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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO. 22NCC-22-01/2014
FORUM PETROLEUM SERVICES &
2. RANHILL BERHAD
JUDGMENT
[1] Enclosure 18 is the Plaintiff’s application pursuant to O. 14A of the Rules of Court 2012 to determine questions of law arising from the Plaintiff ’s pleaded case against the 2 nd Defendant. The 2 nd
Defendant agreed to the questions framed but is of the view that the
Plaintiff had no cause of action against the 2 nd Defendant.
[2] The questions framed for the Court ’s determination are as follows:- i. Whether the corporate veil of the 1 st Defendant ought to be lifted.
CONSTRUCTIONS CO. LTD. v.
1. RANHILL INTERNATIONAL INC.

2 ii. Whether the 1 st Defendant and the 2 nd Defendant are jointly and/or severable liable to pay to the Plaintiff the sum of US$679,791.00 which is payable pursuant to the
Settlement Agreement dated 31.5.2013. iii. Whether the 2 nd Defendant is liable for the failure and/or refusal of the 1 st Defendant to pay the outstanding and/or overdue sum pursuant to the Settlement Agreement dated 31.5.2013 on the grounds of the Defendant’s unconscionable conducts. iv. Whether the Settlement Agreement dated 31.5.2013 between the 1 st Defendant and the Plaintiff binds the
2 nd Defendant. v. Whether, based on the conducts and documents filed, there is any liability on the part of the 2 nd Defendant for the amount claimed by the Plaintiff in this action.
Salient Facts
[3] The Plaintiff filed an application for summary judgment against the First Defendant for US$679,791.00 and obtained judgment on
14.6.2014.
[4] On 1.12.2004, the Plaintiff was appointed as a sub-contractor by Ranhill-Petroneeds JointVenture (“RPJV)”, a joint-venture between the 1 st Defendant and Petroneeds Services International, in a contract for the Non-Destructive Testing for a project known

3 as the Melut Basin Oil Development Project (Upstream) Engineering,
Procurement, Construction and Commissioning (EPCC) for Al-
Jabalayn Central Processing Facilities (the “Contract”). The Contract was executed on 23.12.2004.
[5] On or about 2006, the Plaintiff completed its scope of work under the Contract. However, RPJV failed to pay the Plaintiff the stipulated sum under the Contract. RPJV then proposed a settlement scheme for the outstanding payment under a Settlement
Agreement dated 21.1.2009 (SA). A subsequent SA was executed on 22.11.2009.
[6] Subsequently, the 1 st Defendant issued an unequivocal guarantee letter dated 21.1.2009 to guarantee payment obligations of RPJV under said SA.
[7] Paragraph 2 of the Guarantee Letter provides as follows:
“
RII [Ranhill International Inc.] hereby guarantees that RPJV shall comply with its payment obligations pursuant to the Settlement Agreement.”.
[8] However, despite the SA and the guarantee RPJV and/or the 1 st Defendant failed to make payments in accordance with the said SA.
The Arbitration Award
[9] Pursuant to Clause 59.1 of the Contract, the Plaintiff issued a
Notice of Arbitration dated 1.6.2011 against the 1 st Defendant. The
Plaintiff and the 1 st Defendant then mutually agreed to enter into

4 a Referral Agreement for the purpose of referring the matter to arbitration. Clause 2.3 of the Referral Agreement stipulated that any award made by the appointed arbitrator shall bind both parties.
[10] On 27.9.2011, an Arbitration Award (AA) was made by the arbitrator awarding the sum of USD1,322,000.00 to be paid by the
1 st Defendant to the Plaintiff. Paragraph 2 of the AA states that in the event the 1 st Defendant fails to pay two consecutive installments on the respective due date, the whole outstanding sum becomes immediately payable.
[11] In compliance with the Arbitration Award, the 1 st Defendant made the following payments based on the agreed installments schedule in the Arbitration Award as follows:-
Month
August 2011
Payments due
USD100,000.00
Payments made
USD100,000.00
October 2011 USD150,000.00
December 2011 USD150,000.00
March 2012
May 2012
July 2012
USD100,000.00
USD100,000.00
USD100,000.00
USD150,000.00
No payment made
No payment made
USD100,000.00
USD50,000.00
September 2012 USD100,000.00
November 2012 USD100,000.00
January 2013 USD100,000.00
February 2013 USD100,000.00
No payment made
No payment made
No payment made
No payment made

