Forestry Assets Sdn. Bhd. v Rosma Aida Binti Rameli (BA-12BNCvC-62-10/2024)

1.

ESHMAEL RAO SOOSAY DASS …APPELLANTS

1.

LEE CHIH CHIANG …RESPONDENTS

This is an appeal against the whole of the decision of the learned Sessions Court Judge at Bandar Baru Bangi delivered on 25 September 2024. The learned Sessions Court Judge granted the respondents wide-ranging relief, including declarations that the agreements were invalid, declarations of responsibility against the defendants, an order for repayment of RM183,500.00, special 22/06/2026 11:25:04 BA-12BNCvC-62-10/2024 Kand. 50 damages of RM429.00, general damages to be assessed, exemplary and/or aggravated damages, interest, and costs.

The appeal, in its original form, is reflected in the Supplementary Memorandum of Appeal dated 26.12.2024. Grounds 10 to 13 therein show that the appellants’ essential complaint was that the learned Sessions Court Judge had erred in law and fact in treating the 1st Defendant as though it were not entitled to conduct the relevant arrangements, in holding the agreements invalid, in rejecting the appellants’ best endeavours defence, and in imposing personal liability on the 2nd appellant.

Subsequently, and importantly, a further issue emerged during the appeal. It came to light that the 1st appellant had been wound up on 27.11.2023, which was before the Sessions Court judgment of 25.09.2024. The appellants then took the additional position that in the absence of leave, including retrospective or nunc pro tunc leave under s 471 of the Companies Act 2016, the judgment below was invalid, nugatory and unenforceable. The respondents resisted this.

Having considered the matter in full, I find that the appeal must fail.

The Sessions Court’s judgment records that the trial lasted four days and involved two witnesses for the Plaintiffs Rosma Aida binti Rameli (SP-1) and Lee Chih Chiang (SP-2) and one witness for the defendants ; Eshmael Rao Soosay Dass (SD-1), who was also the 2nd Defendant. The learned Sessions Court Judge summarised the Plaintiffs’ position as being that they had entered into several sale agreements for Aquilaria/Gaharu trees sold by the 1st Defendant, which at all material times represented itself as the beneficial owner of those trees. The Plaintiffs paid the full purchase price under those agreements, totaling RM183,500.00.

The Sessions Court further recorded that under the relevant contractual arrangement, the 1st Defendant was to act as manager of the trees for a period of two years and/or until the trees were harvested. The Plaintiffs’ complaint was that despite requests and demands, they received no adequate updates concerning the plantation, the status of the trees, or the legal footing of the arrangement, and that they did not receive the returns allegedly represented to them. The Plaintiffs therefore sought repayment of the sums they had paid, together with related reliefs.

The issues identified by the learned Sessions Court Judge were expressly set out as follows: whether the three sale agreements dated 6.3.2017, 3.1.2017 and 16.3.2017 were void; whether the trees on Malay Reservation land could be managed and/or leased by the 1st Defendant; whether the 1st Defendant was an investment company; whether the 1st Defendant had exercised best endeavours; whether the 1st Defendant had made fraudulent representations; and whether the 1st Defendant was a separate entity.

At the conclusion of trial, the Sessions Court held in favour of the Plaintiffs. The formal judgment makes clear that the court accepted the Plaintiffs’ case substantially in full. Issues for Determination in this Appeal

Based on the issues argued before this Court, the matters for determination are:

whether the learned Sessions Court Judge erred in holding that the agreements dated 6.3.2017, 3.1.2017 and 16.3.2017 were invalid;

whether the learned Sessions Court Judge erred in treating the Malay Reservation land issue as materially affecting the legality and enforceability of the arrangements;

whether the learned Sessions Court Judge erred in rejecting the appellants’ attempt to characterise the 1st appellant as an investment company in a way that assisted their defence;

whether the learned Sessions Court Judge erred in rejecting the best endeavours defence;

whether the learned Sessions Court Judge erred in finding fraudulent misrepresentation;

whether the learned Sessions Court Judge erred in holding the 2nd appellant personally liable notwithstanding the separate legal entity doctrine; and

whether the winding up of the 1st appellant before delivery of the Sessions Court judgment, and the absence of leave under s 471 Companies Act 2016, require the judgment below to be set aside.

