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Singapore company, Malaysian victims. How to sue? We ask the lawyers suing True Fitness

2 months ago UiHua

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If asked, most people would describe suing someone as a three-step process – hire a lawyer, go to court, collect money. However, it’s actually a lot more complicated, especially if the person or entity you’re suing is from another country. While it should be said that there are many ways to go about it (depending on the circumstances of each case), the lawsuit between the members of True Fitness against the Singaporean company is an interesting case study on the kinds of hurdles faced by the plaintiffs (the people suing) and what their lawyers are doing to overcome these hurdles. 

While the initial attention given to True Fitness seems to have died down among the general public, many members are still feeling the burn in their gluteus maximus over the sudden closing of outlets without proper notice - especially considering that the gym was still signing up members in the days prior to its closure.

The last most of us have heard about the whole debacle is that two lawyers - Alex Anton Netto and Chen Yu Szen - from Malaysian law firm Dee, Netto, Fatimah & Ng (DNFN) were rallying members to file a class action lawsuit against True Fitness, being members themselves.

Alex Netto speaking to members outside True Fitness Jaya 33 in June. Image from The Star

But here’s the problem - True Fitness is based in Singapore. So does this mean that the lawsuit will be filed in Singapore, or can the Malaysian courts demand that the owners travel to Malaysia to attend court?

To answer these questions, we got in touch with Alex Netto, who tells us that they’re actually taking a two-pronged approach, in Malaysia AND Singapore:

  1. By filing a petition with the Singapore Government

  2. By filing a class-like action lawsuit in the Malaysian court

We’ll get into the details later on in the article, but let’s address a question some of you might be thinking - What’s a “class-like action lawsuit”?


 

All the members are suing in groups

You may have heard the term “class action lawsuit” used a lot in the media, especially when it comes to cases in the United States.

Simply put, a class action lawsuit is a group of people who have faced similar injuries from the actions of one party banding together to file a lawsuit. The disbursements (basically the legal costs) are equally shared among the group and, if they’re awarded any form of compensation, that’s shared equally as well.

Alex says that a class action lawsuit and a class-like action lawsuit is essentially the same because everyone involved have similar grievances or injuries. However, he uses the term class-like action lawsuit because the members have different types of agreements with True Fitness. To put it in an example, you may have one member with 5 years of membership left and another who has a lifetime membership. They both experience similar grievances (e.g., paying for a gym membership they can’t use) but differ in the type of agreement they had with True Fitness (e.g., 5 year versus lifetime membership).

It’s important to note that, in the legal context, “injuries” don’t only refer to physical hurt but also other forms of harm recognized by law, such as loss of reputation, negligence, or breach of contract. This is part of what’s called Tort law, which is explained in greater detail in a separate article.

[READ MORE: What is Tort law?]

The other thing to note is that everyone involved in the class-like action lawsuit must have experienced similar injuries from the same party. This means that, for example, a True Fitness member who injured himself on a piece of faulty equipment cannot use this incident to be part of the class-like action lawsuit. He can still be a part of it if he still has some years left of his membership, but he will have to file a separate suit for the injuries sustained from the faulty equipment.

So what exactly are the members suing for? Well, this is where it gets interesting…


 

In Malaysia, the class action lawsuit hasn’t been filed yet!

Don’t freak out.

Just as how you can’t expect to develop a Jordon Yeoh body from running on a threadmill alone, there are several precursory steps that must be taken to lead up to that outcome.

Jordon Yeoh, for your reference. image from World of Buzz

The lawyers first had to collect the documents and warrants to act (basically permission for someone to act on your behalf) from members interested in taking legal action against True Fitness. As there were more than 1,800 applications to process, DNFN will be filing the legal proceedings in two batches based on when they were received. At the time of writing, the first batch of legal proceedings have been submitted to the court.

