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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO. 22NCC-331-04/2013
ILUSTRASI HIKMAT SDN. BHD.
AND
TAN SRI DATO’ SERI SYED MOKHTAR SHAH
BIN SYED NOR & 3 OTHERS
GROUNDS OF JUDGMENT
Enclosures 16, 18 and 20 are the 3rd, 1st and 2nd Defendants’
applications respectively pursuant to Order 18 Rule 19 (1) (a) (b) and
(d) and/or O92 of the Rules of the Court 2012 (ROC) for an order to
strike out the Respondent’s/Plaintiff’s Writ and Statement of Claim
(“SOC”) on the grounds that it is plain and obvious that the Plaintiff
does not have a cause of action. The SOC is scandalous, frivolous
and vexatious and/or an abuse of the process of the Court. For the
purpose of the hearing, the following documents were considered by
this Court:Enclosure 16
i)
The Writ of Summons dated 9.4.2013;
ii)
The Statement of Claim dated 8.4.2013;
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iii)
The Defence of the 1st Defendant dated 27.5.2013;
iv)
The Defence of the 2nd Defendant dated 27.5.2013;
v)
The Defence of the 3rd Defendant dated 27.5.2013;
vi)
The Defence of the 4th Defendant dated 27.5.2013;
vii)
The Application to Strike out dated 3.7.2013;
viii)
The Affidavit in Support of the 3rd Defendant affirmed on
2.7.2013;
ix)
The Affidavit in Reply of the Plaintiff affirmed on 29.7.2013; and
x)
The Affidavit in Reply of the 3rd Defendant affirmed on
16.8.2013.
Enclosure 18
i)
The Affidavits of Zuraida Zainal Abidin affirmed on 17.7.2013
and 12.8.2013 on behalf of the 3rd Defendant;
ii)
The Affidavits of Nazliza Mohd Nasir affirmed on 2.7.2013 and
16.8.2013 on behalf of the 3rd Defendant; and
iii)
The Affidavits of Azhar b. Md Awal affirmed on 17.7.2013 and
12.8.2013 on behalf of the 2nd Defendant.
Enclosure 20
i)
The Writ of Summons dated 9.4.2013;
ii)
The Statement of Claim dated 8.4.2013;
iii)
The Defence of the 1st Defendant dated 27.5.2013;
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iv)
The Defence of the 2nd Defendant dated 27.5.2013;
v)
The Defence of the 3rd Defendant dated 27.5.2013;
vi)
The Defence of the 4th Defendant dated 27.5.2013;
vii)
The Application to Strike out by the 2nd Defendant dated
19.7.2013;
viii)
Affidavit in Support of the 2nd Defendant affirmed on 17.7.2013;
ix)
The Affidavit in Support of the 3rd Defendant affirmed on
2.7.2013;
x)
The Affidavit in Reply of the Plaintiff affirmed on 29.7.2013;
xi)
The Affidavit in Reply of the 3rd Defendant affirmed on
16.8.2013;
xii)
Affidavit in Support of the 1st Defendant affirmed on
17.7.2013;
xiii)
Affidavit in Reply by the 1st Defendant affirmed on 7.8.2013;
and
xiv)
Supplementary Affidavit by the 3rd Defendant affirmed on
20.8.2013.
Background
On 14 .4.1994, the Third Defendant (Bernas) was incorporated by
the Government of Malaysia (the Government). On 12.1.1996, the
Government entered into an agreement with Bernas setting out the
latter’s commercial activities, rights and liabilities.
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On 11.7.1995, seven (7) parties entered into a Shareholder
Agreement (SA) to form a joint venture company called Budaya
Generasi Sdn. Bhd. (4th Defendant) for the purpose of entering into
an agreement with the Government to purchase the shares of
Bernas. The parties to the Agreement were as follows:i.
Permatang Jaya Sdn. Bhd. (PJSB)
ii.
Pertubuhan Peladang Kebangsaan (NAFAS)
iii.
Persatuan Nelayan Kebangsaan (NEKMAT)
iv.
ZAW Ventures Sdn. Bhd. (ZAW)
v.
Simpletech Sdn. Bhd. (Simpletech)
vi.
Syarikat Perniagaan Peladang (MADA) Sdn. Bhd. (SPPM)
vii.
Syarikat Perniagaan Peladang (KADA) Sdn. Bhd. (SPPK)
The objective of the company as stipulated in Clause 2.2 of the said
Agreement,
“i.