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April 2013
June 2013
Total sum
USD100,000.00
USD122,000.00
USD1,322,000.00
No payment made
No payment made
USD400,000.00
[12] As a result of the 1 st Defendant defaulting its obligation to make payments in accordance with the AA, the balance outstanding sum of US$922,000.00 became immediately due and payable to the
Plaintiff by the 1 st Defendant.
The 2013 Settlement Agreement (SA 2013)
[13] On 8.4.2013, the Plaintiff commenced a legal action against the 1 st Defendant in the High Court of Labuan vide Civil Suit No. LBN-
22-8/4-2013 (the “ Labuan Suit ”) claiming the sum of US$922,000.00 for the 1 st Defendant’s breach of the AA. It is the Plaintiff’s pleaded case that sometime in early May 2013, the 2 nd Defendant had contacted the Plaintiff’s Solicitors to negotiate an amicable resolution for the Labuan Suit for and on behalf of the 1 st Defendant. The
Plaintiff and the 1 st Defendant then entered into a Settlement
Agreement dated 31.5.2013 (SA 2013) to resolve the Labuan Suit.
[14] Clause 3 of the SA 2013 stipulates that the 1 st Defendant shall pay to the Petitioner the sum of USD772,000.00 (the
“ Settlement Sum ”) by way of seven (7) monthly installments commencing from 1.6.2013 till 1.12.2013. It was also agreed that the
1 st Defendant shall pay the sum of RM25,000.00 to the Plaintiff being legal costs for the Labuan Suit, on or before 1.1.2014.

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[15] Clause 4 of the SA 2013 further provides that the 1 st
Defendant shall forward to the Plaintiff’s Solicitors seven post-dated cheques as security for the monthly installments.
[16] Clause 5 of the SA 2013 further stipulates:
“
a. in the event the 1 st Defendant fails and/or defaults in paying any of the monthly installments, the balance outstanding sum shall become due and payable immediately by the 1 st Defendant;
b. any costs incurred by the Plaintiff in recovering the outstanding sum shall be borne by the 1 st Defendant; and
c. in the event the Plaintiff is required to commence legal proceedings by reason of any default of the 2013 Settlement Agreement, the 1 st
Defendant shall not dispute the said legal proceedings
.”.
[17] The 1 st Defendant only made 2 monthly installments and failed to make the subsequent monthly installment payments to the Plaintiff, in breach of the SA 2013. The Plaintiff, through its solicitors, then issued the 1 st Defendant a notice of demand dated 27.8.2013 for
US$672,000.00 being the balance outstanding Settlement Sum.
[18] The following outstanding sums became due and payable immediately by the 1 st Defendant are as follows:
(a) US$50,000.00 being the 3 rd installment due on 1.8.2013;
(b) US$150,000.00 being the 4 th installment due on
1.9.2013;
(c) US$150,000.00 being the 5 th installment due on
1.10.2013;

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(d) US$150,000.00 being the 6 th installment due on
1.11.2013;
(e) US$172,000.00 being the 7 th and final installment due on 1.12.2013; and
(f) RM25,000.00 (US$7,791.00) being the agreed legal cost for the Labuan Suit.
[19] On 25.10.2013, the security cheques for the 3 rd to 5 th installments delivered by the Defendants were returned by the bank on the grounds that the payments for the cheques were cancelled.
Relief
[20] The Plaintiff claims for the following reliefs:-
(a) That the Defendants pay to the Plaintiff the sum of
US$679,791.00 (RM2,243,000.00);
(b) Interest at the rate of 5% per annum on any amount awarded by this Honourable Court;
(c) Cost of this action on a solicitor-client basis; and
(d) Any further and/or other reliefs as the Court deems fit and just.

