322

Borneo Law Reports (2013) 2 BLR

1
Lee Nyuk Heng & Anor
v
Pembangunan Ladang Hassan Sdn Bhd & 5 Ors
5

High Court, Sabah & Sarawak (Kota Kinabalu) – Civil Suit No S22-04-2002
Ian HC Chin J
April 14, 2003

Civil procedure – Injunction – Stay – Injunction to prevent removal of plaintiffs from 10

positions held in various companies by unlawful meetings – Whether there were special
circumstances warranting stay of injunction – Whether court should give appropriate
directions under s 150 of the Companies Act 1965 –Companies Act 1965, s 150

The defendants had attempted to remove the plaintiffs from various companies by
resorting to meetings and by passing resolutions when there was no quorum for 15
such meetings. The plaintiffs applied for and was granted an injunction to restore
their position in the said companies. The instant application by the fifth and sixth
defendants by way of a summons in chambers, was for a stay of the said injunction.

Held, dismissing the application with costs

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1. Even assuming that the injunction could be suspended, it would still require
the court to consider whether there are special circumstances to justify such a
suspension. Suspending the injunction had the result of refusing the grant of
the injunction, therefore the nugatory test should apply equally. That meant
that the nugatory result of a successful appeal could be relied on by both parties
25
and therefore it was not a decisive factor in considering whether a stay should
be granted. Though the defendants did not expressly argue their case on what
are the special circumstances that entitled them to a stay, they appeared to the
instant court to have done so obliquely. [see para 4]
2. In any event, the purpose of the injunction was to restore the status quo of
the first plaintiff as the managing director before he was wrongfully ousted. 30
The consequence of the first plaintiff retaining that position, flowed from the
injunction and that was not a special circumstance. [see para 5]
3. Another matter arose after the grant of the injunction where the defendants
sought to query the decision taken by the plaintiffs. That again was a matter
which flowed from the re-instating of the first plaintiff as the managing director, 35
resulting in the plaintiffs making various decisions, some of which the defendants
were not happy with. Again, that was not a special circumstance. [see para 7]
4. The parties had traded a lot of allegations and the best resolution to the
problems would be an appropriate application under the relevant provisions
of the Companies Act 1965 so that all those problems could be resolved in one 40
action and not piece way as a direction under s 150 of the Companies Act 1965
would result in. The court therefore declined giving any direction under s 150.
[see para 15]
 Lee Nyuk Heng & Anor v
Pembangunan Ladang Hassan Sdn Bhd & 5 Ors
(2013) 2 BLR Ian HC Chin J 323

1 Appeal status: The appeal to the Court of Appeal was dismissed by the Court of
Appeal.

Cases referred to by the parties

5 Erinford Properties Ltd v Cheshire County Council [1974] 2 All ER 448 (dist)
El Sombrero Ltd, In re [1958] 1 Ch D 900, 906-906 (dist)
Kemunting Tin Dredging (M) Bhd & 2 Ors v Baharuddin bin Ma’arof & 20 Ors [1985]
1 CLJ 442 (ref)
Kerajaan Malaysia v Dato’ Hj Ghani Gilong [1995] 2 MLJ 119 (foll)
Kerajaan Malaysia v Jasanusa Sdn Bhd [1995] 2 MLJ 105 (foll)
10
Leong Ah Hong v Hup Seng Co Ltd [1963] MLJ 164 (ref)
Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2002] 3 MLJ 49 (ref)

Legislation referred to by the parties

Companies Act 1965, s 150
15
Norbert Yapp (Jayasuriya Kah & Co) for plaintiffs
Lim Hock Leng and Priscilla Lim Tze Chin (Lim Guan Sing & Co) for defendants

Ian HC Chin J

20
[1]  I have on November 13, 2002 granted various injunctions against the defendants
after hearing both parties and the fifth and sixth defendants now apply for a stay
of the injunction through the summons in chambers dated December 19, 2002.
The injunction I granted has the effect of restoring the plaintiffs to their former
positions in the various companies before the said defendants removed them,
which they did, and I need only state very generally here, by resorting to unlawful
25 meetings and by passing resolution when there was no quorum for such meetings.

[2]  The said defendants said the stay of the injunction “is necessary in order to
preserve the integrity of the said appeal” and that “the justice of the case, in any
event, is in favour of the fifth and sixth defendants and this can easily be addressed
by appropriate directions being given by this honourable court under s 150 of
30 the Companies Act 1965 for the convening and/or reconvening of the annual
general meetings of the first and fourth defendants and thereby put to rest the
complaints of the plaintiffs in relation to the issue of control of the said first and
fourth defendants.”