To enter into the Contract; and
ii.
To take over the rights and liabilities of BERNAS and perform its
obligations.”.
The authorized share capital was RM10 million divided into 10 million
ordinary shares of RM1 each. Clause 4.1 of the same Agreement
sets out the shareholdings in the 4th Defendant as follows:
i.
PJSB
:
38.89%
ii.
NAFAS
:
11.111%
iii.
NEKMAT :
11.111%
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iv.
ZAW
:
11.111%
v.
SSB
:
11.111%
vi.
SPPM
:
11.111%
vii.
SPPK
:
5.555%
The Parties to the said Agreement also agreed to devise and
implement an employee share option scheme (ESOS) for the
staff of BERNAS. Subsequently on 2.1.1996, a Supplementary
Shareholders Agreement (SSA) was entered into between the
Plaintiff and the 7 parties to the Shareholders Agreement as well
as Sebiro Holdings Sdn. Bhd. (SEBIRO). By this SSA, the Plaintiff
and Sebiro also hold shares in the 4th Defendant thereby reducing
the shares of ZAW and SSB. Clause 3 and 4 of the SA was amended
to reflect the shareholdings of the Plaintiff as well as Sebiro, each
now holding 5%.
On 18.1.1996, the Government entered into a Privatisation
Agreement with the 4th Defendant as the Government was
desirous in privatizing BERNAS by selling the entire issued
and paid up capital of BERNAS excluding the Special Shares
to a consortium of companies for the consideration sum of
RM199,914,000.00. The entire equity in Padiberas was then sold
to the 4th Defendant and the shareholdings allocated amongst the
10 shareholders, including the Plaintiff, are in the following manner:i)
Permatang Jaya Sendirian Berhad (PJSB)
:
35%
ii)
Pertubuhan Peladang Kebangsaan (NAFAS) :
10%
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iii)
Persatuan Nelayan Kebangsaan (NEKMAT)
:
10%
iv)
ZAW Venture Sdn. Bhd. (ZAW)
:
5%
v)
Simpletech Sdn. Bhd. (SSB)
:
5%
vi)
Syarikat Perniagaan Peladang (MADA)
:
10%
:
5%
Sdn. Bhd. (SPPM)
vii)
Syarikat Perniagaan Peladang (KADA)
Sdn. Bhd. (SPPK)
viii)
Ilustrasi Hikmat Sdn. Bhd. (IHSB)
:
5%
ix)
Sebiro Holdings Sdn. Bhd. (Sebiro)
:
5%
x)
Pengurusan dan Kakitangan BERNAS
:
10%
Pursuant to the terms of the Priviatisation Agreement on 25.8.1997,
Bernas was listed on the Main Board of the KLSE. The Board of
Directors of Budaya Generasi subsequently approved the sale and
purchase of shares between Permatang Jaya Sendirian Berhad
(35%), Simpletech Sdn. Bhd. (5%) and Zaw Venture Sdn. Bhd. (5%)
and Gandingan Bersepadu Sdn. Bhd. (Gandingan Bersepadu) on
4.8.2003.
On 7.11.2003, the Plaintiff executed a circular resolution agreeing to
the sale and transfer of KADA’s equity (5%) in the 4th Defendant to
Gandingan Bersepadu. On 4.4.2004, the Plaintiff executed a circular
resolution agreeing to the sale and transfer of Sebiro’ equity (5%) in
the 4th Defendant to Gandingan Bersepadu.
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On 28.8.2009, Tradewinds (M) Bhd. (Tradewinds) entered into 2
shares sale agreements to buy 31.52% equity of Wang Tak Co. Ltd.
(a Hong Kong registered company) and 22.24% equity of Gandingan
Bersepadu in Budaya Generasi. On 5.11.2009, the dividend-in-specie
exercise was tabled and passed at the Board of Directors meeting of
the 4th Defendant.
On 17.11.2009, the 2nd Defendant made a Mandatory General
Offer (MGO) through Maybank Investment Bank to acquire all the
remaining ordinary shares in the 4th Defendant not already held by
Tradewinds as required by section 33A of the Securities Commission
Act 1993 and section 6 of the Code on Take Over and Mergers 1998.
On 24 November 2009, the dividend-in-specie exercise was tabled
at an Extraordinary General Meeting of the 4th Defendant and
approved by a majority vote of 72.22%. Tradewinds then made a
General Offer to the shareholders of the 4th Defendant to acquire all
the remaining shares not already held by it on 24.11.2009.
