SARAJ RESOURCES SDN BHD v.

PATU ANAK LONTEN

High Court Sabah & Sarawak, Kuching Yew Jen Kie J [Suit No: KCH-
22NCvC-42/9-2017] 24 May 2018

Case(s) referred to: Malayan Banking Bhd v. Boo Hock Soon [2013] 2 MLRA
387; [2013] 2 MLJ 843 (refd)

Counsel: For the plaintiff: Lesley Ling; M/s Clement & Co Advocates For the
defendant: Gladys Lee; M/s Gladys and Brandon Advocates

[Inter-parte interlocutory injunction be granted with costs.]

JUDGMENT

[ Inter-Parte Hearing Of Enclosure 7]

Yew Jen Kie J:

[1] On 15th January, 2018 the Court granted, upon application by the Plaintiff
vide Notice of Application ( Ex Parte ) (Enclosure 7), an ex-part injunction
restraining the Defendant by himself or his servant or agent or otherwise from
transferring and/or dealing with all his shares in Bau Maju Resources Sdn Bhd
["the Company"] pending the disposal of the main suit in this action.

[2] On 26th January, 2018 the Court granted an ad interim Injunction pending
the inter-parte hearing.
Plaintiff's Case

[3] The Plaintiff averred in the Affidavit in Support [Enclosure 8] that the
Defendant is at all material time the registered owner of 75% shares in the
Company. There is an oral agreement and understanding ["the Agreement"]
between the Plaintiff and the Defendant that the Defendant would transfer part
of his shareholding in the Company to the Plaintiff in return for the Plaintiff
rendering its service and assistance to the Company to procure a Quarry Licence
for a quarry site at Bukit Tunggal, Sebuyau, Samarahan, from the Government
of Sarawak.

[4] The Agreement was made on or about 2 November 2015 between the
Plaintiff and the Defendant, through the Plaintiff's representative One Ting Bin
Cheong ["Mr Ting"] and the Defendant's representative, one Lee Sin Hwa

[2018] MLRHU

Saraj Resources Sdn Bhd v. Patu Anak Lonten 1

["Mr Lee"] who was duly authorized by the Defendant. Thus, the Defendant
was aware of the dealing made on behalf of the Defendant with the Plaintiff
through its representative.

[5] Pursuant to the Agreement, Mr Ting and Mr Lee met on 1 November 2016
to further discuss on the application for the Quarry Licence and the share
structure as agreed was reduced into writing [Exhibit DD-2 of encl 8]. Mr Lee
agreed on the Defendant' behalf that 40% of the Defendant's shareholding in the
Company shall be transferred to the Plaintiff. The initially agreed 40% was
subsequently revised and reduced to 35%.

[6] The service and assistance rendered by the Plaintiff to Bau Maju in
procuring the Quarry Licence are inter alia :
a. Engaged consultant to prepare drawing for submission of quarry application
and paid all costs and expenses incurred thereto;

b. Provided financial assistance for the general costs and expenses incurred for
site use; and

c. Attended meeting and followed up with officers from the relevant ministry to
comply with the requirement for quarry application.

[7] It was within the knowledge of the Defendant of the costs and expenses
incurred by the Plaintiff in the course of procuring the Quarry Licence. A copy
of Stone Potential Report No JMG SWK (SG) 017/23/429 [Exhibit DD-3 of
encl 8] was prepared under the instruction and expenses of the Plaintiff.

[8] At all material times, the Plaintiff managed and controlled the quarry
application through Mr Ting and other agents and/or staff. In this connection
and as evidenced by the Company Search with Suruhanjaya Syarikat Malaysia
["SSM"] dated 27 February 2017 [Exhibit DD-4 of encl 8], the Company's
registered address was changed to the registered address of the Plaintiff at 1st
Floor, No 82, Lot 9926, Block J, RH Plaza, Lorong Lapangan Terbang 1, 93350
Kuching, Sarawak, to facilitate the application for a Quarry Licence.

[9] Pending the application for the Quarry Licence, sometime in January 2017,
the Defendant duly executed the Form of Transfer of Securities (Form 32A)
[Exhibit DD-5 of encl 8] in favour of the Plaintiff.

[10] On 6 February 2017, the Government of Sarawak through Ministry of

Resource Planning and Environment issued the Quarry Licence No
15/LC/8D/27/2016 (QL) [Exhibit DD-6 of encl 8] ["the Quarry Licence"] to the
Company in respect of the quarry site at Bukit Tunggal, Sebuyau, Samarahan
with an area of about 156.3 hectares.

