Quasi-partnership can be distinct from a family-run company?

The term "quasi-partnership" is often equated with a company run solely by family members utilising management and business practice based on mutual trust and confidence. Establishing the existence of a quasi-partnership is paramount when handling a brief based on minority oppression or a just and equitable grounds petition on the premise that mutual trust and confidence amongst the shareholders have broken down.

However, a more recent Court of Appeal decision has held a family company can be distinct from a quasi-partnership. Brief facts of WTK Realty Sdn Bhd v Kathryn Ma Wai Fong and another appeal [2024] MLJU 808 are as follows:-

WTK Realty Sdn Bhd is a company founded by the late Datuk Wong Tuong Kwang in 1981. After suffering a stroke in 1993, the founder handed over management of the WTK Group to his sons, Datuk Wong Kien Nai (WKN), Datuk Wong Kie Yik (WKY) and Wong Kie Chie (WKC). Apart from his three sons, he was survived by his wife (since deceased) and three daughters. Thereafter, the WTK Group was managed by WKN until he was stricken with illness and passed away on 11.3.2013. WKN left behind his widow (Kathyrn Ma), a son (Neil Wong) and a daughter (Mimi Wong). All three are beneficiaries of the estate under a will. Kathryn Ma became the executor of the estate of WKN.

Since the death of WKN, numerous suits were filed involving the companies involving WTK Group. On the one side was Kathryn Ma and/or companies controlled by her. On the other side are families of WKY and WKC and/or companies which they controlled.

In May of 2017, Kathryn Ma filed the instant petition against the flagship company of the WTK Group. She averred that WTK Realty Sdn Bhd is a family company as ownership of shares was passed down to the successive generations of the Wong family. Also, control of the company at the board level was also passed down in similar manner. It was her contention that since the death of WKN, the relationship of mutual trust and confidence had irretrievably broken down and hence the reliance on the just and equitable provision to wind up WTK Realty Sdn Bhd.

The learned Judicial Commissioner allowed the petition, a decision which the Court of Appeal subsequently upheld. One issue the Court of Appeal deliberated on was the significance of WTK Realty Sdn Bhd being a family company. This is because Kathryn Ma did not plead that is was a quasi-partnership. The Court of Appeal agreed that a just and equitable petition is not confined to quasi-partnership companies but also to strictly family companies.

My observation after reading the decision is that:-

1. the courts are readily more open in recognising companies incorporated as family companies in Malaysia have a place in our young nation and the dynamics of the relationship between the family members at play in such companies.
2. a family company may not necessarily be a quasi-partnership as it can be a distinct type of company in its own right.