Bina Harta Group Sdn. Bhd. v Yee Chee Pang (WA-24NCC-122-03/2024)

BINA HARTA GROUP SDN. BHD. (No. Syarikat: 202001004455 (1360775-U))

LEE LUN TEONG (No. K/P: 820310-06-5111)

OO HENG TENG (No. K/P: 881104-08-6439)

CONEFF CORPORATION SDN. BHD. (No. Syarikat: 198601000090 (149225-K)) …PLAINTIFFS

YEE CHEE PANG (No. K/P: 521109-10-5687)

YEE JUNG DNG (No. K/P: 880219-14-5481) …DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 37, 55, 64 & 70) Introduction [1] The applications broadly relate to control over the company, alleged misappropriation of housing purchasers' monies, and procedural issues regarding how the dispute should proceed. The key underlying dispute involves alleged breaches of Subscription Agreements and Housing Development Act requirements regarding purchasers' monies. Vide Enclosure 37, Ad interim Mareva Injunction was granted on favour of the Defendant’s application. Applications for determination [2] There were 4 applications in relation to Mareva Injunction filed by the Defendants. They are: 1) Enclosure 37 – Defendants’ Mareva Injunction; • Ex-parte application for Mareva injunction to freeze assets of the Second Plaintiff (Lee) and BH Homes • Based on allegations of misappropriation of purchasers' monies and breach of Housing Development Act 2) Enclosure 55 – Plaintiffs’ application to set aside Ex-Parte Order dated 28.6.2024 (Enclosure 48) 3) Enclosure 64 – Plaintiffs’ application to vary Ad Interim Injunction Order dated 15.7.2024 4) Enclosure 70 – Defendants’ application to vary Ad Interim Injunction Order dated 15.7.2024 • Application to vary the Ad Interim Mareva Injunction

• Seeking to increase restrained amount from RM2.28 million to RM4.86 million This Court granted several orders which include:

Ex-parte Order dated 28.6.2024 made upon the Defendants’ Mareva Injunction Application in Enclosure 37 (“Ex-Parte Mareva injunction Order”);

(ii) Ad Interim Order dated 15.7.2024 extending effect of the ex-parte Order until the hearing of Enclosure 37 (“Ad Interim Mareva Injunction Order”);

(iii) An Order dated 13.8.2024 that varied the terms of the Ad Interim Mareva Injunction Order (“Varied Ad Interim Mareva Injunction Order” Enclosure 37 - Defendants' Mareva Injunction Application Introduction [3] This is my decision on the Defendants' application for a Mareva injunction in Enclosure 37, seeking to restrain Lee Lun Teong (the Second Plaintiff) and Bina Harta Homes Sdn Bhd ("BH Homes") from disposing of or dealing with their assets up to the value of RM4,866,282.00. [4] After careful consideration of the evidence and submissions, I allowed the Defendants' application. These are my reasons. Background Facts [5] The background facts are largely undisputed. Coneff Corporation Sdn Bhd ("Coneff") is a licensed housing developer undertaking two ongoing housing projects - Phase 3B (Residensi Desa Idaman) and Phase 5 (Residensi Wilayah Madani). [6] In November 2022, the Defendants invested RM15 million in Coneff through Subscription Agreements dated 1-11-2022. Under Clause 2.3, this investment was to be used solely for developing and completing the housing projects. Clause 6.3 required Coneff to comply with all applicable legislation relating to its business operations. [7] As a licensed housing developer, Coneff is subject to the Housing Development (Control and Licensing) Act 1966 ("HDA") and Housing Development (Housing Development Account) Regulations 1991 ("HDR"). These require that all purchasers' monies must be deposited into Housing Development Accounts ("HDA Accounts"), separate HDA Accounts must be maintained for each development phase, and HDA monies may only be utilized for permitted purposes. Nature of Housing Development Account Monies [8] It is perhaps important to restate the position of monies in a housing Development account. This is to emphasise the point that it must be kept in a separate account un-comingled with any other monies not related to the said housing development. A wanton use of monies in a designated housing development account will result in a breach of the housing development legislation. It may also invite a criminal sanction for a breach of trust. [9] The Housing Development Act is clear and comprehensive. Subsections 7(1) to (4) of the HDA provides: - “(1) Subject to subsection (9), every licensed housing developer shall open and maintain a Housing Development Account with a bank or finance company for each housing development undertaken by the licensed housing developer;

