1. ) Ko Byoung Soo v 1. ) Heng Hup Metal Sdn Bhd (WA-22NCC-616-12/2020)

KO BYOUNG SOO

HAN KYUNG JA

KO SUNG WAN (PASPORT NO: M79679868) PLAINTIFFS

HENG HUP METAL SDN BHD

PERFECT SL RESOURCES SDN BHD

LEAD WIZARD SDN BHD

INTERCEDAR INDUSTRY (M) SDN BHD

SIA KOK CHIN

LOW HOCK SOON

SINGARA VELAN A/L THANDAVARAYAN

TAN LEH KIAH (NRIC NO: 511227-02-5099) DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] It is never easy to establish an oral contract. It is even more difficult to prove the existence of the oral contract when there are existing agreements which encapsulate terms which are inconsistent with the oral contract. Can a party be permitted to deny or assert a different contract from the one that was executed and for which it had in fact proceeded to perform on the grounds of duress, coercion or undue influence? Can a contract be set aside for unconscionability? Can a contracting party be precluded from insisting on its pre-emption rights stipulated in a contract based on laches, acquiescence and or estoppel by convention? These are the issues dealt with in this judgment delivered after full trial. [2] For the record, the Plaintiffs had on 29.3.2021 by consent, allowed the 3rd and 8th Defendants to be struck out as parties to the present action. Further, on 21.5.2021, this Court had also struck out the Plaintiffs’ claim against the 7th Defendant. Thus, when the trial proceeded for this action, the Plaintiffs’ claims were only against the 1st, 2nd, 4th, 5th and 6th Defendants. Background Facts [3] The 1st Plaintiff, at 42 years old, came to Malaysia and founded the 4th Defendant on 3.7.1992 upon the grant of the Pioneer Status from MIDA. Upon obtaining the requisite licences and approvals from the Department of Environment, the 4th Defendant began operations in 1994 in the lead recycling plant business where it purchased used batteries, extracted the lead components therein and processed them into lead ingot for resale to the commodities market. The nature of the business is such that it requires large quantity of raw materials from its suppliers of at least 1,600 metric tons to ensure sustainability of its business. [4] Prior to the events giving rise to this case, the Plaintiffs, in particular, the 1st Plaintiff (PW1) and his son, Koh Kyung Hwan (PW3), were the prime movers of the 4th Defendant (‘Intercedar’). The 2nd Plaintiff, Han Kyung Ja (PW2) and the 3rd Plaintiff, Ko Sung Hwan (‘Ko’) are the 1st Plaintiff’s wife and son respectively. Together, the Plaintiffs were the majority shareholders and directors of the 4th Defendant. [5] The 1st Defendant (‘Seng Hup’) is a major player in the supply of battery scraps and have been supplying raw materials to the 4th Defendant since its incorporation year of 2008. [6] The events leading to the present action began after the 4th Defendant had to upgrade its equipment and machinery in and around 2008-2009 in line with the Department of Environment requirements. As a result of the upgrades, the 4th Defendant fell into financial difficulties. It owed substantial sums to its various suppliers, including the 1st Defendant which limited its supply of the battery scrap it needed. In fact, in 2013, the 4th Defendant even had to face a Winding up Petition from one of its suppliers, Image Harvest Sdn. Bhd. [7] Following this, the Plaintiffs and the 4th Defendant were pushed into seeking ‘funding’ or ‘financing’ (‘the Fund Raising Initiatives’) to keep the 4th Defendant afloat. In this regard, it looked to various private parties during the period from September 2011 to June 2012 for financial assistance, namely:

Asia Power Steel Industries Sdn. Bhd., circa Sep 2011, for a loan of RM 6 million with a repayment plus profit-sharing arrangement;

AAA Transactions Sdn. Bhd., circa Apr-Jun 2012, for a loan RM 8,532,000.00 secured by a pledge of 69.48% shares in the 4th Defendant and properties of the 4th Defendant, namely Lot 1339 and Lot 1340;

An undisclosed Korean Group, circa Jun 2012, for a sale of the 4th Defendant for USD 18 million or USD 25 million;