[3]  What legal principles, then, should apply to the present application for a stay
35 of the injunction that I have granted? The defendants contended that Erinford
Properties Ltd v Cheshire County Council [1974] 2 All ER 448 is relevant but that was a
case where the court has refused an injunction but nevertheless granted a limited
one pending the appeal against the refusal of the grant of the injunction while in
the present case the court has granted the injunction. In my view, the principles
set out in Kerajaan Malaysia v Jasanusa Sdn Bhd [1995] 2 MLJ 105 and in Kerajaan
40
Malaysia v Dato’ Hj Ghani Gilong [1995] 2 MLJ 119 should apply and this has been
restated recently in Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2002]
3 MLJ 49 to be this:
324 Borneo Law Reports (2013) 2 BLR

A successful litigant should not be deprived of the fruits of a judgment obtained in 1

his favour, unless there are special circumstances (or special grounds) that justify
a stay of execution to be granted. The special circumstances must be special, not
ordinary, common or usual circumstances and that go to the execution of the
judgment and not to the validity of the judgment (or merits of the appeal).
5
[4]  Even assuming that the injunction can be suspended (applying Erinford) it would
still require the court to consider whether there are special circumstances to justify
such a suspension. For the purpose, the nugatory test will be considered. It must
be borne in mind that one of the plaintiffs was the managing director of the family
companies until the defendants attempted to remove him by calling for meetings
and passing resolutions, which I was of the view that they were illegal. So I granted 10
the injunction to restore the position of the plaintiffs. Therefore, when talks about
nugatory test, it applies to both parties because if the plaintiffs were not granted
the injunction, they would have been able to rely on Erinford and on the nugatory
test and it sure cannot be the case that because the plaintiffs had been granted
the injunction the nugatory test can be applied. Suspending the injunction has the 15
result of refusing the grant of the injunction, which attracts Erinford and therefore
the nugatory test should apply equally. This means that the nugatory result of a
successful appeal could be relied on by both parties. It therefore is not a decisive
factor in considering whether a stay should be granted. Though the defendants did
not expressly argue their case on what are the special circumstances that entitled
them to a stay, they appeared to me to have done so obliquely. 20

[5]  The defendants had contended that the plaintiffs’ conduct have given
rise to a state of disarray of who should properly hold management of those
companies because the managing directorship had expired, that there is no final
pronouncement yet on the validity of the resolutions and the need to preserve
the integrity of the pending appeal against the grant of the injunction. In so far as 25
the pending appeal point is concerned, I have earlier adverted to and dismissed it.
As for the other two points, it appears to me that the defendants are regurgitating
the issues that have already been argued during the hearing of the application
for an injunction. In any event, the purpose of the injunction was to restore the
status quo which was that the first plaintiff was the managing director before he
30
was wrongfully ousted. Therefore, the consequence of the first plaintiff retaining
the position flows from the injunction and that is not a special circumstance.

[6]  Another matter advanced as constituting a special circumstance is set forth

in these words:
there is also uncertainty in Ladang Hassan’s management although the plaintiffs 35
profess not to exclude the fifth and sixth defendants from the management, that is
expressly contradicted by their stand that “they do not have to answer your clients’
query on the Begajuta matter as it is a management issue”.
[7]  That matter arose after the grant of the injunction where the defendants sought
to query the decision taken by the plaintiffs. This again is a matter flowing from 40
the court re-instating the first plaintiff as the managing director, resulting in the
plaintiffs taking various decisions, some of which the defendants are not happy and
they seek now to suspend the injunction. Again, this is not a special circumstance.
 Lee Nyuk Heng & Anor v
Pembangunan Ladang Hassan Sdn Bhd & 5 Ors
(2013) 2 BLR Ian HC Chin J 325

1 [9]  The application for a stay or suspension of the injunction is, in the premises,
dismissed with costs to the plaintiffs. I turn now to the second prayer of the
defendants which is:
(2) … pursuant to s 150 of the Companies Act 1965, that directions be given as
5 this Honourable Court deems just for the re-convening and/or convening of
the Annual General Meeting for the years 2001 and 2002, as the case may be,
of both Pembangunan Ladang Hassan Sdn Bhd and Bugaya Forests Sdn Bhd,
the abovenamed first and fourth defendants including directions for one (1)
member to constitute a quorum for the said Annual General Meetings;
10 [10]  This application came about because when granting the injunction the court
had said this:
I fix April 16, 2003 at 9.00 a.m. to consider any application for directions that
may be required arising out of the grant of the injunction herein.
[11]  For the purpose of this application, the defendants again referred to allegations
15
made when opposing the grant of the injunction which I have already dealt with
and this is not the place to rehash the same. However, it is clear that the defendants
want to remove the first plaintiff from his managing directorship post and had
maintained that they have a right to do so, relying on the following passage of In
re El Sombrero Ltd [1958] 1 Ch D 900 at 906:
20
In my judgment, this is eminently a case in which the court ought to exercise its
discretion; first, because if the Court were to refuse the application it would be
depriving the applicant of a statutory right, which, through the company he is entitled
to exercise under s 184(1), to remove the respondent as directors; secondly, (and I
think this a proper matter to take into account as part of the reasons for deciding
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to exercise my discretion), the evidence disclosed that the respondents are failing
to perform their statutory duty to call an annual general meeting …
There is clear statutory duty on the directors to call the meeting whether or not the
accounts, the consideration of which is only one of the matter to be dealt with at
annual general meeting are ready or not. It cannot possibly serve for an excuse for
failing to perform that statutory duty. It is quite obvious that the only reason why
30 the respondent refused to call an annual general meeting is because the inevitable
result of convening and holding that meeting would be that they would find that
they had ceased to be directors.
[12]  That decision turns on the facts of that case. The facts are different in the
present case and this will be adverted to later. The plaintiffs had argued that the
35 defendants had not satisfied the court that it was “impracticable” to call for a
meeting as required by s 150 of the Companies Act 1965 which says:
150. Power of Court to order meeting
If for any reason it is impracticable to call a meeting in any manner in which
meetings may be called or to conduct the meeting in the manner prescribed
40
by the articles or this Act the Court may, either of its own motion or on the
application of any director or of any member who would be entitled to vote
at the meeting or of the personal representative of any such member, order a
326 Borneo Law Reports (2013) 2 BLR

