL has no legal

obligation to pay KPSL’s debts due to the Plaintiff. Nor does
the 1st Defendant have any legal obligation to pay KPSL’s
debts due to the Plaintiff;

(iii) the Plaintiff cannot lift KPSL’s corporate veil as the Plaintiff
has not pleaded that the 1st Defendant has used KPSL as a
sham, façade and an instrument of fraud;

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(iv) the Plaintiff has no cause of action against the 1 st , 2 nd , 5 th

and 6 th Defendants for the tort of conspiracy as the sale of
the 2nd Defendant’s shares in KPSL to the 7 th Defendant has
not caused any damage to the Plaintiff;

(v) the Plaintiff has no cause of action against the 2nd , 5 th and 6 th
Defendants as the ASOC has pleaded that it is the 1 st
Defendant which has effectively controlled KPSL at the
material time; and

(vi) the Plaintiff has specifically pleaded that liability should lie
only with the 1 st to 4 th Defendants and on this ground alone,
This Suit should be struck out against the 5 th and 6 th
Defendants.

8. The 3 rd and 4 th Defendants advanced the following submission:

(a) the Plaintiff has not satisfied case law requirements to lift the
corporate veil of KPSL, namely the Plaintiff must prove that:-

(i) it is in the interest of justice to lift KPSL’s corporate veil; and

(ii) there is fraud or unconscionable conduct amounting to fraud,

to justify the lifting of KPSL’s corporate veil; and

(b) the 3 rd and 4 th Defendants cannot be said to exercise any control

over KPSL because:-

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(i) the 3 rd Defendant (and later, the 4 th Defendant) has only 30%
shareholding of KPSL;

(ii) paragraph 22 ASOC avers that the 1 st and 3 rd Defendants

controlled KPSL (Paragraph 22) but paragraph 23 ASOC
alleges that the 1 st Defendant held 70% shares of KPSL at
the material time and was the directing mind and will of
KPSL (Paragraph 23). Paragraph 23 has negated the
allegation of control over KPSL by the 3 rd and 4 th
Defendants; and

(iii) all the particulars regarding control of KPSL in Paragraph 23

have been pleaded by the Plaintiff against the 1 st Defendant
only and not against the 3 rd and 4th Defendants.

F. Court’s approach in respect of striking out applications

9. Order 18 rule 19(1) and (2) as well as Order 92 rule 4 RC provide as

follows:

“Order 18

rule 19(1) T h e C o ur t m a y at a n y s t a g e o f th e
p r o c e e d i n g s or d e r t o b e s t r u c k ou t o r
amended any pleading or the endorsement, of
any writ in the action, or anything in any pleading
or in the endorsement, on the ground that:-

(a) i t d i s c lo s e s n o r e as o n a b l e c a us e o f
action or defence, as the case may be;

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(b) it is scandalous, frivolous or vexatious;

(c) it may prejudice, embarrass or delay the fair

trial of the action; or

(d) it is otherwise an abuse of the process

of the Court,

and may order the action to be stayed or

d i s mi s s e d o r j u d gm e n t t o b e e n t e r e d
a c c o r d i n g l y , a s th e c a s e m a y b e .

19(2) No evidence shall be admissible on an

application under subparagraph (1)(a).

Order 92
rule 4 For the removal of doubt it is hereby declared
that nothing in these Rules shall be deemed
to limit or affect the inherent powers of the
Court to make any order as may be
necessary to prevent injustice or to prevent
an abuse of the process of the Court.”

(emphasis added).

10. In deciding These Applications, I adopt the following approach:

(a) a pleading can only be struck out in a plain and obvious case,
namely where that pleading is obviously unsustainable - the
Supreme Court’s judgment in Bandar Builder Sdn Bhd & Ors v.
United Malayan Banking Corporation Bhd [1993] 3 MLJ 36, at
43;

(b) the mere fact that a pleaded case is weak and is not likely to
succeed, is not a ground to strike out that pleading - Bandar
Builder Sdn Bhd, at p. 44;

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(c) the court will assume that the contents of the pleading in
question are true - the Court of Appeal’s decision in Tuan Haji
Ishak bin Ismail v. Leong Hup Holdings Bhd & other appeals
[1996] 1 MLJ 661, at 679;

(d) every Malaysian citizen has a constitutional right of access to

justice under article 5(1) of our Federal Constitution - the
Federal Court’s judgment in Sivarasa Rasiah v. Badan
Peguam Malaysia [2010] 3 CLJ 507, at 514-515.
Unless a suit is obviously unsustainable, I will be reluctant to
deprive a Malaysian citizen of his or her fundamental right of
access to justice;

(e) under Order 18 rule 19(1) RC, in the interest of justice

the court has a discretion to direct the statement of
claim be amended - Court of Appeal’s judgment in
Muniandy s/o Subrayan & Ors v. Chairman & Board
Members of Koperasi Menara Maju Bhd [1991] 1 MLJ
557, at 560 and 561;

(f) in deciding an application under Order 18 rule 19(1)

RC, the court has power to stay an action. I will d iscuss
about this power later in this judgment;

(g) in considering a striking out application under Order 18

rule 19(1)(a) RC, the court cannot consider affidavit

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evidence according to Order 18 rule 19(2) RC - the Court

of Appeal’s judgment in See Thong v. Saw Beng Chong [2013]
3 MLJ 235, at 241. Based on See Thong, I will first decide
These Applications under Order 18 rule 19(1)(a) RC on whether
the ASOC disclosed any reasonable cause of action against the
1 st to 6 th Defendants (1 st Inquiry). For the 1 st Inquiry, I will only
consider the Amended OS and I will not take into account any
affidavit evidence in compliance with Order 18 rule 19(2) RC;

(h) after the 1 st Inquiry, I will consider all the affidavit evidence filed
by all the parties in These Applications in a subsequent inquiry
(2 nd Inquiry) to decide whether This Suit:-

(i) is scandalous, frivolous and/or vexatious under Order 18

rule 19(1)(b) RC; and/or

(ii) is an abuse of court process under Order 18 rule 19(1)(d)

RC, Order 92 rule 4 RC and/or the court’s inherent
jurisdiction; and

(i) after the 1 st and 2 nd Inquiries, if the court decides not to strike out
a suit, the court should:-

(1) not express any view in respect of the strength or weakness

of the suit; and

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(2) refrain from making any finding of fact as the court cannot
embark on a trial on affidavits, especially when there are
conflicting affidavits.