The 1st Defendant circa Jun 2012, for a loan of USD 2 million secured by a pledge of 51% shares in the 4th Defendant. [8] It is not in dispute that none of these parties accepted the entreaties of the Plaintiffs and or the 4th Defendant for a loan/financial assistance, including the 1st Defendant. [9] With the option of borrowing not biting, the 4th Defendant ended up selling one of its factory lots, Lot 1340, to the 1st Defendant on 22.10.2012. A part of the purchase price, that is, a sum of RM 2,704,000.00 was used to contra / offset against the debts owed by the 4th Defendant to the 1st Defendant bringing its debts down to RM 1,688,939.75 and allowing for the continued supply of battery scrap. [10] That, however, was short-lived. [11] By May 2014, the 4th Defendant’s debt to the 1st Defendant rose again to around RM 5,346,297.54, indicative that they did not or could not pay for the supply that the 1st Defendant had rendered, or indeed of any other suppliers. [12] The Plaintiffs once again sought for a loan, not from those who already rejected them, but this time from a Dato’ Edward Lau of an entity called ‘Techvance’. In connection to this, there is a document from PW3 dated 12.8.2014 sent to Dato’ Edward Lau stating that the Plaintiffs were seeking an investment of RM 3 million in exchange for 8,635,000 shares of the 4th Defendant valuing the said shares at RM 0.35 sen per share. However, Dato’ Edward Lau did not make the investment. [13] It would appear that the Plaintiffs were also simultaneously discussing with the 1st Defendant around mid-2014 to resolve the 4th Defendant’s financial needs. In this regard, from the documentary evidence, it seems that the Plaintiffs had agreed with the 1st Defendant to the sale of the 1st Plaintiff’s 4,400,000 shares in the 4th Defendant (approximately 50.96% @ 51% of its paid-up capital) (‘the Sale Shares’) for a purchase consideration of RM 4 million sometime in late 2014. [14] There is no dispute that the 1st Plaintiff had started discussing and negotiating the Sale Shares with the 5th Defendant (‘Sia’) from way back in Jun 2014. The 5th Defendant was a director of the 1st Defendant. [15] Financial and legal due diligence were conducted and draft agreements exchanged thereafter before the finalisation and execution on 19.12.2014 of the formal agreements for the sale of the Sale Shares. [16] There were 2 agreements that were executed on 19.12.2014. [17] The first was the Sale Shares Agreement (‘SSA’) which was entered into between the 2nd Defendant (‘Perfect SL’) and the 1st Plaintiff. The 1st Defendant had used the 2nd Defendant as its vehicle for the purchase of the Sale Shares. The 2nd Defendant was a company in which the 5th Defendant and the 6th Defendant (‘Low’) each held 50% shares thereto. To my mind, both the 5th Defendant and the 6th Defendant were mere nominee of the 1st Defendant who are the real beneficial owner of the Sale Shares. [18] The second agreement that was executed was a Shareholders Agreement (‘SHA’). The SHA was an agreement between the 2nd Plaintiff and the 3rd Plaintiff on the one part and the 2nd Defendant on the other. For completeness, apart from the 2nd Defendant, the 2nd and 3rd Plaintiffs, one Lee In-Hee and one Muhammad @ Atan bin Daham were the other registered shareholders of the 4th Defendant at the material times but they were not made parties to the SSA. [19] The 5th Defendant testified that the 2nd Defendant had sometime in December 2014 required the 3rd Plaintiff, who is the 1st Plaintiff’s son based in South Korea at that time to execute the SHA before a Notary Public and returned the same. In this regard, the 1st Plaintiff was candid to admit that the 3rd Plaintiff did no execute the SHA before a Notary Public. Although the executed but unnotarized SHA was returned to the 2nd Defendant’s solicitors sometime in January 2015, the same was sent back to him to be notarized and was never returned. [20] Of significance is the fact that no one, the Plaintiffs included, paid any heed to the SHA, or even mentioned or sought to enforce any of its terms subsequent to the execution of the same at least not until sometime on 9.12.2020 when the 1st Plaintiff wrote to the 1st, 5th and 6th Defendants alluding to a loan and the SHA for the first time. It is common ground that the SHA was not incorporated as part of the Memorandum & Articles of Association of the 4th Defendant. [21] There is no dispute, however, that the performance of the SSA was completed in September 2015, when the Sale Shares i.e the 4,400,000 (51%) shares of the 4th Defendant were duly transferred to the 2nd Defendant and the relevant Share Certificate dated 30.09.2015 for the Sale Shares was issued in the 2nd Defendant’s name. There is also no dispute that although the RM 4 million was not paid in accordance with the time stipulated in the SSA, nevertheless, the RM 4 million has been fully paid, with RM 2 million of it by way of contra / offset of the 4th Defendant’s debts to the 1st Defendant and the balance by cash instalments. Accordingly, the obligations under the SSA have been fully performed. [22] At this juncture it is opportune to set out the core issues raised by the Plaintiffs in this action. These relate to the SSA and the SHA. They involve what the Plaintiffs have described as the ‘Loan Conditions’. It is this that I will now have to turn to in continuing my narration of the background facts. [23] Notwithstanding the express words of the SSA and the SHA, the Plaintiffs’ case is that all along, the Plaintiffs had only desired to enter into a loan agreement with the 1st Defendant by pledging the 1st Plaintiff’s shares as security. According to the 1st Plaintiff, the figure of 4,400,000 shares was first mooted in 2012 during the Fund Raising Initiative. The intention then, vis-à-vis the 1st Defendant, was merely to take a loan with the pledge of the 4,400,000 shares as security for the loan only. This was the intention of the parties as well when the SSA was executed. [24] Although the issue of raising funds through the pledging of the 4th Defendant’s shares was put aside in favour of the disposal of Lot 1340 in late 2012, the Plaintiffs contended that this had nevertheless formed the platform in which the second fund raising exercise was mooted with the 5th Defendant on behalf of the 1st Defendant sometime in September 2013 which culminated with the signing of the SSA and the SHA in 2014. [25] It is the Plaintiffs’ case that the understanding and agreement arrived at between the Plaintiffs and the 1st Defendant which had led to the 1st Plaintiff agreeing to transfer the Sale Shares were subject to the following conditions:

