1. ) 1. Perkapalan Dai Zhun Sdn Bhd v 1. ) 1. Formosa Plastics Marine Corporation (27NCC-56-09/2016)

PERKAPALAN DAI ZHUN SDN BHD

PDZ HOLDINGS BHD (COMPANY NO: 360419-T) … PLAINTIFFS

FORMOSA PLASTICS MARINE CORPORATION

EASTGATE VENTURES SDN BHD

EVRA SHIPPING LINES SDN BHD

KUNDANG LAKES COUNTRY CLUB SENDIRIAN BERHAD (COMPANY NO:117171-A) … DEFENDANTS 2 (heard together with Civil Case In the High Court of Malaya at Kuala Lumpur) (Commercial Division) ADMIRALTY IN PERSONAM NO. WA-27NCC-4-01/2017

EASTGATE VENTURES SDN BHD

SPADE WAVE LIMITED (BV COMPANY NO: 1883939) … PLAINTIFFS

PERKAPALAN DAI ZHUN SDN BHD (COMPANY NO: 182249-H) … DEFENDANT BEFORE YA KHADIJAH BINTI IDRIS JUDGE 3 GROUNDS OF JUDGMENT (enclosure 125) Intoduction [1] Enclosure 125 is the application by Perkapalan Dai Zhun and PDZ Holdings Bhd for an order that the judgment (after full trial) made by this court on 31 October 2019 (“Judgment”) be stayed until the conclusion of the hearing and final disposal of the appeal filed by Perkapalan Dai Zhun and PDZ Holdings Bhd against the Judgment. [2] Enclosure 125 (“Stay Application”) was allowed based on the grounds stated below. Factual Background [3] There are two (2) cases before this court –

Admiralty in personam WA-27NCC-56-09/2016 (“Suit 56”). The parties to Suit 56 are as follows – 4

the first plaintiff is Perkapalan Dai Zhun Sdn Bhd (“PDZ Sdn Bhd”) a private limited company incorporated under the laws of Malaysia which carried on the business of shipping and provision of related services. PDZ Sdn Bhd was wound up by Judgment of Court dated 13 April 2017; and

(ii) PDZ Holdings Berhad (“PDZ Holdings”) is a public limited company whose shares are listed on the Bursa Malaysia. It is an investment holding company. PDZ Holdings is the holding company of PDZ Sdn Bhd in 2015 and until 30 December 2016, when it disposed of its shares to one Salvage Point Ltd. Defendant

the first defendant is Formosa Plastics Marine Corporation (“Formosa”) the owner of 2 vessels, the MV Formosa Container 5 (“FC 5”) and MV FPMC Container 10 (“FPMC 10”). On 3 May 2017, the court allowed Formosa’s application for a stay of this suit against Formosa pending the disposal of arbitration 5 proceedings, which were commenced by Formosa against both PDZ Sdn Bhd and Eastgate, Evra and KLCC. The arbitration proceedings commenced by Formosa remain pending, Formosa took no part in Suit 56;

(ii) the second defendant is Eastgate Ventures Sdn Bhd (“Eastgate”) a private limited company incorporated in Malaysia, and carries on the business of oil and gas trading and services;

(iii) the third defendant is Evra Shipping Lines Sdn Bhd (“Evra”) is a private limited company incorporated in Malaysia which carries on the business of shipping, stevedoring and maritime transport, as freight contractors and as agents of shipping companies; and

(iv) the fourth defendant is Kundang Lakes Country Club Sendirian Berhad (“KLCC”) is a private limited company incorporated in Malaysia which owns and operates the Kundang Lakes Country Club (known as “KLCC”).