This is to preserve the integrity of the suit in question. Any

dispute of facts should and can only be resolved at the trial
based on oral evidence and after each party has exercised his or
her right to cross-examine the opposing party’s witnesses. I rely
by analogy on the Supreme Court’s judgment in Alor Janggus
Soon Seng Trading Sdn Bhd & Ors v. Sey Hoe Sdn Bhd &
Ors [1995] 1 MLJ 241, at 266, regarding the court’s duties in
deciding an interlocutory injunction application.

G. 1 st Inquiry - ASOC disclosed reasonable causes of action

11. I am satisfied that the ASOC ex facie discloses the following 2 causes
of action against the 1 st to 6 th Defendants:

(a) the Plaintiff’s Pleading on Tort of Conspiracy; and

(b) the Plaintiff’s Pleading on Fraud.

G1. Plaintiff’s Pleading on Tort of Conspiracy

12. The Plaintiff’s Pleading on Tort of Conspiracy fulfils all the elements of
the tort of conspiracy by unlawful means as held by the following 2

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Court of Appeal decisions:

(a) Renault SA v. Inokom Corp Sdn Bhd & Anor and other
appeals [2010] 5 MLJ 394, at 406:-
“In regard to the tort of conspiracy, the following need to be
satisfied at this interlocutory stage:

(a) an agreement between two or more persons (that is

an agreement between Tan Chong and others);

(b) an agreement for the purpose of injuring Inokom and

Quasar;

(c) that acts done in execution of that agreement resulted

in damage to Inokom and Quasar;

(d) damage is an essential element and where damage is

not pleaded the statement of claim may be struck out.

(see Yap JH v. Tan Sri Loh Boon Siew & Ors [1991]
4 CLJ (Rep) 243).”; and

(b) SCK Group Bhd & Anor v. Sunny Liew Siew Pang & Anor
[2011] 4 MLJ 393, at 399:-
“ T h e t o r t o f c on s p ir a c y i s no t c o n s t it ut e d b y the
conspiratorial agreement alone. For conspiracy to take place,
there must also be an unlawful object, or, if not in itself
u n la w f u l , i t m us t b e b r o ug ht a b ou t b y u nl a w f u l m e a n s :
s e e D a v i e s v . T h o ma s [ 1 9 2 0] 2 C h 1 8 9 p e r W a r r i n g t o n L J ,
and Seah Siang Mong v. Ong Ban Chai & Another Case [1998]
1 CLJ Supp 295 (HC) per Ghazali J (now FCJ). There must be a
co-existence of an agreement with an overt act causing damage
to the plaintiffs. Hence, this tort is complete only if the agreement
is carried into effect, thereby causing damage to the plaintiffs. In

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order to succeed in a claim based on the tort of conspiracy, the

plaintiffs must establish:

(a) an agreement between two or more persons;

(b) for the purpose of injuring the plaintiff; and

(c) acts done in the execution of that agreement resulted in

damage to the plaintiff: Marrinan v. Vibart [1962] 1 All ER
869 at p 871 per Salmon J; and Halsbury's Laws of
England (4 th Ed) Vol 45 at p 271, as applied by Ghazali J
(now FCJ) in Seah Siang Mong.”.

G2. Plaintiff’s Pleading on Fraud

13. The ASOC has given sufficient particulars of the Plaintiff’s Pleading
on Fraud in accordance with Order 18 rule 12(1)(a) RC.

14. In view of the contents of the ASOC which pleaded 2 causes of action
based on the torts of conspiracy and fraud, the 1 st Inquiry must be
resolved in favour of the Plaintiff. Accordingly, I dismiss These
Applications under Order 18 rule 19(1)(a) RC.

H. 2 nd Inquiry

H1. Plaintiff has locus standi to file This Suit

15. The following provisions in RBA are relevant to These Applications:

“Section 2
“associate of a business” includes:-

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(a) any person who is in law the owner or a joint owner or

part owner of any business;
(b) every person who is a partner in any business which is
the property of a partnership; …

5(1) The person responsible for a business shall, not

later than thirty days from the date of the
commencement of the business, apply to the
Registrar [ROB] for the registration of the
business. …

5(8) The registration of a business under [RBA] shall

not be deemed to imply that the requirements of
any law in relation to such business or to persons
carrying on such business or employed in such
business have been complied with.

5C(2) Where a business has been registered, the [ROB]

shall revoke its registration if the [ROB] is
satisfied that the business is being used for
unlawful purposes or any purpose prejudicial to or
incompatible with the security of the Federation,
public order or morality.

6(1) Save as hereinafter expressly provided, when and

so long as any person is recorded in any register
[Register] as an associate of a business, it shall
be evidence against him or any person claiming
through or under him that he was such an
associate unless it is proved that such person
was not at any material time such an associate
and that he was recorded as such in [the Register]
through a bona fide mistake, or without his
knowledge and in fraud of him.

6(4) A certificate of registration or a certified copy of

any entry in the [Register] in respect of any
business shall be prima facie evidence of the
truth of the facts stated therein; but, subject to
the provisions of this Act, the admission of such

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evidence shall not prevent any party to a

proceeding from proving, that some person who
is not registered as such is nevertheless an
associate of a business.

8(1) So long as the prescribed particulars in respect of

any person who is or who claims to be an
associate of any business are not recorded in the
[Register], no right of such person under or
arising out of any contract made or entered into
by or on behalf of such person in relation to such
business shall be enforceable by suit or other
legal proceeding either in the name of such
business or in his individual name or otherwise:

Provided that:-

(a) such person may apply to the High Court for

relief against the disability imposed by this
section and such court, on being satisfied
that the default was accidental or due to
inadvertence or to fraud on such person or to
some other sufficient cause or that on other
grounds it is just and equitable to grant relief,
may grant such relief, either generally or in
relation to any particular contract, as to the
court may seem just, on condition that the
costs of the application be paid by such
person (unless the court otherwise orders)
and on such other conditions, if any, as the
court may impose; but such relief shall not
be granted except on such service and such
publication of notice of the application as the
court may order, nor shall relief be given in
respect of any contract if any party to the
contract proves to the satisfaction of the
court that, if [RBA] had been complied with,
such party would not have entered into the
contract;

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8(3) In any application made under proviso (a) to

subsection (1) the applicant may ask for
rectification of the [Register] and the court may
order accordingly.

12(1) Any person who:-

(a) being a person required to register his

business under [RBA] carries on that
business without registering the business;
(b) continues to carry on any business after the
period of registration has expired;
(c) without lawful excuse fails to comply with any
summons or requirement of the [ROB] under
section 10; \
(d) makes any statement or furnishes any
information to the [ROB] under the provisions of
[RBA] or of rules made thereunder whether such
statement is verbal or in writing, which is false in
any material particular or by reason of the
omission of any material particular and which he
either knows or has reason to believe is false; or
(e) resists or obstructs the [ROB], any inspector or
any other officer of the [Companies Commission
of Malaysia (SSM)] or any public officer in the
performance of his duties under [RBA],

commits an offence and shall on conviction be liable

to a fine not exceeding fifty thousand ringgit or to
imprisonment for a term not exceeding two years or to
both.”