The applicable appellate principles are well known and, indeed, were invoked by the appellants themselves. In Vasudevan v T Damodaran & Anor [1981] 2 MLJ 150, the court reaffirmed that an appellate court should not lightly interfere with the findings below unless wrong principle or miscarriage of justice is shown. Likewise, in Gan Yok Chin & Anor v Lee Ing Chin & Ors [2004] 4 CLJ 309, the Federal Court emphasised that appellate interference is justified only where the trial court’s appreciation of the evidence is plainly wrong or judicially deficient.

I respectfully adopt those principles. This Court is not to conduct a fresh retrial merely because another view of the evidence might be available. The appellants must show a real appealable error.

The first substantive issue addressed by the learned Sessions

Court Judge was whether the three agreements dated 6.3.2017,

1.2017 and 16.3.2017 were void. This issue, in my judgment, goes to the root of the appeal because the entire defence mounted by the appellants was premised on the proposition that the agreements were valid commercial arrangements for the sale and management of Aquilaria or Gaharu trees and that the plaintiffs had simply entered into an investment-type venture carrying its own commercial risks. The learned Sessions Court Judge rejected that characterisation. Having reviewed the record and the reasoning below, I find no sufficient basis to interfere with that conclusion.

The learned Sessions Court Judge approached this issue by examining the ownership status and legal basis of the trees said to have been sold under the agreements. The court noted that the plaintiffs were provided only with certificates and not with proper underlying documentation capable of showing that the 1st defendant had a legally sustainable right over the trees in the manner represented. The learned judge also referred to the evidence of SD-1 that the 1st defendant did not see the need to register any lease or related land interest affecting the relevant sites. That factual matrix was plainly significant because the plaintiffs’ entire participation in the transaction depended on the assumption that the 1st defendant had real, legally supportable rights that could be transferred, managed, harvested and ultimately monetised.

The Sessions Court accepted the plaintiffs’ submission that in the absence of proper legal protection, the plaintiffs’ interests could be materially prejudiced. That concern was not fanciful. If the land on which the trees stood was later dealt with by third parties who were not privy to the plaintiffs’ agreements, the plaintiffs’ supposed interests could be rendered practically meaningless. The learned judge therefore concluded that the agreements suffered from uncertainty and referred to s 30 of the Contracts Act 1950 in support of that conclusion. The judge further relied on Saw Siew Tuan v Omicrast Manufacturers Sdn Bhd [2013] 6 MLJ 189, which recognises that where a fundamental ingredient of the bargain is insufficiently certain, the agreement may be void for uncertainty.

Before this Court, the appellants submit that the learned judge was wrong to focus on uncertainties associated with land-related arrangements because, according to them, the subject matter of the bargain was not land but trees. They also contend that the 1st appellant had “beneficial ownership” of the trees and that beneficial ownership is a recognised concept in law. In support, they rely on Borneo Housing Mortgage Finance Bhd v Time Engineering Bhd [1996] 2 MLJ 12 and IB Capital Sdn Bhd v Ivory Indah Sdn Bhd & Anor [2021] MLJU 1388.

I accept, without difficulty, that beneficial ownership is a recognised legal concept. But the appellants’ argument, with respect, overlooks the real issue. The question was never whether beneficial ownership exists in principle. The question was whether, on the facts of this case, the 1st appellant proved that it had the beneficial ownership and the corresponding legal capacity which it represented to the plaintiffs. The learned Sessions Court Judge answered that question in the negative, and I find that answer entirely open on the evidence. A recognised legal concept does not automatically translate into proof of entitlement on a given factual record.