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The Plaintiff’s Case
[21] It is the contention of the Plaintiff that the 1 st and 2 nd
Defendants are both liable to the Plaintiff for the sum of
US$679,791.00 (RM2,243,000.00) payable pursuant to the SA 2013 as they are in fact a single economic unit as the 1 st Defendant is a wholly owned subsidiary of the 2 nd Defendant and share the same business and/or correspondence address. Both the 1 st and
2 nd Defendant are essentially engage in the same principal business activities, the provision of engineering and construction services.
[22] It is further contended that the 2 nd Defendant as the holding company, exercise control over and manages the financial and operating policies of its subsidiaries including the 1 st Defendant.
[23] The negotiations that were held prior to, during and subsequent to the execution of the 2013 settlement agreement were conducted by officers of the 2 nd Defendant. Furthermore, the director of the 1 st Defendant ( “Amran Awaluddin”) who executed the SA 2013 is also the executive director of the 2 nd Defendant. Amran Awaluddin is also one of the signatories of the 1 st Defendant’s security cheques delivered to the Plaintiff’s Solicitors pursuant to the said Agreement.
The security cheques were delivered to the Plaintiff’s Solicitors by way of a letter from the 2 nd Defendant.
The 2 nd D efendant’s Case
[24] The Learned Counsel for the 2 nd Defendant submitted that the 2 nd Defendant should not be made liable to the Plaintiff because there is no privity of contract between the parties. The SA 2013 is

9 between the Plaintiff and the 1 st Defendant. Every clause in the
SA 2013 specifically states that the liability to pay the outstanding sums are by the 1 st Defendant and not the 2 nd Defendant.
[25] It is further submitted that Amran Awalludin signed the SA
2013 as a director of the 1 st Defendant and executed on behalf of the said company. The fact that he is also a director of the 2 nd
Defendant does not make him liable in the absence of fraud.
[26] The email correspondences between the Plaintiff’s solicitors and the litigation department of the 2 nd Defendant does not mean that there is involvement of the 2 nd Defendant. The cheques issued were all issued by the 1 st Defendant and not the 2 nd Defendant.
[27] It is the submission of the Defendants that there is nothing pleaded in the Statement of Claim to justify the lifting of the corporate veil as no fraud was alleged and neither is the Plaintiff’s case that the 2 nd Defendant attempted to evade its legal obligations to the
Plaintiff.
[28] The Learned Counsel further submitted that the law recognizes that a parent company is a holding company in that it involves situations where many other companies are owned by it but each with a distinct separate entity. The Plaintiff failed to show any fraud or unlawful act on the part of the Defendants.
[29] I now turn to consider the three questions of law framed for my consideration.

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Question 1
Whether the corporate veil of the 1 st Defendant ought to be lifted
[30] The Supreme Court in Aspatra Sdn. Bhd. & Ors. v. Bank
Bumiputra (M) Bhd. & Anor [1987] 2 CLJ 377; [1987] CLJ (Rep)
50 held,
“ ......the court would generally lift the corporate veil in order to do justice particularly when an element of fraud is involved although the consequences of lifting the veil would vary according to the circumstances of each case.
”.
[31] It is therefore clear that the corporate veil will only be pierced by the Court in appropriate circumstances. In the case of Hotel
Jayapuri Bhd. v. National Union of Hotel Bar and Restaurant
Workers & Anor [1979] 1 LNS 32 HC the Court lifted the veil of incorporation on the facts of that case because it concerned the
Industrial Relations Act 1967 where the Industrial Court was required to disregard technicalities and to take into account the rules of equity, good conscience and the merits of the case.
[32] In Abdul Aziz Atan & Ors v. Ladang Rengo Malay Estate
Sdn. Bhd. [1985] 1 CLJ 255; [1985] CLJ (Rep) 370; [1985] 2 MLJ
165 the Court dismissed the appeal and held that an incorporated company was a legal person separate and distinct from the shareholders of the company. At p. 373 (CLJ); pp. 167 to 168 (MLJ),
Shankar J had this to say:
“ It is trite law that an incorporated company is a legal person separate and distinct from the shareholders of the company. The company from the date of incorporation has perpetual succession and the Companies
Act provides that the liability on the part of the shareholders to contribute