Where a housing development is to be developed in phases, the licensed housing developer shall open and keep a Housing Development Account under subsection (1) for each phase of such development;

The licensed housing developer shall pay into the Housing Development Account of a housing development the purchase monies received by the licensed housing developer from the sale of housing accommodation in the housing development and any other sum or sums of money which are required by regulations made under this Act to be paid into the Housing Development Account;

The licensed housing developer shall not withdraw any money from the Housing Development Account except as authorised by regulations made under this Act Regulations 4 and 7 of the Housing Development (Housing Development Account) Regulations, 1991 (“ HDR” ) provide: “Regulation 4:

A licensed housing developer shall deposit forthwith into the Housing Development Account all monies whatsoever, whether in respect of instalments of purchase price or otherwise, paid by a purchaser in relation to his purchase of a housing accommodation in a housing development. Regulation 7 No monies in a Housing Development Account of a housing development shall be withdrawn by a licensed housing developer except for all or any of the following purposes ... ”. [10] The nature of Housing Development Account monies is well-established in our jurisprudence. In Kinda Hardware Trading (KL) Sdn Bhd v Kumpulan A Besik Sdn Bhd (in liquidation) [2019] 1 LNS 743, the High Court held that monies in Housing Development Accounts constitute trust property. This trust nature imposes fiduciary duties on the housing developer and its directors to ensure proper management of these funds. [11] In Foong Seong Equipment Sdn Bhd v Keris Properties Sdn Bhd (No 1) [2009] 5 MLJ 381, the Court of Appeal emphasized that housing legislation must be construed purposively in favor of purchasers. Low Hop Bing JCA held: "[36] Hence, it is abundantly clear that the withdrawal of monies from the housing development account can only be done after the completion of the development of residential properties... The premature and immediate payment of all gross sale proceeds... would run counter to the interest of the purchasers of residential properties. [37] In relation to residential properties, the housing development account is obviously intended to protect purchasers from becoming victims of abandoned housing projects. The housing legislation being a piece of social legislation must be construed purposively, beneficially and liberally in favour of the purchasers." [12] This principle was affirmed by the Federal Court in [2013] 2 MLJ 361, in which Hashim Yusoff FCJ held at [39] and [40]: “[39] We also agree ... The monies paid by the purchasers would go into the HDA. But the developer could only withdraw from the said account when the project has been completed ... Otherwise the developer would have to pay out first to the landowner out of its own pocket since it could not make any withdrawal from the HDA until the project was completed... [40] ... The grounds given by the learned Dato’ Low Hop Bing, JCA are impeccable and we are in agreement with them entirely.” [13] These authorities underscore the special protected status of HDA monies and the strict compliance required with HDA provisions. [14] The strict application of these duties spelt out in the law and regulations on licensed housing developers to “deposit forthwith” HDA Monies in its HDA account(s) is clear as found in the High Court decision by Wong Kian Kheong J in Barisan Tenaga Perancang (M) Sdn Bhd v Dr Mansur bin Hussain & Ors [2016] MLJU 1251 (HC) which held that if the purchasers’ monies are not placed in the HDA Account, it is an offence under Section 7A (10) of the Act. “During cross-examination, Dr. Mansur had admitted that he was aware of BTP’s legal obligation to pay all money received from the Purchasers, into BTP’s HDA. Dr. Mansur had admitted during re-examination that about RM9.9 million paid by the Purchasers, had not been credited into BTP’s HDA. I cannot accept Dr. Mansur’s contention that the approximate sum of RM9.9 million had been used for the Project. This is because once BTP failed to credit any sum of money paid by the Purchasers into HDA, BTP would have already committed an offence under s 7A(3) HDCLA. Such an offence is punishable under s 7A(10) HDCLA with a maximum imprisonment of 3 years and/or a fine of not less than RM250,000.00 and not more than RM500,000.00... As Dr. Mansur was a director of BTP at the time of BTP’s failure to credit a sum of about RM9.9 million into BTP’s HDA, Dr. Mansur would be deemed by s 22(1) HDCLA to have committed an offence under s 7A (3) HDCLA... [15] Hence, from a compliance with law perspective, the company Coneff and its Directors are strictly required by the HDA and the HDR to :-

upon receiving the Purchasers’ Monies for each of the units of housing accommodation sold by Coneff, to deposit forthwith all the Purcahsers’ Monies into Coneffs HDA Account(s); and