By
a
Novation
Agreement
dated
30.12.2009
between
the
Government, Tradewinds and the 4th Defendant, the Parties
agreed that the Government gave its consent to the 4th Defendant
to novate all of its rights, liabilities, benefits, interest, duties
and obligations under the Privatisation Agreement to Tradewinds.
The Plaintiff received 1.71% equity of the 3rd Defendant and a
cash dividend of RM15,126,485.00.
On 14.1.2013, Perspective Land (M) Sdn. Bhd., Kelana Ventures
Sdn. Bhd., Seaport Terminal (Johor) Sdn. Bhd. and Acara Kreatif
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Sdn. Bhd. made a joint offer to purchase all the remaining
ordinary shares in Tradewinds not already held by the joint offerors.
On 21.3.2013 the said four joint offerors made a General Offer to
acquire all the remaining shares in the 3rd Defendant not already
owned by the joint offerors and the 2nd Defendant.
The Plaintiff’s Claim
The Plaintiff is seeking for the following reliefs:a)
Declaration that the 1st Defendant, Tan Sri Syed Mokhtar
(SM) is in breach of the 2003 SM assurances (read together
with the Privatisation Agreement and Shareholders Agreement)
in previously undertaking the 2009 General Offer and presently
the 2013 General Offers.
b)
Declaration that as a consequence, the 2013 General Orders
respecting Bernas are illegal, unenforceable and void with
specific relief orders to the following effect:(i)
the previous control of the Original Private Promoter had
over Bernas be restored back to the Original Private
Promoter upon similar terms to be derived from the 2009
General Offer;
(ii)
the shareholding of SM held through SM 2003 Nominee
in the Original Private Promoter be offered to all other
shareholders in Original Private Promoter including the
Plaintiff upon terms to be derived from the 2009 General
Offer.
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(c)
Declaration that the Novation Agreement dated 30.12.2009 is
null, void and of no effect.
(d)
Damages for breach of 2003 SM assurances and the
Shareholders Agreement.
(e)
Further other relief; and
(f)
Costs.
Decision
The historical background of this case is important as it clearly sets
out the legal position of the Parties.
The Plaintiff
The Plaintiff is a shareholder who holds 0.75% equity of Bernas.
Originally the Plaintiff was a 5% shareholder in the 4th Defendant
which in turn owned the entire Padiberas pursuant to the terms and
conditions of the Privatisation Agreement. The 4th Defendant had 10
shareholders (as set out above) who were parties to the SA as well
as the Supplementary Shareholders Agreement (SSA).
The 1st Defendant
SM, the 1stDefendant,is a businessman.
The 2nd Defendant
The 2nd Defendant is the shareholder of the 3rd Defendant.
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The 3rd Defendant
The 3rd Defendant once known as Bernas was incorporated by
the Government of Malaysia on 14.4.1994. The Government then
entered into an agreement with Bernas on 12.1.1996 setting out
its commercial activities as well as its rights and liabilities.
The 4th Defendant
In the Statement of Claim the 4th Defendant is described as the
Original Private Promoter. By the SA dated 11.7.1995 seven parties
(excluding the Plaintiff) agreed to form a joint venture company called
Budaya Generasi Sdn. Bhd. (the 4th Defendant) with the sole purpose
to purchase the shares of Bernas On 2.1.1996
by an SSA the
Plaintiff came on board with a 5.555% shareholding.
1996 Privatisation Agreement
On 18.1.1996, the Government of Malaysia and the 4th Defendant
entered into an agreement to privatize Bernas. In the recital of the
said Agreement, it is stated as follows,
“(A)
Padiberas Nasional Berhad (formely known as Syarikat Padiberas
Nasional Berhad) (‘BERNAS’) is a company incorporated in Malaysia
under the Companies Act 1965 and by virtue of the Lembaga Padi
dan Beras Negara (Successor Company) Act 1994, having its
address at 13-17 and 20-21 Floors Bangunan Perkim 250D Jalan
Ipoh PO Box 10108, 50903 Kuala Lumpur and has at the date of this
Agreement an authorized share capital of Ringgit Malaysia One
Billion and One (RM1,000,000,001.00) only divided into One Billion
(1,000,000,000) ordinary shares of RM1.00 each and One (1) Special
Share of RM1.00 of which two hundred million (200,000,000)
ordinary share and the Special Share have been issued and are fully
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paid up and are beneficially owned by the Government or its
nominees.
