THE OFFICIAL REPOSITORY OF
MALAYSIAN JUDGMENTS & RULINGS

[2018] MYCA 53 ENGLISH

Zen Courts Sdn Bhd v Bukit Jalil Development Sdn Bhd and 2 Others
Suit Number: Rayuan Sivil No. W-02(IM)(NCC)-842-04/2017 

Litigation & court procedure - Application of the Petitioner to restore the status ante

JUDGMENT

Introduction

[1] This appeal is against the decision of the learned High Court Judge made on 27th March 2017 dismissing the Appellant/ Petitioner’s Notice of Application dated 22.8.2016 for an order to restore the status ante of the Petitioner in the 1st Respondent. We had, after perusing the records of appeal and hearing and considering the written and oral submissions of learned counsels for the parties, found no merits in the appeal. We unanimously dismissed the appeal with costs of RM10,000 to the Respondents subject to the payment of allocator. The deposit to be refunded. These are our reasons in full.

[2] For the purpose of this judgment, the parties will be referred to as they were referred to in the High Court.

The Petitioner’s Notice of Application

[3] In the Notice of Application (Enclosure 167), the Petitioner had applied for the following orders, inter alia:-

(i) to restore the status ante of the Petitioner in the 1st Respondent prevailing immediately prior to the Court’s Order dated 18.7.2013;

(ii) that the Petitioner be restored to the Register of the 1st Respondent as the registered owner of 30% of the share in the 1st Respondent;

(iii) that two (2) persons nominated by the Petitioner be appointed as directors of the Board of Directors of the 1st Respondent.

Background

[4] The Petitioner filed a petition pursuant to section 181 Companies Act, 1965 (“the 181 Petition”) on the grounds that the 1st and 2nd Respondent breached a Joint Venture Agreement dated 12.9.1995 (“the JVA”) entered between United Engineers Berhad (“UEM”) and the 2nd Respondent. The 1st Respondent was incorporated pursuant to the said JVA. Under the terms of the JVA, UEM held 30% shareholding and the 2nd Respondent held 70% in the 1st Respondent.

[5] On 27.3.2012 after a full hearing, the High Court concluded that the 2nd Respondent had acted in an oppressive manner in the affairs of the 1st Respondent company. The High Court allowed the 181 Petition and granted the following reliefs-

(i) The 2nd Respondent buys out all 4,500,000 shares of the Petitioner in the 1st Respondent, at the price of those shares to be determined by an independent valuer on a ‘net tangible asset’ basis. The valuation to be as at the date of the order.

(ii) The appointment of an independent valuer to be mutually agreed by the Petitioner and the 2nd Respondent. In the event the parties could not agree to the independent valuer, the parties at liberty to apply to the court to appoint a valuer.

(iii) The valuation to be done within three (3) months from the date of the Order. The parties may make representations to the valuer as to the valuation.

(iv) The valuer appointed shall file the valuation report into Court and the parties may apply.

(v) The Court will determine the final value of the shares and the terms of the Buy-Out Order.

(vi) The costs of the valuation to be borne by the 1st Respondent.

(vii) The 2nd Respondent and Petitioner shall be at liberty to apply.

[6] Ferrier Hodgson MH Sdn. Bhd. (“Ferrier”) was mutually appointed by the parties to the 181 Petition as the valuer to conduct the valuation of the shares for the Buy-Out exercise. Ferrier completed the valuation and submitted the final valuation report dated 31.12. 2012. The Petitioner, however was not satisfied with the value of its 30% shareholding valued at RM35.97 million assessed by Ferrier. The Petitioner claimed that the fair market value of the shares was RM262 million.

[7] Dissatisfied with the valuation the Petitioner filed a Notice of Application dated 26.2.2013 (Enclosure 80) to make representation on the valuation report and to call expert evidence in Court. The grounds of the application, inter alia, were as follows:

(i) There are express provisions in the Buy-Out order that state that parties are at liberty to apply. The court always retains the power to make further orders ancillary to or in relation to the valuation report.

(ii) Ferrier prepared a draft valuation report which invited parties to comment on it. The Petitioner had responded by counter offering a valuation done by Hartanah Consultants (Valuation) Sdn Bhd (“Hartanah”).

(iii) Ferrier applied the wrong considerations when it relied on the valuation report of Henry Butcher in respect of the value of the land and disregarded the higher valuation conducted by Hartanah on the gross development value of the most priced asset of the 1st Respondent company.

(iv) The Petitioner averred that it would be just and reasonable that sufficient material be provided for an adequate valuation.

[8] The 2nd Respondent subsequently filed a Notice of Application dated 15.3.2013 (Enclosure 84) for the Court to determine the final value of the Buy-Out of the Petitioner’s shares and for consequential orders to give effect to the purchase of the shares. The learned High Court Judge heard both the applications in Enclosures 80 and 84. After having considered the submissions of the parties the learned High Court Judge dismissed Enclosure 80 and allowed Enclosure 84. The Court ordered the final Buy-Out value of the Petitioner’s shares as follows:

(i) the 2nd Respondent shall buy the Petitioner’s shares in the 1st Respondent at RM7.99 per share and the aggregate purchase price of the Shares fixed at RM35.97million (“the purchase price”);

(ii) the Buy-Out must be completed no later than 4 months after the date of the Order;

(iii) Petitioner to procure the resignation of Mr. Yeoh Keng Tat as director of the 1st Respondent, such resignation to be effective on or before the date of completion of the purchase of the 30% shares.