(emphasis added).

16. Learned counsel for the 1 st , 2nd , 5 th and 6 th Defendants contended that
the Plaintiff was only registered as a business from 14.1.1995 to
27.11.2008 and thereafter from 10.4.2013 to 9.4.2016. According to

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the 1 st , 2nd , 5 th and 6 th Defendants, for the period from 28.11.2008 to

9.4.2013, the Plaintiff did not exist as a legal entity. The Plaintiff
obtained KLHC Judgment on 27.8.2009 when the Plaintiff’s business
registration had lapsed. Reliance was placed on the following cases
in the order these cases were presented in the written submission of
the 1 s t , 2 nd , 5 th and 6 th Defendants:

(a) the High Court’s judgment in Zman Production Sdn Bhd v.

Razlan bin Ramdin & Ors [1998] MLJU 471;

(b) the High Court case of Goo Teong Eng v. Ng Kim Chuan &
Anor [1996] 3 MLJ 32; and

(c) the Court of Appeal’s judgment in Arci Enterprise (suing as a

firm) v. Selinsing Mining Sdn Bhd & Ors [2007] 1 MLJ 110.

17. Firstly, with respect to learned counsel for the 1 st , 2nd, 5 th and 6 th
Defendants, RBA does not confer legal personality on a business
registered under RBA. My decision is premised on the following
reasons:

(a) there is no provision in RBA which is equivalent to s 16(5) of the

Companies Act 1965 (CA). Section 16(5) CA reads as follows:

“Effect of incorporation
16(5) On and from the date of incorporation
specified in the certificate of

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incorporation but subject to [CA] the

subscribers to the m emo r and um
together with such other persons as
may from time to time become members
of the company shall be a body
corporate by the name contained in the
memorandum capable forthwith of
exercising all the functions of an
incorporated company and of suing and
being sued and having perpetual
s u c c e s s i on an d a c omm on s e a l w it h
power to hold land but with such liability
on the part of the members to contribute
to the assets of the company in the
event of its being wound up as is
provided by [CA].”

(emphasis added);

(b) it is clear that the Partnership Act 1961 (PA) does not confer
legal personality on a partnership. Accordingly, it will be
anomalous, if not an absurdity, for Parliament to confer legal
personality on a business of a partnership which is registered
under RBA when the specific law governing partnership, PA,
does not confer legal personality on a partnership;

(c) the term “business” is defined widely in s. 2 RBA to include

“every form of trade, commerce, craftsmanship, calling, profession,
or other activity carried on for the purposes of gain, but does not
include any office or employment or any charitable undertaking
or any occupation”” specified in the Schedule to RBA. Section
5(1) RBA requires the “person responsible for a business” to

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register the business. If the contention of the 1 st , 2 nd , 5 th and 6 th

Defendants that registration under RBA confers legal personality
is correct, this will have far-reaching consequences of conferring
legal personality on every “business” registered under RBA. This
may cause confusion and absurdity as sole proprietorships and
partnerships are not legal entities in themselves even if the
businesses of such sole proprietorships and partnerships have
been registered under the RBA. Sole proprietors and partners of
a firm are legal persons in their own individual capacities; and

(d) the following provisions in RBA show that the RBA has the
following limited purposes:-

(i) according to s. 5(8) RBA, even if a business has been

registered under RBA, such a registration “shall not be
deemed to imply that the requirements of any law in relation
to such business” have been complied with;

(ii) under s. 6(1) RBA, when a person is recorded in the Register

to be an “associate of a business”, such a record shall be
evidence against the person that the person is such an
associate unless it is proved that the person is not at any
material time such an associate and that the person has
been recorded in the Register through a bona fide mistake,
or without the person’s knowledge and in fraud of the
person;

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(iii) under s. 6(4) RBA, a certificate of registration of a business

“shall be prima facie evidence of the truth of the contents
stated therein” but the admission of such a certificate shall
not prevent any party from proving that some person who is
not registered as such, is an “associate of a business” as
defined in s. 2 RBA;

(iv) by virtue of s. 6(1) RBA, when a person is recorded in the

Register as an “associate of a business”, it shall be evidence
against the person that he or she is such an associate
unless he or she can prove that:-

(1) he or she was not at the material time such an

associate; and

(2) he or she has been recorded in the Register:-

(2A) through a bona fide mistake, or

(2B) without his or her knowledge and in fraud of

him or her;

(v) s. 8(1) RBA only imposes a disability on a person who claims

to be an “associate of a business” who is not recorded in the
Register, from having any right “under or arising out of any
contract” made by the person in relation to such business
and such a right shall not be “enforceable by suit or other

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legal proceeding either in the name of such business or in

his individual name or otherwise” [Disability under Section
8(1)]. The Disability under Section 8(1) is not absolute and is
subject to proviso (a) to s. 8(1) RBA [Proviso (a)] whereby
the person under the Disability under Section 8(1) (Disabled
Person) may apply to the High Court for relief against the
Disability under Section 8(1):-

(1) if the default failing to register is:-

(1A) accidental;

(1B) due to inadvertence;

(1C) due to fraud on the Disabled Person; or

(1D) due to some other sufficient cause; or

(2) if it is just and equitable to grant relief

- the High Court has wide discretionary power to grant

relief, either generally or in relation to any particular
contract, as the High Court may seem just on certain
conditions. The High Court’s wide power under Proviso
(a) is amplified by s. 8(3) RBA which allows the Disabled
Person to apply to the High Court to rectify the Register
accordingly. There is only 1 exception whereby the High
Court cannot grant any relief, namely when a party to
the contract proves to the satisfaction of the court that, if

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RBA has been complied with, such party would not have
entered into the contract (No Relief Exception).

I will discuss the effect of the Disability under Section 8(1),

Proviso (a) and No Relief Exception later in this judgment;
and

(vi) the failure of an “associate of a business” to register the

business attracts penal consequences under s. 12(1)(a)
RBA. It is to be noted that the imposition of criminal
punishment by way of s. 12(1)(a) RBA for failure to register a
business under s. 5(1) RBA, does not mean that RBA confers
legal personality on a business registered under RBA.

18. As explained above, RBA does not confer legal personality on a

partnership. The Disability under Section 8(1) only disables a
partnership from filing a suit based on a contract in relation to the
business of the partnership. The Disability under Section 8(1) cannot
deprive the partnership of a legal personality when the partnership
does not possess a legal personality in the first place. In this case,
the Disability under Section 8(1) does not apply because the Plaintiff
is claiming under the torts of conspiracy and fraud.

