IN THE COURT OF APPEAL, MALAYSIA

(APPELLATE JURISDICTION)
CIVIL APPEAL NO. W-02(IM)(NCVC)790-04/2019

BETWEEN

CAIRNHILL HOTEL (M) SDN BHD ... APPELLANT

(COMPANY NO.: 1038916-D)
AND

TAN POH LEE ... RESPONDENT

(I.C. NO.: 641112-10-5780)

[In the Matter of the High Court in Malaya at Kuala Lumpur

Civil Suit No. WA-22NCVC-559-09/2018

Between

Cairnhill Hotel (M) Sdn Bhd … Plaintiff

(Company No.: 1038916-D)
And

1. Tan Poh Lee

(I.C. No.: 641112-10-5780)

2. Tetuan Ian Ghee & Associates … Defendants

(Sued as a Firm)

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 CORAM:

MARY LIM THIAM SUAN, JCA

HAS ZANAH BINTI MEHAT, JCA
S NANTHA BALAN, JCA

JUDGMENT OF THE COURT

[1] On 25.3.2019, the High Court allowed the respondent’s application

made pursuant to Order 18 rule 19(1)(a), (b) and/or (d) of the Rules of Court
2012 and struck out the appellant’s claim without any liberty to file afresh on
the ground inter alia that the appellant had sued the wrong party. After
proper consideration of the matters in issue and in light of the submissions
made against the contents of the record of appeal, we unanimously allowed
the appeal.

The civil action

[2] The appellant’s civil action against the respondent and the legal firm of
Messrs. Ian Ghee & Associates was in essence a claim for damages for
wrongful distress commenced at the Sessions Court at Kuala Lumpur by one
Tan Kim Choo Holdings Sdn Bhd [TKCH] and the action taken in relation to
that claim. The appellant is a company incorporated for the principal objects
of providing hotel services. It runs a hotel at premises identified as Wisma
TKC located at No. 478, Batu 3 ½, Jalan Sultan Azlan Shah, 51200, Kuala
Lumpur [hotel] that it tenanted from TKCH, as landlord at a monthly rental of

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RM100,000.00 with GST, pursuant to tenancy agreement dated 1.4.2014.
The respondent is one of the 3 shareholders and directors of TKCH; the
others being Tan Boon Thien and Tan Kim Choo. Tan Boon Thien is the
Managing Director of the appellant. He and the respondent are siblings. Tan
Kim Choo was their late father.

[3] Vide letter dated 5.10.2015, the appellant was directed to pay part of
the monthly rental directly to TKCH and the other towards the medical and
other expenses of Tan Kim Choo who suffered a massive stroke in August
2015. The appellant did so accordingly.

[4] By letter dated 18.12.2015, the respondent instructed Messrs. Ian

Ghee & Associates [2nd defendant] to file an ex parte Originating Summons
at the KL Sessions Court for an order to issue a writ of distress on the ground
that the appellant had not paid its monthly rental of RM106,000.00 (inclusive
of GST) due from September to November 2015.

[5] On 29.12.2015, a writ of distress was issued and on 30.12.2015, at

about 1.00 p.m., the writ was executed.

[6] Two police patrol cars were said to have come to the hotel and “closed
the way entering” the hotel. At that material time, the hotel was occupied
with guests. The 2nd defendant is alleged to have “ordered” the Court Bailiff
to seize the appellant’s assets; and together with its “followers and other
Court officers” emptied the appellant’s hotel rooms and the shops in the
hotel. According to the narrative, workers and agents of the appellant and

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the shops were asked to leave the hotel immediately and the hotel was
sealed at 5.00 p.m. with the Court officer informing all that no one could enter
the hotel until further notice. The 2nd defendant and a few individuals then
used iron chains and their master key to lock the entrance of the appellant’s
hotel. A few individuals who were said to be the 2nd defendant’s followers
“wandered” into the hotel despite the closure. These persons used the hotel
facilities including a person by the name of Kevin, who is said to be the 2nd
defendant’s brother, stayed at the hotel on 5.6.2016, at or about 6.00 p.m.
On that same day, an individual broke into the hotel and stole goods
belonging to the hotel.

[7] On 8.1.2016, the appellant successfully set aside the distress

proceedings.

[8] The appellant then sued the respondent and the 2nd defendant for inter
alia damages claiming that its business had suffered loss and damage as a
result of their unlawful action. It claimed that the distress action was invalid
because-

i. it was commenced without the express agreement, authority

and/or consent of TKCH;
ii. that the respondent did not have the directors’ resolution of
TKCH authorizing her to appoint solicitors for TKCH and for
commencing the distress action;
iii. that TKCH never held directors’ meetings to discuss any
payment of rental due for the hotel;

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 iv. that the respondent commenced the distress action using
TKCH’s name without agreement and/or consent of the board of
directors of TKCH;
v. that the respondent had given instructions, consent and/or
authority purportedly in the name and on behalf of TKCH when
she did not have TKCH’s agreement, consent and/or authority to
do so.

[9] The appellant alleged that the respondent and the 2nd defendant had
committed the tort of abuse of process of court as the aim of the distress
action was not for a genuine redress but for the collateral purpose of
oppressing the appellant; and trespass. The appellant specifically alleged
that the respondent’s act of commencing the distress action was out of
personal vendetta; that the 2nd defendant, the legal firm, should have known
that whatever instructions, consent and/or authority purportedly exercised by
the respondent using TKCH’s name and on its behalf was invalid or ultra
vires; that the 2nd defendant had committed willful blindness towards the
respondent’s lack of authority.