(B)
By an agreement dated 12th January 1996 between the Government
and BERNAS (“the Bernas Agreement”), the parties thereto had set
out
the
entire
arrangement
between
them
vis-à-vis
the
corporatisation exercise carried out by the Government in respect of
commercial and social activities of the dissolved Lembaga Padi dan
Beras Negara and the role and obligations of BERNAS after the
Corporatisation Date and its relationship with the government
thereafter. A copy of the Bernas Agreement is annexed hereto and
marked as Appendix I.
(C)
The Government is desirous in privatizing BERNAS by selling the
entire issued and paid-up share capital of BERNAS excluding the
Special Share (“the said Shares”) to a consortium of companies
organisations, associations and persons more particularly described
in clause 7.1 hereof subject to the terms and conditions hereinafter
contained.”.
Under the said Agreement, the 4th Defendant is described as the
Privatisation Company.
It is stated in the Plaintiff’s SOC that sometime in 2003 the whole
arrangement of the original shareholders in the 4th Defendant was
allegedly disrupted by the emergence of a new shareholder in the
name of Gandingan Bersepadu. It is the Plaintiff’s case as stated
in the Statement of Claim that the arrangement was subsequently
acknowledged by SM to the Plaintiff as being his nominee vehicle.
Upon realizing the entry of Gandingan Bersepadu, the Plaintiff
purportedly arranged for financing of RM100 million to purchase
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the said Subject Shares that had otherwise been acquired in stealth
by Gandingan Bersepadu. The Plaintiff, however, did not proceed
with the intended purchase and the issue relating to pre-emption
was subsequently resolved upon terms agreed. It is contended
that contrary to the terms of the Privatisation Agreement, the
representative of the Plaintiff on the Board of the 4th Defendant
had no knowledge as to whether Gandingan Bersepadu had, directly
or indirectly through Bernas, obtained formal approval of the
Government.
It is further stated in the Plaintiff’s SOC that prior to 2003, SM had
specifically approached the Plaintiff to abandon its counter-offer to
purchase the Subject Shares as well as any complaints it has and to
allow the entry of Gandingan Bersepadu as a shareholder of the
4th Defendant. The assurances are as stated in the Statement of
Claim as follows:“ (a) SM had been instructed by the then Prime Minister of Malaysia to
assume control of Bernas to provide better efficiency to its affairs and
the entry of SM through the SM 2003 Nominee would advance the
commercial interest of all the shareholders of the Original Private
Promoter (including the Plaintiff).
(b) SM intended the investment in Bernas to be a long term investment
(which he desired to pursue with the Plaintiff) and his plans would
ensure significant benefit to the Plaintiff and the adherence of the
underlying objective of Bernas in terms of the Privatisation Agreement
and Bernas Agreement.
(c)SM will conduct himself in a transparent manner in his future dealings
within the Original Private Promoter and Bernas so as to allay concerns
of the Plaintiff that there would not be any further activities undertaken in
stealth.
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(d) The Shareholders Agreement and the Supplemental Shareholders
Agreement will be honoured in its original form and spirit.”.
In or about 2009, SM, through the 2009 Mandatory General Offer
(MGO) persuaded the Plaintiff and other shareholders of the 4th
Defendant to allow SM to migrate their collective interest in Bernas to
Tradewinds through a process of internal acquisitions by Tradewinds
of the shareholding. The said migration through the 2009 MGO was
undertaken and achieved through a majority decision.
The Plaintiff, in its Statement of Claim describedthe particulars of
illegality as follows,
“(a)
The spirit of the pre-emption under the Shareholders Agreement
was again being breached by SM and SM 2003 Nominee by
essentially allowing control of Bernas to be again hived off to
another remote nominee of SM namely Tradewinds.
(b)
The objective of the dividend in specie exercise that was being
formulated on a parallel basis with the 2009 General Offer was
such that the premium that was had by the Original Private
Promoter in Bernas was removed away from each of the minority
shareholders of the Original Private Promoter and housed entirely
with SM.
(c)
The dividend in specie exercise was effected on or about 511. 2009
through a positive controlling vote of representatives of SM on the
Board of the Original Private Promoter without declaring their
ultimate interest in the exercise.
(d)
The said dividend in specie exercise undermine the very purpose
and existence of the Original Private Promoter which was then
rendered dormant with no further business activity.
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(e)
The Bernas Agreement was subsequently novated to Tradewinds
without any formal meeting of the Board or shareholder of the
Original Private Promoter.”.
