Gan Boon What v Chan Cheh Shin (WA-22NCC-585-11/2022)

(I) Plaintiffs’ claim against the Defendant

The Plaintiffs contend that they had invested in various funds that were allegedly operated by the Defendant. The details of the alleged funds are as follows: -

CMON

(ii) GT Dollar

(iii) Chemopower 1

(iv) Asean Dividend Fund

Fadamas

(vi) CVM

(vii) Maldives Strategy Bond

(viii) Australia China

The Plaintiff further claims that the following alleged representations were made by the Defendant to them:

He identified these funds as having the potential to increase in value.

(ii) These private funds and private companies purportedly possess good business potential.

(iii) These private funds and private companies require funds to grow and will eventually be publicly listed.

(iv) Those who invest in these companies and private funds will obtain lucrative profits once these entities are listed on a public stock exchange.

That the monies invested by the Plaintiffs shall be used to invest in companies which have good potential to be listed on a stock 2 exchange. This companies include CMON, Chemopower, Fulda, Palau Capital and GT Dollar.

(vi) Once listed these companies will generate profits as the shares value will increase.

(vii) That the Plaintiffs will also receive dividends from these companies.

(viii) That the investments will be safe and secure as the value of the shares will increase.

(ix) That the Defendant shall guarantee the said investments.

That the Defendant was an award-winning investor specializing in investment and financial matters.

It is alleged that: -

3.1 That the Defendant is the director of Palau Capital Private Limited and Fulda (Malaysia) Bhd (hereinafter referred to as “Palau Capital” and “Fulda”).

3.2 Palau Capital and Fulda run the activities of marketing of investment products and manage investments.

3.3 Palau Capital and Fulda collects monies from individuals such as the Plaintiffs and will be utilized for the said investments. 3

3.4 The said entities also undertake marketing activities, seminars and manage investment portfolios.

3.5 That the said entities have an online system that manages these investments and tracts investments for their clients. Palau Capital shall act as the collecting agent of all investments and manage all investments.

3.6 The Defendant is the directing and controlling mind of Fulda.

3.7 That Fulda collects monies for itself and for Palau Capital.

3.8 That the Defendant is a former director of GT Dollar Pte Ltd (hereinafter referred to as “GT Dollar”).

3.9 GT Dollar is a company involved in information technology that creates and markets systems related to cashless payments and/or online payments / e-wallets and crypto-currency. The Plaintiffs had also been induced to purchase debit cards that were not usable.

3.10 That the Defendant is the directing and controlling mind of GT Dollar. 4

3.11 That the Defendant had wrongly sold his shares in GT Dollar to Zhang Bauluo without the knowledge or prior notice to the Plaintiffs. Payments made to Messrs Liew, Julia Tun & Hari

3.12 That payments will be made to the above firm where the monies will be transferred to the Defendant and/or Palau Capital’s account

3.13 That the company known as CMON Limited (hereinafter referred to as “CMON”) is an entity based in Hong Kong and is involved in the business of fantasy board games of a software company.

3.14 That Defendant alleged CMON shall be listed on the Hong Kong stock exchange and shall be profitable 5

The Plaintiffs further allege that the said representations were false and fraudulently made to cause the said Plaintiffs to agree to invest or pay substantial sums of monies to Fulda, Palau Capital, Messrs Liew, Julia Tun & Hari, GT Dollar, Asia Dividend Fund and Chemopower.

The Plaintiffs also claim that: -

the Defendant did breach his duty of care / trust to them by failing to manage the investment sums and failed to pay the promised returns and dividends from the said investments.

(ii) The funds allegedly paid for the purposes of investments in Chemopower, Fulda or GT Dollar was not utilized appropriately and in some instances were paid wrongly to third parties such as Messrs Liew, Julia Tun & Hari to the sum of SGD 350,000.00.

The Plaintiffs further claims that the Defendant was unlawfully enriched to the sum of RM 14, 583, 236.34, USD 2, 898, 227.31 and SGD 154,000.00 that were allegedly paid by the Plaintiffs to Fulda, Palau 6 Capital, Messrs Liew, Julia Tun & Hari GT Dollar, Chemopower and Asia Dividend Fund.

For the above reasons, the Plaintiffs claims that the Defendant should be directed to refund the sums invested by the Plaintiffs.

The Plaintiffs also claims that the Defendant had wrongfully utilised the companies to commit fraud. The corporate veil should therefore be lifted and liability be imposed against the Defendant.

Initially the Plaintiffs had instituted proceedings against the Defendant and Zhang Bauluo, Palau Capital Pte Ltd, Koh Chee Chong, Fulda (Malaysia) Bhd, Gt Dollar Pte Ltd and Messrs Liew, Julia Tun & Hari. The claim against the other Defendants was withdrawn and the Plaintiff only continued the claim solely against the Defendant.

Defendant’s Defence

The Defendant denies that he had introduced or marketed any of the alleged investments as claimed by the Plaintiffs. 7

That each of the Plaintiffs did enter into separate agreements for each of the investments and that they are aware of the risk of the said investments.

That the Defendant had resigned from the board of Fulda on 24-4-

He was only involved in seminars presented by Fulda but did not make any said representations concerning investments in any of the companies as suggested by the Plaintiffs. He only made representations concerning the GT Power, Chemopower, Fadamas and Asean Dividend Fund. He did not introduce CVM, Maldives Strategy Board and Australia China Investments. He also denies owing any duty of care to any of the Plaintiffs.

That the Plaintiffs had each entered into separate agreements concerning the purchase of the shares. He also alleges that none of the Plaintiffs were involved in CMON or participated in CMON. He denies that he was involved in Palau Capital and any payments made to the said entity were based on the terms agreed to by the Plaintiffs. 8

That the Plaintiffs had undertaken their own due diligence before the investments were made by them. He also alleges that the claim was not particularized in detail and he is facing an unfair and ambiguous claim that should be dismissed. His counsel suggests that the claims for fraudulent misrepresentation are so ambiguous and uncertain that the whole claim should be dismissed in toto.

The Defendant alternatively suggests that the monies paid by the Plaintiffs were banked into the accounts of Fulda, Palau Capital, GT Dollar Pte Ltd or Messrs Liew, Julia, Tun & Hari. It was not banked into the accounts of the Defendant and not received by him. He did not receive any of the sums as alleged by the Plaintiffs.

He also alleges that he did resign from Fulda on 24-4-2017 and was never appointed as a director of GT Dollar. He also suggests that even if this Court accepts that there were investments undertaken by the Plaintiffs into these companies, the claim is allegedly premature as the dividends are not due as per the terms of the agreements entered. 9

The companies search undertaken on the relevant entities shows that:-

The Defendant is a shareholder of Fulda (Malaysia) Berhad. The other shareholder is one Kok Chee Chong. The Defendant was a director of the company until he resigned on 24-4-2017.

(ii) The Defendant is a director of Palau Capital Pte Ltd since 18- 4-2017. The sole shareholder of the said company is Palau Asset Management Inc.

(iii) The Defendant is a former shareholder of GT Dollar Pte Ltd.

(iv) GT Payment Ltd holds 1.56 million shares in GT Payment (M) Sdn Bhd.

The Defendant is a shareholder Chemopower Technology Pte Ltd. B. ISSUES TO BE DETERMINED BY THIS COURT

The following issues need to be determined by this Court: -

Whether the Plaintiffs have proved their claims that the Defendant had committed fraudulent misrepresentation as alleged in the Amended Statement of Claim? 10

(ii) Whether the Defendant had been unjustly enriched at the expense of the Plaintiffs?

(iii) Whether the corporate veil of the above-mentioned companies should be lifted and liability be imposed against the said Defendant?

(iv) Whether the Defendant should be directed to pay back the sums invested by the Plaintiffs as he was not authorized to sell / market or promote any investment scheme or raise any capital or sell shares to the public under Malaysian law. C. TRIAL

The Plaintiff did produce 7 witnesses to prove their case against the Defendant. The following witnesses were produced: - Plaintiffs’ Witnesses 19.1 Liew Siew Ting PW1 19.2 Chin Guat Khim PW2 19.3 Chan Fook Hing PW3 19.4 Gan Boon What PW4 19.5 You Siew Ching PW5 11

19.6 Cheah Sin Chye PW6 19.7 Koh Chee Chong

The Defendant appeared himself (as DW1) and refuted the Plaintiffs’ claim. D.