the 4th Defendant shall at least repay the 1st Defendant a sum of RM 4 million;

the 1st Defendant shall advance RM 4 million to the 1st Plaintiff to enable him to make a personal loan to the 4th Defendant for repayment of RM 4 million to the 1st Defendant;

as security for the loan, the 1st Plaintiff would sell his 51% shares in the 4th Defendant for only RM4 million on condition that the 1st Plaintiff would have the right to redeem and/or buy back those shares at a later date (‘Put Option’);

the 1st Defendant was to supply the 4th Defendant with a minimum quantity of 1,600 metric tonne of raw materials each month for its operational and financial breakeven point;

the 4th Defendant shall only pay down the debt due and owing to the 1st Defendant as and when the financials of the company allows it to do so; and

the Plaintiffs including PW3 (the ‘Ko Family’) shall continue to manage the affairs of the 4th Defendant and shall have majority control of the board of directors of the 4th Defendant where the Plaintiffs would be entitled to appoint 4 out of 7 directors of the board of the 4th Defendant. (‘the Loan Conditions’). [26] It is said that the Loan Conditions were finalized as between the 1st Plaintiff and the 5th Defendant who negotiated on behalf of the 1st Defendant sometime in October 2014. The legal documentations were then prepared by Miss Jacqueline Lee (DW2) of Messrs Jacqueline Lee & Co. the solicitors for the 1st, 2nd, 5th and 6th Defendants. In this regard, DW2 testified that enquiries with banks were made during the period October – November 2014 wherein ‘due diligence’ on the 4th Defendant was concluded in or about November 2014. The SSA and the SHA were executed on 19.12.2014. [27] However, as alluded to above, it is a striking feature of this case that there is no express mention or reference made of the Loan Conditions in the SSA and or the SHA at all. More specifically, the SSA or its drafts did not contain, or even remotely hint at, any so-called ‘Loan Conditions’. The SSA was drafted as a straightforward share sale agreement for the 51%% of the shares of the 4th Defendant for RM4 million, including the standard ‘Whole Agreement’ clause spelling out that it “constitutes the whole agreement between the parties and it is expressly declared that no variation hereof shall be effective unless made by the parties in writing”. This glaring omission of any reference at all of the ‘Loan Conditions’ is also true of the SHA which also contains an ‘Entire Agreement’ clause. [28] The thrust of the Plaintiffs’ case is that the omission of the Loan Conditions from the SSA and the SHA was a result of an intentional maneuver through a series of unconscionable conduct on the part of the 1st, 2nd, 5th and 6th Defendants. The Plaintiffs also claimed that they were put under duress and or undue influence to sign the SSA and SHA even though the Loan Conditions were not incorporated into both the agreements. Thus, the Plaintiffs are seeking to set aside the SSA and the SHA on the ground of unconscionable conduct, duress, coercion and under influence. Alternatively, the Plaintiffs pray for the rectification of the SSA and the SHA to incorporate the Loan Conditions into the said agreements. [29] In support of the aforesaid grounds, the Plaintiffs referred to the following series of events:

despite the Loan Conditions being finalized in October 2014 with financial due diligence ensuing during the period October-November 2014, no draft agreements were given to the Plaintiffs during this period despite their requests. This was confirmed by DW2, the solicitors of the 1st, 2nd, 5th and 6th Defendants;

on 9.12 2014, the 1st Plaintiff was notified that that the 1st Defendant had nominated the 2nd Defendant to be the contracting party instead of the 1st Defendant. The 2nd Defendant was newly incorporated on 8.12.2014 with a RM2.00 paid up capital;

on 17.12.2014, the draft SSA and draft SHA were sent to the Plaintiffs. However, the Loan Conditions were not incorporated into the draft agreements. Nevertheless, the drafts did provide that the Plaintiffs’ control over the 4th Defendant’s board remained with the Plaintiffs and the Chairman of the board with a casting vote was stipulated to be the person nominated by the 2nd or 3rd Plaintiff;

a mere 2 days later on 19.12.2014, the 1st and 2nd Plaintiff, together with the PW3 were asked to attend at Messrs Jacqueline Lee & Co’s office. This meeting was to be for the signing of the SSA and SHA;

the Plaintiffs had initially refused to sign the SSA and the SHA as the agreed terms, namely the Loan Conditions were not incorporated into the agreements and further that the 2nd Defendant being a newly incorporated RM2.00 company was not even a subsidiary of the 1st Defendant;

the aforesaid led the 5th Defendant to threaten to wind up the 4th Defendant for the debts that it owed the 1st Defendant and the 5th Defendant further threaten to cease the supply of raw material to the 4th Defendant company. These were testified to by the 1st and 2nd Plaintiff and PW3. This threat is a real to the Plaintiffs;

the finalized SHA which was given to the 1st Plaintiff only on that day were changed in material respects from the draft agreement sent 2 days earlier. In particular, the following clauses were changed:

Clause 8.1(a) a. Draft: Board is to consist of 7 directors, 4 of whom to be appointed by the 2nd and 3rd Plaintiffs. b. Finalized: Board is to consist of 11 directors, 6 of whom to be appointed by the 2nd Defendant.

Clause 8.2 a. Draft: Chairman with a casting vote to be a director proposed by the 2nd or 3rd Plaintiffs. b. Finalized: Chairman with a casting vote to be a director proposed by the 2nd Defendant.

Clause 8.3 a. Draft: Quorum for Board meetings shall be 4 directors with at least 3 directors shall be representatives of the 2nd and 3rd Plaintiff, 1 director shall be representative of 2nd Defendant and 1 director shall be representative of “A”, specified in the draft as MD with name and passport number unfilled. It can be reasonably deduced that “A” refers to the 1st Plaintiff. b. Finalized: Quorum for Board meetings shall be 5 directors with at least 4 directors shall be representatives of the 2nd Defendant and 1 director shall be representatives of the 2nd or 3rd Plaintiff.

Clause 8.7 a. By changing Clause 8.1(a), the Plaintiffs were stripped of their rights to name the CEO and COO of the 4th Defendant.

