Striking-out Grounds (locus standi) - Nurain

Please enable JavaScript to view the full PDF

[2020] 1 LNS 1053 Legal Network Series IN THE COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA (CIVIL DIVISION) [CIVIL SUIT NO.: WA-22NCC-326-06/2019] BETWEEN 1. DATUK SERI MAGLIN DENNIS D’CRUZ (NRIC No.: 560227-10-5057) 2. DATUK SUBRAYAN SELLAPPAN (NRIC No.: 440402-08-5641) 3. DATO DR LOGA BALA MOHAN JAGANATHAN (NRIC No.: 660403-07-5175) 4. DATO ELAYPPEN MUTHUSAMY (NRIC No.: 631115-06-5201) 5. DATUK DR K D SIVA KUMAR KRISHNADAS (NRIC No.: 640607-10-6967) 6. DATUK MOHAN A KANDASAMY (NRIC No.: 600222-05-5007) 7. DATUK TIONG YAP CHOON (NRIC No.: 610411-08-5263) 8. SATHIAH SUDAKARAN (NRIC No.: 760607-06-5313) 9. DATUK CHIW TIANG CHAI (NRIC No.: 570119-04-5017) 10. DATO’ INDER SINGH BEANT SINGH (NRIC No.: 670508-10-5747) 11. SELVARAJOO PERMAL (NRIC No.: 670418-07-5265) 12. ASECALIN V FERNANDEZ 1 [2020] 1 LNS 1053 Legal Network Series (NRIC No.: 640626-08-6527) 13. JAYASELAN RAJOO (NRIC No.: 770108-14-6003) … PLAINTIFFS (BRINGING THIS CLAIM IN A REPRESENTATIVE CAPACITY FOR AND ON BEHALF OF THE FORMER MEMBERS OF myPPP) AND 1. TAN SRI DATUK SERI M. KAYVEAS (NRIC No.:540429-06-5067) 2. KAYVEAS HOLDINGS SDN BHD (COMPANY No.: 829080-V) 3. BINTANG IRADAT (M) SDN BHD (COMPANY No.: 510546-X) 4. DATUK CHANDRAKUMANAN ARUMUGAM (NRIC No.: 611111-08-5215) 5. DATO’ LY KIM CHEONG (NRIC No.: 800307-04-5365) 6. VIJAYAN SINGARAM (NRIC No.: 601205-10-6639) 7. SHANKER KANDASWAMY (NRIC No.:781015-14-5339) 8. KUMARA RAJA R ARUMUGAM (NRIC No.: 660114-10-6545) 9. DATUK LAU BENG WEI (NRIC No.:660114-10-6545) 10. KETUA PENGARAH INSOLVENSI … DEFENDANTS 2 [2020] 1 LNS 1053 Legal Network Series GROUNDS OF JUDGMENT Introduction [1] This judgment is in respect of the 9 th . Defendant’s application to strike out the Plaintiffs’ action in Enclosures 18 under Order 18 Rule 19 (1)(b) and or (d) of the Rules of Court, 2012 (‘the Rules’) and the 1 st . to 8 th . Defendants’ application to strike out in Enclosures 20 under Order 18 Rule 19(a)) and Enclosure 21, also under Order 18 Rule 19(b) and or (d) of the Rules. The case involved interesting legal issues on the rights of members of a society to property of the society that has been de-registered and their locus standi to sue. Background Facts [2] This is an action filed by former members of myPPP, a political party established under the Societies Act 1966 [Act 335] (‘the Act’) against various parties for tort of abuse of court process and conspiracy to injure by unlawful means designed to cause loss, harm and damage to the members. The action is taken by the Plaintiffs in a representative capacity for and on behalf of the former members of myPPP. [3] Amongst the reliefs sought by the Plaintiffs include: a. A declaration and an order that the consent judgment dated 16.1.2019 recorded in Civil Suit No: WA-22NCVC-796- 11/2018 be set aside; b. A declaration that Bintang lradat (M) Sdn Bhd (Company No. 510546-X) is the property of myPPP and shall vest in the Director General of Insolvency following the de- registration of myPPP on 14.1.2019; 3 [2020] 1 LNS 1053 Legal Network Series c. A declaration that all the building known as Wisma myPPP is the property of myPPP and is vested in the Director General of lnsovency following the re-registration of myPPP on 14.1.2019; d. An order for damages following from the unlawful conspiracy and the tort of abuse of process. [4] The Plaintiffs have named the Director General of Insolvency as a party to the action. [5] MyPPP was a political party registered under the Act. Bintang lradat (M) Sdn Bhd (‘Bintang lradat’) was acompany incorporated in 2000 and was formed as the investment and corporate entity that acted for and on behalf of myPPP. [6] From 1998, myPPP was headquartered at a building known as W isma myPPP located at No. 74 Jalan Rotan, Off Jalan Kampung Attap, 50460 Kuala Lumpur (‘Wisma myPPP’). Sometime in 2003, when Wisma myPPP was put up for auction, myPPP utilising Bintang lradat, paid 10% deposit for the purchase of Wisma myPPP. [7] To finance the balance purchase price, Bintang lradat sought a friendly loan from one Chong Chek Ah (‘Chong’). As security fort his friendly loan, the shares in Bintang lradat were transferred in trust to Chong. In breach of the trust, Chong had wrongfully increased the share capital of Bintang lradat and caused the shares in Bintang lradat to be transferred to various of his nominees . [8] So metime in 2010 , myPPP initiated a civil suit against the shareholders of Bintang lradat and pursuant to the Federal Court’s decision in Civil Appeal No. 02-1 0- 201 2( W ), the 4 [2020] 1 LNS 1053 Legal Network Series Federal Court held that Chong and his nominees held the shares in Bintang lradat as constructive trustees for and on behalf of myPPP. [9] Sometime in 201 8, there was a dispute with regard to the office bearers in my PPP. Via a letter dated 10 .07 .201 8, the Registrar of Societies (“ROS”) confirmed that the validity of the