Applicable Legal Principles Burden of Proof 21. It is trite law that the burden of proof to prove the claim as pleaded lies solely with the Plaintiff.

I refer to Letchumanan Chettiar Alagappan (as executor to SL Alameloo Achi (deceased)) & Anor v Secure Plantation Sdn Bhd [2017] 5 CLJ 418 where Jeffrey Tan FCJ held: - “[50] In International Times & Ors v. Leong Ho Yuen [1980] CLJU 31; [1980] 1 LNS 31; [1980] 2 MLJ 86, Salleh Abas FCJ (as he then was), delivering the judgment of the court, said that the first sense 12 of the expression "burden of proof" in s. 101 is the burden to establish the case which rests throughout on the party who asserts the affirmative of the issue, while the second sense of the expression "burden of proof" in s. 102 is the burden to adduce evidence: For the purpose of this appeal it is necessary to bear in mind the distinction between the two senses in which the expressions burden of proof and onus of proof are used (Nanji & Co v. Jatashankar Dossa & Ors AIR 1961 SC 1474-1478 and Raghavamma v. Chenchamma AIR 1964 SC 136-143). The first sense, signified by the expression burden of proof such as referred to in s. 101 of the Evidence Act is the burden of establishing a case and this rests throughout the trial on the party who asserts the affirmative of the issue. The appellants in the present appeal relied on justification and fair comment. Therefore, the burden of proving these defences rests entirely upon them (Gatley on Libel and Slander 7th Ed, paras 351 and 354). The second sense referred to as onus of proof, on the other hand, relates to the responsibility of adducing evidence in order to discharge the burden of proof. The onus 13 as opposed to burden is not stable and constantly shifts during the trial from one side to the other according to the scale of evidence and other preponderates. Such shifting is one continuous process in the evaluation of evidence. According to ss. 102 and 103 of the Evidence Act, if the party with whom this onus lies whether initially or subsequently as a result of its shifting does not give any or further evidence or gives evidence which is not sufficient, such party must fail. It is this onus that we are concerned with in the present appeal. [51] There is an essential distinction between burden of proof and onus of proof, burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts (Addagada Raghavamma & Anor v. Addagada Chenchamma & Anor 1964 SCR

933). [52] The "burden of proof" in s. 101 is the burden to establish a case which rests throughout on the party who asserts the affirmative of the issue. The "burden of proof" in s. 102 is the burden to adduce evidence, to make out or rebut the claim. The "burden of proof" in s. 102 shifts from one side to the other according to the weight of the 14 evidence. To differentiate the sense used, the "burden of proof" in s. 101 is "burden of proof", while the "burden of proof" in ss. 102 and 103 is dubbed "onus of proof". In some jurisdictions, the s. "burden of proof" is labelled "legal burden" while the s. 102 burden of proof" is referred to as "evidential burden". [53] In Ranchhodbhai v. Babuhai AIR 1982 Guj 308, P Desai and S Majmudar thus illustrated the "burden of proof" to establish the case which never shifts and the shifting burden to adduce evidence in the context of ss. 101 and 102 of the Indian Evidence Act which are identical to ss. 101 and 102 of the Evidence Act: It is also well to bear in mind that there is an essential distinction between "burden of proof" and "onus of proof"; burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence (see Raghavamma v. Chenchamma, AIR 1964 SC 136). Burden of proof has two distinct meanings, namely, (i) the burden of proof as a matter of law and pleadings, and (ii) the burden of proof as a matter of adducing evidence. Section 101 15 of the Evidence Act deals with the former and s. 102 of the Evidence Act with the latter. The first remains constant but the second shifts. In a claim application, therefore, the burden of proof, in the first sense, certainly lies on the claimant. If he examines himself and his witness, if any, and if the evidence, tested in the light of the principles set out above, is found to be acceptable, the onus shifts on the tortfeasor to prove those circumstances, if any, which dislodge the assertions of the claimants. If the tortfeasor fails to prove before the court any fact or circumstance which tends to affect the evidence led by the claimant, the claimant would be entitled to ask the court to hold that he has established the case and, on that basis, to make a just award it would thus appear, that though the legal burden, - the burden as a matter of law and pleadings - remains constant on the claimant, the burden as a matter of adducing evidence changes often times as the trial of the claim petition progresses. [54] Section 101(1) provides that "Whoever desires any court to give judgment as to any legal right or liability, dependent on the existence of facts which he asserts, must prove that those facts exist". 16 "Section 101 states that the initial burden of proving a prima facie case in his favour is cast on the plaintiff..." (Woodroffe and Amir Ali Law of Evidence 19th edn, vol. 3 at p. 3194). Illustration (b) to s. puts it beyond doubt that the "burden of proof" rests throughout on the plaintiff. Section 102 provides that "the burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side". "The initial onus of proving the case is always on the plaintiff" (Sarkar Law of Evidence 16th edn at 1593). Illustration (a) to s. 102 puts it beyond doubt that a plaintiff has the initial onus of proof. [55] But "when (the plaintiff) gives such evidence as will support a prima facie case, the onus shifts on to the defendant, to adduce rebutting evidence to meet the case made out by the plaintiff. As the case continues to develop, the onus may shift back again to the plaintiff. It is not easy to decide at what particular stage, in the course of the evidence, the onus shifts from one side to the other. When after the entire evidence has been adduced, the tribunal feels it cannot make up its mind as to which of the versions is true, it will hold that the party on whom the burden lies has not discharged the burden, but if it 17 has, on the evidence, no difficulty arriving at a definite conclusion, then the burden of proof on the pleading recedes into the background" (Woodroffe and Amir Ali, supra, at p. 3194; see also Abrath v. North Eastern Rly at 452). "... the onus of proof may shift... but the question must ultimately arise whether the person who is bound to prove the affirmative of the issue... has discharged... that burden" (Jane Wakelin v. The London And South Western Railway Company (1986) 12 App Cas 41; (1887) 12 App Cas per Lord Halsbury LC) or proved "his case sufficiently to justify a judgment in his favour" (Stoney v. Eastbourne R D Council[1927] 1 Ch 367, 397 per Lord Hanworth MR). [56] Thus, a plaintiff has both the burden of proof as well as the initial onus of proof. In Britestone Pte Ltd v. Smith & Associates Far East Ltd [2007] 4 SLR 855, the Singapore Court of Appeal per VK Rajah JCA, delivering the judgment of the court, explained that at the start of the plaintiff's case the burden of proof and the onus of proof coincide: ... at the start of the plaintiff's case, the legal burden of proving the existence of any relevant fact that the plaintiff must prove 18 and the evidential burden of some (not inherently incredible) evidence of the existence of such fact coincide. Upon adduction of that evidence, the evidential burden shifts to the defendant, as the case may be, to adduce some evidence in rebuttal. If no evidence in rebuttal is adduced, the court may conclude from the evidence of the defendant. If, on the other hand, evidence in rebuttal is adduced, the evidential burden shifts back to the plaintiff. If, ultimately, the evidential burden comes to rest on the defendant, the legal burden of proof of the relevant fact would have been discharged by the plaintiff. The legal burden of proof - a permanent and enduring burden - does not shift. A party who has the legal burden of proof on any issue must discharge it throughout. Sometimes, the legal burden is spoken of, inaccurately, as "shifting"; but what is truly meant is that another issue has been engaged, on which the opposite party bears the legal burden of proof. [57] The rule is that "the onus of proof of any particular fact lies on the party who alleges it, not on him who denies it; et incumbit probation qui decit, non qui negat, Actori incibit probation... The plaintiff is bound in the first instance, to show 19 a prima facie case, and if he leaves it imperfect, the court will not assist him. Hence the maxim potior est condition defendantis. A plaintiff cannot obviously advantage himself by the weakness of the defence. A plaintiff's case must stand or fall upon the evidence adduced by him. When, however, the defendant, or either litigant party, instead of denying what is alleged against him, relies on some new matter which, if true, is an answer to it, the burden of proof changes sides; and he, in his turn, is bound to show a prima facie case at least and, if he leaves it imperfect, the court will not assist him. Reus excipendo fit actor " (Woodroffe and Amir Ali, supra, vol. 3 at pp. 3190-3191).” Standard of Proof – Balance of Probabilities

