Federal Court allows Pelorus to directly recover RM2.4mil from former partners
PUTRAJAYA: The Federal Court has ruled that a joint venture partner can directly sue its former business partners to recover money it claims had been misused or diverted.
On September 21, the Federal Court ruled that Pelorus Holding Sdn Bhd can directly sue its former partners to recover RM2.4 million claimed to have been misused or diverted. The three-judge panel, headed by Chief Justice Tun Wan Ahmad Farid Wan Salleh, made the decision in an appeal brought by Pelorus against Jaffa Roger Dawkins, Rabiatul Adawiyyah Mohmad, and Harris Luqman Group Sdn Bhd. The bench also included Datuk Collin Lawrence Sequerah and Datuk Azimah Omar.
Pelorus had formed a joint venture company, Pelorus HLG Sdn Bhd, with Dawkins and Rabiatul in 2016 to engage in livestock supply, integrated farming and breeding, abattoir operations, and the distribution of fresh and frozen meat products. However, the partnership eventually broke down, with Pelorus alleging the JV had not adhered to the agreed terms.
Pelorus sued to recoup RM1.188 million, which it claimed was misappropriated for Harris Luqman Group's benefit, and RM1.213 million advanced to service Agrobank loan repayments. The High Court endorsed these claims, but the Court of Appeal held that the sums belonged to the joint venture company, and any claim should be brought by the company directly or through a derivative action.
Wan Ahmad Farid dissented. He argued that Pelorus was bound by the joint venture agreement individually and was not merely a shareholder claiming losses from the joint venture company. The court accepted that the money advanced to the joint venture company was not part of an illegal moneylending scheme, as the advances were made as part of the commercial arrangements under the JVA.
The court upheld Pelorus' RM1 million claim based on personal guarantees given by Dawkins and Rabiatul but dismissed a separate RM516,972.02 claim due to insufficient substantiation. The respondents were required to pay RM100,000 in costs.
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