1. ) CHAN KAH LON 2. ) CHAN SEE MAI v 1. ) CHIN JIA YEE 2. ) CHIN THIEN CHOY 3. ) GIRONA VETERINARY SDN. BHD. 4. ) SOLE BIZ SDN. BHD.

Case Significance

Illustrates the limits of documentary discovery where the documents lie with a liquidator and where the application rests on unsupported allegations rather than evidence of possession, custody or control.

This High Court decision from the Commercial Division at Kuala Lumpur concerns a documentary discovery application in a conspiracy claim alleging corporate misappropriation and abuse of legal process, where the company at the centre of the dispute had been wound up by court order. The plaintiffs, two individuals, had built up veterinary pharmaceutical businesses and brought proceedings alleging a conspiracy to defraud connected with the affairs of those companies; the third defendant company, formed in the veterinary pharmaceutical field, had since been placed in liquidation. The application before the court sought discovery of documents said to bear on the conspiracy, and it raised questions about the proper scope of discovery in commercial litigation, the burden of proof, and the correct selection of parties, against a background of disputes over the circumstances of the winding up and allegations that documents had been destroyed or concealed. The court assessed the application against the established criteria for discovery: the existence of the documents, whether they were in the respondents' possession, custody or control, their relevance to the disputed issues, and whether their disclosure was necessary for the fair disposal of the proceedings. It also had to balance legitimate discovery needs against an overly broad application and to weigh the principles of corporate legal personality and document preservation in a wound-up entity. The court found that the respondents lacked the requisite standing or connection to the documents sought, that mere allegations in the pleadings without supporting evidence were insufficient to establish the necessary possession, custody or power, and that the plaintiffs retained their substantive rights to pursue their conspiracy claims through proper evidence within their control or through appropriate procedural channels, including obtaining documents from the liquidator, who had proper custody of the wound-up company's records. Concluding that necessity had not been established when proper channels existed, the court dismissed the discovery application with costs of RM2,000.00 to the defendants. The judgment is a useful illustration of the limits of documentary discovery where documents lie with a liquidator and where an application rests on unsupported allegations rather than evidence of possession, custody or control.