It is also trite that for a claim based on fraud in a civil claim, this Court will determine this based on a balance of probabilities – whether it is more than likely that the Defendant did commit the alleged wrong as alleged by the Plaintiffs. I refer to Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 5 MLJ 1 where the Federal Court held: - 20 “[49] With respect, we are inclined to agree with learned counsel for the plaintiff that the correct principle to apply is as explained in In re B (Children). It is this: that at law there are only two standards of proof, namely, beyond reasonable doubt for criminal cases while it is on the balance of probabilities for civil cases. As such even if fraud is the subject in a civil claim the standard of proof is on the balance of probabilities. There is no third standard. And ‘(N)either the seriousness of the allegation nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts’. … [52] We therefore reiterate that we agree and accept the rationale in In re B (Children) that in a civil claim even when fraud is alleged the civil standard of proof, that is, on the balance of probabilities, should apply. ...” Determination of Facts – Whether the Defendant did make the said representations

In this case, the Defendant concedes that the monies were paid to Fulda, Palau Capital and GT Dollar Pte Ltd. However, the Defendant’s 21 correctly points out that this is not sufficient to prove the claim against him. It must be shown that the Defendant did make the said representations as alleged in the Amended Statement of Claim.

On the elements needed to prove a claim for fraudulent misrepresentation as alleged by the Plaintiffs, I refer to the judgment of the Court of Appeal in Abdul Razak Datuk Abu Samah v Shah Alam Properties Sdn Bhd & Anor [1999] 3 CLJ 231, Nexgram Land Sdn Bhd v Spacious Glory Sdn Bhd [2022] CLJU 1417 and the judgment of the Federal Court in Admiral Cove Development Sdn Bhd v Balakrishnan Devaraj & Anor [2011] 9 CLJ 133, Kheng Chwee Lian v Wong Tak Thong [1983] CLJ Rep 195 and Takako Sakao v Ng Pek Yuen & Anor [2010] 1 CLJ 381.

Gopal Sri Ram FCJ in Takako Sakao v Ng Pek Yuen (supra) held:- “[24] The "fraud" of which Lord Halsbury spoke in Salomon v. A Salomon & Co Ltd includes equitable fraud. In the recent Australian case of The Bell Group Ltd (In liquidation) v. Westpac Banking Corporation (No 9) [2008] WASC 239; 70 ACSR 1, Owen J 22 discussed the distinction between equitable fraud and fraud at common law. His Honour said:

One of the leading Australian texts on equitable principles is R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (4th ed 2002). When I refer to this text from time to time in these reasons I will do so by the shortened phrase 'Meagher, Gummow and Lehane'. At [12-050] the authors set out a non-exhaustive list of factual and legal situations that have traditionally been treated as species of equitable fraud. They include:

misrepresentation by persons under an obligation to exercise skill and discharge reliance and trust (for example in fiduciary relationships), and inducements to contract or otherwise for the representee to act to his detriment in reliance on the representation; 23

the use of power to procure a bargain or gift, resulting in disadvantage to the other party;

conflict of interest against a duty arising from a fiduciary relationship; and

agreements which are bona fide between the parties but in fraud of third persons.

All of these categories can be seen, to varying degrees, in the claims brought by the plaintiffs in the equitable fraud causes of action. The last category is of particular interest because it encompasses the imposition and deceit species referred to as the Earl of Chesterfield fourth limb. I will come to that doctrine shortly.

22.2.1.2. Equitable fraud and common law fraud compared

The term common law fraud is often used to describe the tort of deceit, or the making of fraudulent misrepresentations. The tort of deceit is said to encompass cases where the defendant knowingly recklessly makes a 24 false statement, with the intention that another will rely on it to his or her detriment.

Derry v. Peek [1889] UKHL 1; [1889] 14 App Cas 337 illustrates the principle that honesty is a duty of universal obligation, existing independently of contract or fiduciary obligations. In Derry v. Peek, the House of Lords rejected the argument that a claim of negligence would support an action for fraudulent misrepresentation. In so doing, their Lordships set the standard for common law fraud. Lord Herschell said, at 374, that to succeed, a plaintiff must prove 'that a false representation has been made (1) knowingly, or (2) without belief in its truth or (3) recklessly, careless whether it be true or false'. In other words, there must be a lack of an honest belief in the truth of the representation. In Armitage v. Nurse [1997] EWCA Civ 1279; [1998] Ch 241; [1997] 3 WLR 1046, Millett LJ discussed the meaning of 'actual fraud' in the context of an exemption clause. At 1053, his Lordship described actual fraud as connoting, at least, 'an intention on the part of the trustee to pursue a particular course of action, either knowing that it is contrary to the interests of the beneficiaries 25 or being recklessly indifferent whether it is contrary to their interests or not.

This, then, marks out a significant difference between common law fraud and equitable fraud. The latter does not require proof of an actual intention to deceive. To summarise, a plea of fraud at common law will not succeed absent proof of an intention to deceive. Such an intention is not an ingredient of equitable fraud which is, essentially speaking, unconscionable conduct in circumstances where there exists or is implied or imposed a relationship of trust or confidence. [25] In Frame v. Smith [1987] 42 DLR (4th) 81, Wilson J usefully identified some of the principal features of such a relationship. Her ladyship said: Relationships in which a fiduciary obligation have been imposed seem to possess three general characteristics: 26

the fiduciary has scope for the exercise of some discretion or power.

the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal or practical interests.

the beneficiary is peculiarly vulnerable to, or at the mercy of, the fiduciary holding the discretion or power. Very little need be said about the first characteristic except this, that unless such a discretion or power is present there is no need for a superadded obligation to restrict the damaging use of the discretion or power: see, for example, RH Deacon & Co Ltd v. Varga, DuDomaine; Third Party [1972] 30 DLR (3d) 653; affirmed 41 DLR (3d) 767. With respect to the second characteristic it is, of course, the fact that the power or discretion may be used to affect the beneficiary in a damaging way that makes the imposition of a fiduciary duty necessary. Indeed, fiduciary duties are frequently imposed on those who are capable of affecting not 27 only the legal interests of the beneficiary but also the beneficiary's vital non-legal or 'practical' interests. For example, it is generally conceded that a director is in a fiduciary relationship to the corporation. But the corporation's interest which is protected by the fiduciary duty is not confined to an interest in the property of the corporation but extends to non-legal, practical interests in the financial well-being of the corporation and perhaps to even more intangible practical interests such as the corporation's public image and reputation. Another example is found in cases of undue influence where a fiduciary uses a power over the beneficiary to obtain money at the expense of the beneficiary. The beneficiary's interest in such a case is a pecuniary interest. Finally, in Reading v. AG [1951] AC 507 (HL), a British soldier who was unable (sic) to smuggle items past Egyptian guards because these guards excused uniformed soldiers from their inspections was held to be a fiduciary. The Crown's interest was a 'practical' or even a 'moral' one, namely that its uniform should not be used in corrupt ways. The soldier-fiduciary had no power to change the legal position of the British Crown, so how could the Crown's legal interests have been affected by the soldier's action? The same can be said of the Crown's 28 interest in AG v. Goddard [1929] 98 LJKB 743, where the Crown was able to recover bribes which had been paid to its employee, a sergeant in the metropolitan police. In my view, what was protected in that case was not a 'legal' interest but a vital and substantial 'practical' interest. The third characteristic of relationships in which a fiduciary duty has been imposed is the element of vulnerability. This vulnerability arises from the inability of the beneficiary (despite his or her best efforts) to prevent the injurious exercise of the power or discretion combined with the grave inadequacy or absence of other legal or practical remedies to redress the wrongful exercise of the discretion or power. Because of the requirement of vulnerability of the beneficiary at the hands of the fiduciary, fiduciary obligations are seldom present in dealings of experienced businessmen of similar bargaining strength acting at arm's length: see, for example, Jirna Ltd v. Mister Donut of Canada Ltd [1971] 22 DLR (3d) 639; affirmed 40 DLR (3d) 303. The law takes the position that such individuals are perfectly capable of agreeing as to the scope of the discretion or power to be exercised, ie, any 'vulnerability' 29 could have been prevented through the more prudent exercise of their bargaining power and the remedies for the wrongful exercise or abuse of that discretion or power, namely damages, are adequate in such a case. [26] An instance of equitable fraud analogous to the present case is Jones v. Lipman [1962] 1 All ER 442. In that case, the first defendant after agreeing to sell his property to the plaintiffs for £5,250 sold and transferred it to a company of which he and his solicitors' clerk were shareholders and directors for £3,000. The plaintiffs sued for and obtained a decree of specific performance against the company of which Russell J (later Lord Russel of Killowen) said: The defendant company is the creature of the defendant, a device and a sham, a mask which he holds before his face in an attempt to avoid recognition by the eye of equity - an equitable remedy is rightly to be granted directly against the creature in such circumstances. 30 In Sunrise Sdn Bhd v. First Profile (M) Sdn Bhd & Anor [1997] 1 CLJ 529, Chong Siew Fai (CJ, Sabah & Sarawak) said that in: cases where there are signs of separate personalities of companies being used to enable persons to evade their contractual obligations or duties, the court would disregard the notional separateness of the companies. His lordship was there, of course, referring to the legal basis upon which judicial intervention has occurred in cases such as Jones v. Lipman. And there you have the authority to support the trial judge's approach.”