19. I refer to the Federal Court’s judgment in Khan Kam Chee v. Loke
Wan Realty Sdn Bhd [1985] 1 MLJ 42, a case which has not been
cited by learned counsel for the Plaintiff as well as for the 1 st , 2 nd , 5 th

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and 6 th Defendants. Wan Suleiman FJ held as follows in Khan Kam

Chee, at 46:
“We should perhaps refer briefly to the cross-appeal by the
respondent, on the ground that Mr. Khan's activity constituted a
business, and non-registration of the prescribed particulars
would, by virtue of S.8 of the Registration of Businesses Act,
1956, Revised 1978, debar him from enforcing his rights under the
contract by suit or any other legal proceeding.

In support, Mr. Abraham cited the case of TCS v. Director-General of

Inland Revenue [1977] 2 MLJ 212, the facts of which we note have no
relevance or application to the facts of the appeal before us.

Counsel very properly intimated that he was not pressing his

cross-appeal. We find no merit in the cross-appeal and
accordingly dismiss it with costs.”

(emphasis added).

20. It is to be noted that the Arbitral Award was made in favour of the
Plaintiff on 27.8.2008, during the time period when the Plaintiff’s
business was registered under the RBA. The Plaintiff’s business
registration expired on 28.11.2008 and was only renewed on
9.4.2013. The KLHC Judgment recognizing the Arbitral Award, was
pronounced on 27.8.2009, after the expiry of the Plaintiff’s business
registration and before its renewal. As explained above, the Disability
under Section 8(1) applies only to contracts made by the Plaintiff. The
Plaintiff has already obtained the Arbitral Award before the lapse of
the Plaintiff’s business registration. An enforcement of the Arbitral
Award by way of the KLHC’s Judgment, in my view, is not an
enforcement of a contract by the Plaintiff which attracts the Disability

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under Section 8(1). In any event, the ASOC has pleaded the torts of
conspiracy and fraud as the bases for This Suit and not the
enforcement per se of the Arbitral Award by way of the KLHC’s
Judgment.

21. As stated above, Order 18 rule 19(1) RC confers power on the court
to stay a suit. Even if the contention of the 1 st , 2 nd , 5 th and 6 th
Defendants (the Plaintiff has no locus standi to sue because on the
date of the KLHC’s Judgment, the Plaintiff’s business registration has
expired) is accepted, Proviso (a) confers wide power on the High
Court to grant relief to the Plaintiff because:-

(a) the partnership of the Plaintiff has not been dissolved at any time
and its composition of 3 partners (3 Partners) remains the same
at all times. It is clear that the Arbitral Award, the KLHC
Judgment and This Suit concern the same 3 Partners; and

(b) the Plaintiff has exhibited a letter dated 10.4.2013 from SSM
(which enforces the RBA) which states that, among others, the
owners of the Plaintiff’s business are the 3 Partners.

In this case, there is no room for the application of No Relief

Exception to bar any application by the Plaintiff under Proviso (a).
Even if the above contention of the 1 st , 2 nd , 5 th and 6 th Defendants is
correct, I will not strike out This Suit against the 1 st , 2nd , 5 th and 6 th
Defendants but instead, in the interest of justice, I should stay This
Suit pending the disposal of an application by the Plaintiff pursuant to

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Proviso (a) (Proviso (a) Application). The court hearing an

application under Order 18 rule 19(1) RC has the discretionary power
not to strike out a suit but may stay the suit pending the disposal of
other related matters. Such a power is fortified by the following
provisions in the RC:

(i) Order 1A RC provides that in administering the RC, including

Order 18 rule 19(1) RC, the court “shall have regard to the
overriding interest of justice and not only to the technical non-
compliance” with RC; and

(ii) Order 2 rule 1(2) RC which states that the RC are “subject to the
overriding objective of enabling the Court to deal with cases
justly” and all parties are required to assist the court to achieve
this overriding objective.

As I am satisfied that RBA does not confer legal personality on a

partnership and the Disability under Section 8(1) does not apply in
this case, there is therefore no need for a Proviso (a) Application to
be made by the Plaintiff. Consequently, there is no need for me to
stay This Suit.

22. The following cases cited by the 1 st , 2 nd , 5 th and 6 th Defendants do not

justify a striking out of This Suit in favour of the 1 st , 2nd , 5 th and 6 th
Defendants:

(a) Arci Enterprise did not discuss Khan Kam Chee. In any event,
Arci Enterprise may be distinguished from this case on the

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following grounds:-

(i) the plaintiff partnership (appellant) had 7 partners and the

appellant was registered as the holder of a mining lease. A
sublease of the mining land was registered in favour of the
first defendant. Subsequently, the first defendant transferred
the sublease to the second defendant; and

(ii) the appellant filed a suit to nullify both the registration of the
sublease and the transfer of the sublease. Before the
hearing of the appellant’s suit:-

(1) 2 of the 7 partners had been adjudged bankrupt;

(2) the appellant’s business registration under RBA expired.

The appellant re-registered the business in the same
name (2 n d Registration) and included one of the
partners who had already been adjudicated a bankrupt!;
and

(3) the ROB terminated the 2nd Registration under s 5C(2)

RBA on 2 grounds, namely one of the appellant’s
partners was a bankrupt and the appellant no longer
carried on mining business.

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The above material facts in Arci Enterprise which justified the

striking out of the appellant’s suit, are clearly different from this
case. The Court of Appeal held in Arci Enterprise, at p. 115, as
follows:-
“[14] It is therefore clear that non-registration or invalid registration
or default in registration does not make a contract entered into by
a partner void ab initio. However no suit may be brought by a
partner to enforce such a contract unless he has first obtained
relief from the High Court in accordance with the proviso to s. 8(1).
But in the present case it is not a partner who is suing in the
name of the plaintiff firm. It is the firm itself. Accordingly, on
the present facts, the revocation of the firm's registration
deprived the plaintiff standing to continue with the action
against the defendants.

[15] It follows that the learned judge was entirely correct in

striking out the plaintiff's action. For the reasons already given, we
uphold the High Court's orders and dismiss the appeal.”

(emphasis added).