Admiralty in personam WA-27NCC-4-01/2017 (“Suit 4”). The parties to Suit 4 are as follows – 6

the first plaintiff is Eastgate; and

(ii) the second plaintiff is Spade Wave Limited (“Spade Wave”), a British Virgin Island Business Company incorporated under the laws of British Virgin Island. Defendant PDZ Sdn Bhd, the sole defendant. [4] On 2 November 2011 Eastgate, Evra, KLCC and Spade Wave obtained leave from the court to continue Suit 56 and Suit 4 against PDZ Sdn Bhd. Subsequently on 26 March 2018, PDZ Sdn Bhd’s application for PDZ Holdings’ solicitors to continue their representation of PDZ Sdn Bhd in both suits was allowed by this court. Suit 56 [5] PDZ Sdn Bhd entered into charter agreements with Formosa for the charter of FC 5 and FPMC 10 respectively (“the Charterparties”). It is PDZ Sdn Bhd and PDZ Holdings pleaded case, among others, that there was a concluded agreement in 2016 between PDZ Sdn Bhd and 7 PDZ Holdings on the one part and Eastgate and KLCC on the other part for Eastgate to take-over the Charterparties and thereafter the shipping route described as the Malaysia-Borneo-Bangkok Service (MBB Services). [6]

a declaration that there was no agreement in respect of the take over of the MBB Service finalised between PDZ Sdn

a declaration that the charters in respect of the vessels Formosa Container 5 (“FC 5”) and MV FPMC Container 10 (“FPMC 10”) is not novated to Eastgate, Evra and KLCC;

PDZ Sdn Bhd is liable for all the charter fees to Formosa;

in Suit 56, PDZ Sdn Bhd and PDZ Holdings jointly and severally pay to Eastgate and KLCC the sum RM 5,246,000.00 and interest thereto at the rate of 5 % from 27 May 2016 until date of full realisation;

in Suit 4, PDZ Sdn Bhd do pay Eastgate and Speed Wave the sum RM 1,677,083.40 and interest thereto at the rate of 5 % from date of judgment to date of full realisation; and

PDZ Sdn Bhd and PDZ Holdings to pay to Eastgate, Evra, KLCC and Speed Wave cost of RM 100,000.00. 9 [10] By Notice of Appeal dated 18 November 2019 PDZ Sdn Bhd and PDZ Holdings appealed against the term at paragraph 9 (a) – (d) and (f) (“PDZ’s Appeal”). [11] For the purpose of this judgment, PDZ Sdn Bhd and PDZ Holdings will hereinafter collectively be referred to as “Plaintiffs” and Eastgate, Evra and KLCC as “Defendants”. Plaintiffs’ contentions [12] Essentially the Stay Application is premised on the Plaintiffs’ concern in respect of the capability of Defendants to repay the monies as decreed in the Judgment (“Judgment Sum”) if the PDZ’s Appeal is allowed. It is contended on behalf of the Plaintiffs that the Defendants do not possess the income or financial resources to repay the Judgment Sum. [13] There is no evidence that Eastgate is carrying on business. There is also no evidence of any income or revenue. Eastgate has not filed its annual financial statements for 4 years. Eastgate claims that it is chartering a vessel is not supported by any evidence. 10 [14] Eastgate owes up to RM 10 million to Small Medium Enterprise Development Bank Malaysia Berhad (SME Bank). Its claims that it took the said facility to pay for MBB Service is not true because the facility charge creation date is 24 August 2015 which was 10 months before MBB service take-over on 9 June 2016. [15] Evra is also unable to repay the said sum because it is not carrying on business. Evra has not filed its annual financial statements for 4 years. [16] KLCC is very unlikely to repay the said sum because –

it has very little cash and profit and has no liquid assets;

its cash at bank is only RM 135,000, and its latest (2018) profits are only RM 252,903. The value of KLCC’s golf club land (its prime asset amounting to 96 % of its total assets) is RM 16.9 million, but KLCC’s liabilities are RM 15.3 million (a difference of only RM 1.6 million); and

even though KLCC claims that it is in the business of property development, its account show no revenue from 11 property development. Its account show that its apparent property development land is not held in KLCC’s name, but by another company. If the PDZ’s Appeal is allowed, that land will not be available to satisfy the Judgment Sum. [17] On the other hand, PDZ Holdings is able to satisfy the Judgment Sum and the interest thereto in the event the PDZ’s Appeal is dismissed. This is because –

PDZ Holdings is a public listed company with total assets of RM 63.2 million. Its liabilities is only RM 9 million. Thus its net assets is RM 54.1 million which is 9 times the Judgment

there is no risk that PDZ Holdings will not be able to satisfy the Judgment Sum. PDZ Holdings currently has RM 36 million cash in hand which is 6 times the Judgment Sum. [18] PDZ Holdings undertake to provide substantial security for the Judgment Sum of RM 5 million in the following manner – 12 No.