It is contended by the Plaintiff that the Government was made aware
of the breaches by SM (including that arising from the assurances)
by the Plaintiff who had encouraged the Parties to resolve the matter
amicably upon a tacit invitation to SM to remedy the breaches.
The Plaintiff also states in the SOC that the Government was also
made aware of certain irregularities regarding the import of rice at
inflated values with secret profits illegally retained elsewhere.
Notwithstanding the profitable business of Bernas, it is the contention
of the Plaintiff that the increase in the price of rice is blatant disregard
of the Social Objectives in the Privatisation Agreement and Bernas
Agreement.
On 14.1.2013, Perspective Lane (M) Sdn. Bhd., Kelana Ventures
Sdn. Bhd., Seaport Terminal (Johore) Sdn. Bhd. and Acara Kreatif
Sdn. Bhd. made a joint offer to purchase all the remaining ordinary
shares in the 2nd Defendant. Subsequently on 21.3.2013, the
aforesaid joint offerors made a General Offer to acquire the remaining
shares in the 3rd Defendant not already owned by the joint offerors
and the 2nd Defendant.
The Plaintiff, however, refused to surrender his shares in Bernas. It is
the contention of the Plaintiff that SM and his nominees are not
entitled to assume complete ownership of Bernas and that the control
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of ownership of Bernas should be re-vested in the 4th Defendant upon
such terms as the Court deems appropriate.
By the Novation Agreement entered between the Government, the
4th Defendant and Tradewinds, the Plaintiff received 1.71% equity of
8,046,003 shares in Padiberas. The Plaintiff then pledged the said
1.71% of the shares with Padiberas with HLG Nominees (Tempatan)
Sdn. Bhd. (HLG Nominees) to be sold. Therefore presently the
Plaintiff holds only 0.75% of the shares.
The Plaintiff’s claim is premised on the fact that it had, at once upon a
time held 5.5% equity in the 4th Defendant. As a shareholder, the
rights of the Plaintiff are set out in the SSA and SSA. In its Statement
of Claim, the Plaintiff contends that the spirit of the preemption rights
under the SA was breached by SM and the 4th Defendant.
The Law
It is only in plain and obvious cases that the Court will dismiss an
action summarily. In the case of Lee Nyan Choi v. Voon Noon
[1979] 2 MLJ 28 Lee Hun Hoe CJ (Borneo) at page 29 observed that,
“ The power to dismiss an action summarily without permitting a party to
trial is a drastic power and should be exercised with utmost caution. The
power of summary procedure should only be resorted to on plain and
obvious cases.”.
The Federal Court in Roslan bin Abdullah v. New Zealand Co. Ltd.
[1981] 2 MLJ 324 and in Golden Century Development Sdn. Bhd.
v. Ganhoe & Anor [1983] 1 MLJ 86 referred to the English case, AG
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of Duchy of Lancaster v. L & NW Railway Co. [1892] 3 Ch 274 and
observed that summary procedure,
“ …can only be adopted when it can clearly be seen that a claim or
answer is on the face of it ‘obviously unsustainable’…”.
The principle relating to O18 r. 19(1) RHC was considered in Bandar
Builder Sdn. Bhd. v. United Malayan Banking Corporation Bhd.
[1993] 3 MLJ 36, Mohamad Dzaiddin SCJ (as he then was) said at
page 43 that,
“ It is only in plain and obvious cases that recourse should be had to
summary process under this rule (per Lindley MR in Hubbuck & Sons
Ltd v. Wilkinson, Heywood & Clark Ltd.) and this summary procedure
can only be adopted when it can be clearly seen that a claim or
answer can only be adopted when it can be clearly seen that a claim
or answer is on the face of it ‘obviously unsustainable’.”.
His Lordship goes on to say that such process,
“ …cannot be exercised by a minute examination of the documents and
facts of the case, in order to see whether the party has a cause of action
or a defence…The court must be satisfied that there is no reasonable
cause of action or that the claims are frivolous or vexatious or that the
defences raised are not arguable.”.