office- bearers of myPPP was in doubt. Via a letter dated 13.09.201 8, ROS again confirmed that there was a dispute pertaining to office-bearers. [10] This dispute culminated in the de-registration of myPPP on 14.01 .2019. At the time of the de-registration, the directors and shareholders of Bintang lradat were Datuk Seri Maglin (the 1 st Plaintiff) (70,000 shares), Datuk Mohan (the 5 th Plaintiff) (15,000 shares) and Datuk Lau Beng Wei (the 9 th Plaintiff) (15,000 shares). All held the shares on trust for the party. Conspiracy to defraud [11] Prior to the de-regist ration, in or about November 2018, Datuk Chandrak umanan (the 4 th Defendant) purportedly initiated a civil suit No.:WA-22NCVC-796-11/2018 against Dato’ Ly (the 5 th Defendant), purportedly in his capacity as the Secretary- General of myPPP (“the 796 Suit”) claiming, inter alia, that pursuant to a meeting, Datuk Seri Maglin and Datuk Mohan were to be replaced as the shareholders of Bintang lradat by one Shanker (the 7 th Defendant) and one Kumara Raja (the 8 th Defendant) respectively. [12] Notwithstanding that myPPP had been de-registered by the Registrar of Societies on 14.01.2019, on the next day, 5 [2020] 1 LNS 1053 Legal Network Series 15.01.2019, Dato’ Ly purportedly entered an appearance for the 796 Suit. [13] On 16.01.2019, Datuk Chandrak umanan and Dato’ Ly purportedly entered into a Consent Judgment in the 796 Suit (“the Consent Judgment”). [14] The Consent Judgment caused the 70,000 shares held by Datuk Seri Maglin and the 15,000 shares held by Datuk Mohan in Bintang lradat to be transferred to Shanker and Kumara Raja respectively. [15] Datuk Seri Maglin and Datuk Mohan were also removed as directors of Bintang lradat. [16] On 12.02.2019, the Memorandum and Articles of Association of Bintang lradat were abolished. [17] On 12.03.2019, the 15,000 shares in Bintang lradat were transferred by Kumara Raja to Kayveas Holdings (the 2 nd Defendant). The 70,000 shares in Bintang lradat were also transferred by Shanker to Kayveas Holdings. [18] A further 15,000 shares in Bintang lradat were transferred from Datuk Lau Beng Wei to Kayveas Holdings. [19] Shanker and Kumara Raja thereafter resigned as directors in Bintang lradat. The final structure of Bintang lradat was that Kayveas Holdings become its sole (100%) shareholder, whereas the sole direct or (in Bintang lradat) is Tan Sri M Kayveas (the 181 Defendant). [20] Tan Sri M Kayveas and Kayvea s Holdings now purportedly exercise absolute control over Bintang lradat and Wisma myPPP. 6 [2020] 1 LNS 1053 Legal Network Series Tan Sri M Kayvea s has caused Wisma myPPP to be renamed “Wisma Tan Sri Kayveas”. [21] To depict this: 7 [2020] 1 LNS 1053 Legal Network Series [22] Prior to the initiation of this Suit, the Plaintiffs instructed their solicitors to write to the Director General of Insolvency (‘DGI’) to obtain sanction. [23] The DGI wrote back, via a letter dated 24.05.2019, to state that the DGI had no jurisdiction to grant the sanction as the Suit purportedly does not involve the ‘discovery and realisation’ of assets belonging to myPPP. [24] On 07.10.2019, the de-registration of myPPP was conditionally lifted by the ROS. However, it is not in dispute that the conditions have not been satisfied. The legal issues [25] The Defendants’ grounds for their striking out applications are as follow: a. The Plaintiffs lack locus standi and or capacity to sue the Defendants as the Plaintiffs have no proprietary rights to the properties of myPPP. The right, according to the Defendants belong to the DGI following from the consequences of the de- registration of myPPP under Section 17 of the Act; b. Given that the DGI has decided that it had no powers or authority to commence this action, the Plaintiffs’ proper recourse is to apply to the court for judicial review of the DGl’s decision under Section 86 of the Insolvency Act 1967 or Section 517 of the Companies Act 2016 (‘CA 2016’); c. The Plaintiffs are caught by Article 30.4 and 36.1.1 of myPPP’s Constitution which read as follows: 8 [2020] 1 LNS 1053 Legal Network Series ‘30.4 In any event a Party Member or any person who claims to be a Party Member and who directly or indirectly brings matter regarding the Party or regarding his rights of membership in the Party to Court shall automatically cease to be a member of the Party. 36.1.1 I declare that I shall automatically cease to be a member of the Party if I bring Party matters to Court.’ Applying the aforesaid Articles, the Defendants contended that the Plaintiffs’ action results in their membership to automatically terminate which in turn means that they lack locus standi to maintain this action. Court’s deliberation [26] The first issue for determination is whether the Plaintiffs have the requisite locus standi to bring this action against the Defendants. The contention put forth by the learned counsel for the Defendants is premised on Section 17(1) of the Act which stipulates that upon the cancellation of the registration of a registered society under the provisions of the Act, the property of the society shall forthwith vest either in the DGI or in such officer as may be appointed by the Minister by the terms of the order made under Section 5 of the Act. More specifically, Section 17 of the Act states as follows: ‘17. (1) Upon the making of an order by the Minister under section 5 or upon the refusal of the Registrar to register a local society under section 7, or upon the cancellation of 9 [2020] 1 LNS 1053 Legal Network Series the registration of a registered society under any provision of this Act, the following consequences shall ensue - (a) the property of the society shall forthwith vest either in the Director General of Insolvency or if any other officer by, by the terms of the order under section 5, appointed by the Minister for the purpose of winding up the affairs of the society, then in such other officer; (b) the Director General of Insolvency or such other officer as aforesaid shall proceed to wind up the affairs of the society and after satisfying and providing for all debts and liabilities of the society and the costs of the winding up shall pay the surplus assets, if any, of the society - (i) to the Consolidated Fund if the registration was refused or cancelled by virtue of an order under section 5 or on grounds stated in paragraph 7(3)(a) or subparagraph 13(1)(c)(ii) or if the members of the society so request, and the Minister so directs that such surplus assets be paid to the Consolidated Funds; and (ii) in all other cases, to members if the society according to the rules of the society, or if there be no such rules, then the Director General of Insolvency or such other officer shall prepare a scheme for the 10 [2020] 1 LNS 1053 Legal Network Series application of such surplus assets for the approval of the High Court;’ [27] Relying particularly on Section 17(1)(a) of the Act, learned counsel for the Defendants submitted that the property of myPPP upon its de-registration shall vest in the DGI who under Section 17(1)(b)(ii) shall proceed to wind up the affairs of the society and after satisfying and providing for all debts and liabilities of the society and the costs of winding up shall pay the surplus, if any, of the society to members of the society according to the rules of the society or if there be no such rules, the DGI shall prepare a scheme for the application of such surplus assets for the approval of the High Court. [28] There is no dispute that in the Constitution of myPPP, there are no provisions dealing specifically with the distribution of the surplus assets of the society in the event of de-registration of the same. [29] Based on the aforesaid, learned counsel for the Defendants submitted that as former members of the society, the Plaintiffs have no interests including beneficial interests in the property of myPPP to bring the present action. They have no locus standi as the DGI has not prepared the scheme for the application of any surplus assets of the society for the approval of the High Court. Learned counsel for the Defendants submitted that it is premature to assume that the former members of the society will have an interest in the surplus assets in the scheme to be prepared by the DGI at this stage. [30] With respect, I do not think that this is the right analysis of the law. 11 [2020] 1 LNS 1053 Legal Network Series [31] In determining whether the Plaintiffs have locus standi to commence this action, the Court will need to determine if members of a society have an interest in the property of the society and to consider if their interests, if any, would change in the event of a dissolution or cancellation of registration of the society. [32] In Lee Tak Suan & Anor v. Tunku Dato Seri Shahabudin bin Tunku Besar Burhanuddin & Ors [2009] 4 MLJ 759, the Federal Court held that a property can in law belong to a registered society. In so holding, the Federal Court had taken into consideration Section 9 of the Act, in particular, Section 9(b) provides: ‘the immovable property of a society may, if not registered in the names of trustees, notwithstanding the provisions of any written law to the contrary, be registered in the name of the society, and all instruments relating to that property shall be as valid and effective as if they had been executed by a registered proprietor provided that they are executed by three office-bearers for the time being of the society, whose appointments are authenticated by a certificate of the Registrar, and sealed with the seal of the society’. [33] This was what Abdul Aziz Mohamed FCJ said: ‘[15] With all those incidents attaching to a registered society, I do not find it possible to conclude that a registered society is not a legal entity or that the funds or property of the society do not in law belong to the society. In my opinion references in the Act to the funds or property of a registered society are nor merely a convenient manner of identifying