In this case, it is important to note that on the issue of the said representations, the witness statements from 6 of the Plaintiffs’ witnesses, filed in this Court, only states the following: - “Sometime in 2014 (or Sometime in 2015), I was invited through friends to listen to the talk given by the Defendant, whereby he identified several funds that have the potential to increase in value..” 31 “On the representations and / or inducement and / or recommendation of the Defendant, I invested in some of the products mentioned above respectively.” The above appears in the evidence of Liew Siew Ting, Chin Guat Khim, Chan Fook Hing, Gan Boon What, You Siew Ching, and Cheah Sin Chye.

What is lacking in the evidence in chief of the said witnesses and in any of the testimonies of the said witnesses is the evidence of what was actually uttered by the Defendant at the seminar to them. The witness statements of these witnesses did not particularize the statements or representations that were allegedly uttered by the Defendant. Instead, as shown earlier, what is only mentioned in their witness statements is that they were induced to purchase the shares or investment scheme after listening to the Defendant’s seminar.

I note however during cross-examination all of the Plaintiffs confirmed that all of their actions were undertaken based on the instructions of the Defendant. They contend that payments were made to 32 Fulda, GT Payment, Maldives Asset Management and to Palau Capital were made based on the instructions of the Defendant.

I have also considered the evidence presented by Kok Chee Chong. He was a director and a shareholder of Fulda (Malaysia) Sdn Bhd. The Companies Commission of Malaysia report also shows that he remains a director of the said company. The said report also shows that there are only two shareholders of the said company, Kok Chee Chong and the Defendant.

Kok Chee Chong’s witness statement suggests that the culprit for the alleged wrongs done against the Plaintiff should be borne solely by the Defendant. He claims that Fulda (Malaysia) Sdn Bhd was set up at the insistence or suggestion of the Defendant with the purpose to sell and promote the sale of the shares held by the Defendant to the Malaysian public.

Kok Chee Chong also claims that the Defendant did make the alleged representations to him and to the Plaintiffs. This appears in his answers to questions 5 to 9 of his witness statement. He further claims 33 that the alleged representations were uttered to the Plaintiffs during the seminars undertaken by the Defendant at Fulda’s premises and that all payments have been made to the Defendant.

He further claims that the evidence of such payments and related documents of Fulda was seized by the police and he does not have any documents to prove the same. He also claims that the blame should be on the shoulders of the Defendant. Essentially, he himself and Fulda were victims of the scheme perpetrated by the Defendant.

I do not accept substantial parts of Kok Chee Chong’s testimony. When queried by this Court, I found that Kok Chee Chong did not actually identify in detail what was uttered by the Defendant to the Plaintiffs during the seminars. Despite what was recorded as his answer to questions number 7 to 13 of his witness statements, Kok Chee Chong did not the exact details what was actually uttered by the Defendant to the Plaintiffs. He acknowledged that he was not present at the seminar and did not know what was represented by the Defendant to the Plaintiffs. 34

I also find that Kok Chee Chong did not know the contents of his own witness statement and that he only read the witness statement for the first time on the date of the trial. When questioned by the Defendant’s solicitors, he had spuriously and repeatedly shuffled the answers contained in his witness statement. This occurred when he was asked simple questions by counsel for the Defendant. His testimony and his demeanour show that the evidence contained in the witness statements were not prepared by him or at least contained very little input on his behalf.

I also note of his involvement in Maldives Asset Management Ltd. The website produced in the bundle of documents shows that he was a key player in the said organization and was mentioned to be the CEO and founder of Maldives Asset Management. He did attempt to feign ignorance when cross-examined by the Defendant’s counsel on his involvement and alleges that all blame should be put to the Defendant alone.

I do not accept the said allegation and find that he was also part of the scheme promoted by Fulda. After all he was also a shareholder and director of Fulda and remains on the board of the said company. His involvement in Maldives Asset Management also shows that he is far from 35 innocent. I therefore do not find his evidence to be a credible and I put very little weight on his testimony.

It is also important that this Court notes that substantial parts of the Plaintiffs’ allegations were also denied by the Defendant. This appears in his answer to questions 4 to 74 of his witness statement. He denied making such representations to the Plaintiffs as claimed in their Amended Statement of Claim.

I also note that some of the Plaintiffs have also undertaken their own presentation to third parties and potential purchasers or investors. This can be seen in the evidence of Chan Fook Hing who had prepared his own seminar and acted as an agent of Fulda (Malaysia) Bhd.

This indicates that some of the said Plaintiffs would also be implicated in promoting the proposed investment to third parties and to some of the Plaintiffs as well. Some of the Plaintiffs were also named as agents and received commissions for attracting investors to the scheme promoted by Fulda. Unfortunately, the Defendant did not identify exactly which Plaintiffs were involved in the promotion of the said scheme to any 36 other Plaintiffs or any third party. This was also not the defence pursued by the Defendant during the course of the trial. If the Defendant had wished to do so, I would have expected questions to be pursued to the Plaintiffs’ witnesses during the trial. There is also no credible evidence put forth by the Defendant to support this defence by the Defendant.

Despite the said deficiencies in the Plaintiffs’ case, I find that the Defendant did admit to the following: -

He did attend and gave a seminar to potential clients of Fulda (Malaysia) Sdn Bhd in 2014.

(ii) The purpose of the said seminar is to sell the shares in Chemopower Pte Ltd and GT Dollar Pte Ltd held by him. At the said material time he held 30,000,000 shares in GT Dollar Pte Ltd and 20,000 shares in Chemopower. He also admits that he had promoted or introduced the Asean Dividend Fund and Fadamas at these seminars. See the following from the witness statement of the Defendant: - 37 Q4 A: I have certainly not introduced a number of private companies which will be subsequently listed. I owned shares in GT Dollar Pte Ltd and Chemopower Pte Ltd. These were my own shares. I was looking to sell these shares. Q5 A: …However, some of the Plaintiffs may have attended the seminars which was held by Fulda Malaysia Bhd to help me sell my shares in Chemopower Pte Ltd and GT Dollar Pte Ltd. During these seminars when questions are asked about Palau Capital Ptd Ltd of which I am a director. I had told the attendees that Palau Capital Pte Ltd is a holding company, and it invests in other company’s shares. At that time, I also said that Palau Capital Pte Ltd is also involved in ADF and Fadamas… Q8 A: ...I can only speak for the shares which I owned. There is nothing to manage these shares. I had also cautioned the persons who attended the seminars that both the 38 shares in Chemopower Pte Ltd and GT Dollar Pte Ltd had their risks and the attendees need to do their own diligence. Q10 A: …This is a share transaction. The Plaintiffs who had bought my shares in Chemopower Pte Ltd ought to know that there are risks…. Q11 A: I deny any form of fraudulent misrepresentation. I owned shares in GT Dollar Pte Ltd and Chemopower Pte Ltd which I had wanted to sell. Fulda Malaysia Bhd was the marketing arm in Malaysia. As such, there was no fraudulent misrepresentation. Q21 A: I only used Fulda Malaysia Bhd to sell my shares in GT Dollar Pte Ltd and Chemopower Pte Ltd... Q34 A: None of the Plaintiffs had paid me for the purchase of the GT Dollar shares. That is the reason in 2018 I sold off my GT Dollar shares. Now during this trial, I found out that the Plaintiffs are claiming that they had paid 39 companies not related to me for the purchase of GT Dollar shares. I do not have any knowledge of these matters. There was a marketing arm in Malaysia. This company was known as Fulda Malaysia Bhd. I was a director of this company until April 2017. This company was aware that I had wanted to sell my shares in GT Dollar Pte Ltd. Fulda Malaysia Bhd had organized a seminar and some of the Plaintiffs may have attended these seminars. After these seminars, personnel from Fulda Malaysia would meet up with the attendees.