It is trite law that a pleading should only be struck out if it is shown
that it is on the face of it ‘obviously unsustainable’. It is a summary
power to be sparingly exercised. It should be exercised only in cases
where it is conspicuously clear that the claim on its face is obviously
unsustainable (Re:Pet Far Eastern (M) Sdn. Berhad v. Tay Young
Huat & Others [1999] 2 CLJ 886; [1999] 5 MLJ 558). If it can be
17
shown that the pleadings disclose some cause of action or raised
some question fit to be decided, however slight the chances of
succeeding, the case should not be regarded as suitable for summary
striking out (Re:Omega Holdings Berhad v. Dato’ Tiah Thee Kian &
Ors [2002] 7 CLJ 125; [2002] 6 MLJ 20). In the case Abdul Rahim
Abdul Hamid & Ors v. Perdana Merchant Bankers Bhd. & Ors
[2000] 2 CLJ 457, Mokhtar Sidin, JCA in reliance, inter alia, on the
case of Bandar Builder Sdn. Bhd. held, as follows:
“ In considering an application under O. 18 r. 19(1)(a), the Court has to
take into account the statement of claim on the face of it and no
consideration whatsoever shall be paid to the evidence in the form of
these affidavits. So long as the statement of claim discloses a
reasonable cause of action, however weak the claim is the claim cannot
be struck off summarily. At that stage of the proceedings it is not for us
or for the learned judge of the High Court to consider the merits of
Carah’s claim. On an application under O. 18 r. 19(1)(a) the Court has
only to consider whether the statement of claim discloses a reasonable
cause of action. The well established principle is that the Court will not
summarily strike out pleadings, except only in plain and obvious cases
where the claim or counterclaim is plainly and obviously not
sustainable.”.
In Owen Sim Liang Khui v. Piasau Jaya Sdn. Bhd. & Anor [1996]
4 CLJ 716; [1996] 1 MLJ 113, Gopal Sri Ram, JCA (as he then was)
at p. 136 said:
“ The power to summarily strike out a pleading must be sparingly
exercised, and in respect of the philosophy that underlies the exercise
ofthat power, we can do no better than to quote from the judgment of
Mohamed Dzaiddin SCJ in Bandar Builder Sdn. Bhd. v. United Malayan
Banking Corp, Bhd. [1993] 4 CLJ 7; [1993] 3 MLJ 36 at p. 44:
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This court as well as the court below is not concerned at this stage
with the respective merits of the claims. But what we have to
consider is whether the counterclaim discloses some cause of
action and, likewise, whether the defence to counterclaim raises a
reasonable defence, It has been said that so long as the pleading
disclose some cause of action or raise some question fit to be
decided by the judge, the mere fact that the case is weak and not
likely to succeed at the trial is no ground for the pleadings to be
struck out (see Moore v. Lawson [1915] 31 TLR 418 and Wenlock
v. Moloney & Ors. [1965] 1 WLR 1238).”.
The Privatisation Agreement was executed on 18.1.1996. Clause 7.5
of the Privatisation Agreement expressly provided that Bernas will be
publicly listed and only required the share structure to be maintained
until it was listed on KLSE. Bernas was listed on KLSE on 25.8.1997.
There was no further restriction on the sale of shares and this was
reiterated in this Prospectus dated 27.6.1997 as follows:
“ Save as provided in the Privatisation Agreement whereby not less than
75% of the equity interest in BERNAS shall at all times be held by
Malaysian interests and not less than 30% be held by Bumiputera
interests, there are not restrictions imposed on BGSB with regard to the
sale, transfer or assignment of the shares it owns in the Company.”.
On 4.8.2003, the Board of Directors of the 4th Defendant approved
the sale and purchase of shares between Permatang Jaya Sdn. Bhd.
(35%), Simpletech Sdn. Bhd. (5%) and Zaw Venture Sdn. Bhd (5%)
and Gandingan Bersepadu. The approval is reflected in the Minutes
of Meeting of the Board,
“ 6.1 Lembaga Pengarah menerima dan meluluskan pemindahan saham
sebanyak 1,100,010 saham-saham biasa bernilai RM1.00 setiap satu
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sepertimana dinyatakan di bawah:Pemindahan Saham
Penerima Saham
Bilangan Saham
Permatang Jaya
Gandingan Bersepadu
877,790
Simpletech
Gandingan Bersepadu
111,110
Zaw Venture
Gandingan Bersepadu
111,110…..”.
The Plaintiff had also executed a Deed of Waiver on 19.5.2003
and irrevocably waived all its rights under the SA,
“ I, PARISAH BINTI OTHMAN (Nric No. 530606-03-5514) am hereby
authorized to act on behalf of Ilustrasi Hikmat Sdn. Bhd. (IHSB) in
respect of the Deed of Waiver pertaining to the said Agreements, do
hereby IRREVOCABLY WAIVE all rights of IHSB as set out under
Clause 7 of the Shareholders Agreement.