This will be explained in greater detail below, but In a quick (though not entirely legally accurate) nutshell, before the lawyers can file the lawsuit, they must first:

  • Compel the Court to get an explanation from the directors in person (Section 540)

  • Seek leave (permission) from the Winding up Court to start legal proceedings (Section 471)

 

The first hurdle is that the 6 companies operating the True Fitness brand in Malaysia are going through a winding up process in the Malaysian High Court. Winding up is known to most people as “closing down a company”, which includes selling off all assets (liquidation) to pay off debts and splitting the remainder among the owners/shareholders.

While the lawyers cannot stop the winding up proceedings, they instead filed an application under Section 540 of the Companies Act 2016 which states (in part):

“If in the course of winding up of a company or in any proceedings against a company it appears that any business of the company has been carried on with intent to defraud the creditors of the company or creditors of any other person or for any fraudulent purpose…”

Section 540 is a long read, but very simply, the application aims to compel the judges in the winding up proceedings to summon the directors to court for them to explain the sudden closure of the outlets.

Partial screencap of the Section 540 cause paper

 

Here’s a quick glance at the major reasons given in the application:

  • It was revealed that True Fitness founder Patrick John Wee Ewe Seng entered an agreement to expand operations to China, which was announced in the Hong Kong Stock Exchange in May 2017

  • As part of the expansion, an agreement had been made to shut down operations in Malaysia and Thailand before December 31st 2017.

  • The directors closed down the outlets without proper notice to the members, employees or suppliers

  • New members were still being signed up days before the gym was shut down

From here, the judges will determine if fraud had taken place, or if the allegations against True Fitness were true fitnahs. 

The true fitnahs part was an attempt at humor. Sorry.

At the same time, another application was made under Section 471 of the Companies Act 2016 which states (in part):

“When a winding up order has been made or an interim liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and in accordance with such terms as the Court imposes.”

From here, the court can decide (after hearing the explanation from the directors) if the winding up process should be put on hold, and if they will give the lawyers permission to start the civil action (aka the lawsuit).

 

The lawyers also asked the Singapore government to investigate the True Fitness owners

Partial screencap of the petition handed to the Singapore High Commission

At the same time they filed the applications to the Malaysian High Court, the lawyers also prepared a petition to the Singaporean government. This was handed over to the Singapore High Commission on June 30th.

A petition is basically a formal appeal for a higher authority to take action on something, that’s signed by many people. In this case, the appeal was made for the Singapore government to investigate the company and the company directors (specifically the founder) for possibly committing a crime.

“The manner in which Patrick John Wee Ewe Seng has acted is highly suspect and

he has betrayed the trust and confidence that has been placed in the True Fitness

brand in Malaysia.

 

We thus implore the Singaporean Government to conduct immediate

investigations into this matter with a view to prosecute the persons involved.”

- Quoted from the petition presented to the Singapore High Commission

At the time of writing, there has been no response from the Singapore Government.

“To this date, we have yet to secure a response from the Singapore Government. All we have received was an email from the Singapore High Commission that they have forwarded the Petition to the Singapore Government for their further Action.” - Alex Netto, via email to ASKLEGAL.

 

So bottom line - will the members get their money back?

We asked Alex what sort of compensation (or “damages” in legal terms) they’re hoping to get, and this was his response:

“Essentially, my firm endeavours to get back as much money as we can for our client and to hopefully bring the perpetrators to justice should the court rule that they have defrauded members.” - Alex Netto, in email reply to ASKLEGAL

By the looks of it, we’ll most likely need to do a third update as the lawyers will have to wait for the court’s decision on the matter. This determines the lawyers’ next course of action, and whether the members will see the justice they feel is owed to them.

 

This article is for informational purposes only and should not be taken as legal advice. Every situation is unique and dependent on the facts (ie, the circumstances surrounding your individual case) so we recommend that you consult a lawyer before considering any further action. All articles have been scrutinized by a practicing lawyer to ensure accuracy.

This article is for informational purposes only and should not be taken as legal advice. Every situation is unique and dependent on the facts (ie, the circumstances surrounding your individual case) so we recommend that you consult a lawyer before considering any further action. All articles have been scrutinized by a practicing lawyer to ensure accuracy.
Tags:
true fitness
alex netto
winding up
companies act 2016
class action lawsuit
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