(iii) He is the Director Palau Capital Pte Ltd as such the Defendant involved with Asean Dividend Fund and Fadamas. See the following from the witness statement of the Defendant:- Q5 A: … During these seminars when questions are asked about Palau Capital Pte Ltd of which I am a director, I had told the attendees that Palau Capital Pte Ltd is a 40 holding company and it invests in other company’s shares. At the time, I also said that Palau Capital Pte Ltd is also involved in ADF and Fadamas.

(iv) He presented the future plans of GT Dollar Pte Ltd and Chemopower Pte Ltd. See the following from the witness statement of the Defendant:- Q6 A: I only spoke about the future plans of GT Dollar Pte Ltd and Chemopower Pte Ltd at the seminars organized by Fulda Malaysia Bhd. I said that there were plans to list GT Dollar Pte Ltd and Chemopower Pte Ltd in the stock exchange. I did not speak of any other company. I also told the attendees to do their own due diligence.

He told those attending the said seminars that there is a possibility that the value of the GT Dollar and Chemopower shares will increase depending on the market. See: 41 Q7 A: “I did say that there was a “possibility” but I did not say “high possibility” as it would all depend on the market.”

(vi) That he was a director and shareholder of Fulda (Malaysia) Sdn Bhd and Fulda (Malaysia) Sdn Bhd had organized a seminar concerning the shares in GT Dollar and Chemopower shares as well as Asean Dividend Fund and Fadamas.

(vii) After the seminar, employees from Fulda (Malaysia) Sdn Bhd did meet with the attendees.

(viii) He notified those attending that the purchase of the said shares is not without risk and they should undertake their own due diligence.

(ix) He did explain who Palau Asset Management and what did they do. See the following: - 42 Q13 A: I am not a director of Palau Asset Management. When I am asked about other companies, I do speak about Palau Asset Management and what it does. However, I have not marketed any of its products to the Plaintiffs.

That he did subsequently sell the GT Dollar Pte Ltd shares to a third party on 16-7-2018. Q43 A: Yes, I did sell my shares in GT Dollar Pte Ltd on 16.07.2018. This is because I had not received any money from any of the Plaintiffs for the purchase of my shares in GT Dollar.

(xi) That some of the monies that were raised as capital for Chemopower were not paid to the said company. Q54 A: It is up to me to decide if I want to use the money to develop Chemopower Pte Ltd’s business. In some instances, I had transferred some of the money to Chemopower Pte Ltd. 43

(xii) Fulda (Malaysia) Sdn Bhd is his agent used to sell the shares in Chempower and GT Dollar. Q55 A: …My set of the agreements is in Fulda Malaysia Bhd as they were the marketing arm. As I had resigned as a director, I do not have access to these agreements. Fulda Malaysia has the full set of agreements.

(xiii) That the Defendant was a former investment banker.

Furthermore, I find that the other Plaintiffs evidence have shown to me that the said Defendant did represent to them that the investments promoted by Fulda and the Defendant will be profitable and that the said companies will be listed in the stock exchange. Therefore, in addition to what I have said earlier, I find that the Plaintiffs have proven that the Defendant did make the representations and this was relied upon by the Plaintiffs when they make the investments as suggested and promoted by the Defendant and Fulda.

I note that the Defendant maintains that he did not receive any payment for the shares from Fulda or any third party. This allegedly 44 caused him to sell his shares in GT Dollar to a third party. He stresses that he had warned the Plaintiffs of the risks involved in buying the said shares.

This was particularly stressed by counsel for the Defendant when he cross-examined the Plaintiffs witnesses who confirmed that all decisions were made by them after substantial time had passed after the seminar undertaken by the Defendant and that they had undertaken the purchase or payment to these entities based on their own decision. Nonetheless, I find that the Defendant did not complaint to Fulda or to his co-director and shareholder, why the said payments were not made to him. Neither did the Defendant show any evidence that he queried as to the progress of the promotions undertaken by Fulda. This suggests that in most likelihood he did receive the said payments from Fulda.

I also refer to the documents produced by the Plaintiffs. In the documents issued by Fulda, Fulda was clearly mentioned as the appointed marketing agent for the Defendant and Palau Asset Management Inc. Payments made to Palau Capital also appears in the statements issued to the Plaintiffs informing the amount of monies invested in the scheme promoted by the Defendant through Fulda. 45

As such, the transaction records of Fulda shows that the company is the appointed marketing agent to distribute the products promoted by Mr Chan Cheh Shin and Palau Asset Management Inc.

The banking documents of Palau Capital Pte Ltd with ICBC in Singapore also shows that the Defendant did receive payments from the said company. The Defendant did receive the sum of USD 1.3 million, USD 68,000.00, USD 320, 330.00, SGD 45,000.00 and USD 360, 510.00 from Palau Capital Pte Ltd. This the Defendant suggests was for payment for his services to the said company but this is not substantiated by any invoice or any proof of such service made on behalf of the said company. I also note that Palau Capital Pte Ltd did pay GT Dollar the sum of SGD 1,000, 000.00 on 17-5-2018.

Therefore, I find that the documentary evidence before me shows that Fulda did act as promoters of the sale of shares in GT Dollar and Chemopower held by the Defendant to the Plaintiffs This also extends to promotion of the Asean Dividend Fund and Fadamas and the eventual 46 participation to these funds by the Plaintiffs based on the presentation of the Defendant during these seminar and his participation in this scheme.

(ii) Application of the law to the Facts - Decision of this Court on the Allegation of Fraudulent Misrepresentation against the Defendant 49. As stated earlier, it is trite that for the Plaintiffs successfully sue the Defendant for the tort of deceit, they must prove:

That the Defendant made a representation that is false.

(ii) That the Defendant knew that the presentation was untrue, or the Defendant was reckless as to its truth.

(iii) That the Defendant intended that the representation would induce the Plaintiffs to act or refrain from acting.

(iv) That the Claimant suffered loss.

This could be seen in the decision of English Court of Appeal in Eco 3 Capital Ltd and others v Ludsin Overseas Ltd [2013] EWCA Civ 413 and can be seen in the Malaysian cases of Victor Cham & Anor v Loh Bee Tuan [2006] 5 MLJ 359 and Sim Thong Realty Sdn Bhd v Teh Kim Dar [2003] 3 CLJ 227. 47

I again refer to the judgment of Gopal Sri Ram FCJ in Takako Sakao (supra): - “[24] …The term common law fraud is often used to describe the tort of deceit, or the making of fraudulent misrepresentations. The tort of deceit is said to encompass cases where the defendant knowingly or recklessly makes a false statement, with the intention that another will rely on it to his or her detriment... …In Armitage v. Nurse [1997] EWCA Civ 1279; [1998] Ch 241; [1997] 3 WLR 1046, Millett LJ discussed the meaning of 'actual fraud' in the context of an exemption clause. At p 1053, His Lordship described actual fraud as connoting, at least, 'an intention on the part of the trustee to pursue a particular course of action, either knowing that it is contrary to the interests of the beneficiaries or being recklessly indifferent whether it is contrary to their interests or not'…”

This is important is it will be the basis to determine whether the Defendant is guilty of fraudulent misrepresentation / tort of deceit as claimed by the Plaintiffs. 48

It is also instructive that I consider Section 17 of the Contracts Act 1950 which has helpfully defined fraud as follows: - " ‘Fraud' includes any of the following acts committed by a party to a contract or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contracts: a) the suggestion, as to a fact, of that which is not true by one who does not believe it to be true; b) the active concealment of a fact by one having knowledge or belief of the fact; c) a promise made without any intention of performing it; d) any other act fitted to deceive; and e) any such act or omission as the law specially declares to be fraudulent."

