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

1.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 S/N xpVR/lid80iuhpSxVlpeeg 2! ! GROUNDS OF JUDGMENT (Enclosure 3, 19) Enclosure 3 Introduction [1] This is the Plaintiffs' application for an injunction to restrain the implementation of resolutions passed at an Extraordinary General Meeting ("EGM") of Coneff Corporation Sdn Bhd ("Coneff") held on January 29, 2024. The resolutions concern the removal of the Second and Third Plaintiffs as directors and the appointment of the First Defendant as director. Background Facts [2] Coneff is a housing developer undertaking two ongoing projects - Phase 3B known as Residensi Desa Idaman and Phase 5 known as Residensi Wilayah Madani. The First Plaintiff is the sole holder of ordinary shares in Coneff, while the First and Second Defendants are holders of preference shares pursuant to Subscription Agreements dated November 1, 2022, under which they invested RM15 million in Coneff. [3] The Second Plaintiff (Lee Lun Teong) and Third Plaintiff (Oo Heng Teng) were directors of Coneff prior to the EGM. The Second Defendant was appointed as a director in November 2023. S/N xpVR/lid80iuhpSxVlpeeg 3! ! [4] On January 29, 2024, at an EGM requisitioned by the Second Defendant, resolutions were passed to remove the Second and Third Plaintiffs as directors and appoint the First Defendant as a director. The First Plaintiff objected to these resolutions on the basis that the Defendants, as preference shareholders, did not have voting rights. The Plaintiffs' Case [5] The Plaintiffs contend that Clause 7(e) of Coneff’s constitution, which grants voting rights to preference shareholders, is invalid and contrary to the Companies Act 2016. They rely on Section 2 of the Act which defines a preference share as: "a share by whatever name called, which does not entitle the holder to the right to vote on a resolution or to any right to participate beyond a specified amount in any distribution whether by way of dividend, or on redemption, in a winding up, or otherwise" [6] The Plaintiffs argue that this definition expressly prohibits preference shareholders from having voting rights, rendering Clause 7(e) void under Section 32(2) of the Act which states: "The constitution of a company has no effect to the extent that it contravenes or is inconsistent with the provisions of this Act." The Defendants' Opposition S/N xpVR/lid80iuhpSxVlpeeg 4! ! [7] The Defendants oppose the application on several grounds. First, they argue that Section 2's definition of preference shares should not be read restrictively. [8] The Defendants submit that this provision explicitly recognizes a company's right to confer voting rights on any class of shares through its constitution. They argue that the definition in Section 2 merely describes a typical preference share but does not prohibit companies from conferring additional rights, including voting rights, through their constitutions. Legal Principles [9] The principles governing the grant of an interlocutory injunction are well established. As held in American Cyanamid Co v Ethicon Ltd [1975] AC 396 and applied in Keet Gerald Francis Noel John v Mohd Noor bin Abdullah & Ors [1995] 1 MLJ 193, the court must consider:

