Symmid Corporation Sdn. Bhd. v Nurhaslina Binti Mohamed Nor PIHAK TERKILAN 1. ) MESRIAH BINTI KADIRAN 2. ) Dato' Hazri Bin Mohamed Nor 3. ) CREATE TEQ SDN BHD 4. ) Dato' Norhisam Bin Mohamed Nor 5. ) Nurhafizah Binti Mohamed Nor 6. ) Nurkhairun Nisa Binti Mohamed Nor 7. ) Nor Zulfaqar Bin Mohamed Nor 8. ) Publika Entity Sdn Bhd 9. ) Admiral Dreams Sdn Bhd 10. ) Nour Vision Sdn Bhd 11. ) Prominent Strikes Sdn Bhd 12. ) Dato' Hisam Bin Mohamed Nor 13. ) Noktah Laksamana Sdn Bhd

Case Significance

A significant illustration of the proper plaintiff rule in Foss v Harbottle and the locus standi required for a derivative action under section 347 of the Companies Act 2016: a counterclaim brought by a non-shareholder for corporate loss was struck out and summary judgment entered for the plaintiff.

This High Court decision in the Commercial Division at Kuala Lumpur concerns applications to strike out a counterclaim in a shareholder and corporate-control dispute, and the related grant of summary judgment. The plaintiff, Symmid Corporation Sdn Bhd, sued the defendant, who counterclaimed and, as counterclaim plaintiff, advanced claims of misappropriation and beneficial ownership against a number of counterclaim defendants, including individuals and several companies. The counterclaim defendants applied to strike out the counterclaim under Order 18 rule 19 of the Rules of Court 2012, raising the proper plaintiff rule in Foss v Harbottle and the requirement of locus standi. The court held that the counterclaim plaintiff, being neither a registered nor a beneficial shareholder of the company on whose behalf she sought to sue, had no standing to bring the misappropriation claim, which was in substance a corporate claim; she had not complied with the statutory requirements for a derivative action under section 347 of the Companies Act 2016, and there was no recoverable reflective loss. Indeed, the misappropriation claim was expressly conceded to be legally defective for want of standing. As to the beneficial-ownership claim, founded on an alleged resulting trust said to arise from funding out of the company's arbitration proceeds, the court found no contemporaneous documentary proof to support the presumption relied on, and identified a fatal non-joinder, the separate legal personality of the company being determinative. The court concluded that both categories of claim failed to meet the basic requirements for sustainable pleadings and were reactive and an abuse of process. It struck out the counterclaim, dismissed the counterclaim plaintiff's associated injunction application, and entered summary judgment in favour of the plaintiff. The judgment is a significant illustration of the proper plaintiff rule, the locus standi required for a derivative action, and the striking-out of a counterclaim that circumvents those requirements.