[10] After filing her Defence where it was alleged that the action is
misconceived, commenced against the wrong parties, that it is an abuse of
process and is tainted with mala fides, the respondent applied to strike out
the action. The respondent had also denied that there was any written record
of any resolution or agreement for the alternative arrangements asserted by
the appellant; that any such arrangement was actually a unilateral act of Tan
Boon Thien, the Managing Director of the appellant; that such unilateral

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and/or unlawful deduction of rentals had effectively disrupted the cash flow
of TKCH which further jeopardized the financial commitment of TKCH to
make its loan repayments to UOB Bank. The respondent claimed that the
distress action was instructed “out of necessity” in order to recover the losses
and/or rentals due from the appellant.

Decision of the High Court

[11] The learned Judge agreed with the respondent, finding that she had
no direct link to the distress action, that the appellant had admitted as much
as evident from the appellant’s own Statement of Claim at paragraphs 2.4,
2.6, 3.7 and 4.1, that the distress action was filed and obtained by TKCH and
not by the respondent. Since TKCH is an independent entity separate from
the respondent who manages TKCH, the learned Judge lifted the corporate
veil and found that the respondent cannot be held liable for the acts of TKCH.
Without any cause of action filed against TKCH, and with no averments on
whether TKCH agreed, opposed or denied the distress action, the learned
Judge further held that any action against the respondent “cannot be
sustained.”

Decision of the Court of Appeal

[12] It is our unanimous view that there was a failure on the part of the
learned Judge to appreciate what exactly was the nature of the cause of
action filed against the two defendants; that the action was for the tort of
abuse of process of court and for trespass; and not simply for taking out the

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distress proceedings. Learned counsel for the appellant had described it as
mischaracterization or misunderstanding of the appellant’s claim; and we
agree.

[13] In this regard, it is to be noted that the appellant had alleged that it was
the respondent who had instructed the 2nd defendant to initiate the distress
action in the name of TKCH on the basis that there were outstanding monthly
rentals when there was none and in the face of other arrangements on the
payment of such rentals. The allegation extended to asserting that the
respondent gave instructions for the distress action when she did not have
the necessary mandates such as resolutions duly passed by the Board of
Directors of TKCH, whether for the purpose of initiating action or for
appointing any solicitors, including the 2nd defendant. In other words, the
respondent acted unilaterally and for personal reasons; that there was abuse
of process of court. As for the 2nd defendant, the appellant’s contention is
that the solicitors should have known that whatever instructions, consent
and/or authority purportedly exercised by the respondent on the name and
on behalf of TKCH in commencing the distress action was invalid and ultra
vires.

[14] The cause of action is for abuse of process; the complaint is about how
the respondent set about instructing and obtaining the writ of distress from
the Sessions Court although not properly cloaked with authority. It is not
about the order itself but about the respondent instructing and obtaining the
distress order when she was not authorized or mandated to do so.

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[15] We are not at all convinced that this is a plain and obvious case which
is unsustainable and which deserves to be struck out in limine. On the
contrary, the appellant’s allegations are highly disputed by the respondent
and who has countered with her own set of allegations on want of mandate
on the appellant’s part over the rental arrangements.

[16] More materially before us is the undisputed fact that the distress action
was set aside; albeit pending the resolution of issues raised in the present
suit. This is admitted by the respondent at paragraph 17 of the Defence.
The issues raised in the present suit and thence this appeal relate almost
exclusively to the matter of the validity or otherwise of the distress action and
what had occurred whilst the order was being executed.

[17] Each of these allegations, be it of the appellant or the respondent’s,

obviously pertain to matters which are substantially questions of fact which
need proper and fuller examination and which cannot be disposed of through
an exchange of affidavits. These matters cannot be answered by saying that
the appellant had obviously an unsustainable case as there was no cause of
action and because the wrong party had been sued. There is a lot more to
it than meets the eye and which warrant further examination.

[18] The principles on striking out are trite and cannot be better illustrated
than in the facts of this case (see Supreme Court decision in Bandar Builder
Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 4 CLJ
7). While the learned Judge has a discretion when it comes to striking out
any claim or part of claim, we are of the unanimous view that His Lordship

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had erred in his exercise of discretion, starting with the misapprehension as
to what the appellant’s cause of action is against the respondent.

[19] For all the reasons as set out above, we found merits in this appeal.
We allowed the appeal with costs in the cause, set aside the decision of the
High Court and remitted the case to the High Court for case management
and directions for trial.

Dated: 5th March 2020

sgd
(MARY LIM THIAM SUAN)
Judge
Court of Appeal Malaysia

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Counsel/Solicitors

For the appellant: Gideon Tan (YJ Yap with him)

Messrs. Gideon Tan Razali Zaini
No. 812, 8th Floor
Block A, Kelana Square
No. 17, Jalan SS 7/26
47301 Petaling Jaya

For the respondent: Ng Thian Tuan (Tan Sin Yee with him)
Messrs. Tuan, Mohd Zain & Co
B-08-03 Gateway Corporate Suites
Gateway Kiaramas
No 1, Jalan Desa Kiara
Mont’ Kiara
50480 Kuala Lumpur

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