ARCO CORPORATE ADVISORY SDN BHD v 1. ) PPFB SDN BHD 2. ) PPFB RETAIL SDN BHD 3. ) SYED MUHAMMAD ADAM BIN SYED ZAINAL ABIDIN 4. ) MUHAMMAD AMIESH BIN MOHD REMMY 5. ) ZHAFRI BIN ZULKIFLI 6. ) MUHAMMAD SAIFULLAH BIN NOR AZMI 7. ) MUHAMMAD SHARAWY BIN MOHAMMAD IQBAL 8. ) MOHAMMAD FAIZ BIN MOHAMMAD IDRIS 9. ) MUHAMMAD ALIF BIN MOHD SATAR

Case Significance

Illustrates that a claim against a company's directors or officers pleaded solely on their office, without material facts founding personal liability, independent wrongdoing or grounds to lift the corporate veil, is obviously unsustainable and liable to be struck out under Order 18 rule 19 without opportunity to amend.

This High Court decision at Shah Alam concerns three applications by defendants to strike out the plaintiff's writ and statement of claim under Order 18 rule 19 of the Rules of Court 2012. The plaintiff, a corporate advisory and consultancy company, had sued a company against which its substantive claims were directed, a related company, and seven individuals who were sued as directors or officers of the first defendant during the material period. Three of those individual defendants applied separately to strike out the claim against them.

The individual defendants' common grounds were that the statement of claim disclosed no reasonable cause of action against them, that the plaintiff had failed to plead material facts with sufficient particularity to sustain the alleged causes of action, that the claim against them was premised solely on their positions as directors or officers without any pleaded facts showing personal liability, independent wrongdoing or circumstances justifying lifting the corporate veil, and that the claims were speculative, bare assertions amounting to an abuse of process. The court applied the settled principles that the summary striking-out power is reserved for plain and obvious cases where a claim is obviously unsustainable on the face of the pleadings.

The court held that the claims against the three applying defendants were plainly and obviously unsustainable: they disclosed no reasonable cause of action, were embarrassing and prejudicial to a fair trial, and amounted to an abuse of process. It further held that the defects were substantive rather than technical — the absence of any pleaded factual foundation for personal liability could not be cured by amendment — so that striking out, rather than an opportunity to amend, was justified. The court allowed all three applications and struck out the action against those defendants, with costs of RM5,000 to each. The judgment illustrates that a claim against a company's directors pleaded solely on their office, without facts founding personal liability, is liable to be struck out.