LIM HUN SWEE v 1. ) TOMYPAK HOLDINGS BERHAD 2. ) YONG KWET ON 3. ) KEE TONG KIAK 4. ) TO' PUAN ROZANA BINTI HJ. REDZUAN 5. ) AZMI BIN ARSHAD 6. ) LOW CHIUN YIK

Case Significance

Confirms that pre-action discovery under Order 24 rule 7A of the Rules of Court 2012 will be refused where the applicant cannot show necessity and relevance to an existing or firmly intended proceeding, a reasonable alternative such as inspection has been offered, and the request is a broad, speculative fishing exercise for a collateral purpose.

This High Court decision at Johor Bahru concerns an application for pre-action discovery under Order 24 rule 7A of the Rules of Court 2012, brought by a minority shareholder contemplating derivative proceedings, and it refuses the application as a fishing expedition. The plaintiff, a minority shareholder of a listed company, sought extensive information and documents relating to a loss of some RM6.2 million discovered by the company: details of how and to whom the RM6.2 million had been paid out, the mandates and approval hierarchy of management and directors at the time, who had verified the payments, the full unredacted forensic report commissioned to investigate the loss, the identities of all staff involved in the investigation (including any disciplined or dismissed), and copies of all police reports and related correspondence. Invoking sections 347 and 348 of the Companies Act 2016, the plaintiff framed the request as preparatory to a derivative action for the company's benefit. The court held that pre-action discovery is available only where it is necessary for disposing fairly of the matter or for saving costs under Order 24 rule 8, and that the plaintiff had failed to show that the documents sought had a direct connection with any existing or intended proceeding. It found that the company had twice offered the plaintiff the opportunity to inspect documents at its premises, subject to reasonable restrictions protecting corporate confidentiality, and that the plaintiff had declined and filed this action instead, so the necessity for a discovery order did not arise where a reasonable alternative existed. Applying the principle of proportionality and the authority in Ahmad Zahri Mirza v PricewaterhouseCoopers Capital Sdn Bhd, the court held that broad corporate disclosure without a firm basis would harm the company's privacy and trade secrets, and that the plaintiff had not established the necessity and relevance required by law. Characterising the application as speculative deep-sea fishing made for a collateral purpose and not bona fide, the court held that the mandatory requirements of Order 24 rule 7A(3) and (8) were not met, and dismissed the application with costs of RM5,000 to the defendants.