11 to the assets of the company will be limited in the manner provided by law and its memorandum and articles of association. The whole point of forming a limited company is that the shareholders can have in their hands the management of the business without incurring the risk of being under unlimited liability for the debts of the company .
”.
[33] Justice Abdul Malik Ishak in the Judgment of the Court of
Appeal in the case of Mackt Logistics (M) Sdn. Bhd. v. Malaysian
Airline System Berhad referred to Prest v. Petrodel Resources
Ltd [2013] 4 All ER 673, SC , pertaining to piercing the veil of incorporation in the context of considering the question of whether the Respondent spouse was entitled or to be treated as entitled to properties held by the companies,
“
Piercing The Corporate Veil
….I should first of all draw attention to the limited sense in which this issue arises at all.
‘Piercing the corporate veil’ is an expression rather indiscriminately used to describe a number of different things. Properly speaking, it means disregarding the separate personality of the company. There is a range of situations in which the law attributes the acts or property of a company to those who control it, without disregarding its separate legal personality. The controller may be personally liable, generally in addition to the company, for something that he has done as its agent or as a joint actor. Property legally vested in a company may belong beneficially to the controller, if the arrangements in relation to the property are such as to make the company its controller ’s nominee or trustee for that purpose. For specific statutory purposes, a company ’s legal responsibility may be engaged by the acts or business of an associated company. Examples are the provisions of the Companies Acts governing group accounts or the rules governing infringements of competition law by ‘firms’, which may include groups of companies conducting the relevant business as an economic

12 unit. Equitable remedies, such as an injunction or specific performance, may be available to compel the controller whose personal legal responsibility is engaged to exercise his control in a particular way. But when we speak of piercing the corporate veil, we are not (or should not be) speaking of any of these situations, but only of those cases which are true exceptions to the rule in Salomon v. A Salomon & Co Ltd [1897]
AC 22, [1895-9] All ER Rep 33, ie where a person who owns and controls a company is said in certain circumstances to be identified with it in law by virtue of that ownership and control.
Most advanced legal systems recognise corporate legal personality while acknowledging some limits to its logical implications. In civil law jurisdictions, the juridical basis of the exceptions is generally the concept of abuse of rights, to which the International Court of Justice was referring in Barcelona Traction Light and Power Co Ltd Case (Second
Phase) [1970] ICJ 3 when it derived from municipal law a limited principle permitting the piercing of the corporate veil in cases of misuse, fraud, malfeasance or evasion of legal obligations. These examples illustrate the breadth, at least as a matter of legal theory, of the concept of abuse of rights, which extends not just to the illegal and improper invocation of a right but to its use for some purpose collateral to that for which it exists.
English law has no general doctrine of this kind. But it has a variety of specific principles which achieve the same result in some cases.
One of these principles is that the law defines the incidents of most legal relationships between persons (natural or artificial) on the fundamental assumption that their dealings are honest. The same legal incidents will not necessarily apply if they are not. The principle was stated in its most absolute form by Denning LJ in a famous dictum in Lazarus Estates Ltd v. Beasley [1956] 1 All ER 341 at 345, [1956] 1
QB 702 at 712:

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No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever....
These decisions (and there are others) illustrate a broader principle governing cases in which the benefit of some apparently absolute legal principle has been obtained by dishonesty. The authorities show that there are limited circumstances in which the law treats the use of a company as a means of evading the law as dishonest for this purpose .
”.
[34] Gopal Sri Ram, JCA (later FCJ) in Law Kam Loy & Anor v.
Boltex Sdn. Bhd. & Ors [2005] 3 CLJ 355 , CA, writing for this Court aptly said at p. 362:
“
In my judgment, in the light of the more recent authorities such as
Adams v. Cape Industries Plc [1990] Ch 433, it is not open to the courts to disregard the corporate veil purely on the ground that it is in the interests of justice to do so. It is also my respectful view that the special circumstances to which Lord Keith referred include cases where there is either actual fraud at common law or some inequitable or unconscionable conduct amounting to fraud in equity.
”.
[35] In the instant case before this Court, the 1 st Defendant is a wholly owned subsidiary of the 2 nd Defendant. As the holding company the 2 nd Defendant exercises control and manages the