IHSB shall have no further claims or actions against KADA in respect of
the disposal and sale of shares held by them in Budaya Generasi (M)
Sdn. Bhd. (the said Shares”) and KADA shall have the liberty to deal
with the said Shares in such manner as they deem fit and appropriate.”.
Subsequently, on 7.11.2003, the Plaintiff executed a circular
resolution agreeing to the sale and transfer of KADA’s equity (5%)
in the 4th Defendant to Gandingan Bersepadu. This was followed
by another circular resolution dated 4.4.2004 agreeing to the sale
and transfer of Sebiro’s equity (5%) in the 4th Defendant also to
Gandingan Bersepadu.
The 2nd Defendant then entered into 2 Share Sale Agreements on
28.8.2009 to buy 31.52% equity from Wang Tak Co. Ltd. (a Hong
Kong registered company) and 22.24% equity of Gandingan
Bersepadu in the 3rd Defendant. A Dividend in Specie exercise was
20
then tabled and approved by the BOD of the 4th Defendant at a
meeting held on 5.11.2009.
On 17.11.2009, the 2nd Defendant made a Mandatory General
Offer (MGO) to acquire all the remaining ordinary shares in the
3rd Defendant not held by the 2nd Defendant and on 24.11.2009,
the dividend in specie exercise was tabled at an EGM and approved
by a majority vote of 72.22%. Subsequently, on 9.12.2009 the 2nd
Defendant made a General Offer to the shareholders of the 3rd
Defendant to acquire all the remaining shares in the 3rd Defendant.
By the Novation Agreement dated 30.12.2009 entered into between
the Government, the 4th Defendant and 2nd Defendant whereby the
Privatisation Agreement was novated and the 4th Defendant divested
itself of its entire shareholding in the 3rd Defendant and transferred
all of its rights and liabilities to the 2nd Defendant. The Plaintiff
received 1.71% equity of 8,046,003 shares in the 3rd Defendant and
a cash dividend of RM15,126,485.00.
The Plaintiff then pledged the said 1.71% shares with the 3rd
Defendant with one HLG Nominees (Tempatan) Sdn. Bhd. (HLG
Nominees) to be sold.As at 2.5.2013 when the Plaintiff commenced
this action, the said HLG Nominees had sold more than 50% of the
shares leaving only 0.75% in their hands.
In the present case, it is obvious from the SOC that the Plaintiff’s
cause of action against the Defendants are based on breach of
assurances and that the Novation Agreement dated 30 December
21
2009 between the Government, and the 4th Defendant is null, void
and of no effect.
As stated above, the SA was entered to form a joint venture
company, the 4th Defendant, with the sole purpose of entering into an
agreement with the Government to purchase the shares of Bernas.
The parties to the Agreement were as follows:i.
Permatang Jaya Sdn. Bhd. (PJSB).
ii.
Pertubuhan Peladang Kebangsaan (NAFAS).
iii.
Persatuan Nelayan Kebangsaan (NEKMAT).
iv.
ZAW Ventures Sdn. Bhd. (ZAW).
v.
Simpletech Sdn. Bhd. (Simpletech).
vi.
Syarikat
Perniagaan
Peladang
(MADA)
Sdn.
Bhd.
Perniagaan
Peladang
(KADA)
Sdn.
Bhd.
(SPPM).
vii.
Syarikat
(SPPK).
It is to be noted that the Plaintiff was not even a party to the said
Agreement. Subsequently in 1996, an SSA was executed between
the Plaintiff together with the original 7 parties to the SA as well as
Sebiro Holdings Sdn. Bhd. (SEBIRO). By this Agreement, the Plaintiff
and Sebiro also hold shares in the 4th Defendant thereby reducing
the shares of ZAW and SSB. Clause 3 and 4 of the Shareholders
Agreement was amended to reflect the shareholdings of the Plaintiff
as well as Sebiro each now holding 5%.
22
By the Privatization Agreement, it was agreed that the Government
privatizied BERNAS by selling the entire issued and paid up capital
of BERNAS excluding the Special Shares to the 4th Defendant for
the consideration sum of RM199,914,000.00.The entire equity in
Padiberas was sold to the 4th Defendant and shareholdings allocated
amongst 10 shareholders. Bernas was then listed on the Main Board
on 27.8.1997. On 19.5.2003, the Plaintiff together with the other
shareholders executed a Deed of Waiver irrevocably waiving all
of its rights under the SA as set out in Clause 7 of the SA which
deals with restriction on transfer of shares. By the Deed of Waiver
the Plaintiff have no further claims or actions against KADA in
respect of the disposal and sale of shares held by them in the
4th Defendant and that KADA shall be at liberty to deal with shares.