In my view, the appellants’ repeated submission that the case concerns “trees and not land” is too simplistic. Rights to sell, manage, harvest and commercially exploit trees do not exist in total abstraction from the legal arrangements affecting the land on which the trees stand. The learned trial judge was fully entitled to examine whether the rights asserted by the 1st appellant were legally secure, practically exercisable, and capable of enforcement. The issue was not whether tree ownership and land ownership are always identical. The issue was whether the appellants had shown that the package of rights represented to the plaintiffs actually existed in a sufficiently certain and lawful form. The Sessions Court held that they had not. I see no appellate error in that approach.

I would add that the trial judge’s reasoning cannot fairly be reduced to a merely technical complaint about missing documents. The concern, properly understood, was far more fundamental: the legal foundation said to support the transaction was unstable. The plaintiffs were induced to pay real money for rights that, on the trial judge’s findings, were not shown to be anchored in a legally secure structure. That is not a minor contractual irregularity. It goes to the core of contractual validity and enforceability.

On appellate review, this Court does not ask whether another conclusion might have been possible. It asks whether the conclusion actually reached was plainly wrong. I am not persuaded that it was. The Sessions Court’s conclusion that the agreements were invalid was grounded in both legal principle and factual evaluation. That finding must therefore stand. Issue (b): Whether the Malay Reservation Land Issue Was Material

The second major issue considered by the Sessions Court was whether trees located on Malay Reservation land could lawfully be managed and/or leased by the 1st defendant in the manner asserted. This issue was of real significance because part of the appellants’ case before the trial court, and again before this Court, was that the legal status of the land should not affect the validity of the tree-related transactions. The learned Sessions Court Judge rejected that proposition. In my judgment, rightly so.

The learned Sessions Court Judge considered the relevant statutory restrictions under the Malay Reservation laws of Selangor and Kedah. The judge noted that dealings, leases and disposals contrary to those enactments could be void or otherwise ineffective. The learned judge further appreciated that the arrangements said to support the 1st defendant’s rights over the trees were affected by those statutory constraints. The court then referred to ss 24 and 57 of the Contracts Act 1950 and concluded that the relevant agreements were invalid because their object or consideration was unlawful, and/or because lawful performance was impossible. In reaching that conclusion, the learned judge referred to Taiping Recovery Sdn Bhd (d/h Taiping Securities Sdn Bhd – in liquidation) & Anor v NAA Holdings Sdn Bhd & Ors [2017] MLJU 707.

The appellants submit that this reasoning is unsound because the agreements were not land-sale agreements. They say the trial judge treated the transactions as though they were direct dealings in land, when in truth the agreements concerned only trees. They argue that the legal prohibitions associated with Malay Reservation land should therefore not have been decisive.

I am unable to agree. The critical question is not whether the written agreements purported on their face to transfer land. The critical question is whether the rights which the 1st appellant claimed to possess in relation to the trees depended upon underlying arrangements concerning land that were themselves legally problematic. On the evidence and the submissions accepted below, the answer was yes. If the 1st appellant’s asserted ability to control, manage, lease, harvest or deal with the trees depended on arrangements that ran afoul of the Malay Reservation regime, then the legal fragility of those arrangements directly undermined the rights said to exist over the trees. The learned Sessions Court Judge was entitled to regard that as fatal, or at the very least highly material.

It must be borne in mind that the plaintiffs’ complaint was not that every tree planted on Malay Reservation land can never be the subject of any commercial arrangement. Their complaint was that the specific arrangements relied upon by the defendants in this case did not confer the stable and lawful rights represented to them. The trial judge accepted that complaint. The appellants have not shown that the judge misdirected himself in law in doing so.

I also note that the learned Sessions Court Judge did not treat the Malay Reservation issue in isolation. It formed part of a broader analysis concerning legality, enforceability and impossibility of performance. In other words, the issue was not simply one of statutory formalism; it was one of whether the bargain as sold to the plaintiffs could lawfully and realistically be performed in the manner promised. That was a wholly proper inquiry.