14 financial and operating policies. It clearly show that the 2 nd Defendant and the 1 st Defendant should be treated as one and the same entity.
Furthermore, the negotiations of the settlement which subsequently resulted in the SA 2013 being finalized and executed were conducted by one Syahida Jasmon, the 2 nd Defendant ’s legal officer. Based on the e-mails Syahida had signed off as an officer of the Group, Ranhill
Berhad. The facts show that despite being the 2 nd Defendant’s legal official she had negotiated on behalf of the 1 st Defendant.
Amran Awaluddin is one of the signatories of all the security cheques delivered pursuant to the SA 2013. The said cheques were then delivered to the Plaintiff’s solicitors pursuant to the SA by a letter executed for and behalf of the 2 nd Defendant (Re: pg 39-42 CBD).
Based on the documentary evidence, all the negotiations relating to the SA 2013 was conducted by the 2 nd Defendant and not the
1 st Defendant. In the present case there are compelling reasons to lift the corporate veil as the justice of the case so demands. The circumstances leading to the execution of the SA 2013 and the conduct of the 2 nd Defendant must be taken into consideration that the 1 st and 2 nd Defendants operated as one entity. The 2 nd Defendant had actively negotiated the terms of SA 2013 as well as the issuance and the delivery of the security cheques. The 2 nd Defendant cannot now be allowed to insist on their separate corporate personality to evade the obligations under the SA 2013. This is therefore an appropriate case to lift the corporate veil of the company. It is evidence that the 1 st and 2 nd Defendant can be regarded as a single economic unit.

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Question 2
Whether the 1 st Defendant and the 2 nd Defendant are jointly and/or severable liable to pay to the Plaintiff the sum of US$679,791.00 which is payable pursuant to the Settlement Agreement dated
31.5.2013.
[36] With the lifting of the corporate veil, the 2 nd Defendant would be liable to pay the Plaintiff the sum payable under the SA 2013. The answer to this question would be in the affirmative.
Question 3
Whether the 2 nd Defendant is liable for the failure and/or refusal of the
1 st Defendant to pay the outstanding and/or overdue sum pursuant to the Settlement Agreement dated 31.5.2013 on the grounds of the
Defendant’s unconscionable conducts.
[37] The security cheques were delivered to the Plaintiff however subsequently the cheques were cancelled. There is a clear unconscionable conduct by the Defendants by cancelling the cheques delivered without any notice and/or reasons.
[38] Based on the reasons mentioned above, the answer to this question would be in the affirmative.
Question 4
Whether the Settlement Agreement dated 31.5.2013 between the
1 st Defendant and the Plaintiff binds the 2 nd Defendant.
[39] Based on the reasons mentioned above, the answer to this question would be in the affirmative.

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Question 5
Whether based on the conducts and documents filed, there is any liability on the part of the 2 nd Defendant for the amount claimed by the
Plaintiff in this action.
[40] Based on the reasons mentioned above, the answer to this question would be in the affirmative.
Conclusion
[41] After giving careful consideration to the pleadings and the undisputed material facts as well as the documents agreed by both the Learned Counsels which were referred to this Court, based on the reasons stated above, I find all the questions posed to this Court for determination have to be answered in the affirmative. Accordingly,
Enclosure 18 is allowed with costs.
sgd.
( HASNAH BINTI DATO ’ MOHAMMED HASHIM )
Judge
High Court of Malaya
Kuala Lumpur.
4 th March 2015

Counsels:
For the Plaintiff/Respondent:
Messrs. Thomas Philip
- Alliff Benjamin Suhaimi
For the Defendant/Appellant:
Messrs. Francis Pereira & Shan
- Kumaresan
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