The 4th Defendant had sought the consent of the Government in
respect of the change in shareholding. The sale of the shares were
approved by the BOD and the individual shareholders. The Plaintiff
was not party to the sale of the shares that took place 10 years ago.
By the Novation Agreement entered between the Government,
Tradewinds and the 4th Defendant, the Privatization Agreement
was novated to Tradewinds. The Plaintiff is only a shareholder of
the 4th Defendant. Therefore, the rights of the Plaintiff under the
SA are similar to the other shareholders. The Plaintiff’s rights as a
shareholder does not give it the rights or the locus to maintain an
action for breach against the 1st, 2nd and 3rd Defendants who are
not a party to the SA. The sales of the shares were approved by the
BOD and the individual shareholders.
23
The Plaintiff had acquiesced to all the dealings in Bernas shares and
executed all the necessary resolutions as well as the Deed of Waiver.
By the said Deed of Waiver dated 19.5.2003, the Plaintiff irrevocably
waived all its rights as provided under clause 7 of the SA and shall
have no further claims or actions against KADA in respect of the
disposal and sale of the shares held by them in the 4th Defendant.
KADA shall be at liberty to deal with the shares in such manner
as deem fit. It is further stipulated that the Plaintiff approved that the
4th Defendant will seek the consent of the Government of Malaysia
in respect of the change of the shareholding following the said
transaction. The Plaintiff had also received the dividend in specie
of 1.71% of the equity in Bernas and RM15,126,485.00 as cash
dividend. The Plaintiff had also pledged the shares to HLG Nominees
to be sold in the open market. Therefore, upon the transfer of the
shares, HLG is the registered shareholder of the shares.
In my considered view, to reinstate the shareholding structure that
had prevailed when the other shareholders had willingly sold their
shares about 10 years ago would definitely create commercial
chaos. With regards to the Novation Agreement which was entered
between the Government of Malaysia, the 2nd Defendant and the
4th Defendant, the Plaintiff was not a party to the said Novation
Agreement but was merely a shareholder of the 4th Defendant.
Applying the principles laid down in the two aforementioned leading
authorities to the present application before me, having taken into
account the totality of the facts and circumstances of this case, and
the very detailed submissions of learned Counsel for both parties,
24
I am of the considered view and agree with the Defendants that
this is a plain and obvious case for me to strike out the Plaintiff’s
Statement of Claim under O. 18 r 19 (1)(a). The Plaintiff's claim
against the Defendant is also frivolous, vexatious and its pleadings
are otherwise an abuse of the process of the Court as the Plaintiff
has been dealing with its shares and reducing its equity in the
3rd Defendant and reaping and enjoying commercial benefits. The
transactions were all properly documented as evidenced by the SA,
SSA, the Privatization Agreement, the Novation Agreement as well as
the resolutions, minutes of BOD meeting and approvals of the BOD.
I have considered the pleadings, the affidavits filed herein and the
arguments by the respective Counsels from both sides and having
given the matter a very careful and serious consideration, I am of the
view that the Plaintiff’s claim is obviously unsustainable. Therefore,
this Court could decide the issue to be ventilated without having to go
through the normal process of full-blown trial. Accordingly, I allowed
the prayers sought by the 1st, 2nd and 3rd Defendants and made an
order for costs of RM5,000.00 for this application to be paid by the
Plaintiff to the 1st, 2nd and 3rd Defendants.
sgd.
( HASNAH BINTI DATO’ MOHAMMED HASHIM )
Judge
High Court of Malaya
Kuala Lumpur.
6th February 2014
25
Counsels:
For the Plaintiff/Appellant:
Messrs. Bahari & Bahari
- Mohd Rizal
- Firuz Jaffril
For the Defendants/Respondents:
Messrs. M.Pathmanathan & Co. (for 1st Defendant)
- Dato’ M.Pathmanathan
- Shirin Pathmanathan
Messrs. S.F Chan & Co. (for 2nd Defendant)
- V.Kalaiarasu
Messrs. Abd. Halim Ushah & Associates (for 3rd Defendant)
- Eric Clements.