Whether there is a serious question to be tried

Where the balance of convenience lies

Whether damages would be an adequate remedy On the Question of Serious Issue to be Tried [10] At this interlocutory stage, it would be inappropriate for this court to make any definitive finding on the interpretation of Section 2 of the Companies Act 2016, as this is a matter properly reserved for the hearing of the Originating Summons. However, I must note that the S/N xpVR/lid80iuhpSxVlpeeg 5! ! Plaintiffs' contention that Section 2 creates an absolute prohibition against preference shares carrying voting rights is not unanswerable. Finding on whether there is a serious issue to be tried [11] I accept the argument of the Defendants that section 2 definition of Preference Shares does not overcome the terms of Clause 7(e) of the Constitution. To my mind, the critical consideration is the entitlement to vote. Any shares which disentitles the holder to vote is by definition a preference share. It is not the other way around where the moment a share is labelled as a preference share, a right to vote is extinguished. Even the drafters of the definition have made it clear. [12] The very fact that the definition of a Preference Share is qualified with a phrase “or by whatever name called” lends credence to the argument that the critical issue is the denial to vote. If the constitution allows for a holder of a share to vote, the said shareholder is therefore entitled to exercise the right to vote based on the terms stipulated in the Constitution. [13] I also find that the rights conferred under section 71 of the Companies Act mirrors the entitlement of the Defendant as laid down in Clause 7(e) of the Constitution. The drafters of the company’s Constitution had therefore, spelt out the entitlement of a “Preference Share” holder in the context best suited for the company. S/N xpVR/lid80iuhpSxVlpeeg 6! ! [14] For those reasons, I do not find Clause 7(e) to contravene section 32(2) of the Companies Act. [15] It was not disputed that the Constitution was amended by the Plaintiff themselves. This is to cater for the arrangement entered into between the parties. [16] Parties were represented by solicitors when the two Subscription Agreements were prepared to reflect the RM15m investment by the Defendants. Surely, the interest of all parties have been factored into. [17] In this case, Clause 7(e) of Coneff’s constitution expressly provides: "The holder of the Preference Shares shall have the right to receive notice of and to attend and speak at any general meeting or any meeting of any class of shareholders of the Company and shall have the right to vote at any such meeting. Any vote so exercised by the holder of the Preference Shares or his proxy at such meeting shall be deemed to be equivalent to Seventy-Five per centum (75%) of the total votes exercisable by all shareholders of the Company" [18] This provision represents a clear commercial arrangement between sophisticated parties. To invalidate it based on an overly restrictive reading of Section 2 would not only defeat the parties' legitimate expectations. S/N xpVR/lid80iuhpSxVlpeeg 7! ! [19] The modern approach to corporate law favors flexibility in corporate arrangements unless clearly restricted by statute. As noted by Gopal Sri Ram JCA (as he then was) in Meridian Asset Management Sdn Bhd v Thong Weng Tuck & Ors [2003] 3 MLJ 385: "The court should be slow to interfere with commercial arrangements freely entered into between sophisticated parties unless there are compelling reasons to do so." [20] As such I do not find there being a good and arguable case being established to support the issuance of an injunction. Balance of Convenience [21] It is on the question of balance of convenience that I find the greater reason why the present application must fail. The evidence before this court reveals patterns of conduct that would make the grant of an injunction potentially devastating to the Company's interests and those of its stakeholders. Investment Protection and Corporate Governance [22] The evidence shows that the Defendants' investment of RM15 million was structured with clear corporate governance mechanisms: i. Clause 6A.1 of the Subscription Agreements required that any banking account of Coneff "shall be operated jointly and shall bear the signature of the Second Defendant." This was clearly intended as a safeguard mechanism. S/N xpVR/lid80iuhpSxVlpeeg 8! ! ii. Clause 6.2 mandated that Coneff notify the Defendants of any pending or threatened proceedings affecting the Company or its assets. iii. Clause 6.3 required Coneff to comply with all applicable legislation relating to its business and operations. [23] These provisions demonstrate that the voting rights attached to the preference shares were part of a broader framework of investment protection measures. The evidence shows these protections were not mere formalities but crucial safeguards that the current management has systematically circumvented. [24] The evidence before this court reveals deeply troubling conduct by the Second and Third Plaintiffs in their management of Coneff 's affairs. Misuse of Housing Development Account [25] The evidence reveals violations of the Housing Development (Control and Licensing) Act 1966 ("HDA"). The Second Plaintiff, as director of Coneff, caused or permitted: i. A total of RM4,927,682.00 in housing purchasers' monies to be deposited into non-HDA accounts instead of the mandatory Housing Development Account. This is a clear breach of Section 7A(1) of the HDA which stipulates: S/N xpVR/lid80iuhpSxVlpeeg 9! ! i. "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." ii. The improper utilization of approximately RM4,683,795.31 of Phase 5 purchasers' monies to pay expenses related to Phase 3B of the development. This violates Section 7A(2) of the HDA which requires: "Where a housing development is to be developed in phases, the licensed housing developer shall open and maintain a Housing Development Account under subsection