When the appellant’s business registration had been revoked by

the ROB under s. 5C(2) RBA in Arci Enterprise, the appellant
would have committed an offence under s. 18(1)(b) RBA by
carrying on mining activities and could not therefore proceed with
the appellant’s suit. In this sense, the striking out of the
appellant’s suit in Arci Enterprise is understandable;

(b) Goo Teong Eng concerned a suit to evict, among others, the
first and second defendants, from a “controlled premises” under
the Rent Control Act 1966 (RCA). It was held by the High Court
in Goo Teong Eng, at p. 37, 38 and 39-40, as follows:-

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“In my judgment, the first defendant could not inherit or

take over the tenancy of controlled premises from his
brother, Ng Han Seng. …

Hence, it is abundantly clear that only the specified near

relation as defined in s. 2 [RCA] can inherit or take over the
tenancy of controlled premises, and a brother or a sister
could not do so …

Further, the first defendant was not a partner of the

second defendant. The first defendant was, under s
8(1) [RBA], in no capacity to contract and enter into a
tenancy. …

Hence, in the instant case, the tenancy was in effect

granted to the individual partners of the second
defendant. …

Further, the second defendant had failed to register

itself as a business since 22 July 1987, in
contravention of s. 12(1)(b) [RBA] …

The second defendant has, in the circumstances, been

conducting its business on the premises illegally since
1987. This conduct exposes the partners to an
imprisonment or a fine or both, and entitles the
plaintiff to recover vacant possession under s. 16 (1)(d)
or (k) [RCA]. In order to salvage this position, the
s econd def endant ef f e cted a pay ment of the
compound and renewal fee on 27 October 1995, which
was clearly an afterthought, in response to the issue of
illegality raised by the plaintiff's solicitors. Such
afterthought lacks good faith.”

(emphasis added).

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Firstly, the Disability under Section 8(1) bars the enforcement of

any contract in relation to the business in question. Section 8(1)
RBA does not deprive any party the legal capacity to contract.
The competence of a person to contract is provided by s. 11 of
the Contracts Act 1950 which reads as follows:-

“Who are competent to contract

11. Every person is competent to contract who is of the age
of majority according to the law to which he is subject,
and who is of sound mind, and is not disqualified from
contracting by any law to which he is subject.”

The above material facts of Goo Teong Eng are clearly

distinguishable from this case. With respect, I am unable to see
how Goo Teong Eng can deprive the Plaintiff of the locus standi
to file This Suit; and

(c) the material facts of Zman Production Sdn Bhd, at p. 1-2, are as
follows:-

(i) Zman Production Sdn. Bhd. was only incorporated as a

company on 7.9.1993; and

(ii) Zman Production Sdn. Bhd. filed a suit based on an

agreement executed on 19.6.1992 between Zman
Production (not Zman Production Sdn. Bhd.) and the
defendants. Zman Production’s business was registered with

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the ROB on 15.3.1991 but this registration expired on

15.3.1992. Zman Production’s business registration was only
renewed on 13.8.1992. Accordingly, the agreement was
signed when Zman Production Sdn. Bhd. had not been
incorporated and when Zman Production’s business
registration had expired!

In view of the above material facts, the High Court struck out the
suit in Zman Production Sdn Bhd, at p. 3, on the following
grounds:-

“On the whole evidence, I must hold that the plaintiff has
not proved to the satisfaction of this court that the
compound receipt exhibit P2 [for the offence of not
registering the business under s. 12(1) RBA] has
retrospective effect in the sense of backdating the renewal
of the plaintiff's registration certificate to 16.3.1992, the
date of the expiry of the same. In the circumstances,
there is merit in the defendants' contention that Zman
Production could not have been in existence at the
time when the principal agreement was executed on
19.6.1992 thereby adversely affecting the validity of the
novation agreement subsequently made on 3.3.1994
and hence the plaintif f 's legal capacity or locus
standi to maintain this action against the defendants.

Be that as it may, there is the alternative proposition raised

by Mr. Oh, counsel for the 8 th defendant. He submits that
on the assumption the court holds that Zman Production
was in existence at the time the principal agreement was
executed, there is no valid novation of the said principal
agreement because at the time it was allegedly executed
on 3.3.1994, Zman Production was no more in existence
as it had, on 7.9.1993, been converted to Zman Production
Sdn Bhd, as reflected in the pleadings and the evidence of

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PW1. Counsel for the plaintiff has made no submission on

this issue. Although I do not read that as an admission or
concession by him, I have to say that, given the nature of
what constitutes a novation agreement; the fact that it
requires the consent of all parties involved to legalise it and
which consent appears to be absent in this case in so far
as it relates to Zman Production; that under these peculiar
circumstances, there is substance in Mr. Oh's proposition.

In summary therefore, on the evidence and for the

reasons given, I hold that the plaintiff has no locus
standi to maintain this action against the defendants.”

(emphasis added).

H2. Plaintiff has cause of action for conspiracy

23. The 1 st , 2nd , 5 th and 6 th Defendants have relied on Renault to support

their applications to strike out This Suit on the ground that the sale of
the 2 nd Defendant’s shares in KPSL to the 7 th Defendant has not
caused any damage to the Plaintiff. According to the 1 st , 2 nd , 5 th and
6 th Defendants, the pleaded acts of conspiracy have no “causative
link” with the damage suffered by the Plaintiff.

24. The Plaintiff’s Pleading on Tort of Conspiracy in paragraph 24 ASOC

(Paragraph 24) has pleaded in detail the alleged tort of conspiracy
committed by the 1 st to 8 th Defendants which has prevented the
Plaintiff from enjoying the fruits of the KLHC Judgment. In paragraph
26 ASOC (Paragraph 26), the Plaintiff has pleaded the damage
which has been suffered by the Plaintiff in respect of the commission

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of the alleged tort of conspiracy. I am of the considered view that

Paragraphs 24 and 26 have pleaded the causal link between the
alleged tort of conspiracy and the alleged damage suffered by the
Plaintiff. Paragraph 25 ASOC (Paragraph 25) expressly pleads that
in pursuance of the alleged tort of conspiracy, the 1 s t to 8 t h
Defendants have committed specified overt acts.

12. In Renault:-

(a) the 2 plaintiff companies sued the 3 defendant companies in

respect of, among others, the tort of conspiracy to injure the 2
plaintiff companies;

(b) the second and third defendant companies applied to strike out
the suit based on the tort of conspiracy against them;

(c) in respect of the second defendant company’s striking out

application, the Court of Appeal decided as follows, at p. 405,
406, 407 and 408:-

“[27] Tan Chong [second defendant company] asserts that

Article 8.2 of the master agreement, under the heading
'Consequences of termination', provides, inter alia, that once
termination of the master agreement has been effected, each
party thereto shall be entitled to conclude agreements with
third parties with a view to manufacture, assemble, sell and
distribute Renault vehicles in the territory (Malaysia), as from
the effective date of such cessation of the said agreement. …

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[30] Tan Chong asserts, that based on the statement of claim,

there is only one allegation made against Tan Chong - it is in
relation to the Kangoo project. Inokom and Quasar allege in
the pleadings that Renault and Tan Chong had conspired
with each other by unlawful means to injure Inokom and
Quasar so as to deprive them the opportunity of developing
the Kangoo project. The unlawful means used was allegedly
a false and fraudulent representation on the part of Renault
as to how much Inokom and Quasar ought to invest in order
to develop the Kangoo project. It is asserted that in
discussions in the year 2000, Renault had represented to
Inokom and Quasar that they had to invest USD27m, whereas
in a meeting between representatives of Tan Chong, Inokom,
Quasar and Renault, Tan Chong's director had revealed that
the investment cost of the Kangoo project for Tan Chong
was only RM20m.