Applying the above test, I find that the Plaintiffs have proven on the balance of probabilities the following: -

The Defendant had utilized the services of Fulda (Malaysia) Sdn Bhd to promote and sell the shares or investments in GT Dollar Pte Ltd and Chemopower. 49

(ii) The Defendant did represent to the Plaintiffs that the investments in the Asean Dividend Fund, Fadamas, GT Dollar and Chemopower will be profitable.

(iii) The Defendant did represent that there were risks involved but it is probable that the companies will be listed and the shares will be valuable in the future. This will likely create profits for any investors in the scheme.

(iv) That the Defendant informed the Plaintiffs are to deal with Fulda (Malaysia) Berhad as his agents and to follow the instructions from the said company concerning how payments are to be made and to who they should be made to.

That the Defendant did represent to the Plaintiffs that by participating in the investments by purchasing the shares in the companies owned by him or investments in the said entities, they could partake in the upside when the said companies were listed on the stock exchange. 50

(vi) That the monies paid will be utilized to purchase the shares or investments in Chemopower and GT Dollar as well as investments in Asean Dividend Fund and Fadamas.

The above findings are based on the evidence contained in the Plaintiffs’ testimony as well as those stated in the Defendant’s witness statement which I have detailed in the previous paragraphs and the documentary evidence before me. On this issue, I prefer the evidence of the Plaintiff’s witnesses that explains that the Defendant did make false representations concerning the investments in Asean Dividend Fund, Fadamas, GT Dollar and Chemopower.

I note that the Defendant contends that there is no evidence that he received any of the sums paid by the Plaintiffs for the said investments. He also claims that the sums paid by the Plaintiffs were not without risk, that they were well informed of the risks and that the said investors / purchasers were told to undertake their own due diligence before undertaking the said investments. 51

The Defendant did not produce copies of these alleged terms or agreements that were said to have been presented by Fulda or Palau to these Plaintiffs. However, I find that the Defendant was well conversant with the clauses that appear in these agreements and have particularized the terms of the agreements for the investments made for GT Dollar, Chemopower, Asean Dividend Fund and Fadamas bond. In his witness statement, he suggests that he had access to these agreements as he was a director of Fulda and has since not been able to have access to these agreements.

It is however unfortunate that counsel for the Plaintiffs did not cross examine the Defendant concerning the terms of the said agreements and how did he have access to the same. I therefore cannot make any finding as to whether the Defendant was party to the creation of the said agreements.

Nevertheless, this does mean that the Defendant’s contention is correct. He himself failed to produce the agreements at trial to support his contention that the Plaintiffs were well aware of the risks of the transactions and that these transactions were genuine. To convince this Court that his contentions are correct, the Defendant should therefore 52 produce the said agreements. After all, the burden of proof to show that the Plaintiffs knew of the risks and are bound by the terms of such agreements lies with the Defendant.

The next question would then be whether the said representations were false and were relied on by the Plaintiffs.

Considering all the facts and evidence before me, I find that the Defendant is guilty of fraudulent misrepresentation / tort of deceit as claimed by the Plaintiff. I find that the substantial part of the Defendant’s representations was false, and he did not have any basis to support the representations made to the Plaintiffs. I find that the Defendant did make the representation that the (i) monies paid will be used to invest in the said entities and funds; (ii) that these companies / funds were profitable and could be listed on a stock exchange; and (iii) that the Plaintiffs will benefit from the said investments. I also find that the Plaintiffs have proven that they did rely on the said representations and would not have invested if not for the representations made by the Defendant. 53

I further find that he did not have any basis to show that the (i) the said monies paid by the Plaintiffs would have been utilized to purchase or invest in GT Dollar or Chemopower or the Asean Dividend Fund or Fadamas; (ii) that the said companies have the potential to be listed on a stock exchange; and (iii) that the shares purchased in the companies or invested in will be profitable for the Plaintiffs.

There is no evidence produced by the Defendant to justify his representation that these two companies were profitable and were suitable to be listed on any stock exchange at the material time. If the Defendant representations were to be believed or were made honestly, he would have surely been prepared with adequate data analysis concerning the profitability of the said companies, the products or services supplied by the said companies and how the share price of these two companies were either undervalued or could be valuable in the future.

As a former investment banker, one expects such analysis would have been prepared by the Defendant and presented to this Court to justify his position concerning these two companies. The Defendant admits that he had discussed the (i) future plans of Asean Dividend Fund, Fadamas, GT Dollar Pte Ltd and Chemopower Pte Ltd; and (ii) there were 54 plans to list GT Dollar Pte Ltd and Chemopower and that the said funds would be profitable. This was presented to the Plaintiffs during the seminar to promote the shares of these two companies and investments. He allegedly caveats the said representations by stating that he did tell the investors of the need for them to undertake their own due diligence. However, I do not accept the said contention and find that this is merely an afterthought raised by the Defendant. If this is to be believed, this would have surely been put into writing and explained clearly by the Defendant explicitly to the investors.

I therefore find that his representation was false or at least was made recklessly without any belief in their truth. If these representations were made honestly and were true, surely his statements would have been backed up with sufficient data on profitability, the 2 companies’ business plans / investment funds and the plans to list the two entities. The defences raised by the Defendant are merely bare averments not supported by any documentary evidence and I find cannot be believed by this Court.

The Defendant also contends that the said representations did not actually cause the Plaintiffs to purchase or invest in Asean Dividend Fund, 55 Fadamas, Chemopower or GT Dollar. This is allegedly because the said Plaintiffs did not immediately purchase the shares or invested in the said companies as the alleged representations were made in 2014. The Plaintiffs had paid Fulda and the third parties only in early 2015 to late 2018 for the said shares.

The Defendant also contends that he should not be liable as he left Fulda in mid-2017. He resigned as a director of Fulda on 24-4-2017 and alleges that he was no longer involved in the said company. These transactions were allegedly undertaken independently by the said Plaintiffs and were not caused by the representations made by the Defendant.

Nevertheless, I do not accept the position put forth by the Defendant. As he did admit in his witness statement, he was aware that the sales representatives or representatives of Fulda did continue to follow up with those attending his seminar for the purposes of canvassing investors based on the representations made by the Defendant. This was clearly intended to persuade these individuals to purchase or participate in the scheme. Therefore, the purchase of the shares or investments were caused by the seminar and the representation made by the Defendant. 56

I therefore do not accept that the said representations did not have any effect on the decision-making process of the Plaintiff. I find that the Plaintiffs only agreed to invest based on the representations made by the Defendant.

The Defendant also contends that the said representations are not binding as these constitute mere opinions of what could occur in the future. Counsel correctly points out that as a general rule, only representation of existing facts could only constitute a claim for the tort of deceit. However, as with all general rules there are always exceptions and the facts of this case fall within categories of cases where the exception applies.

