1. ) NG CHIK VOON 2. ) TAN SWEE HOE 3. ) KOAY KUAN KING 4. ) CHENG TEN SIONG v 1. ) STRONGHOLD CYCLES SDN BHD 2. ) DIDI RESOURCES SDN BHD 3. ) DIDI AUTOMOTIVE SDN BHD 4. ) DIDI MOTORCYCLES SDN BHD 5. ) DIDI LIFESTYLE PTE LTD 6. ) GB MOTORS REALTY SDN BHD 7. ) GOH BROTHERS MOTORCYCLES SDN BHD 8. ) GOH BROTHERS CAPITAL SDN BHD 9. ) TELAGAMAS CAPITAL SDN BHD 10. ) GOH KIAN SIN 11. ) JUAN CHOW WEE

ba-24ncc-120-10-2023 High Court (Mahkamah Tinggi) 21 January 2025 • BA-24NCC-120-10/2023 • 27 min read

12 cases cited (1 SG, 11 foreign)

Outcome

Conclusion [65] In conclusion, I allow all 3 striking out applications in Enclosures 29, 32 and 34 with costs. I award global costs to the 2nd to 10th Defendants for Enclosures 29 and 32 in the sum RM40,000.00 and costs to the 11th Defendant for Enclosure 34 in the sum of RM20,000.00.

Quoted verbatim from the judgment of High Court (Mahkamah Tinggi) (ba-24ncc-120-10-2023). Read the full judgment on the official Malaysia Courts portal for the complete decision.

Catchwords

Striking out - Oppression claim by majority shareholders - Discussions between promoters - Arrangement during incorporation – Alleging breach of the Arrangement - Diversion of business from Company – Majority shareholders in control of the board and management – Locus standi to claim under section 346 of the Companies Act 2016 – Whether majority control is ineffective to bring to an end or remedy the alleged oppressive conduct – Proper plaintiff rule - Rule against reflective loss – Duplicity of proceedings – Abuse of process - The Arrangement and alleged oppressive acts are fully pleaded in a separate writ action filed earlier - Both writ action and section 346 claim seeking money compensation in term of an account of profits or damages and purchase consideration of shares as buy-out remedy respectively – Whether remedies in law adequate

Practice Areas

Civil Procedure Company Law

Judges (1)

Elaine Yap Chin Gaik Delivered

Counsel (9)

Izral Partnership Firm Peter Ling & Co. Firm Tommy Thomas Firm Alicia Gomez Counsel Defendant Ganesan Nithi Counsel Defendant Jane Chan Counsel Plaintiff Manpreet Sandhu Counsel Defendant Nicholas Navaraon Counsel Plaintiff Peter Douglas Counsel Defendant

Parties (15)

DIDI LIFESTYLE PTE LTD Respondent DIDI MOTORCYCLES Sdn Bhd Respondent Didi Automotive Sdn Bhd Respondent Didi Resources Sdn Bhd Respondent GB MOTORS REALTY Sdn Bhd Respondent GOH BROTHERS CAPITAL Sdn Bhd Respondent GOH BROTHERS MOTORCYCLES Sdn Bhd Respondent STRONGHOLD CYCLES Sdn Bhd Respondent TELAGAMAS CAPITAL Sdn Bhd Respondent Cheng Ten Siong Applicant Goh Kian Sin Respondent Juan Chow Wee Respondent Koay Kuan King Applicant Ng Chik Voon Applicant Tan Swee Hoe Applicant

Case Significance

Confirms that a section 346 oppression petition is not a vehicle for shareholders who themselves control the company's board and management, and that complaints of diverted business may be defeated by the proper plaintiff rule and the rule against reflective loss.

This High Court decision at Shah Alam is an unusual oppression action brought by majority shareholders, which the court struck out as unsustainable. The plaintiffs, who between them controlled the board and management of the company, brought a claim under section 346 of the Companies Act 2016 alleging oppressive conduct. Their complaint centred on discussions between the promoters and an arrangement said to have been reached during the company's incorporation, which they alleged had been breached, and on the diversion of business away from the company to a group of related corporate defendants and two individuals. Several defendants applied to strike the action out.

The court confronted the difficulty inherent in a majority-shareholder oppression claim. An action under section 346 is designed to protect a member against conduct that is oppressive or unfairly prejudicial, but where the complaining members already control the board and management, they ordinarily have the power to bring the alleged oppression to an end themselves, which undercuts their standing to seek the statutory remedy. The court also had regard to the proper plaintiff rule and the rule against reflective loss, drawing on authority including Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd, which govern when a wrong done to a company must be vindicated by the company rather than by individual shareholders. It treated the striking-out applications as standing or falling together on the common grounds, and did not decide the fact-sensitive question of delay.

The court allowed all three striking-out applications with costs, awarding global costs of RM40,000 to the second to tenth defendants and RM20,000 to the eleventh defendant. The judgment illustrates that an oppression petition is not a vehicle for shareholders who themselves control the company, and that complaints of diverted business may fall foul of the proper plaintiff rule and the rule against reflective loss.

What was the basis of the oppression claim?

Majority shareholders who controlled the board and management brought a claim under section 346 of the Companies Act 2016, alleging breach of an arrangement made during incorporation and the diversion of business from the company to related corporate defendants and two individuals.

Why was the claim struck out?

The court reasoned that members who already control the company can ordinarily end any oppression themselves, undermining their standing, and that the complaint of diverted business engaged the proper plaintiff rule and the rule against reflective loss, so the claim was unsustainable.

What costs were ordered?

The court allowed all three striking-out applications with costs, awarding global costs of RM40,000 to the second to tenth defendants and RM20,000 to the eleventh defendant.