In my view, the trial judge was entitled to conclude that the statutory restrictions materially affected the legal viability of the arrangements. The appellants’ attempt to isolate “trees” from the land-based legal context is not persuasive. The rights claimed in respect of the trees were not free-standing rights detached from the land regime. Accordingly, I uphold the Sessions Court’s conclusion on this issue. Issue (c): Whether the 1st Defendant Was Truly an Investment

The third issue addressed by the Sessions Court was whether the 1st defendant was an investment company in the sense suggested by the defence. Although this issue may appear, at first glance, to be less central than the other issues, it is not entirely unimportant because it goes to the way the defendants sought to characterise the nature of the transaction and, correspondingly, the level of risk allegedly assumed by the plaintiffs. The appellants’ broad position was that the plaintiffs entered into an investment-like venture and must bear the ordinary vicissitudes of that venture. The Sessions Court did not accept that framing.

The learned judge referred to the evidence of SD-1 in cross-examination, where SD-1 accepted that the 1st defendant’s nature of operation involved estate management and dealings in trees, plants and agricultural products. The learned judge also noted that the defendants failed to produce supporting corporate documents proving that the 1st defendant was, in truth, an investment company in the manner contended. That finding was not speculative. It was grounded in the evidence of the defendants’ own witness and the absence of documentary support for the label now pressed.

In my judgment, the importance of this issue lies not so much in the corporate label itself, but in what that label was being used to suggest. The appellants wished the court to regard the arrangements as part of a risk-bearing investment scheme such that non-realisation of returns, or delay in performance, would not readily translate into legal culpability. The Sessions Court was entitled to reject that framing where the underlying evidence did not support the proposition that the company operated in the manner now asserted.

Even if this issue is not independently decisive of the appeal, I find no basis to disturb the trial judge’s conclusion. It was a factual finding open on the evidence. Issue (d): Whether Best Endeavours Assisted the Appellants

The Sessions Court next considered whether the 1st defendant had exercised best endeavours. The learned judge held, first, that because the agreements had already been found invalid and contrary to law, the defendants could not rely on the contractual term of best endeavours as a shield. Secondly, the learned judge held that the defendants had not proved that best endeavours had in fact been exercised. In support of the legal treatment of such an obligation, the learned judge referred to Perbadanan Kemajuan Negeri Selangor v Selangor Country Club Sdn Bhd [2017] 2

The appellants submit that the learned judge failed to appreciate that best endeavours does not mean guaranteed success. I readily accept that proposition as a matter of general law. A party bound by a best endeavours obligation is not ordinarily guaranteeing the result itself. But that proposition, though correct, does not resolve the present appeal. The appellants’ difficulty is twofold.

First, as the Sessions Court correctly appreciated, a best endeavours clause cannot rescue an arrangement that is already legally defective at its foundation. If the rights which the 1st defendant claimed to possess were not legally secure, then the defendants could not respond to the plaintiffs’ complaint simply by saying that they had tried their best. One cannot cure a defective or unlawful legal foundation merely by effort.

Secondly, and independently of that point, the learned judge made a factual finding that best endeavours had not in fact been proved. That was a finding open to the trial court on the evidence. The trial judge was entitled to examine what concrete steps had actually been taken, whether those steps were timely, serious and effective, and whether the defendants had demonstrated sustained and genuine endeavour rather than a generalised assertion of effort. The judge was not satisfied that this had been shown.

On appeal, this Court is not to revisit that factual conclusion unless it is plainly unsustainable. I do not find that it is. The learned Sessions Court Judge’s treatment of the best endeavours point was both legally and factually sound. I therefore reject the appellants’ challenge on this issue. Issue (e): Whether Fraudulent Misrepresentation Was Proved

The fifth issue, and one of the most serious, concerns the finding of fraudulent misrepresentation. The learned Sessions Court Judge accepted the plaintiffs’ case that the 1st defendant, through the 2nd defendant and/or its employees and/or agents, deliberately concealed facts concerning the uncertainty and/or invalidity of the arrangements in order to induce the plaintiffs to enter into the agreements and pay substantial sums.