[11] Despite the successful issuance of the Quarry Licence to Bau Maju and
numerous demands by the Plaintiff, the Defendant has to date failed, neglected
and/or refused to transfer his 35% shareholding in the Company to the Plaintiff.

Saraj Resources Sdn Bhd v. Patu Anak Lonten [2018] MLRHU

[12] Due to the Defendant's breach of agreement, the Plaintiff has been
deprived of its legal entitlement to the said 35% share in the Company and the
Plaintiff will continue to suffer further losses and damages in the form of profit
generated from the Quarry Licence if it is in operation.

[13] To the Plaintiff's knowledge, the Defendant had transferred 35% of his
shareholding from his total 75% in the Company to one Chieng Lik Aik on a
date unknown to the Plaintiff. Based on the company search with the SSM dated
10 January 2018 [Exhibit DD-8 of encl 8], the Defendant who previously held
75% shareholding now only holds 40%.

[14] The Plaintiff has reasonable belief that the Defendant has transferred or is
in the midst of transferring another 10% shareholding in the Company to one
Foo Chek Heng for a consideration sum of RM200,000.00 as shown in the Sale
and Purchase Agreement and the Form of Transfer of Securities [Exhibit DD-9
of encl 8] duly executed by the Defendant and one Foo Chek Heng.

[15] The Plaintiff averred that if the Defendant transfers all of his shareholding
in the Company before the final disposal of the Suit herein, it will defeat the
Plaintiff's claim and deprive the Plaintiff from its legitimate entitlement. It will
render the Suit herein nugatory and redundant as the Plaintiff would not be able
to recover the agreed 35% shareholding in the Company from third party
transferee(s).

[16] Hence, the present application in encl 7.

The Law

[17] The law on the granting of interlocutory injunction is well-settled. In

summary, a judge hearing an application for interlocutory injunction should
undertake an inquiry along the following lines:

a. Whether there is a serious question/issue to be tried;

b. Where the balance of convenience/justice lies;

c. Whether damages are adequate remedy to the Plaintiff.

The above principle was first laid down in the House of Lords case of American
Cynamid v. Ethicon Ltd [1975] 1 All ER 504], adopted by the Malaysian Court
in Mohamad Zainuddin Putah v. Yap Chee Seng

[1976] 1 MLRH 482; [1978] 1 MLJ 40 and followed by Keet Gerald Francis
Noel John v. Mohd Noor Abdullah & Ors [1994] 1 MLRA 454; [1995] 1 MLJ
193; [1995] 1 CLJ 293; [1995] 1 AMR 373.

1st Consideration: Whether There Is A Serious Question/Issue To Be Tried

[18] In considering this issue, I have at the forefront of my mind the caution
given by Gopal Sri Ram JCA [as he then was] in case of Keet Gerald (supra) ,

[2018] MLRHU

Saraj Resources Sdn Bhd v. Patu Anak Lonten 3

wherein his Lordship uttered that in deciding whether there is serious issue to be
tried in application for interlocutory injunction, the Court ought to look at the
totality of facts presented and decided whether there are bona fide issues in the
affidavits which are serious enough to merit a trial. In the process of doing this,
his Lordship said.

"Above all, he must refrain from making any determination on the merits of the
claim or any defence on it. It is sufficient if he identified with precision the
issue raised on the joinder and decides whether these are serious enough to
merit a trial...."

[19] In the Defendant's Defence, the Defendant raised the following issues:

a. The Defendant has no dealings whatsoever with the Plaintiff, including the
Agreement allegedly to use the Plaintiff's service and assistance to procure the
Quarry Licence at Bukit Tunggal, Sebuyau from the Government of Sarawak
and in consideration thereof, to transfer his shareholding in the Company to the
Plaintiff.

b. The Defendant never authorized any representatives including Mr Lee, who

is neither a director nor shareholder of the Company, to enter into any
agreement, to negotiate or deal on behalf of the Defendant.

c. Even if there was an Agreement entered between the Plaintiffs representative

and the Defendant's alleged representative, Mr Lee, the said Agreement was
made without the Defendant's authority, consent and/or knowledge.
d. The Defendant and the Company were not privy to the Agreement.

e. The Stone Potential Report [Exhibit DD-3 of encl 8] is irrelevant as it is in

respect of a different site and/or location.

f. The Defendant disputed the execution of Form 32A [Exhibit DD-5 of encl 8].

