HSC Medical Inc. v 1. ) ConserveNRG Sdn. Bhd. 2. ) Vivek G. Dharkar 3. ) M Ramanathan a/l S.M. Meyyappan PIHAK TERKILAN Ng Yeen Seen

Case Significance

A useful catalogue of the pleading requirements for fixing a company's director or representative with personal liability: privity, a clear assumption of personal liability, properly pleaded veil-lifting or agency, particularised fraud, and an identifiable trust — absent which the claim is struck out.

This decision of the High Court of Malaya at Kuala Lumpur (Commercial Division) concerns an application to strike out a counterclaim brought against an individual named as a defendant to that counterclaim. The underlying action was a commercial dispute in which a Canadian company sued a Malaysian company and two individuals; the Malaysian company and one of the individuals then counterclaimed against the original plaintiff and two further parties, including the individual applicant. The applicant sought to strike out the counterclaim against her under Order 18 Rule 19(1)(a) to (d) of the Rules of Court 2012, contending that it disclosed no reasonable cause of action against her, was scandalous, frivolous and vexatious, and was an abuse of process.

The court analysed the pleaded basis for the counterclaim and found it wanting on every footing advanced. The contractual claims foundered on privity: the negotiations relied on were attributable to the company rather than to the individual personally, and a director or representative who negotiates for a company does not thereby assume personal liability on the company's contract in the absence of a clear assumption of such liability. Attempts to reach the individual through the corporate veil failed because lifting the veil had not been pleaded; the allegations of fraud and misrepresentation were not pleaded with the particularity the law requires; the agency doctrine had likewise not been pleaded; and the constructive-trust claim could not stand where no identifiable trust property was shown and the necessary elements were not established. With no pleaded wrongdoing capable of fixing the individual with liability, the counterclaim against her disclosed no reasonable cause of action and was an abuse of process. The court accordingly allowed the application and struck out the counterclaim against her, with costs in her favour. The judgment is a useful catalogue of the pleading requirements that a claim seeking to impose personal liability on a company's director or representative must satisfy.