In approaching this issue, the learned judge referred to Golden Bond Sdn Bhd v Sabtra Sdn Bhd & Anor [2004] 7 MLJ 493, and the extract therein referring to Panatron Pte Ltd v Lee Cheow Lee & Anor [2001] SLR 405, as well as the classic authorities of Pasley v Freeman (1789) 3 TR 51, Derry v Peek (1889) 14 App Cas 337, and Bradford Building Society v Borders [1941] 2 All ER 205. The Sessions Court then set out the elements of fraudulent misrepresentation and held that they were satisfied.

The appellants say this was wrong. They contend that the case was wrongly transformed from a failed investment into a fraud action. They also argue that Golden Bond is distinguishable on its facts.

I am unable to agree. The respondents’ case was not merely that anticipated returns did not materialise. Their case was that they entered into the agreements and paid the sums in question because they believed the 1st appellant had the rights and status which it represented itself as having. That is a materially different complaint from saying merely that the venture turned out badly. The Sessions Court accepted that the plaintiffs were induced by false representations concerning the legal and practical footing of the arrangement.

It is true that Golden Bond involved its own factual matrix. But the legal principle for which it was cited remains pertinent. The question is whether a false representation of fact, made knowingly or recklessly, induced the other party to act to its detriment. The learned judge was satisfied that it did. The fact that the case at hand is not factually identical does not deprive the trial judge of the ability to rely on the legal principles there stated.

It is also significant that the trial judge was in the best position to assess the credibility of the witnesses. Fraudulent misrepresentation often turns not only on documentary content but on whether the court accepts one side’s explanation of the transaction over the other’s. An appellate court must be especially careful before overturning such evaluative findings. The appellants have not, in my view, shown a basis for doing so here.

In the circumstances, I uphold the Sessions Court’s conclusion that fraudulent misrepresentation was proved. Issue (f): Whether the 2nd Appellant Could Properly Be Held

On the question of separate legal personality, the learned Sessions Court Judge held that the 2nd defendant had full control over the 1st defendant’s decisions and financial affairs at all material times, and that the 1st defendant was used as an instrument of fraud to shield the 2nd defendant from personal liability. The court therefore lifted the corporate veil. In doing so, the learned judge referred to Panasonic Appliances Air-Conditioning (M) Sdn Bhd v Top Square Sdn Bhd (Shanmugam a/l Ramasamy & Ors, third parties) [2020] MLJU 2261, Chin Chee Keong v Toling Corporation (M) Sdn Bhd [2016] 6 CLJ 666, and Zaharen Zakaria v Redmax Sdn Bhd & other appeals [2016] 5 MLJ 91.

The appellants argue that the learned judge erred in piercing the corporate veil, stressing that mere status as director and shareholder cannot suffice. That proposition is correct as far as it goes. But it does not accurately characterise the reasoning below. The Sessions Court did not hold the 2nd defendant liable merely because of his office. It did so because it found, as a matter of fact, that he controlled the company and that the company was used as the vehicle or instrumentality through which the actionable conduct was carried out.

Those findings were open to the trial judge. This Court, sitting as an appellate court, is not to replace them merely because another view of the evidence is possible. The appellants have not shown that the findings on control, involvement and misuse of the corporate structure were plainly wrong. I therefore see no reason to interfere with the finding of personal liability against the 2nd appellant. Issue (g): The Winding Up Issue Under s 471 Companies Act 2016

I turn finally to the additional issue that arose only at the appellate stage. It is common ground that the 1st appellant was wound up on 27.11.2023 and that the Sessions Court judgment was delivered thereafter, on 25.09.2024. The appellants say that because the respondents did not obtain leave, including retrospective or nunc pro tunc leave under s 471 Companies Act 2016, the judgment below is invalid and cannot stand.