[31] Tan Chong maintains that there is no cause of action in

the tort of conspiracy to injure and, that on the undisputed
facts and on the facts as pleaded, the claim against Tan
Chong is devoid of any substance, equivocal, lacking in
precision, inconsistent and improbable in itself. We are
unanimous and agree that this is a fit and proper case for the
writ and statement of claim to be struck off as against Tan
Chong. …

[34] It is trite law that the agreement to injure must come first
(in other words the agreement should have crystallised),
before the alleged unlawful acts are done in execution or
pursuant to the agreement.

[35] Inokom and Quasar have pleaded in the statement of

claim that the agreement or conspiracy to injure was made
sometime in the year 2001 (para 41 of the statement of
claim): …

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[37] Inokom and Quasar have never denied the fact that the
alleged representation was first made by Renault to them in the
year 2000.

[38] We are unanimous that there cannot in law and in fact

conceivably be an agreement or combination or conspiracy
between Renault and Tan Chong to injure Inokom and
Quasar when the alleged representation was pleaded to have
been made in 2000 and the alleged conspiracy was pleaded
to have occurred in 2001.

[39] The alleged representation was made only by Renault to

Inokom and Quasar. The court cannot draw, from Inokom's and
Quasar's bare allegation that Renault had made the alleged
representation to them, an inference or conclusion that Renault
and Tan Chong had conspired in any way in the making of the
said representation.

[40] We are unanimous that there is no cause of action in the

tort of conspiracy against Tan Chong. The appeal is allowed.
The statement of claim against Tan Chong is struck off.”

(emphasis added).

It is clear that the plaintiff companies’ suit against the second

defendant company for the tort of conspiracy was struck out
because the alleged agreement to conspire could not be
subsequent to the alleged wrongful acts to execute that
agreement; and

(d) the Court of Appeal allowed the third defendant company’s

striking out application, at p. 409 and 410, on the following
grounds:-

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“[42] There is no allegation of any overt acts carried

out by TC Euro [third defendant company] in the
pleadings and by necessary implication TC Euro had
not carried out any overt acts. …

[43] It is to be noted that besides the absence of

allegations of overt acts on the part of TC Euro the
statement of claim has also failed to plead the
agreement between the defendants to conspire and
state precisely what was the purpose or what were
the objects of the alleged conspiracy. The statement
of claim has also failed to set forth with clarity and
precision the overt acts which are alleged to have
been done by each of the alleged conspirators in
pursuance and in furtherance of the conspiracy. …

[47] Going by the dictionary definition of 'conspiracy'

there could never have been any conspiracy when all
element of secrecy is lost, because Inokom and
Quasar themselves were informed and had full
knowledge of Tan Chong's action.

[48] We are unanimous that there is no cause of action in

the tort of conspiracy as against TC Euro. The statement
of claim is vexatious and frivolous. Just as fraud must be
pleaded with great particularity, so must the constituent
ingredients of the alleged conspiracy by TC. Euro be
pleaded. In the circumstances, for reasons already
stated, the appeal is allowed and the statement of claim
against TC Euro is struck off.”

(emphasis added).

In view of the particular pleading and distinctive facts of Renault, with

respect, I am not able to see how Renault can support the striking
out applications by the 1 st , 2 nd , 5 th and 6 th Defendants in this case.

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H3. Lifting or piercing corporate veil?

26. Before I consider the submission of the 1 s t to 6 th Defendants

regarding whether the Plaintiff can lift KPSL’s corporate veil in this
case, paragraph 27 ASOC (Paragraph 27) pleads that in the interest
of justice, KPSL’s corporate veil should be lifted so that the court may
impose liability on the 1 st to 6 th Defendants. Paragraph 29.1 ASOC
(Paragraph 29.1) prays for the 1 st to 4 th Defendants to be made liable
to the Plaintiff for the satisfaction of the KLHC Judgment.

27. In view of Paragraphs 27 and 29.1, the Plaintiff is not merely seeking
the court’s leave to lift KPSL’s corporate veil but the Plaintiff is
actually applying to pierce KPSL’s corporate veil so as to impose
liability on the 1 st to 6 th Defendants. In KTL Sdn Bhd & Anor v.
Leong Oow Lai and 2 other cases, Kuala Lumpur High Court Civil
Suit No. 22NCC-317-03/2013 [2014] 1 LNS 427, at paragraphs 66
and 67, I have followed Staughton LJ’s judgment in the English Court
of Appeal case of Atlas Maritime Co SA v. Avalon Maritime Ltd (The
Coral Rose) (No. 1) [1991] 4 All ER 769, at 779, regarding the
difference between the lifting a corporate veil and its piercing. If a
party applies to impose liability on any person who controls a
corporate entity, the party is applying to pierce and not merely lift, the
corporate veil in question.

H4. Lifting or piercing corporate veil is not a cause of action

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28. Learned counsel for the 1 st to 6 th Defendants have submitted at length

that the Plaintiff cannot lift the corporate veil of KPSL for various
reasons which I will discuss later in this judgment.

29. At the outset, I should make clear that even if a party can rely on case
law to lift or pierce a corporate veil, such a lifting or piercing a
corporate veil is not a cause of action in itself:-

(a) the High Court’s judgment in Deepak Jaikishan a/l

Jaikishhan Rewachand & Anor v. Intrared Sdn Bhd
(previously known as Reetaj City Centre Sdn Bhd and
formerly known as KFH Reetaj Sdn Bhd) & Anor [2013] 7
MLJ 437, at 458; and

(b) KTL Sdn Bhd, at paragraph 68(a).

30. Lifting or piercing a corporate veil, in my view, is only a is judicial

mechanism to attain justice when a statutory or case law exception
applies in a particular case to lift or pierce a corporate veil - KTL Sdn
Bhd, at paragraph 68(c).

31. I have decided above that the ASOC discloses 2 reasonable causes
of action in respect of the tort of conspiracy and fraud. On this ground
alone, I am constrained to dismiss These Applications, even if the
Plaintiff has failed to fulfil case law requirements to lift or pierce
KPSL’s corporate veil.