(ii) only withdraw the Purchasers’ Monies from Coneff’s HDA Account for specified purposes prescribed in Regulation 7A and in the manner prescribed by Regulation 7 of the HDR. Principles of granting a Mareva Injunction [16] The principles governing Mareva injunctions are well-established. In S&F International Ltd v Trans-con Engineering Sdn Bhd [1985] 1 MLJ 62, the Federal Court held that an applicant must establish a good arguable case, demonstrate a real risk of dissipation of assets, and show that assets exist within the jurisdiction. [17] Applying the facts to the accepted legal principles, I find the Defendants have established a strong arguable case based on several grounds. Good Arguable Case [18] First, there has been a clear breach of express contractual obligations under the Subscription Agreements. Clause 2.3 required the RM15 million investment to be used solely for project development. Clause 6.3 required compliance with applicable legislation including HDA/HDR. The evidence in Enclosure 40, comprising bank statements, shows substantial portions were diverted to Lee and BH Homes. [19] Second, there have been serious breaches of statutory obligations under HDA/HDR. The Plaintiffs admit in Enclosure 58 that RM4,927,682.00 of purchasers' monies were not credited to HDA Accounts. Bank statements show these funds were diverted to non-HDA accounts and subsequently to Lee and BH Homes. There was a further breach by using Phase 5 purchasers' monies (RM4,683,795.31) to pay Phase 3 expenses. [20] Third, there have been significant breaches of trust obligations regarding HDA monies. Following Kinda Hardware Trading, the purchasers' monies constituted trust property. The Second and Third Plaintiffs, as directors, breached their fiduciary duties by failing to deposit purchasers' monies into HDA Accounts, diverting trust monies to non-HDA accounts, and making unauthorized withdrawals contrary to Foong Seong Equipment principles. These breaches of trust provide additional grounds for preservation of assets. The Defendants' Standing [21] The Plaintiffs contend that the Defendants, as preference shareholders, lack standing to apply for Mareva injunctive relief. This argument is without merit. [22] First, the High Court in Kinda Hardware Trading recognized that HDA monies constitute trust property. The Court of Appeal in Foong Seong Equipment further emphasized that housing development legislation must be construed purposively to protect purchasers' interests. [23] Second, the Defendants' application stems directly from breaches of express terms in the Subscription Agreements. Coneff's failure to comply with HDA requirements violated Clause 6.3, while the diversion of funds contravened Clause 2.3 which mandate that subscription monies be used solely for project development. [24] Third, as a director of Coneff, the Second Defendant faces potential criminal liability under the HDA for the company's breaches. This gives him clear standing to seek protection of the Court. [25] The Plaintiffs' contention that the Defendants lack standing as preference shareholders must fail. The Defendants are not bringing a derivative action but suing for direct breaches of the Subscription Agreements which have exposed them to potential criminal liability under the HDA as directors. Real Risk of Dissipation [26] From the evidence shown to this court, a total of RM4,927,682-00 of housing purchasers' monies were not credited into Coneff’s HDA accounts by Lee (the sole signatory to Coneff’s accounts. This is an outright contravention of the HDA and the HDR provisions. [27] There is compelling evidence not just of risk but actual dissipation. Out of the RM4,927,682.00, only RM 175,427.00 from purchasers of Phase 5 housing accommodation units was allegedly paid into the client account of Messrs Tam & Chan, and an additional RM240,500.00 into the account of Messrs Kuek, Ong & Associates, which appears to have remained in those client accounts. However, the remaining RM4,511,755.00, which was deposited into Coneff’s non-HDA accounts, has clearly been dissipated, as the account balance as of 31 July 2024 was a mere RM 172,699.76. [28] The misappropriation of trust monies, as established in Kinda Hardware Trading, is particularly serious given the social protection purpose emphasized in Foong Seong Equipment. The diversion of these protected funds to personal accounts and unauthorized purposes demonstrates not just dissipation but a fundamental disregard for statutory safeguards designed to protect purchasers. [29] The Plaintiffs' justifications for the fund movements cannot be sustained. The claimed "advance payments" of RM15 million lack any supporting documentation. Project Management Agreement payments of RM9.2 million are supported by only two invoices totalling RM90,000. Balance of Convenience [30] Significantly, the Court of Appeal in Lee Kai Wuen v Lee Yee Wuen [2022] 7 CLJ 505 has clarified that balance of convenience is not a criterion in Mareva applications. Justice Darryl Goon explained at : " [119] As has already been pointed out, a Mareva injunction is an injunction of quite a different character. It is not the final remedy sought in a cause...In none of the authoritative cases in which the Mareva injunction was introduced was it ever stated or required that the balance of convenience is a criterion to be met." [31] The Court further emphasized that the jurisdiction exists specifically to prevent abuse of legal process: "[120] The jurisdiction exercised by courts in the grant of Mareva injunctions is one to prevent an abuse of the legal process in cases where there is a real risk that a litigant facing potential liability may seek to render any judgment that may finally be entered against him impotent by dissipating or disposing his assets." Other considerations [32] There is no evidence that the Mareva order has impacted the Second Plaintiff's living expenses as no application has been made for variation. Claims of business disruption remain unsubstantiated as BH Homes has never applied to intervene. Coneff's operations are unaffected as the Mareva doesn't cover its accounts, and the Second Defendant is approving legitimate payments within 1-2 days. [34] The Plaintiffs asserted that the Ad Interim Mareva Injunction Order could be discharged or "revoked" on the grounds that BH Homes owns a shop lot at Plaza Arkadia (“Shop Lot”) which would apparently suffice as adequate security warranting the discharge of the Ad Interim Mareva Injunction Order because the net market value of the Shop Lot is in excess of RM6 million, and therefore the unencumbered value of the Shop Lot exceeds the restrained sum. [35] This was proven to be inaccurate by the Defendants. In making the averments under oath, the Plaintiffs deliberately concealed that:

BH Homes had, in fact, sold the Shop Lot to one Yeo Chwen Shi in or around October 2023 for RM4 million;

(ii) Yeo lodged a private caveat to protect his interest in the Shop Lot; and

(iii) in the statutory declaration affirmed by Yeo and lodged in support of his private caveat, Yeo confirmed that BH Homes had received RM1.2 million as part payment of the purchase price. [36] As such, the picture painted was that he property was unencumbered but it turned out quite the reverse. [37] Although there was an attempt to rebut the contention of the Defendants on this issue by stating that the sale and purchase of the said property had been aborted, it was merely supported by an inconclusive reference to a Valuation Report. Be that as it may, I find the contention by the Plaintiff to be suspect. The Plaintiff failed to show there were steps taken to refund the RM1,000,000 deposit by the purchaser paid into the account of the company. [38] More compelling, the land title search conducted by the Defendants on 3.9.24, 4 months after the sale of the Shop Lot was purportedly aborted, shows that the private caveat lodged by one the purported purchaser Yeo Chwen Shi was still in effect. [39] While there were numerous other examples of the Plaintiffs’ lack of candour and probity, it sufficient this Court to rule based on the above to determine this application. Conclusion on Mareva Injunction Application [40] The Defendants are seeking from this Court to confirm the Ex-parte Mareva Injunction Order, the Ad Interim Mareva Injunction Order and the Varied Ad Interim Injunction Order previously made. There was also an application to grant an order in respect of the remaining prayer in Enclosure 37 which read as follows: “(9) an Order that BH Homes be joined a party to this Suit and added as a Defendant to the Defendants’ Counterclaim” [41] It is my finding that the Defendants have established all requirements for a Mareva injunction. The evidence shows systematic diversion of trust monies in breach of both contractual and statutory obligations. The Plaintiffs' explanations lack credibility and documentary support. [42] Accordingly, I allow Enclosure 37 with costs. The earlier orders in Enclosures 48, 75 and 95 are confirmed. [43] Accordingly, I confirm the earlier orders made in Enclosures 48, 75 and 95 and remaining prayer in Paraghraph (9) of Enclosure 37. Enclosure 55: Plaintiffs’ application to set aside Ex-Parte Mareva Injunction Order [44] The Plaintiffs have applied in Enclosure 55 to set aside the Ex-parte Mareva Injunction Order dated 28th June 2024. Having considered the submissions, I find that this application should be dismissed for the following reasons: Standing to File the Mareva Injunction Application [45] The Plaintiffs' primary contention is that the Defendants, as preference shareholders, lack standing to file the Mareva Injunction Application. I disagree. The Defendants' standing arises on two grounds:

First, under Clause 6.3 of the Subscription Agreements, Coneff expressly undertook to comply with all applicable legislation relating to its business operations, which necessarily includes the Housing Development (Control and Licensing) Act 1966 ("HDA") and its regulations. The failure to deposit housing purchasers' monies into the Housing Development Account ("HDA Account") constitutes a clear breach of this undertaking.