I refer to the leading case of Esso Petroleum Co Ltd v Mardon [1976] QB 801 where Lord Denning MR explained: - “Now I would quite agree with Mr. Ross-Munro that it was not a warranty - in this sense - that it did not guarantee that the throughput would be 200,000 gallons. But, nevertheless, it was a forecast made by a party - Esso - who had special knowledge and skill. It was the 57 yardstick (the e.a.c.) by which they measured the worth of a filling station. They knew the facts. They knew the traffic in the town. They knew the throughput of comparable stations. They had much experience and expertise at their disposal. They were in a much better position than Mr. Mardon to make a forecast. It seems to me that if such a person makes a forecast - intending that the other should act upon it and he does act upon it-it can well be interpreted as a warranty that the forecast is sound and reliable in this sense that they made it with reasonable care and skill. It is just as if Esso said to Mr. Mardon: "Our forecast of throughput is 200,000 gallons. You can rely upon it as being a sound forecast of what the service station should do. The rent is calculated on that footing". If the forecast turned out to be an unsound forecast, such as no person of skill or experience should have made, there is a breach of warranty. Just as there is a breach of warranty when a forecast is made "expected to load" by a certain date if the maker has no reasonable grounds for it, see Sunday v. Keighley (1922) 27 Commonwealth Cases 296 or bunkers "expected 600/700 tons", The Pantanassa (1958) 2 Lloyd 449 at pages 455-7 by Mr. Justice 58 Diplock. It is very different from the Hew Zealand case where the land had never been used as a sheep-farm and both parties were equally able to form an opinion as to its carrying capacity - see particularly 1927 Appeal Cases at pages 183-4. In the present case it seems to me that there was a warranty that the forecast was sound, that is, Esso made it with reasonable care and skill. That warranty was broken. Most negligently Esso made a "fatal error" in the forecast they stated to Mr. Mardon, and on which he took the tenancy. For this they are liable in damages. The Judge, however declined to find a warranty. So I must go further. Assuming that there was no warranty, the question arises whether Esso are liable for negligent mis-statement under the doctrine of Hedley Byrne v. Heller & Partners Ltd.(1964) Appeal Gases 465. It has been suggested that Hedley Byrne cannot be used so as to impose liability for negligent pre-contractual statements: and that, in a pre-contract situation, the remedy (at any rate before the 1967 Act) was only in warranty or nothing. Thus in Hedley Byrne itself Lord Reid said (at page 483): 59 "Where there is a contract there is no difficulty as regards the contracting parties: the question is whether there is a warranty". And in Oleificio Zuccu v. Northern Sales (1965) 2 Lloyds Reports 196 Mr. Justice McNair said that: "... as at present advised, I consider the submission advanced by the buyers - that the ruling in Hedley Byrne applies as between contracting parties - is without foundation". As against these, I took a different view in McInerney v. Lloyds Bank

1 Lloyds 241, when I said at page 253: "... If one person, by a negligent mis-statement, induces another to enter into a contract - with himself or a third person-he may be liable in damages". …… It seems to me that Hedley Byrne, properly understood, covers this particular proposition: If a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another - be it advice, information or opinion - with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct, and 60 that the advice, information or opinion is reliable. If he negligently gives unsound advice or misleading information or expresses an erroneous opinion, and thereby induces the other aide into a contract with him, he is liable in damages. This proposition is in line with what I said in Candler v. Crane Christmas & Co. (1951) 2 King's Bench at pages 179-180, which was approved by the majority of the Privy Council in Mutual Life & Citizens Assurance Limited v. Evatt

Appeal Cases 793. And the Judges of the Commonwealth have shown themselves quite ready to apply Hedley Byrne between contracting parties; see in Canada Sealand v. Ocean Cement (1973) 33 Dominion Law Reports (3rd) 625; and New Zealand Capital Motors v. Beecham (1975) 1 New Zealand Law Reports 576. Applying this principle, it is plain that Esso professed to have - and did in fact have - special knowledge or skill in estimating the throughput of a filling station. They made the representation - they forecast a throughput of 200,000 gallons - intending to induce Mr. Mardon to enter into a tenancy on the faith of it. They made it negligently. It was a "fatal error". And thereby induced Mr. Mardon to enter into a contract of tenancy that was disastrous to him. For this misrepresentation they are liable in damages.” 61

Lamin Mohd Yunus PCA adopted the above in Kluang Wood Products Sdn Bhd & Anor v Hong Leong Finance Bhd & Anor [1999] 1 CLJ 1, where he held: - “In relation to statements made in pre-contractual negotiations, if a contracting party is under a duty of care in making such statements, a breach of that duty may lead to liability in tort for negligence. Thus in Esso Petroleum Co. Ltd v. Mardon [1976] 2 All ER 5 CA where the plaintiffs' servant holding himself out as having special expertise made a negligent representation in circumstances which gave rise to the duty to take reasonable care to see that the representation was correct, and the duty of care existed during the precontractual negotiations and survived the making of the written contract, the plaintiffs were held liable in tort of negligence. In our present case, the learned trial judge, finding that Hong Leong, through Pang, had represented to Kluang Wood that the availability of the end-finance was a certainty and that the first drawdown would be in the first quarter of 1984, and noting that no end-finance at all was provided, posed the question whether Pang had been negligent in making the representations, and alluded to the three elements necessary to establish the existence of a duty of care as propounded in Charlesworth & Percy on Negligence 8th Edn. p. 83 which read: 62 The elements, which normally are essentials, in order to establish the existence of such a duty (i.e. duty of care), are:

it (the advice or information given) must concern a business or professional transaction, the nature of which makes clear the "gravity of the inquiry and the importance and influence attached to the answer

the informant either realises or ought to have realised that he was being trusted as a matter of importance to give advice or express an opinion or disclose the best information known to him, since his statement was likely to be the basis upon which the recipient intended to act; and

in all the circumstances it was reasonable for the recipient to act on such advice, opinion or information. (brackets added) The learned trial judge then found

that the statements made concerned a business transaction; 63

that Pang as the Chief Manager of Hong Leong, Southern Region, realised that he was being entrusted to give all necessary information on which Kluang Wood could act, and

that, in the circumstances of this case, it was "not unreasonable" that Chew had acted on the statements resulting, as events turned out, to the detriment of Kluang Wood. (see pp. 92 and 93 of the appeal record.) From the above, it is implicitly clear that the learned trial judge found Pang negligent in making the statements. An action for damages lies in respect of a misstatement which was negligently made thereby causing pecuniary loss to a person relying on such statement unless responsibility is expressly disclaimed in making the statement: Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465 HL. In that case, Lord Morris of Borth-y-Gest after considering the extent of liability that the making of negligent misstatement attached to such professionals as an accountant, a solicitor or a doctor, continued (p. 495): I can see no difference of principle in the case of a banker. If someone who was not a customer of a bank made a formal approach to the bank with a definite request that the bank would 64 give him deliberate advice as to certain financial matters of a nature with which the bank ordinarily dealt the bank would be under no obligation to accede to the request: if, however, they undertook, though gratuitously, to give deliberate advice (I exclude what I might call casual and perfunctory conversations) they would be under a duty to exercise reasonable care in giving it. They would be liable if they were negligent although, there being no consideration, no enforceable contractual relationship was created. Box v. Midland Bank Ltd [1979] 2 Llyod's Rep 391 which applied the Hedley Byrne principle (as the ratio in Hedley Byrne v. Heller, supra, is commonly known) contains certain salient features that bore comparable similarity to those in the instant appeal before us. ……..Applying the Hedley Byrne principle, the bank was therefore held liable. In his judgment, Lloyd J remarked (p. 398 right col.): The Hedley Byrne principle is not limited to negligent advice. It covers negligent statements generally including pre-contractual statements of the kind which grounded liability in Esso Petroleum Co. Ltd v. Mardon [1967] QB 801 CA. The Hedley Byrne principle was applied in our courts in Neogh Soo Oh & Ors. V. G. Rethinasamy [1983] CLJ 663and Chin Sin Motor Works Sdn. Bhd. and Anor v. Arosa Development Sdn. Bhd. and 65 Anor [1992] 1 MLJ 23. In the latter case, the appeal to the Supreme Court was, as far as my research went, withdrawn.”

I accept that the Defendant did resign from Fulda on 24-4-2017. Nevertheless, he remained as a shareholder of the said company and did not stop the said company or issue any notice to the public stating that the said company did not have any capacity to act on his behalf. He admits that he had used Fulda to market the sale of his shares in Chemopower and GT Dollar and promote the investment funds referred to earlier. If he is to be believed, he would have surely put a stop to the marketing exercise undertaken by Fulda and would have informed the general public that he no longer associates himself with the company. This was not undertaken by the said Defendant.

Furthermore, as a former director of Fulda, I find that he should have been aware of the activities of Fulda in 2014 to early 2017. I find that he has allowed the company to continue to promote the investment scheme and the said of the shares in GT Power and Chemopower as well as the investments in Asean Dividend Fund and Fadamas. Therefore, he is bound by the actions of the said company. 66

This would extend to the payments made by the Plaintiffs to third parties as suggested by Fulda and its agent. I believe that the Plaintiffs would not have made payments to entities such as Palau Capital or Palau Asset Management if not for the representation by the Defendant and their belief in what was said by the Defendant. Even if the Defendant did not receive the payments, as he now alleges, I am surprised that he did not raise any issue with his co-shareholder in the company at the material time and was happy to continue with the said arrangement. As I said he remained a shareholder until today and has not shown any action to distance himself away from Fulda or any of the related entities.