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H5. Whether Plaintiff can pierce KPSL’s corporate veil?

32. The leading case in Malaysia regarding the piercing of a corporate

veil is the Federal Court’s judgment in Solid Investment Ltd v.

Alcatel Lucent (M) Sdn Bhd [2014] 3 CLJ 73, at 92, where Hasan

Lah FCJ held as follows:

“We agree with the Court of Appeal that the learned trial
judge erred in lifting the corporate veil of the defendant to
make the defendant liable to account to the plaintiff. The
reason given by the learned trial judge was that it was in
the interest of justice to prevent associated companies of
Alcatel Group including the defendant from “darting in and
out with the corporate labyrinth” before the court. We also
agree with the Court of Appeal that there must be evidence
either of actual fraud or some conduct amounting to fraud
in equity to justify the lifting of corporate veil.”

(emphasis added).

Solid Investment Ltd, in my opinion, has laid down a two-fold

requirement (2 Conditions) for a party to lift or pierce a corporate

veil, namely the party has to plead and prove:-

(a) the lifting or piercing of a corporate veil is in the interest of

justice; and

(b)(i) actual or Common Law fraud; or

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(b)(ii) equitable or constructive fraud.

33. The ASOC has, in my view, fulfilled the 2 Conditions as follows:

(a) in Paragraph 27, the Plaintiff has pleaded that it is in the interest
of justice to lift KPSL’s veil of incorporation; and

(b) Paragraphs 24 and 27 contain the Plaintiff’s Pleading on Fraud.

At this interlocutory stage, the Plaintiff is not required under Order 18

rule 19(1) RC to prove the 2 Conditions. Nor is it desirable for the
Plaintiff to prove the 2 Conditions at this interlocutory stage as only
affidavit evidence is before the court and the court should not resolve
any conflict in affidavit evidence. This is especially so if the court
dismisses a striking out application – in such an event, the court
should keep an open mind so as to preserve the integrity of the trial of
the suit in question.

34. In this case, the Plaintiff has applied to pierce KPSL’s corporate veil
based on the Plaintiff’s Pleading on Fraud. Once the Plaintiff has
pleaded fraud against, among others, the 1 st to 6 th Defendants, if the
Plaintiff can prove this averment of fraud at trial beyond all
reasonable doubt, all the 1 st to 8 th Defendants will be liable in their
own personal or corporate capacity irrespective of:-

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(a) the fact that KPSL is a legal person separate from the 1 st to 6 th
Defendants;

(b) the 1 st to 6 th Defendants are not liable for KPSL’s debts;

(c) the Plaintiff’s pleading that the 1st Defendant (and not the 2 nd to
5 th Defendants) is the only directing mind and will of KPSL;

(d) the Plaintiff’s failure to plead that the 1 st Defendant has used
KPSL as a sham, façade and in instrument of fraud; and

(e) the Plaintiff’s specific pleading that liability should lie with the 1 st
to 4 th Defendants and not the 5 th and 6 th Defendants.

Accordingly, at this juncture, I cannot strike out in limine This Suit.

35. In specific response to the contention that the Plaintiff has not
pleaded that the 1 s t Defendant has used KPSL as a sham, façade
and in instrument of fraud:-

(a) the Plaintiff’s Pleading on Fraud suffices to fulfil the second

condition laid down by Solid Investment Ltd for the court to lift
or pierce a corporate veil;

(b) there is no magic in the phrase that a company is used as a

sham, façade or an instrument of fraud; and

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(c) there is no prejudice to the 1 st to 6 th Defendants if the ASOC

omits the averment that the 1 st Defendant has used KPSL as a
sham, façade and in instrument of fraud.

36. In reply to the contention by the 1 st , 2 nd , 5 th and 6 th Defendants that the

Plaintiff has specifically pleaded that liability should lie with the 1 st
to 4 th Defendants and not the 5 th and 6 th Defendants, it is to be noted
that sub-paragraph 29.3 ASOC expressly prays for general damages
to be paid by the 1 s t to 8 th Defendants jointly and severally.

H6. Necessary “presence” of 2 nd to 6 th Defendants in This Suit

37. Even if the ASOC has pleaded that the 1 st Defendant is the only
directing mind and will of KPSL, the “presence” of the 2 nd to 6 th
Defendants is necessary in this case for the following reasons:

(a) the Plaintiff’s Pleading on Tort of Conspiracy and Fraud have

expressly included the 2 nd to 6 th Defendants; and

(b) it is pertinent to note Order 15 rule 6(2)(b)(i) and (ii) RC which

read as follows:

“6(2) Subject to this rule, at any stage of the proceedings in any

cause or matter, the Court may on such terms as it thinks

just and either of its own motion or on application:-

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(b) order any of the following persons to be added as a

party, namely:-

(i) any person who ought to have been joined as

a party or whose presence before the Court is
necessary to ensure that all matters in dispute
in the cause or matter may be effectually and
completely determined and adjudicated upon;
or

(ii) any person between whom and any party to

the cause or matter there may exist a question
or issue arising out of or relating to or
connected with any relief or remedy claimed in
the cause or matter which, in the opinion of the
Court, would be just and convenient to
determine as between him and that party as
well as between the parties to the cause or
matter.”

(emphasis added).

Under Order 15 rule 6(2)(b)(i) and (ii) RC, a party can be joined
as a co-defendant even though the plaintiff has no cause of
action against the party provided that such a joinder:-

(i) is necessary to ensure that all matters in dispute may be

effectively and conclusively determined; or \

(ii) there exists a question or issue arising out of or relating to or

connected with any relief or remedy claimed in a case which,

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in the opinion of the Court, would be just and convenient to

determine as between the plaintiff and the proposed party as
well as between the other parties in the case.

I am of the considered view that the “presence” of the 2 nd to 6 th

Defendants is necessary in This Suit:-

(1) to ensure that all issues regarding the Plaintiff’s Pleading on

Tort of Conspiracy, Fraud and Lifting of Corporate Veil are
effectively and conclusively determined within the meaning of
Order 15 rule 6(2)(b)(i) RC; and/or

(2) because there exists a question arising from the Plaintiff’s

claim for relief in ASOC regarding the piercing of KPSL’s
corporate veil whereby it would be just and convenient to
determine such a question as between:-

(2A) the Plaintiff and the 2 n d to 6 t h Defendants; and/or

(2B) the Plaintiff and the 7 t h to 8 t h Defendants.