[20] As regard the issues (a) to (d) above, it is pertinent to note that it was Mr
Lee who attested the execution of Form of Transfer of Securities [Exhibit DD9
of encl 8] by the Defendant whereby the Defendant transferred his 10%
shareholding in the Company to one Foo Chek Heng. It is also evident from the
Letter of Approval for the Quarry Licence dated 6 February 2017 [Exhibit DD-
10 of encl 17] that it was Mr Lee who collected exh DD-10. In fact, the
Defendant admitted at para 9 of the Defence that Mr Lee was involved in the
application for quarry licence. All these suggest that Mr Lee was involved in the
affairs of the Company.

[21] Based on the above contemporaneous documents and the Defendant's

admission that Mr Lee was involved in the quarry application, it becomes
plainly clear that the issue whether Mr Lee was the representative of the

Saraj Resources Sdn Bhd v. Patu Anak Lonten [2018] MLRHU

Defendant in the course of procuring the Quarry Licence for the Company is
serious enough to merit a trial.

[22] As for the Defendant's allegation that he and the Company have no dealing
with the Plaintiff and there was no Agreement whereby he authorized Mr Lee to
agree on his behalf that the Defendant shall transfer his 35% shareholding in the
Company to the Plaintiff in return for its service and assistance in the
procurement of the Quarry Licence for the Company, it is significant to note
that based on the SSM search [Exhibit D4 of encl 8], the Company had changed
its registered address to share with the registered address with the Plaintiff.
Surely, the question as to why the Company had moved its registered office to
share with the registered office with the Plaintiff is a pertinent question which
can only be answered in a trial.

[23] As for issue (e) above, the Defendant averred in para 6 of the Affidavit in
Opposition [Enclosure 16] that the Plaintiff did not rendered its services and
assistance to the Company for the procurement of the Quarry Licence for the
quarry site at Bukit Tunggal, Sebyau, Sarawak from the Government of
Sarawak at any material time. He averred that the Stone Potential Report Ref
No JMG SWK (SG) 017/23/429 [Exhibit DD-3 annexed to encl 8] showed that
the said stone potential study/research was for Lot 768, Bukit Buan, Bau of
Kuching Division. It was averred that exh DD-3 "has nothing to do with the
Company's quarry site ie the location of the quarry site is different (one in
Sibuyau while the one in the report is of Bau) affecting different hills/mountains
[one in Bukit Tunggal while the report affects Bukit Buan".

[24] The Plaintiff had explained in para 5 of the Affidavit in Reply [Enclosure
17] that it was a mistake to annex exh DD-3 which was also prepared for Bau
Maju but in respect of a different site in Bukit Buan, Bau. Upon realizing the
mistake, the Plaintiff annexed the correct report in respect of Bukit Tunggal,
Sebuyau, Samarahan ie Stone Potential Report Ref No JMG SWK (SG)
017/22/420 entitled "ASSESSMENT OF STONE POTENTIAL FOR
QUARRYING AT SEBUYAU AREA, SEBUYAU SUB-DISTRICT KOTA
SAMARAHAN DIVISION, WEST SARAWAK" [Exhibit DD-13 of encl 17].

[25] It is to be noted that there is no opposition to exh DD-13 and it is therefore

deemed admitted by the Defendant as the correct report in respect of the quarry
application for the site at Bukit Tunggal.
[26] As for issue (f), the Defendant claimed that he had neither seen nor signed
Form 32A [Exhibit DD-5]. It is noted that the Defendant did not dispute the
execution of a Form 32A, but he claimed that the Form 32A that he had signed
was exh PL-1 of encl 16, and not exh DD-5 of encl 8. He further claimed that
exh PL-1 that he executed was blank with no particulars of the transferee at the
time of execution and that it was in respect of another transaction with a third
party which fell through.

[27] From the conflicting versions above, there arise a serious question on
whether the Defendant had signed Form 32A [Exhibit DD-5] and if he did sign,
whether the act of the Defendant in executing it amounts to

[2018] MLRHU

Saraj Resources Sdn Bhd v. Patu Anak Lonten 5

acknowledging the transfer of his 35% shareholding in the Company to the

Plaintiff.