I do not however extend the above liability to payments made for purposes other than those stated earlier. This will therefore not extend to payments made concerning Maldives, CVM and Australia China investments. As long as the payments were made for the investments in Chemopower, GT Dollar, Fadamas and Asean Dividend Fund then the Defendant should be directed to compensate the Plaintiffs for their losses.

I do however find that the payments made by the Plaintiffs to Messrs Liew, Julia Tun & Hari and some to Maldives Asset Management, Palau Capital and Palau Assets were paid for the purposes of the said 67 transactions relating to the related investment and purchase of shares referred to earlier. This appears in the table prepared by the solicitors for the Defendant who had helpfully identified that the said transactions were undertaken for the purposes of the said investments in Asean Dividend Fund, Fadamas, Chemopower and GT Dollar shares (see Bundle marked as X-2).

For the aforementioned reasons, I find that the Plaintiffs have proved their case for the tort of deceit against the Defendant relating to the investment scheme with regard to the shares / investments in Chemopower, Fadamas, Asean Dividend Fund and GT Dollar. The said representations were false or at the very least made recklessly by the Defendant and as a result the Plaintiffs decided to invest. The Plaintiffs have also shown to this Court that they did suffer losses as a result of the said investments made.

The evidence before me shows that the Defendant did make the representations that had caused the Plaintiffs to eventually agree to invest in those companies and those investment schemes. I also find that the payments made by the Plaintiffs to Palau Capital, Palau Asset Management and Maldives Asset Management that were paid for 68 purposes of investments in the Asean Dividend Fund, Fadamas, GT Dollar and Chemopower are binding on the Defendant.

On the balance of probabilities, I find that the Plaintiff have proven their claim that the Defendant did make the alleged representations pertaining to the shares or investments in Asean Dividend Fund, Fadamas, GT Dollar and Chemopower that was promoted in the said seminars undertaken by the said Defendant.

(ii) Whether the Defendant had been unjustly enriched at the expense of the Plaintiffs?

On the issue of unjust enrichment, I opine that there is no need for this Court to decide on this issue as that is not an essential requirement for the tort of deceit.

As I have stated earlier, the Defendant did make the said fraudulent representations to the Plaintiffs concerning Chemopower and GT Dollar shares / investments as well as Fadamas and Asean Dividend Fund. 69

Therefore, the Defendant should compensate the Plaintiffs for the losses suffered by them.

(iii) Whether the corporate veil of the above-mentioned companies should be lifted and liability be imposed against the said Defendant?

I also opine that the corporate veil of the entities where the monies were paid need not be lifted to impose liability against the Plaintiffs. Fulda (Malaysia) Sdn Bhd was the appointed agent of the Defendant and should therefore be liable for their actions.

The allegation that the Defendant did not receive payments from these entities, does not mean that he should not be held responsible for these losses. The tort of deceit does not require evidence that the Defendant had obtained any profits or was enriched as a result of the said tort. What has to be proven is that the Plaintiffs did suffer damages as a result of the Defendant’s representation. 70

I further refer to the decision of the Federal Court in Goh Soon Ann v Sandvik Malaysia Sdn Bhd [1984] 1 MLJ 121 where the issue of the creation of agency was considered. In that case, Seah FJ stated: - “We now turn to consider the law. Some 120 years ago Lord Cranworth said in Pole v. Leask [1863] 33 LJ Ch 155 at 161: “No one can become the agent of another person except by the will of that other person.” In Garnac Grain Co. Incorp. v. H.M.F. Faure & Fairclough Ltd. [1968] AC 1130 Lord Pearson said at page 1137: “The law to be applied is the law relating to the creation of an agency relationship... The relationship of principal and agent can only be established by the consent of the principal and the agent. They will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognise it themselves and even if they have professed to disclaim it, as in ex parte Delhasse [1878] 7 Ch D 511. But the consent must have been given by each of them, either expressly or by implication from their words and conduct. Primarily one looks to what they said and did at the time of the alleged creation of the agency. Earlier words and conduct may afford evidence of a course of dealing in existence at that time 71 and may be taken into account more generally as historical background. Later words and conduct may have some bearing, though likely to be less important. As to the conduct of the relationship, the question to be asked is: What is it that the supposed agent is alleged to have done on behalf of the supposed principal?”

I refer to sections 135, 139,140 and 179 of the Contracts Act 1950 as well as the Court of Appeal in Darahman bin Ibrahim & Ors v Majlis Mesyuarat Kerajaan Negeri Perlis & Ors [2008] 4 MLJ 309 where Raus Sharif JCA (as he then was) held:- “[122] It is said that, "The essential characteristic of an agent is that he is invested with a legal power to alter his principal's legal relations with third parties; the principal is under a correlative liability to have his legal relations altered" (Dowrick 17 MLR 36; and Reynolds 94 LQR 225). No formality is required to appoint an agent. Indeed, Gopal Sri Ram JCA, delivering the judgment of the Court of Appeal in KGN Jaya Sdn Bhd v. Pan Reliance Sdn Bhd [1996] 2 CLJ 611 at 616, aptly said as follows: Further, Part X of the Contracts Act 1950, which contains the relevant provisions on agency does not contain any 72 requirement that the appointment of an agent or sub-agent has to be in writing or be evidenced in writing. Hence the appointment may be express or implied, that is to say, it may be gathered from the facts and circumstances of a case and from the conduct of the parties. [123] In reality, an agent may be appointed orally. Such an appointment is considered good and effective (Liu Wing Ngai t/a Kam Wah Ultrasonic Engineering Co. v. Lui Kok Wai t/a Almac Machinery [1997] 1 SLR 559; and Heard v. Pilley [1869] 4 Ch App 548).”

I refer to the judgment of the Court of Appeal in T & TT Enterprise Sdn Bhd v Lembaga Pembangunan dan Lindungan Tanah [2009] 2 CLJ 160 where Low Hop Bing JCA stated: - “[18] Section 179 renders a principal liable for the act of his agent. As between the principal and third persons, the contract or act of the agent is one which is binding on the principal: see the commentary on s. 226 (equipollent to our s. 179 ) Pollock and Mulla 12th ed, Indian Contracts and Specific Relief Acts, p. 2290. 73 (see also Bryant, Powis and Bryant Ltd, supra, per Lord MacNaghten at p. 180). [19] In order to successfully invoke the law contained in s. 226 in India and in our s. 179, it is incumbent on the plaintiff to establish that the defendant is in fact the principal, failing which, the defendant cannot be made liable therefor: see Watteau v. Fenwick [1893] 1 QB 346 HC per Wills J.”

Also refer to Choo Ah Kow v Yeow Yew Thiam & Anor [1989] 1 CLJ Rep 14 and Asma Baizura Mohamad Omar & Anor v Pengiran Awang Daud Awang Putra & Anor [2022] CLJU 1757.

If the Defendant believes that his agent did not pay him the sums that were solicited from the Plaintiffs, then he is entitled to institute his own claims against his agent. That does not prevent the Plaintiffs from claiming the losses that they have suffered after relying on the alleged representations. 74

(iv) Whether the Defendant should be directed to pay back the sums invested by the Plaintiffs as he was not authorized to sell / market or promote any investment scheme or raise any capital or sell shares to the public under Malaysian law.

I also find that the Defendant’s activity in promoting the investment in Asean Dividend Fund, Fadamas, Chemopower and GT Dollar contravenes section 58 of the Capital Markets and Services Act 2007 (“CMSA”). I reproduce relevant parts of the said legislation: -

No person shall whether as a principal or agent, carry on a business in any regulated activity or hold himself out as carrying on such business unless he is the holder of a Capital Markets Services Licence or is a registered person.

Subsection (1) shall not apply to the persons or classes of persons as specified in Schedule 3. 75 Section 2 - Interpretation "regulated activity" means any of the types of regulated activities specified in Part 1 of Schedule 2; "securities" means-

debentures, stocks or bonds issued or proposed to be issued by any government;

shares in or debentures of, a body corporate or an unincorporated body; or

units in a unit trust scheme or prescribed investments, and includes any right, option or interest in respect thereof.

92.