or describing property that does not in law belong to the society but belongs to 12 [2020] 1 LNS 1053 Legal Network Series the members, but those references actually mean what they say and reflect a recognition that in law the property belongs to the society. [16] As far as concerns the vesting aspect of the funds and property of the club, 2 24(a) of the Rules is consistent with s. 9(a) and (b) of the Act. But where the rule speaks of the committee ‘as Trustees for the Ordinary Members of the club’ and when r 3 speaks of ordinary members having the right ‘to share with other Ordinary Members in the property and assets of the club’, I am of the opinion that those rules are looking to the day when the registered society that the club is, is dissolved, or when its registration is cancelled. When a registered society is dissolved, s. 9(h) requires that ‘all necessary steps shall be taken for the disposal and settlement of the property of such society, its claims and liabilities, according to the rules (if any) of the said society applicable thereto’. When the registration of a registered society is cancelled, s. 17(1)(a), (b) provides, inter alia, that the property of the society shall vest in the Director General of Insolvency who ‘shall proceed to wind up the affairs of the society and after satisfying and providing for all debts and liabilities of the society and the costs of the winding up shall pay the surplus assets, if any, of the society ... to members of the society according to the rules of the society ...’. I should think that, in the case of dissolution, that is also what happens to the surplus assets of a society, in consequence of the steps that s. 9(h) requires to be taken. [17] It is, therefore only after dissolution or cancellation of registration that the property of a registered society 13 [2020] 1 LNS 1053 Legal Network Series becomes the property of individual members, and even then only to the extent of surplus assets. Until then no member can claim that theb property of the society is his. It is legally the property of the society. The members maybe the ultimate beneficial owners of the property, but the present beneficial and legal owner is the society’. [34] What is clear from the above judgment is that after the dissolution or cancellation of registration of a registered society, the property of the registered society becomes the property of the individual members to the extent of the surplus assets. [35] The legal position held by Abdul Aziz Mohamed FCJ does not at all mean that prior to the dissolution or cancellation of registration of a registered society, the members do not have any interest at all in the property of the society. This is clear from His Lordship’s statement in the passage cited above which acknowledged that the position prior to dissolution or cancellation of registration is that the members cannot claim that the property of the society is his but they are nevertheless the ‘ultimate owners of the property’ notwithstanding that ‘the present beneficial and legal owner is the society’. [36] In Hanchett-Stamford v. A-G [2008] EWHC 330 at 333, Lewison J analysed the members’ right to the property of an unincorporated association as follows: ‘[31] It follows, in my judgment, that the members for the time being of an unincorporated association are beneficially entitled to ‘its assets, subject to the contractual arrangements between them. This was also Lawrence Collins J’s conclusion in Hunt’s case at [113]. It is important to stress that this is a form of beneficial 14 [2020] 1 LNS 1053 Legal Network Series ownership; that is to say that in some sense the property belongs to the members.’ [37] The nature of property ‘owned’ by an unincorporated association is further elaborated by Lewison J citing with approval Pennycuick J’s judgment in Re Conveyances Dated 13 June 1933, 17 August 1933 and 2 September 1950, Abbatt v. Treasury Solicitor [1969] 1 All ER 52 where he said: ‘It is an implied term of the contract of membership of a members’ club that an individual member is precluded from obtaining the realisation and distribution of the club property so long as the club functions. But once the club ceases to function the reason for this disappears and the right of the existing members must, I think, crystallise once and for all’ (See [1969] 1 All ER 52 at 57-58, [1969] 1 WLR 561 at 567)’ [38] In the Court of Appeal [1969] 3 All ER 1175 at 1177 that was referred to by Lewison J in Hanchett-Stamford v. A-G (supra), Lord Denning said: ‘In 1954 the property rights of the individual members were simply these: They had no separate rights so long as the club continued to be a going concern. The property had to be managed and applied for the benefit of the members as a whole. The individual members would only have any realisable rights in the property if and when the club was dissolved. Then they would have a beneficial equitable joint interests in the property so that on dissolution it was to be sold and divided equally between them’. [39] Further, in Boyle and Ors v. Collins & Ors [2004] 2 BCLC 471, Lewison J again stated that: 15 [2020] 1 LNS 1053 Legal Network Series ‘[25] ... In strict law a club has no existence apart from its members. Property thought to be held on behalf of a club is, in law, held on behalf of its members. Legally it is their property. As O’Connor MR put it in Tierney v. Tough [1914] 1 IR 142: ‘The society is only the aggregation of those individuals, and the property of the former is the property of the latter.’ [26] However, they will have bound themselves by the rules of the club which will normally deal with how the club’s property is to be used and dealt with. See Re Recher’s Will Trusts [1971] 3 All ER 401, [1972] Ch 526. The nature of the relationship between a defunct club and its members was considered by Pennycuick J in Abbatt v. Treasury Solicitor [1969] 1 All ER 52 at 57-58, [1969] 1 WLR 561 at 567. He said: ‘It is an implied term of the contract of membership of a members’ club that an individual member is precluded from obtaining the realisation and distribution of the club property so long as the club functions. But once the club ceases to function the reason for this disappears and the right of the existing members must, I think, crystallise once and for all.’ [40] Therefore, whilst the members of a registered society have a beneficial interest in the property of the society, the interest is held jointly and is subject to jus accrescendi which excludes the possibility of severance without the dissolution of the members’ relationship. As joint property, the interest of a member in the property is not transferable. However, this changes on the 16 [2020] 1 LNS 1053 Legal Network Series dissolution or cancellation of registration of the society. In such event, each of the members is entitled to the property and to seek the severance of the same. [41] In JM Sanderson v. Hi Peak Property Limited [2014] EWHC 4918 (Ch), Morgan J explained the effect of a cancellation of registration of a society in this way: ‘12. I have referred to the possibility of a cancellation of a registration under the 1965 Act because the registration of Hunloke Allotment Association Limited was indeed cancelled on the 281 cancellation March 2011. It is not necessary to explain how that came about. It is accepted that cancellation did occur. As I have indicated, the Act does not spell out what is the effect of cancellation of a registration. It is perhaps implicit in section 3 of the 1965 Act that cancellation of registration will take away from the society the things which section 3 states are the consequences of registration. So, on that basis the society ceases to be a body corporate, it ceases to be able to sue and be sued in the name of the body corporate, it ceases to have limited liability and the property ceases to be vested in the body corporate’. [42] Hence, the dissolution of the society arising from the de- registration will result in the property of the society being automatically vested in the members except that under our Section 17(1)(a) of the Act, the legal titles to these properties are vested in the DGI but the ultimate beneficial rights continue to belong to the members as opined by Abdul Aziz Mohamad FCJ in Lee Tak Suan (supra). [43] What then is the effect of Sections 17(1)(b)(ii) of the Act on the members’ interest in the surplus assets of the society where as in 17 [2020] 1 LNS 1053 Legal Network Series our present case, the rules of myPPP do not provide for the distribution of its surplus assets upon dissolution or cancellation of its registration. Does this mean, as contended by the learned counsel for the Defendants that the members have no rights at all until the DGI presents a scheme for the approval of the High Court? [44] I do not agree that merely because the Constitution or the rules of the society make no provisions on the distribution of its surplus assets upon dissolution or cancellation means that the members’ ultimate beneficial rights to the same are somehow taken away or become conditional upon the DGI preparing a scheme. [45] In my mind, if the society does not determine for its members the manner in which its surplus assets upon dissolution are to be distributed, the Act places upon the DGI the responsibility of devising a scheme that provides for a fair distribution of the surplus assets of the society based on, inter alia, factors peculiar to the structure and objects of the society and the contributions of its members. There could be different categories of memberships within the society (eg, ordinary and life memberships) with different contributions or subscriptions from each category of members. Some members may have been in arrears of their subscriptions. [46] There could be a myriad of circumstances which may make a pari passu distribution of the surplus assets not being the most ideal. The scheme prepared by the DGI is subject to the approval