Second, as a director of Coneff, the Second Defendant faces potential personal criminal liability under the HDA for the company's breaches. The Second Defendant is therefore personally vulnerable to criminal sanctions for Coneff's failure to comply with the HDA's mandatory provisions regarding purchasers' monies. Compliance with Requirements for Ex-Parte Applications [46] The Defendants have fully satisfied the requirements for an ex-parte application under Order 29 Rule 1(2A) of the Rules of Court 2012. This is evidenced in paragraphs 7(i) to (vi) of the Defendants' 8th Affidavit (Enclosure 72), which details how each requirement under Rule 1(2A) has been met in the Defendants' supporting affidavit (Enclosure 38). Real Risk of Dissipation [47] The evidence before me demonstrates not merely a risk but actual dissipation of housing purchasers' monies:

Out of RM4,927,682.00 in housing purchasers' monies, only RM175,427.00 remains in Messrs Tam & Chan's client account and RM240,500.75 in Messrs Kuek, Ong & Associates' client account.

The remaining balance of RM4,511,755.00 was deposited into Coneff's non-HDA accounts in clear contravention of the HDA.

These funds have been substantially dissipated, as evidenced by the mere RM172,699.76 balance remaining in Coneff's non-HDA accounts as of 31st July 2024. Timeliness of Application [48] I find no merit in the Plaintiffs' allegation of delay. The Defendants filed their Mareva Injunction Application just 16 days after receiving Coneff's bank statements on 10th June 2024 pursuant to this Court's order. Given the volume of documentation (approximately 200 pages of bank statements) that needed to be reviewed and analyzed, this represents a prompt response. Inclusion of BH Homes [49] The inclusion of BH Homes within the scope of the Mareva Order was justified. The evidence shows that BH Homes received over RM11 million from Coneff's non-HDA accounts that had received housing purchasers' monies, without any legitimate justification. The money trail clearly demonstrates that BH Homes was used as a conduit for the diversion of these funds. Conclusion on Enclosure 55 [50] The Application in Enclosure 55 to set aside the Ex-parte Mareva Injunction Order dated 28.6.2024 is accordingly dismissed. Enclosure 64: Plaintiffs’ application to vary Ad Interim Injunction Order dated 15.7.2024 [51] Given the grave and dire state of affairs of the company as consequence of the 2nd Plaintiff and 3rd Plaintiffs’ actions, I see no reason to allow a variation of the Mareva Injunction. Further, there is no clear evidence provided by the Plaintiffs to warrant such a variation. [52] Enclosure 64 is accordingly dismissed. Enclosure 70: Defendants’ application to vary Ad Interim Injunction Order dated 15.7.2024 [53] The application in Enclosure 70 is allowed and I allow the remaining prayer in Enclosure 70 as follows: “(ii) that the 2nd Plaintiff must disclose to the Defendants in writing his assets and the assets of BH Homes (Excluding the shoplot property held under Master Title Geran 75099, Lot 421489, Mukim Batu, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan KL and bearing postal address A-1-02, Plaza Arkadia, Jalan Intisari Perdana, Desa Park City, 52200 Kuala Lumpur), up to the value of RM4,865,282-00 whether in their own name or not and whether solely or jointly owned and/or in their nominee’s name holding on their behalf, giving the value, location and details of all such assets, which must be served on the Defendants’ solicitors within three

days of the date of pronouncement of this Order” - Sgd - (AHMAD FAIRUZ BIN ZAINOL ABIDIN) Judge High Court of Malaya Kuala Lumpur Dated: 7th March 2025 Counsel Ong Swee Long and Eng Yi Wang for the Plaintiffs Messrs. Armiy Rais Ganeasan Nethi, Dato Bruce Lim, Rahayu Mumazaini and Tanyi Heng (PDK) for the Defendants Messrs. Lim & Yeoh