In a December 17 judgement, the Court of Appeal ordered two directors of Putratec Sdn Bhd to personally pay the costs of a legal dispute following the company’s inability to fund its own litigation.
The case centres around Aker Solutions Sdn Bhd’s application for costs against the directors, Haji Kamri and Haji Omar, after Putratec’s financial difficulties prevented the company from fulfilling its obligations.
The dispute emerged when Aker Solutions filed an application seeking to have Putratec’s directors personally responsible for the costs of the litigation. Aker Solutions argued that Putratec, unable to meet its financial commitments, was effectively being used as a façade, and the directors were funding the litigation themselves in a bid to benefit from the outcome.
Putratec opposed the application, claiming that it was improper to bring the application under the same action and disputing the assertion that the directors had personally controlled or funded the legal proceedings.
Putratec’s legal team, represented by lawyers Lim Rui and Navrita Kaur of Messrs Raed Lim, argued that the Aker Solutions had failed to notify the two directors personally about the application, citing issues with service of documents. Putratec also contended that no evidence existed to show that the directors had personally funded the litigation or stood to gain from it. However, these arguments were dismissed by the judge, who found the directors’ involvement in the case to be substantial.
After hearing the case on May 30 and delivering the judgement on June 13, the judge rejected the Putratec’s objections and ruled in favour of the respondent. The ruling highlighted Putratec’s precarious financial situation, noting that the directors were funding the litigation personally. In the absence of evidence from Putratec to offer an alternative explanation, the judge concluded that the directors must have had control over the litigation. “The court is satisfied that the appellant’s (Putratec) financial status required the directors to fund the action,” the judge stated. “In such circumstances, where the appellant company (Putratec) was unable to pay its costs, and where no alternative funding explanation was offered, the directors stood to benefit from the outcome of the litigation and should be held personally liable.”
The court also addressed the issue of lifting the corporate veil, which Putratec had contested. The judge determined it was appropriate to pierce the coroprate veil in this case, involving Haji Kamri and Haji Omar, as the financial dealings of Putratec and the directors’ involvement justified lifting the veil. The judge further noted that, while no fraudulent behaviour was alleged, the directors’ actions in managing the litigation and their direct financial involvement warranted the decision.
Putratec’s arguments that the directors had not been properly served with key documents were dismissed. Despite the directors not providing direct evidence during the proceedings, the court found that the directors were sufficiently aware of the application, having been represented by legal counsel and receiving Aker Solutions’ submissions.
While Putratec’s legal team argued that the application was unfair and that the directors were not personally responsible for funding the case, the judge ruled that the directors’ roles and responsibilities in the litigation were clear. As such, the decision to hold them personally liable for the costs was deemed appropriate.
As a result, the court dismissed Putratec’s appeal and affirmed the order that the directors should personally bear the costs of both the original case and the application for costs.
Putratec was also ordered to pay the costs of the appeal, which are to be taxed if the parties cannot reach an agreement.
Aker Solutions was represented by Messrs Abrahams Davidson and Co lawyers Elaiza Hanum Merican and Cornelius Yong Ji Quan.
The appeal was heard by Chief Justice of the Brunei Supreme Court Dato Seri Paduka Steven Chong, along with Justices Michael Lunn and Sir Peter Gross. – Fadley Faisal