of the court. In preparing the scheme, the DGI cannot ignore the members’ rights to the surplus assets and their position as ‘equitable joint owners of the assets’. In short, the scheme cannot deprive the members of their ownership of the surplus 18 [2020] 1 LNS 1053 Legal Network Series assets. Under Article 13 of our Federal Constitution, it is expressly stated that no person shall be deprived of property save in accordance with law. Of course, there may be situations where the members of the society have divested themselves of all interests or where no members of the society can be found. In such event, the scheme may envisage that the surplus assets be declared ownerless or bona vacantia. [47] Accordingly, in my judgment I hold that the Plaintiffs in this case, being former members of the Society immediately prior to its deregistration, do have proprietary rights over the assets of the society to enable them to claim the locus standi to commence the present action notwithstanding that the Constitution of myPPP makes no provisions on the distribution of the surplus assets on dissolution. [48] The Defendants next ground is that the proper party to bring an action for myPPP in this case ought to be the DGI to whom all property of MyPPP are vested under Section 17(1)(a) of the Act. [49] Although the Plaintiffs have sought the sanction of DGI to have the property vested in him, the DGI had declined on the ground that he does not have the powers over the property as the property in question, Wisma myPPP is not registered in the name of MyPPP. [50] Learned counsel for the Defendants submitted that the proper recourse for the Plaintiffs is to take out an application to challenge the decision of the DGI. This can be made under either section 86 of the Insolvency Act 1967 (‘Insolvency Act’ ) or section 517 of the Companies Act 2016 (‘CA 2016’). These sections provide: Insolvency Act 19 [2020] 1 LNS 1053 Legal Network Series ‘86. Appeal to court against Director General of Insolvency If the bankrupt or any of the creditors or any other person is aggrieved by any act or decision of the Director General of Insolvency, he may apply to the court, and the court may confirm, reverse or modify the act or decision complained of and make such order in the premises as it thinks just’. Companies Act 2016 ‘517. Appeal against decision of liquidator. Any person aggrieved by any act or decision of the liquidator may apply to the Court which may confirm, reverse or modify the act or decision complained of and make such order as it thinks just.’ [51] It is submitted by learned counsel for the Defendants that both the Section 86 of the Insolvency Act and Section 517 of the CA 2016 are applicable under Section 17(1)(e) of the SA 1966 which provides: ‘for the purposes of the winding up the affairs of the society, the Director General of Insolvency or such other officer as aforesaid shall have all the powers which are vested in the Director of Insolvency by any written law relating to bankruptcy for the purpose of the discovery of the property of a debtor and the realization therefor, and also such powers as are by any written law relating to companies vested in an official liquidator and all the provisions of the said laws relating to bankruptcy and to the winding up of companies, so far as they relate to 20 [2020] 1 LNS 1053 Legal Network Series discovery and realization of the property of a debtor and to the winding up of a company, shall, mutadis mutandis, apply to the winding up of the affairs of the society under this Act.’ [52] To begin this analysis, it is pertinent to appreciate that the claims by the Plaintiffs in this action are not claims made on behalf of the society but by members of a de-registered society representing the individual members of the de-registered society. These individuals are asserting their personal rights which have crystalized upon the de-registration of the society. [53] The causes of action by the Plaintiffs in this action are personal to each of the members of the society. These are reflected in the reliefs sought which include various declarations and orders for damages. There is also a prayer for the Consent Judgment to be set aside on the ground that the same was procured by fraud. Insofar as the claim in respect of the property of the society, the Plaintiffs are seeking nothing more than a declaration that the shares of Bintang lradat and the property, Wisma myPPP belong to myPPP and that the same be vested in the DGI in accordance with Section 17(1) of the Act. [54] The causes of action for conspiracy to injure and the tort of abuse of process are not causes of action that vest with the DGI. Neither is the action based on these causes of action matters that relate to the discovery and realisation of the property of the society for the purposes of the winding up of the affairs of the society. [55] Accordingly, in my judgment, the question of sanction from the DGI simply does not arise. 