DOUBLE ACRES SDN BHD v. TIARASETIA SDN BHD

2000] 7 CLJ 550

DOUBLE ACRES SDN BHD v. TIARASETIA SDN BHD
HIGH COURT MALAYA, KUALA LUMPUR
ABDUL MALIK ISHAK J
[CIVIL SUIT NO: S5-22-116-99]
31 JULY 2000

DOUBLE ACRES SDN BHD v. TIARASETIA SDN BHD
HIGH COURT MALAYA, KUALA LUMPUR
ABDUL MALIK ISHAK J
[CIVIL SUIT NO: S5-22-116-99]
31 JULY 2000

COMPANY LAW: Directors – Liability – Liability for breach of contract by company – Whether confined to s. 132(1) Companies Act 1965 – Whether lifting of veil of incorporation necessary

CIVIL PROCEDURE: Pleadings – Counterclaim – Bare allegations of fraud and conspiracy – Whether counterclaim struck out

This was an appeal against the order of the Senior Assistant Registrar dismissing an application by one Teok Kian Seng (‘TKS’) to strike out the counterclaim of the defendant (‘Tiara’) against him. TKS was the second defendant named in the counterclaim.

The facts were that Tiara had employed the services of the plaintiff (‘DASB’) to develop a piece of land. TKS was the director of DASB. DASB entered into an agreement with another company called Puncakdana Sdn Bhd (‘Puncakdana’) to develop the said piece of land. Puncakdana then took a loan with MBf Finance Bhd for development purposes. Tiara claimed that TKS was personally liable for alleged breaches of contract by DASB with Tiara. Tiara also claimed for a sum of RM9 million which allegedly was an unauthorised drawdown of the said loan by the defendants named in the counterclaim. Apart from these, Tiara raised the issues of fraud and conspiracy.

Held:

[1] TKS was not personally liable for the breaches by DASB, if at all that breaches were to exist. As Tiara had cited DASB in its counterclaim, Tiara had no cause of action against TKS in his personal capacity. As a director of DASB, TKS duties and liabilities did not extend beyond the parameters of s. 132(1) of the Companies Act 1965.

[2] The parties to the MBf loan were Puncakdana and MBf Finance Bhd. It was therefore apparent that TKS had no say or control over the manner in which the MBf loan was operated. There was thus no necessity to lift the veil of incorporation of DASB. Even if the drawdown of RM9 million was unlawful, it was for MBf Finance Bhd to pursue the matter. Tiara who was not the lender nor the borrower under the MBf loan was not entitled to bring a claim for the sum of RM9 million.

[3] Bare allegations were advanced by Tiara in regard to the issues of fraud and fraudulent misrepresentation. Tiara too failed to show how TKS orchestrated the alleged fraud and fraudulent misrepresentation.

[4] There was no agreement or arrangement among the defendants in the counterclaim to carry out an overt act detrimental to Tiara. Just like fraud, conspiracy too must be particularised in the counterclaim so that the opposite party would not be caught off guard. Incidentally, in Tiara’s affidavits the particulars of conspiracy were not itemised at all.

[5] Tiara failed not only to plead but also to prove how the defendants had conspired among themselves to intentionally injure Tiara. There was also a failure to show how Tiara had suffered as a result thereof.

[6] TKS had demonstrated conclusively from the relevant affidavits and the supporting documents thereto that Tiara’s allegations were mischievous, irrelevant and totally unsustainable against him.

[Appeal allowed.]

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