The appellants rely heavily on Tan Aik Ling v CT World Construction Sdn Bhd and another suit [2024] MLJU 2479, Dato’ Tanasegaran a/l Naguru & Ors v Suresh Kumar Rajadurai [2021] MLJU 1847, and Re Malaya bin Sibuku; ex parte Kaya Karisma Sdn Bhd [2021] 10 MLJ 118. They also emphasise that the respondents themselves at one point indicated they would seek the relevant sanction but did not ultimately do so.

The respondents submit that s 471 should not be applied mechanically to erase the result of a full trial. They say the purpose of the section is to protect the assets of the wound-up company and ensure orderly administration of the winding up, not to furnish a purely technical escape route from liability after adjudication. They rely on Mosbert Berhad (in liquidation) v Stella D’Cruz [1985] CLJU 47 and CGU Insurance Bhd v Asean Security Paper Mills Sdn Bhd & Other Appeals [2002] 2 CLJ. They also point out that no execution has been taken against the company’s assets and that any actual recovery remains subject to the insolvency regime.

I accept that s 471 is an important statutory safeguard and that ordinarily leave is required where proceedings are to continue against a wound-up company. I also accept that retrospective or nunc pro tunc leave may serve as a mechanism of regularisation, as recognised in Tan Aik Ling.

However, I do not accept that every judgment entered without such leave must automatically be treated as void and erased regardless of context. The object of s 471 must be kept in view. As the respondents rightly argue, the provision is directed at the protection of the company’s assets and the orderly administration of the winding up.

In the present case, there is no evidence that the respondents have taken execution steps against the 1st appellant’s assets, sought priority over other creditors, or otherwise interfered with the winding up. They remain bound by the insolvency regime. That significantly weakens the argument that the mischief s 471 is aimed at preventing has already arisen in a way requiring the judgment to be expunged.

This was also not a case where the respondents knowingly commenced fresh proceedings against a wound-up company in defiance of the statute. The case had already gone through a full trial on the merits. The winding up issue surfaced later. In that context, I agree that it would be disproportionate to erase the result of a full evidentiary trial solely on this ground.

Nor do I read Tan Aik Ling as laying down an inflexible rule that every judgment entered without prior leave must always be set aside. It recognises retrospective leave as a means of regularisation, but does not deprive the court of the ability to consider the justice and posture of the case before it.

I also do not accept the appellants’ submission that the respondents thereby unequivocally abandoned their rights. Their failure to ultimately file the contemplated leave application may have procedural significance, but in the circumstances of this case it does not inexorably compel the setting aside of a judgment obtained after full trial.

I therefore hold that the winding up issue does not justify appellate interference with the Sessions Court judgment. Any implications of the winding up may more appropriately arise at the enforcement and proof-of-debt stage, not by nullifying the adjudication itself in the circumstances of this appeal.

For all the reasons set out above, and following closely the structure and reasoning sequence of the Sessions Court judgment while applying the proper appellate lens, I find that the appellants have failed to show that the learned Sessions Court Judge misdirected himself in law or fact, or that the decision appealed against is plainly wrong.

I hold that the learned Sessions Court Judge did not err in concluding that the agreements were invalid, that the Malay Reservation issue was material, that the best endeavours argument did not assist the appellants, that fraudulent misrepresentation had been proved, and that the 2nd appellant could properly be held personally liable. I further hold that the additional objection founded on the winding up of the 1st appellant and the absence of leave under s 471 Companies Act 2016 does not justify setting aside the judgment below.

Accordingly, the appeal is dismissed. The judgment of the Sessions Court dated 25.09.2024 is affirmed and maintained.

Having regard to the full appeal, the written submissions, the reply submissions, and the further submissions on the winding up issue, I award global costs of RM5,000.00 to the respondents. Dated this 20th Mei 2026 -sgd- ………………………………….. Asmah binti Musa Pesuruhjaya Kehakiman Mahkamah Tinggi Malaya Mahkamah Tinggi Shah Alam Counsel for Plaintiff : Mr. Magita Hari Mogan Messrs. Mogan & Co Both Defendants unrepresented.