RM 400,000-00 x 3 months paid into Court / joint stakeholder account by end-January 2020 RM 1,200,000-00 2. Land with a 3 storey building erected RM 3,800,000-00 TOTAL RM5,000,000-00 [19] The 1st instalment of RM 400,000.00 was furnished by PDZ Holdings on 26 November 2019. By January 2020, PDZ Holdings would have provided the security of RM 5 million as full satisfaction of the Judgment Sum, which is the best and maximum comfort for the Defendants that the Judgment Sum will be satisfied if the PDZ’s Appeal is dismissed. Contentions by the Defendants [20] The grounds opposing the Stay Application is as follows –

there is no special circumstances to warrant a stay of the execution of the Judgment. The Stay Application is an abuse of process. The Defendants ought not to be deprived of their fruits of litigation; 13

the search results on the financial position of the Defendants shows the Defendants are not in a financially week or dire position. Instead the results indicate that the Defendants are ordinary with normal financial liabilities; and

the Plaintiffs has admitted they are unable to pay the whole judgment sum in the event the Stay Application is denied. The law [21] In an application for stay it is incumbent upon the applicant to prove there is special circumstances or special grounds to justify a stay. As to what amount to special circumstances, the Court of Appeal in Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2003] MLJ 49 held – … the special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal). (emphasis added) [22] The Federal Court in Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257 FC; [2003] 4 CLJ 1 FC held there are many factors that may constitute special 14 circumstances and the fact that an appeal would be rendered nugatory if stay was refused is the most common one. It is an example of special circumstances. Essentially what amounts to special circumstances would depend on the facts of each case. Findings of the court [23] Having considered the parties’ affidavit evidence and submission, this court is of the view there is special circumstances which warrant this court to exercise its discretion to stay the execution of the Judgment. The Defendants’ position in so far as their financial resources is concerned raise serious doubts as to their ability to repay the Judgment Sum to the Plaintiffs in the event the PDZ’s Appeal is allowed. Thus, the said appeal may be rendered nugatory if the Stay Application is not allowed. [24] Based on the Company Commission of Malaysia (“CCM”) search result conducted on 5 November 2019 as seen at Exhibit TCH-5 of enclosure 126, there is no information on Eastgate’s business and / or income for the previous 4 years. The last financial statement of Eastgate was filed on 25 August 2015 for the financial year ended 30 June 2015. Based on the available information from the 2015 financial 15 statement, as in 2015 Eastgate’s current assets and revenue was RM 683,814.00 and RM 1,387,701.00 respectively. Although its current liabilities was recorded at RM 147,692.00 the unsatisfied charge for financial facilities of RM 10 million (in favour of SME Bank) substantially exceeded Eastgate’s current assets and revenue. [25] Eastgate’s assertions that the company is in the business of operating its vessel registered as Nur Eye II is not substantiated with evidence. Eastgate’s contentions that the SME Bank facility was taken as working capital to operate the MBB service is also not supported with evidence. In any event, there is no information (accounts or financial statements) offered about the status of the said charge and facility. As it is now, there is an undischarged charge and liabilities of about RM 10 million to SME Bank. [26] With regards to Evra, based on the CCM search dated 5 November 2019 (see Exhibit TCH-6 of enclosure 126), the last financial statement of Evra was filed on 30 June 2016 for the financial year ended 31 December 2015. Thus Evra’s business and source of income and / or revenue is not known. Evra submit it is not impecunious because Evra has assets amounting to RM 932,798.00 compared to liability of only RM 99,738.00. However the data quoted by Evra is based on 16 Evra’s financial position in 2015 and there is no information (accounts or financial statements) in relation to its financial position for the last 4 years. As admitted by counsel for the Defendants during oral submission, Evra is a RM 2 company. Thus it is clear that Evra would not be in the position to repay the Judgment Sum if the need arises. [27] It is noted that KLCC is a public listed company which engage in the business of operating golf club and sand mining. Based on it its latest financial position for the financial year end 30 June 2018 (see Exhibit TCH-8 of enclosure 126), its non-current assets is RM 19,895,127.00, current assets is RM 700,927.00, current liabilities is RM 15,290,665.00 and profit is RM 252,903.00. Thus KLCC current liabilities exceeded its current assets of only RM 700,927.00, with a big difference of RM 14,500,000.00. [28] Besides profit of RM 252,903.00, KLCC’s audited Financial Statement for the financial year end 30 June 2018 (see Exhibit TCH-9 of enclosure 126), shows it has cash at bank and in hand of RM 135,940.00. Although KLCC recorded the value of its golf club land (which forms 96 % of KLCC total assets) as RM 16,915,322.00, its liabilities as stated above is RM 15,290,665.00 which gives a difference 17 of RM 1,624,657.00. This position indicate KLCC lack substantial cash and liquid assets to repay the Judgment Sum. [29] KLCC through its director claim that KLCC is an on-going concern with property development. However as pointed out by the Plaintiffs, there is no indication of revenue or income generated from its property development business (see page 80 and 96 of enclosure 126). It is noted that the KLCC’s land for future development is not held in KLCC’s name but held in trust in the name of a joint venture developer on behalf of KLCC under a Joint Venture Agreement (see page 94 of enclosure 126). Thus it is unlikely that the said land can be utilised for purpose of repayment of the Judgment Sum. [30] On the other hand, PDZ Holdings 2018 audited financial statements (se Exhibit TCH-10 of enclosure 126) shows it is a public listed company with total assets of RM 63.2 million and liabilities of RM 9 million. PDZ Holdings’ financial statement shows that it has about RM 39 million cash consisting of RM 2,947.00.00 in cash at bank and cash in hand and RM 36,052,000.00 in fixed deposits. Based on this alone, PDZ Holdings would be in the position to pay to the Defendants the Judgment Sum if the PDZ’s Appeal is dismissed. 18 [31] Besides that, PDZ Holdings has given its undertaking to provide security for the Judgment Sum of RM 5 million in the following manner –