2nd Consideration: Where The Balance Of Convenience Lies

[28] In Keet Gerald (supra) , Gopal Sri Ram JCA [as he then was] went on to
say:

(2) having found that an issue has been disclosed that requires further
instigation, he must consider where the justice of the case lie. In making his
assessment, he must take into account all relevant matters, including the
practical realities of the case before him. He must weigh the harm that the
injunction would produce by its grant against the harm that would result from
its refusal.........If after weighing all maters, he comes to the conclusion that the
plaintiff would suffer greater injustice if relief is withheld, then he would be
entitled to grant the injunction especially if he is satisfied that the plaintiff is in
a financial position to meet his undertaking in damages.
[29] It is undisputed fact that the Defendant had transferred his 35%
shareholding in the Company to one Chieng Lik Aik on a date unknown to the
Plaintiff and the Defendant has transferred or is in the midst of transferring
another 10% of his shareholding in the company to one Foo Chek Heng as
evidenced by exh DD-9 of encl 8.

[30] It is stating the obvious that unless restrained, it is highly probable that the
Defendant would transfer his remaining 40% shareholding in the Company to
third party (ties), and this will deprive the Plaintiff of its claim for the 35% of
the Defendant's shareholding in the Company for the services and assistance it
had rendered to the Company and the loss and damages incurred in procuring
the Quarry Licence.

[31] On the other hand, if the interlocutory injunction is granted, the Defendant
still remains as the legal owner of his 40% shareholding in the Company and
continues to enjoy any profit the Company may generate; he is merely
restrained from transferring and/or dealing his shares temporarily during the
pendency of the Suit herein.

[32] Clearly, the Plaintiff would suffer greater injustice if the relief is withheld.
The balance of convenience therefore lies in favour of the Plaintiff.

[33] I am mindful of the learned counsel for the Defendant's submission that the
Plaintiff has not shown it has the ability to pay the damages. Suffice it to say
that the Defendant did not raise this issue on the Plaintiff's ability to meet its
undertaking in damages in his Affidavit in Opposition. As such, it has deprived
the Plaintiff of the opportunity to respond to this allegation. It is unfair and the
Defendant should not be permitted to raise this issue now at the stage of
submission.

3rd Consideration: Whether Damages Would Be Adequate Remedy For The

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Saraj Resources Sdn Bhd v. Patu Anak Lonten [2018] MLRHU

Plaintiff

[34] Learned counsel for the Defendant submitted that the Plaintiff can be
alternatively and adequately compensated in damages for the alleged service
and assistance rendered to the Defendant in the event that the Plaintiff succeeds
in the Suit herein.

[35] Learned counsel for the Defendant submitted that the Court should take
into account that the market value of the shares owned by the Defendant in the
Company before the issuance of the Quarry Licence and after the issuance of
the Quarry Licence; the market value has since increased tremendously after the
issuance of the Quarry Licence to the Company. In the event the Plaintiff
succeeds in the Suit, the Plaintiff would be unjustly enriched due to the
difference in the market value of the Defendant's share before and after the
issuance of the Quarry Licence.

[36] As learned counsel for the Plaintiff has rightly submitted, the point of
"alternative remedy" or "difference in term of shares value" was never raised in
the Defendant's Affidavit in Opposition and it was submitted from the bar. It
should therefore be ignored as decided in Malayan Banking Bhd v. Boo Hock
Soon [2013] 2 MLRA 387; [2013] 2 MLJ 843. In any event, it is of no
relevance to the application herein as the Plaintiff is claiming for the transfer of
the Defendant's 35% shareholding in the Company and not for the value of the
said shares.

[37] It is to be noted that the Plaintiff's claim is the Defendant's 35%

shareholding in the Company. In the event the Plaintiff succeeds in the Suit, the
Plaintiff will then secure 35% shareholding in the Company which gives it the
ownership of the Company. Ownership of a company which has been issued
with the Quarry Licence is certainly more valuable and profitable compared to
monetary compensation, especially when there is no quantification of the value
of the Defendant's shares in terms of market value. Thus, in my view, damage
will not be an adequate compensation.

Conclusion

[38] Upon being satisfied that the Plaintiff has met all requirements in granting
an interlocutory injunction, I order that an inter-parte interlocutory injunction be
granted in terms as prayed for in encl 7 with costs of RM8,000.00.