[9] Dissatisfied with the decision of the High Court, the Petitioner filed an appeal against the decision of the learned High Court Judge with respect to Enclosures 80 and 84. The Court of Appeal heard the appeal and affirmed the decision of the High Court Judge. The Petitioner subsequently appealed to the Federal Court and on appeal to the Federal Court the Petitioners appeal was allowed. The decisions of the courts below were reversed. The Federal Court ordered, inter alia, as follows;

(i) the decision of the High Court and the Court Appeal in respect of Enclosures 80 and 84 be set aside;

(ii) Order in terms of Enclosure 80;

(iii) cross examination of expert witnesses in respect of the valuation reports to be conducted before another High Court Judge.

[10] The 2nd Respondent filed for an order to execute the Buy-Out Order. On 25.2.2014 the Senior Assistant Registrar allowed the 2nd Respondent’s application and made the following orders:

(i) that the Petitioner having failed and/or refused on 11.11.2013 to deliver to the 2nd Respondent the Form of Transfer of Shares in respect of the transfer by the Petitioner in favour of the 2nd Respondent of 4,500,000 ordinary shares of RM1.00 each in the capital of the 1st Respondent upon receipt from the solicitors of the 2nd Respondent of their written confirmation to the Court that they have in possession the cashier’s orders or banker’s cheques the said Form of Transfer of Shares (Form 32A) be executed by the Registrar of the High Court for and behalf of the Petitioner and delivered to the 2nd Respondent’s solicitors.

(ii) That the 2nd Respondent be directed to deliver to its solicitors as stakeholder, cashier’s orders or banker’s cheques made payable to “Chellam Wong” for the following amounts:

a) The total amount of RM35,970,000.00 being the purchase price for the shares; and

b) RM576, 505.48 being the amount of interest computed at 5% per annum from 18.7.2013.

(iii) Mr. Yeoh Keng Tat be deemed to have ceased to be a director of the 1st Respondent.

(iv) The Petitioner pay costs of RM10, 000.00 each to the 1st Respondent and the 2nd Respondent.

The High Court

[11] The learned High Court Judge having considered the submissions of the parties, dismissed the application of the Petitioner to restore the status ante of the Petitioner in the 1st Respondent prevailing immediately prior to the Court’s Order dated 18.7.2013. His Lordship was of the considered view that the Buy-Out Order pursuant to the High Court Order dated 27.3.2012 remained intact and unchallenged as there was no appeal by the Petitioner against that Order of the High Court. What the Petitioner had attempted to do was to challenge the Order by filing the notice of application in enclosure 167. The mode taken to challenge the said Buy-Out Order by filing Enclosure 167 was wrong and an abuse of process of the court. The learned High Court Judge found that the Petitioner was barred by the doctrine of res judicata from filing Enclosure 167 in its attempt to challenge the Buy-Out Order.

[12] The questions posed to the Federal Court in the Petitioner’s Notice of Motion for leave to appeal to the Federal Court were restricted to matters in relation to the valuation of the Petitioner’s shares in the 1st Respondent and not the Buy-Out Order.

Our Decision

[13] Learned Counsel for the Petitioner submitted that it is trite law that a successful appellant has a restituitionary right to any property transferred under any judgement of the court which is reversed. When an order is set aside on appeal, the Court has the inherent jurisdiction to make restitution and to restore the parties’ position prior to the impugned order granted. Therefore, with the Federal Court Order setting aside the High Court dated 18.7.2013, it would mean that the Petitioner was entitled to the restoration of the status ante of the parties.

[14] It was further argued that since the Order dated 18.7.2013 and the consequential orders have been set aside by the Federal Court, the Petitioner must be restored to its original position as the Buy-Out has not been completed. The restoration will preserve the integrity of the Order made on 27.3.2012.

[15] Having heard parties and having perused the appeal records, we were not persuaded that we should restore the status ante of the Petitioner in the 1st Respondent. In short, we concurred with the learned High Court Judge that the Buy-Out Order remains unchallenged by the Petitioner. The Buy-Out Order dated 27.3.2012 is still good, valid and intact. The Federal Court in its grounds of judgment in the appeal (Re: Zen Courts Sdn. Bhd. v Bukit Jalil Development Sdn. Bhd. & Ors [2017] 2CLJ 32) had given clear orders:

“Effectively, the new judge is to hear encl. 84 and determine the final value of the shares, in accordance with Abdul Aziz J's direction. This setting aside order, by no stretch of the imagination had set aside the buy-out order of 27 March 2012 or taken away the essence of the agreement. In short, this buy-out order is still good, valid and intact.”

[16] The sum of RM35.97 million has been paid to the Petitioner. The proceedings in the High Court will determine the final value of the shares in accordance to the Buy-Out Order i.e. whether the value of the share is RM35.97 million or RM 262 million as claimed by the Petitioner.

Conclusion

[17] For the above reasons we unanimously dismissed the appeal. We ordered costs of RM5000 to each set of Respondents’ solicitors subject to payment of allocator. We also ordered that the deposit be refunded to the Petitioner.

Sgd

HASNAH BINTI DATO’ MOHAMMED HASHIM
Judge
Court of Appeal, Malaysia
Putrajaya

Date: 21st February 2018

COUNSEL

For the Appellant: Datuk Seri Gopal Sri Ram, Miss Emily Wong, Mr. David Yii, Tetuan Dennis Nik & Wong, 68-1, Jalan Telawi, Bangsar Baru, 59100 Kuala Lumpur

For the 1st Respondent: Mr. John Skelchy, Tetuan James Monteiro, Unit D4-6-1, Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur

For the 2nd and 3rd Respondents: Mr. Gopal Sreenevasan, Mr. PL Leong, Tetuan Sreenevasan Young, J-3A-13, Solaris Mont Kiara, No.2 Jalan Solaris, 50480 Kuala Lumpur

Legislation referred to:

Companies Act 1965, Section 181

Judgments referred to:

Zen Courts Sdn. Bhd. v Bukit Jalil Development Sdn. Bhd. & Ors [2017] 2CLJ 32

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