a caveat over an unencumbered piece of land in Port Klang and 3 storey building erected thereon (the Property). The result of the said land title search performed on the Property at Exhibit SCJ-1 of enclosure 129 shows that PDZ Holdings is the sole registered proprietor;

the Property has been valued at RM 3.8 million by way of a valuation report dated 20 February 2019 (see Exhibit TCH- 12 of enclosure 126);

PDZ Holdings is willing to pay a total sum of RM 1,200,000.00 into Court or into a mutually agreed stakeholders’ account, by way of payment of 3 months equal instalments of RM 400,000.00 each over 3 months, that is:-

November 2019 :

(ii) December 2019 :

(iii) January 2020 : Total : RM1,200,000.00 19 [32] This court is of the view the above arrangement provides adequate security for the Defendants in the event the Plaintiffs are required to satisfy the Judgment Sum. Although the Defendants is deprived from enjoying the fruits of their litigations pending disposal of the PDZ’s Appeal, should the PDZ’s Appeal allowed, the Defendants will be compensated with interest imposed on the Judgment Sum which run from date of judgment until date of realisation. Conclusion [33] Premised on the above this court allowed the Stay Application on the following condition –

Plaintiffs to make payment of cash of RM 400,000.00 each for 3 consecutive months of November 2019 – January 2020 and to be paid into a joint stakeholder account to be maintained jointly by the partners of the Plaintiffs’ solicitor and the Defendants’ solicitor. For November 2019 the payment is to be paid into the account within 7 days from the date the joint stakeholder account is opened. The subsequent 2 payments to be paid into the said account on 20 or before 31 December 2019 and 31 January 2020 respectively;

in respect of the caveat, the Plaintiff to do the necessary paper work to be submitted by 13 December 2019 to the Defendants’ solicitor for the Defendants’ solicitor to lodge a caveat on the land as referred to in Plaintiff’s affidavit enclosure 126. All costs pertaining to the entry of caveat is to be borne by the Plaintiffs; and

in the event any of the conditions above is not complied the stay order is set aside. ( KHADIJAH BINTI IDRIS ) JUDGE HIGH COURT (COMMERCIAL DIVISION) DATED 29 FEBRUARY 2020 Counsel: Plaintiff : Ganesan Nethi and together with Siah Ching Joe of Messrs Tommy Thomas Defendant :