21 [2020] 1 LNS 1053 Legal Network Series [56] It must also be noted that under Section 38(1)(a) of the Insolvency Act 1967, it is expressly stipulated that: ‘(1) Where a bankrupt has not obtained his discharge - (a) The bankrupt shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person) without the previous sanction of the Official Assignee’ [Emphasis added] [57] There is no similar provision under the Act requiring sanction from the DGI before members of a de-registered society can bring an action in respect of a cause of action that accrues to the members personally upon the deregistration of the society. The vesting of the property of the society to the DGI under Section 17(1)(a) does not affect the members’ personal cause of action to bring a claim for conspiracy to injure by unlawful means against the Defendants in this action and for an order that certain property be vested in the DGI. Accordingly, the reference to Ms Laksamana Realty Sdn Bhd v. Goh Eng Hwa [2004] 1 CLJ 274 by learned counsel for the Defendants is, with respect, misplaced. [58] As regards Section 483 of the Companies Act 2016, it provides that: ‘Custody and vesting of company’s property (1) Where an interim liquidator has been appointed or a winding up has been made, the interim liquidator or liquidator shall forthwith take into his custody or under his control all the property to which the company is or appears to be entitled. 22 [2020] 1 LNS 1053 Legal Network Series (2) On the application of the liquidator, the Court may order that all or any part of the property belonging to the company or held by trustees on behalf of the company shall vest in the liquidator and the property shall, subject to subsection (3), vest accordingly and the liquidator may, after giving such indemnity, if any, as the Court directs, bring or defend any action which relates to that property or which is necessary to bring or defend for the purpose of effectually winding up the company and recovering its property’. [59] In the case of a company, it is the liquidator who has the authority to bring or defend any action for the purpose of effectually winding up the company and recovering its property as the causes of action of the company are vested in the liquidator. Unlike the case of an unincorporated association, the shareholders of the company do not have any beneficial interests in the company’s assets upon its dissolution. Another significant distinction is that the company is not dissolved until the winding up is completed whereas in the case of an unincorporated association, it is dissolved before the winding up is complete. Under Section 5(2) of the Act, it is expressly provided that: ‘An order made under this section shall be published in the Gazette and shall operate to cancel immediately the registration of any such society or societies, if already registered under this Act; and no society against which an order made under this section applies shall be so registered’. Section 36(c) of the Act further stipulates: ‘36. A registered society may terminate or be dissolved in any of the following ways: 23 [2020] 1 LNS 1053 Legal Network Series (a) upon the happening of any event declared by the rules to amount to termination of the society; (b) by the consent of three-fourths of the members of the society testified by their signatures to an instrument of dissolution; (c) by the Registrar cancelling the registration of the society under section 13 or dissolving it under section 37.’ [60] There is therefore no ‘society’ that is in existence for the DGI to act on behalf of upon the de-registration of the society. [61] Accordingly, I find no merits in the Defendants’ contention that the Plaintiffs’ filing of this action is pre-mature and that they have to challenge the DGl’s decision by way of judicial review. [62] The next issue for consideration is the Articles 30.4 and 36.1.1 of myPPP’s Constitution which essentially has the effect of the Plaintiffs’ membership in myPPP ceasing automatically the moment the Plaintiffs file this action which involves ‘matters regarding the Party or regarding their rights of membership in the Party’. [63] As stated, the property of an unincorporated association is the property of its members except that they are precluded from severing their share except in accordance with the rules of the association and that on dissolution, those who are members at the time become entitled to their share of the assets. [64] If the contention of learned counsel for the Defendants is accepted, this will mean that on the dissolution of the society, no member will be able to bring a claim in respect of his share 24 [2020] 1 LNS 1053 Legal Network Series of the assets of the society as his status as a member will automatically cease with the action. Clearly, this cannot be the case. [65] The cases of Amran bin Abd Rahman v. Dato Haji Ikmal Hisham bin Abdul Aziz [2013] 1 LNS 666 and Henry Jamry Yakim v. Datuk Seri Mohd Najib Tun Haji Abdul Razak [2014] 1 LNS 