MALAYSIA - The Federal Court has ruled that members of a registered society can sue their management committee for wrongdoing in the interest of their association. Judge Tan Sri Abdul Aziz Mohamad said the court recognised that a registered society was a legal entity because it had the right and liability to sue and be sued.

However, because the Societies Act 1966 prohibited an action in the name of the registered society, it was the unanimous ruling of the court that members could only initiate a legal action in the name of the registered society's office bearers or its public officer.

Aziz said this when allowing an appeal by Selangor Turf Club members Lee Tak Suan and Dr Ng Ah Kow and ruled that they could sue on behalf of other members against the management committee, which had purchased RM30 million of "worthless shares in a troubled company without a track record".

Aziz's written judgment was delivered on May 28 but a copy was made available yesterday.

Tan Sri Richard Malanjum and Datuk Hashim Yusoffwere the other judges who jointly heard the appeal earlier.

The plaintiffs, Lee and Ng, had filed a suit in the High Court in 2005 and named six management committee members and club secretary Kaka Singh Dhaliwal as defendants.

The two had sought damages for the benefit of the club.

Lee and Ng said the action was brought because the wrongdoers themselves were in control of the club.

They claimed that the committee had breached the club constitution and rules because they should have first obtained the consent of members

for any expenditure that exceeded RM500,000.

However, the committee took the stand that it had acted within the parameters of the law as the share purchase was merely an investment.

The committee filed an application to strike out the suit on the grounds that the club, being an unincorporated association, was not a legal entity.

The High Court dismissed the application, holding that the plaintiffs' action was correct in law because the claim was brought for the benefit of the club.

However, the Court of Appeal reversed the decision in 2006, and this led the plaintiffs to file an appeal to the apex court.

Following the apex court ruling, the High Court can now proceed to hear the suit filed by Lee and Ng.