meeting to be called held and conducted in such manner as the Court thinks fit, 1
and may give such ancillary or consequential directions as it thinks expedient,
including a direction that one member present in person or by proxy shall be
deemed to constitute a meeting or that the personal representative of any
deceased member may exercise all or any of the powers that the deceased
5
member could have exercised if he were present at the meeting.
[13]  They then referred to Leong Ah Hong v Hup Seng Co Ltd [1963] MLJ 164 at 165,
where it is said:
In my judgment, in a matter such as before me it is not enough for the applicant
to satisfy me that it is impracticable to call or conduct a meeting; he must further 10
satisfy me that it is impracticable to call or conduct a meeting of the company in
any manner in which meetings of that company may be called, or to conduct the
meeting of the company in manner prescribed by the articles of the Ordinance.
[14]  A similar decision was reached in Kemunting Tin Dredging (M) Bhd & 2 Ors v
Baharuddin bin Ma’arof & 20 Ors [1985] 1 CLJ 442. In this regard I am of the view 15
that the defendants had failed to show the court why the meeting cannot be
called under the articles. The defendants must not go back to past incidents but
proceed afresh to call for meetings under the articles or under the law and exhaust
all that avenue before it can be said to be impracticable to call for the meeting.
Even then the court has to consider the reasons why the plaintiffs did not call for
the meeting. They have proffered the following reasons: 20

7. It is not possible to hold those annual general meetings right now as the
accounts for the year ended 2002 have yet to be finalised. The said Lee Nyuk
Kheng has refused to co-operate with the companies to furnish and hand over
all the necessary details and records of the dealings made by him on behalf of
the companies and also the cash which have come into his hands during the 25
one year period when the companies were under his control. Whilst he had
acknowledged through his solicitors that the total amount obtained from the
sale of the FFB fruits was RM7,140,468.94, he has however refused to show the
documentary proof that this was the only amount collected by him during
the period. He claimed that the account records/documents were given to the
commercial crime department following reports lodged by the companies on 30
the missing funds. I am informed by the company’s cashier, Mr Peter Chin, that
Lee Nyuk Kheng had taken more than RM1 million in value of cash cheques from
the company’s safe on September 27, 2002 which he has not returned to the
company to date. He has also refused to account for the proceeds from the sale
of the first defendant company which run into millions of ringgit. Furthermore,
the former accountant employed by him has also refused to return to work 35
despite notices issued to him by the company. Under the circumstances, I verily
believe that it is not proper or right for Lee Nyuk Kheng to insist that the two
companies must hold the annual general meeting now when he himself is the
main contributor of the predicament faced by the companies.
8. I further believe that this is also not the right time to hold the annual general 40
meeting as the company secretary is under suspension for unlawful and
unauthorised acts committed by him for which he is being investigated by the
Registrar of Companies. In addition, the company secretary has failed to carry
 Lee Nyuk Heng & Anor v
Pembangunan Ladang Hassan Sdn Bhd & 5 Ors
(2013) 2 BLR Ian HC Chin J 327

1 out his duties professionally. He failed to notify the board of directors of the first
defendant company in relation to the advance of RM1,137,500 taken by Lee Nyuk
Kheng on behalf of the first defendant company from Malsa Corporation Sdn
Bhd on August 15, 2002. The company is currently looking for a replacement.
5 [15]  So, there is an assertion that the accounts were not ready because of the
acts of the defendants and this resulted in the postponement of the calling of
the meeting. This is different from the facts of In re El Sombrero Ltd. It must not be
forgotten also that the plaintiffs had asserted that the relationship between the
parties are that they are 50/50 owners of the companies concerned and the running
and decision making process must reflect that. Therefore, it can be anticipated that
10
any attempt to remove the plaintiffs from their positions in the companies may
be met with objection by them on this ground. This makes a direction under s 150
inadvisable. The parties have traded a lot of allegations and the best resolution to
the problems would be an appropriate application under the relevant provisions
of the Companies Act so that all these problems can be resolved in one action and
15 not piece way as a s 150 direction would result in. I would therefore decline giving
any direction under s 150.

[16]  The defendants’ application (by summons in chambers dated December 19,
2002) is dismissed with costs to the plaintiffs.

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