834 cited by learned counsel for the Defendants can be distinguished as both these cases do not deal with a situation where the society has been de-registered. [66] In our instant case, the question of being a member of myPPP at the time of this action simply does not arise as myPPP has already ceased to exist by the time this action is brought. The Plaintiffs are bringing this action in their capacity as the members of myPPP at the time the society was de-registered on 14.1.2019. In other words, the Plaintiffs are claiming as former members of myPPP who are asserting their proprietary rights to the assets of the de- registered society. [67] In my mind, both the Articles 30.4. and 36.1.1 of the Constitution simply have no bearing to the Plaintiffs’ present action. The Plaintiffs are not bringing a claim as ‘a Party member’ but as former party members in this case. In fact, the Plaintiffs’ rights to the assets only crystalized upon the dissolution of the society when the Plaintiffs’ memberships have ceased. Thus, I do not find any merits to the Defendant’s submission in reliance on aforesaid Articles. [68] Quite apart from the aforesaid, it must be noted that the Plaintiffs’ action herein also seeks to set aside the Consent Judgment which they claim is tainted and affected by fraudulent conduct of the Defendants. Such an action requires an independent proceeding by way of a trial as the fraud has to be 25 [2020] 1 LNS 1053 Legal Network Series proven. Under such a circumstance, it is not appropriate to strike out the action summarily. [69] As stated by Lord Buckmaster in Hip Foong Hong v. H Neotia and Co [1918-19] All ER Rep Ext 1417; [1918] AC 888 at 894: ‘A judgment that is tainted and affected by fraudulent conduct is tainted throughout and the whole must fail ... where a new trial is sought upon the ground of fraud, procedure by motion and affidavit is not the most satisfactory and convenient method for determining the dispute. The fraud must be both alleged and proved and the better course in such a case is to take independent proceedings to set aside the judgment on ground of fraud, when the whole issue can be properly defined, fought out, and determined.’ [70] In the instant case, what is alleged by the Plaintiffs regarding the manner in which the Consent Judgment was procured, if true, tantamount to a fraud on the Court. Such a serious allegation warrants a fuller examination at a trial and not to be disposed of summarily. Conclusion [71] The above deliberation makes it abundantly clear that this is certainly not a suitable case for this court to make an order summarily striking out the action. The test for striking out as stated by the Supreme Court in Bandar Builder v. United Malayan Banking Corporation [1993] 3 MLJ 36 is that the claim on the face of it must be ‘obviously unsustainable’. In Sivarasa Rasiah v. Che Hamzah Che Ismail [2012] 1 MLJ 473, the Court of Appeal further elaborated on the test stating: 26 [2020] 1 LNS 1053 Legal Network Series ‘[16] ...The stress is not only on the word ‘unsustainable’ but also on the word ‘obviously’ i.e. the degree of unsustainability must appear on the face of the claim without having to go into lengthy and mature consideration in detail. If one has to go into a lengthy and mature consideration in detail of the issues of law and or fact, then the matter is not appropriate to be struck out summarily. It must be determined at trial.’ [72] For the aforesaid reasons, I dismissed Enclosures 18, 20 and 21 with costs. Dated : 6 JANUARY 2020 (ONG CHEE KWAN) Judicial Commissioner High Court of Malaya, Kuala Lumpur, Commercial Division, NCC2 COUNSEL: For the plaintiffs - K Thavanesan, Gavin Jayapal, Laavanya Selvaraja & Santhyaa Venugopal; M/s Gavin Jayapal For the 1 st to 8 th defendants - U Sashiraj, Muralee Menon & Damian Kiethan; M/s Raj, Ong & Yudistra For the 9 th defendant - Alvin Oh; M/s Sia Siew Mun & Co Case(s) referred to: Lee Tak Suan & Anor v. Tunku Dato Seri Shahabudin bin Tunku Besar Burhanuddin & Ors [2009] 4 MLJ 759 Hanchett-Stamford v. A-G [2008] EWHC 330 27 [2020] 1 LNS 1053 Legal Network Series Re Conveyances Dated 13 June 1933, 17 August 1933 and 2 Septemner 1950, Abbatt v. Treasury Solicitor [1969] 1 All ER 52 Court of Appeal [1969] 3 All ER 1175 at 1177 Boyle and Ors v. Collins & Ors [2004] 2 BCLC 471 JM Sanderson v. Hi Peak Property Limited [2014] EWHC 4918 (Ch) Ms Laksamana Realty Sdn Bhd v. Goh Eng Hwa [2004] 1 CLJ 274 Amran bin Abd Rahman v. Dato Haji Ikmal Hisham bin Abdul Aziz [2013] 1 LNS 666 Henry Jamry Yakim v. Datuk Seri Mohd Najib Tun Haji Abdul Razak [2014] 1 LNS 834 Hip Foong Hong v. H Neotia and Co [1918-19] All ER Rep Ext 1417; [1918] AC 888 at 894. Bandar Builder v. United Malayan Banking Corporation [1993] 3 MLJ 36 Sivarasa Rasiah v. Che Hamzah Che Ismail [2012] 1 MLJ 473 Legislation referred to: Societies Act 1966, ss. 5(2), 9(b), 17(1)(a), (b)(ii), (e), 36(c) Insolvency Act 1967, ss. 38(1)(a), 86 Companies Act 2016, ss. 483, 517 28