for each phase of such development." Misappropriation of Company Funds [26] The bank statements and transaction records before this court paint an alarming picture of systematic diversion of company funds. Specifically: i. Between November 2022 and July 2024, the Second Plaintiff and/or the Third Plaintiff caused the transfer of monies from Coneff’s bank accounts to: a. BH Homes in the net sum of RM9,223,518.00 b. The Second Plaintiff personally in the net sum of RM5,867,988.55 ii. The Second Plaintiff received into his personal account a further sum of: S/N xpVR/lid80iuhpSxVlpeeg 10! ! a) RM3.5 million directly from the First Defendant (meant as part of the Subscription Price) b) RM11,643,511.47 from BH Homes [27] The total amount received by the Second Plaintiff through these various channels amounts to RM21,011,500.02. This diversion of funds has left Coneff in a precarious financial position, evidenced by: i. Multiple winding-up petitions filed against Coneff ii. A CIPAA claim exceeding RM12 million from Aneka Jaringan iii. A statutory demand under Section 466 of the Companies Act for RM5.3 million from Fronteam Construction Risk of Further Harm [28] The evidence demonstrates not merely a risk but actual instances of asset dissipation. Of particular concern is the fact that out of the RM4,927,682.00 in housing purchasers' monies: i. Only RM175,427.00 remains in Messrs Tam & Chan's client account ii. Only RM240,500.00 remains in Messrs Kuek, Ong & Associates' client account iii. The balance of RM4,511,755.00 deposited into non-HDA accounts has been dissipated S/N xpVR/lid80iuhpSxVlpeeg 11! ! Conclusion [29] The balance of convenience overwhelmingly tilts against granting an injunction. The evidence demonstrates that allowing the current management to remain in control would risk: i. Further breaches of housing development laws ii. Continued dissipation of company assets iii. Increased exposure to winding-up proceedings iv. Additional prejudice to housing purchasers' interests [30] The Plaintiffs' suggestion that damages would be an adequate remedy for the Defendants is unrealistic given the depleted state of company accounts and the apparent dissipation of funds. The current bank balances of Coneff and related entities suggest any award of damages would be difficult, if not impossible, to satisfy. [31] In these circumstances, implementing the EGM resolutions represents the course that would cause the least irremediable prejudice to all parties involved. While the Plaintiffs may suffer some prejudice, this is far outweighed by the potential harm to the Company, its creditors, and housing purchasers if the current management remains in control. [32] The application is therefore dismissed with costs. Enclosure 19 - Defendants’ application for an Injunction S/N xpVR/lid80iuhpSxVlpeeg 12! ! [33] By Enclosure 19, the Defendants are seeking various injunctive reliefs to protect Coneff’s assets and prevent further deterioration of Coneff’s financial position. It was argued that the interlocutory relief is to preserve the status quo pending this Court’s disposal of this OS. [34] The application is made in the context of that the Defendants are not taking a derivative action but a personal action by the Defendants against the Plaintiffs for multiple breaches of the Subscription Agreement, fraudulent conduct and misappropriation of Company’s monies. The Defendants’ claims also involve the Company’s non-compliance with the mandatory provisions of the HDA and HDR, which itself constitutes a breach of the Subscription Agreements, as well as the fraudulent misappropriation of trust monies by the Second Plaintiff or Coneff caused by the Second Plaintiff. [35] The injunctive reliefs (upon modifications as underlined and strikethrough) that the Defendants are seeking are as follows: “(1) an interlocutory injunction restraining the 1st to 3rd Plaintiffs from transferring, pledging, charging, encumbering by security or otherwise, or dealing in any manner with any of the ordinary shares of the 4th Plaintiff (“Company”) previously registered under the name of the 1st Plaintiff which is presently held under the 2nd Plaintiff’s name;

an interlocutory injunction restraining the 1st to 3rd Plaintiffs from amending or attempting in any way to amend the Company’s Constitution or from issuing or attempting to issue S/N xpVR/lid80iuhpSxVlpeeg 13! ! any new shares in the Company, save for ordinary shares issued and/or allotted pursuant to the 1st Defendant’s Conversion Notice dated 10-5-2024;

an interlocutory injunction restraining the 1st to 4th Plaintiffs from executing any Sale and Purchase Agreements without the Defendants’ consent (which shall not be unreasonably withheld) and/or collecting any monies from purchasers for the sale of units in the Desa Idaman property development undertaken by the Company, unless such monies are paid into the Company’s HDA Account;

an interlocutory injunction restraining the 1st to 3rd Plaintiffs from causing or attempting to cause the Company to incur any debt, borrowing or liability whatsoever, without the Defendants’ consent;

an interim mandatory injunction compelling the 2nd and the 3rd Plaintiffs, being the directors of the Company, to issue, allot, transfer and register 25,000,000 new ordinary shares of the Company in the name of the 1st Defendant within 5 business days from the date of the Order made herein;

an interlocutory injunction requiring the 2nd and 3rd Defendants to add the 2nd Plaintiff as a mandatory signatory to all the Company’s Bank Accounts within 3 days from the date of pronouncement of this Order”; S/N xpVR/lid80iuhpSxVlpeeg 14! ! [36] As an alternative to the Defendants’ prayer 7 in Enclosure 19, the Defendants pray for the Plaintiffs’ Injunction Application in Enclosure 3 be dismissed, upon which, the resolutions passed at the Company’s Extraordinary General Meeting (EGM) held on 29.1.24 be carried out and given immediate effect, including resolutions for:

the appointment of the First Defendant as director of the Company; and

(ii) the removal of the Second and Third Plaintiffs as director of the Company. [37] This Court has granted an Ad Interim Injunction Order on 07.06.2024. The Defendants are seeking this Court to confirm the Ad Interim Order and to grant orders in respect of the remaining prayers. Decision on Enclosure 19 [38] The Defendants have demonstrated serious issues to be tried arising from multiple breaches of the Subscription Agreement and fraudulent conduct by the Plaintiffs. The evidence reveals that the Plaintiffs have: a) Misappropriated substantial portions of the RM15 million Subscription Price paid by the Defendants, which was contractually required to be used solely for developing and completing the Project; S/N xpVR/lid80iuhpSxVlpeeg 15! ! b) Caused Coneff to breach mandatory provisions under the Housing Development (Control and Licensing) Act 1966 by failing to deposit housing purchasers' monies into Housing Development Account (HDA) accounts; c) Diverted approximately RM4.9 million of housing purchasers' monies from the Company's non-HDA accounts to the Second Plaintiff's personal accounts and accounts of companies controlled by the Second Plaintiff; d) Used Phase 5 housing purchasers' monies to pay expenses related to Phase 3B in contravention of HDA requirements for separate accounting; and e) Created unjustified debts and exposed Coneff to multiple winding-up petitions, placing the company in a precarious financial position. [39] The Plaintiffs have opposed this application primarily on three grounds: a) First, they contend that the Defendants lack experience in managing housing development projects. This objection is without merit. The evidence shows the First Defendant has over 30 years of business experience managing various projects. More importantly, the Plaintiffs' own conduct - repeatedly breaching the HDA and HDR provisions and mismanaging company funds - demonstrates their lack of competence to manage a housing development project. S/N xpVR/lid80iuhpSxVlpeeg 16! ! b) Second, the Plaintiffs argue that allowing the application would disrupt Coneff’s daily operations. This concern is unfounded. The evidence shows the Second Defendant has been approving legitimate payment requests, supported by proper documentation, typically within 1-2 working days. Moreover, requiring the Second Defendant's approval for payments aligns with Clause 6A.1 of the Subscription Agreements, which the Plaintiffs agreed to. c) Third, the Plaintiffs assert that damages would be an adequate remedy. This argument ignores the nature of the harm being caused. The Plaintiffs' ongoing breaches and mismanagement pose an existential threat to Coneff's survival and put hundreds of housing purchasers at risk. Such harm cannot be adequately compensated by damages. [40] Applying the principles in Keet Gerald Francis Noel John v Mohd Noor bin Abdullah & Ors [1995] 1 MLJ 193: i. Serious Issues to be Tried: The evidence overwhelmingly demonstrates multiple serious breaches of the Subscription Agreement and fraudulent conduct that merit full trial. ii. Balance of Convenience: The harm to the Company, the Defendants, housing purchasers and other stakeholders if the injunction is refused far outweighs any inconvenience to the Plaintiffs if it is granted. Without the injunction, there is a real S/N xpVR/lid80iuhpSxVlpeeg 17! ! risk of the Company being wound up due to the Plaintiffs' mismanagement. iii. Preservation of Status Quo: The injunctive relief sought is necessary to preserve the Company as a going concern pending trial. Removing the Second and Third Plaintiffs from unfettered control over company operations is the only viable solution to prevent further financial deterioration and protect the Company's assets. [41] For these reasons, the Defendants' application in Enclosure 19 is allowed with costs. This will enable the Project to move forward under proper management and oversight, free from the Plaintiffs' demonstrated pattern of fraudulent conduct and mismanagement. Consequential finding [42] As I have dismissed Enclosure 3, I see no reason to grant prayer 7 found in Enclosure 19 as it would enable the Defendants to take control of the management of Coneff based on the resolution passed at the EGM convened of 29.1.24. [43] The resolutions passed at Coneff’s Extraordinary General Meeting (EGM) held on 29.1.2024 be carried out and given immediate effect, including resolutions for:

the appointment of the First Defendant as director of Coneff; and

(ii) the removal of the Second and Third Plaintiffs S/N xpVR/lid80iuhpSxVlpeeg 18! ! Conclusion: [44] Enclosure 19 is allowed but for Prayer 7. - 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 S/N xpVR/lid80iuhpSxVlpeeg