H7. Cases relied on by 1 s t to 6 t h Defendants

38. The cases cited by learned counsel for the 1 st to 6 th Defendants can
be distinguished as follows:

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(a) in the Court of Appeal case of Pamol (Sabah) Ltd & Anor v.
Joseph bin Paulus Lantip & Ors [2012] MLJU 547, at
paragraphs 8, 10, 15, 26 to 32, 35 and 36:-

(i) there was no pleading regarding tort of conspiracy and fraud

against the third and fourth defendant companies;

(ii) the 6 plaintiffs had abused court process when a company

beneficially owned by the 6 plaintiffs had instituted an earlier
suit with a substantially similar claim; and

(iii) the Court of Appeal only allowed the appeal by the fourth
defendant company to strike out the suit against the fourth
defendant company on the ground that the second suit
against the fourth defendant constituted an abuse of court
process;

(b) in Tenaga Nasional Bhd v. Irham Niaga Sdn Bhd & Anor
[2011] 1 MLJ 752, at 772 and 773, the Court of Appeal held as
follows:-

“[49] You cannot simply raise the veil of incorporation just

because you feel that it is in the interest of justice. But if
there is fraud, then the veil of incorporation may be
lifted. But here, there was no fraud at all. …

[51] At para 56 of the statement of claim at p 74 of the

appeal record at Jilid 1, the respondents pleaded what
they said to be fr aud. However, the wor d 'fraud' do es

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not mean anything more than what is stated. When you

plead fraud, the particulars must be pleaded. Since
there was no liability on the part of the appellant (TNB)
to pay the award handed down by the arbitrator, then
the plea of fraud must necessarily fail. When fraud has
been pleaded, that warrants a strict scrutiny of the
pleadings. Here, on the facts, there was no fraud at all.
In Wong Yew Kwan v. Wong Yu Ke & Anor [2009] 2 MLJ
672, this court said that 'mere general allegations of
fraud are insufficient to constitute a pleaded case of
fraud' …

[52] Now, at para 56 of the statement of claim at p 74 of

the appeal record at Jilid 1, the respondents suggested
that the appellant (TNB) had used TNBT since its
inception as a contracting vehicle to commit fraud. If
such allegations were true (the appellant (TNB) here
has denied it vehemently), then the respondents would
have been aware of the alleged fraud at the time the
five agreements were entered or at the latest at the
time when the original suit was filed. Yet the
respondents had elected to affirm the validity of the
five agreements and pursue the matter by way of an
arbitration proceeding against TNBT solely.”

(emphasis added).

It is to be emphasized that there was no plea of tort of conspiracy

by fraudulent means in Tenaga Nasional Bhd;

(c) the appellants in ARL Associates Sdn Bhd & 30 Ors v. Bank
Kerjasama Rakyat Malaysia Bhd [2012] 1 LNS 821, at
paragraphs 10 to 12, pleaded negligence and not conspiracy to
defraud; and

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(d) in the following cases, there was no plea of conspiracy to

defraud:-

(i) ATA Management Consultants Sdn Bhd v. Makmuran

Sdn Bhd [2004] 3 MLJ 53;

(ii) Law Kam Loy & Anor v. Boltex Sdn Bhd & Ors [2005] 3
CLJ 355;

(iii) Tiong Hoo Teck v. Wong Ho Enterprise Sdn Bhd & Ors
(No 2) [2014] 4 MLJ 405;

(iv) Rand Worldwide Foreign Holdings Inc v. Japri Maming &

Anor [2014] 1 LNS 902;

(v) Q2 Engineering Sdn Bhd v. PJI-LFGC (Vietnam) Ltd & 2

Others [2013] 1 LNS 104;

(vi) Official Receiver and Provisional Liquidator, Maril-

Rionebel (M) Sdn Bhd (formerly known as Kredin Sdn
Bhd) v. Anafartal Caddesi Sdn Bhd [2006] 4 MLJ 1; and

(vii) Lembaga Pelabuhan Perumahan dan Bandar v. Li Chen

Chong & Others [2002] MLJU 436.

39. The Court of Appeal case of Yee Weng Kai v. Yam Kong Seng &

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Anor [2013] 2 MLJ 575 cited by learned counsel for the 3 rd and 4 th
Defendants, has been reversed by the Federal Court in Yam Kong
Seng & Anor v. Yee Weng Kai [2014] 6 CLJ 285.

H8. Whether This Suit constitutes an abuse of court process?

40. In view of the Plaintiff’s Pleading on Tort of Conspiracy, Fraud and

Lifting of Corporate Veil, it is clear that This Suit does not constitute
an abuse of court process. In the circumstances, I must decline to
strike out This Suit against the 1 st to 6 th Defendants under Order 18
rule 19(1)(d) RC, Order 92 rule 4 RC and/or the court’s inherent
jurisdiction.

H9. Whether This Suit is scandalous, frivolous and vexatious?

41. For reasons expressed above, I do not find This Suit to be:-

(a) scandalous of the 1 st to 6 th Defendants. In Technointan Holding

Sdn Bhd v. Tetuan Tan Kim Siong & Teh Hong Jet [2006] 7
CLJ 541, at 547, the High Court explained the meaning of
“scandalous, frivolous and vexatious” in the then Order 18 rule
19(1)(b) of the Rules of the High Court 1980 (in pari materia with
Order 18 rule 19(1)(b) RC):-

“Scandalous means wholly unnecessary or irrelevant,

while “frivolous and vexatious” mean obviously

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unsustainable: see Mohamed Nazri, supra; Boey Ai

Leng v. Trans Resources Corporation Sdn Bhd [2002] 1
CLJ 405 and Datuk Ir Che Amran Mohd Yusoff v.
Yayasan Melaka & Ors [2003] 1 CLJ 767.”; and

(b) frivolous and vexatious.

H10. Result of 2 nd Inquiry

42. After considering all the affidavits filed in respect of These

Applications, for reasons explained above, the 2 nd Inquiry must be
answered in favour of the Plaintiff.

I. Court’s decision

43. In view of the above reasons, I am constrained to dismiss These

Applications with costs to be paid by the 1 st to 6 th Defendants to the
Plaintiff.

(WONG KIAN KHEONG)

Judicial Commissioner
High Court (Commercial Division)
Kuala Lumpur

DATE: 5 FEBRUARY 2015

Counsel:

For the plaintiff - Lee Min Chon (Masitah Alias with him); M/s Lee Min
Choon & Co

For the 1 s t , 2 n d , 5 t h & 6 t h defendants - Dhinesh Bhaskaran (Denise Tan

Kae Ji with him); M/s Shearn Delamore & Co

For the 3 r d & 4 t h defendants - V Vijaya Segaran (Danial Rahman Yang

Razali; M/s Maxwell Kenion Cowdy & Jones

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