Clause 9.3 a. Draft: The quorum for all meetings of the Shareholders shall be at least fifty one per cent (51%) of the total issued shares which must include attendance by representatives of the 2nd Plaintiff and the 3rd Plaintiff and A or the 2nd Defendant subject to and without prejudice to the mandatory requirement of the Act and prevailing laws. b. Finalized: The quorum for all meetings of the Shareholders shall be at least fifty point five per cent (50.5%) of the total issued shares which must include attendance by representatives of the 2nd Defendant and the 2nd Plaintiff or 3rd Plaintiff subject to and without prejudice to the mandatory requirement of the Act and prevailing laws. [30] The 1st and 2nd Plaintiffs are not conversant in the English Language and though PW3, the 1st and 2nd Plaintiff’s son understands some English, he is not a lawyer. At no time were the changes highlighted or explained to the Plaintiffs. This was confirmed by DW2, the solicitors of the 1st, 2nd, 5th and 6th Defendants who said that she did not notify them of the changes as she did not act for them. [31] At all material times, the Plaintiffs were not legally represented by any solicitors and never had an opportunity to seek independent legal advice. This was confirmed by DW2, the solicitors for the 1st, 2nd, 5th and 6th Defendants. [32] Thus, with the looming threat of being wound up by the 1st Defendant or having its raw material supply ceased, the 1st and 2nd Plaintiff dutifully executed the SSA and the SHA without the Loan Conditions and the SHA was sent to the 3rd Plaintiff in Korea for his execution wherein such was later returned to DW2, the solicitor of the 1st, 2nd, 5th and 6th Defendants. [33] Notwithstanding the aforesaid, it is the Plaintiffs’ case that although the Loan Conditions were not eventually incorporated into the executed SSA and SHA, the fact as to its existence is nevertheless supported by the evidence before this Court. More specifically: Condition 1: The 4th Defendant shall at least repay the 1st Defendant a sum of RM4 million

Despite the absence of any term in the SSA and SHA requiring the 4th Defendant to repay the 1st Defendant a sum of RM 4 million, it is not disputed that the RM 4 million under the SSA was in fact paid to the 1st Defendant by the 4th Defendant through a series of contra and unusual cash payments; Condition 2: The 1st Defendant shall advance the said RM4million to the 1st Plaintiff to enable him to make a personal loan to the 4th Defendant for repayment of RM4million to the 1st Defendant

The entire ‘share price’ of RM 4 million for the 1st Plaintiff’s 4,400,000 shares in the 4th Defendant which ought to have been received personally by the 1st Plaintiff was advanced to the 4th Defendant to repay its debt to the 1st Defendant. There is a conspicuous absence of any negotiation on the share price; Condition 3: As security for the loan, the 1st Plaintiff would sell his 51% shares in the 4th Defendant for only RM4 million on condition that the 1st Plaintiff would have the right to redeem and/or buy back those shares at a later date

The pledge of the 1st Plaintiff’s 51% shares was mooted as early as 2012 via email dated 11.6.2012;

The Sale Shares were undervalued under the SSA as it does not represent the true market price of the shares but merely as a means of obtaining a loan from the 1st Defendant. This is testified to by the 1st Plaintiff and corroborated by the valuation of shares in the internal emails between the 1st Defendant company’s staff and the 1st Defendant’s lawyer which sets the valuation at RM

1.86 (as oppose to the supposed purchase price of RM 0.96) which the 5th Defendant agreed would make the purchase price to be approximately RM 8.228 million. Even the assessment of stamp duty valued the shares at approximately RM 7.76 million;

The restrictive covenants and pre-emption rights under Clause 6 of the SHA prepared by the 1st, 2nd, 5th and 6th Defendants’ solicitors provide for the 1st Plaintiff’s share buyback by the 2nd and 3rd Plaintiffs. Condition 4: The 1st Defendant has to supply the 4th Defendant with a minimum quantity of 1,600 metric tonnes of raw materials each month for the 4th Defendant’s operational and financial breakeven point

the 1st Defendant supplied quantities of raw materials close to the promised amount from January 2015 to December 2015. This is testified to by the 1st Plaintiff and corroborated by the 1st Defendant’s debtor ledger;

There was a reduction followed by a cessation in the raw material supply by the 1st Defendant but this was as a result of the subsequent events where the Sale Shares was indirectly sold to one Lead Wizard Sdn Bhd (‘Lead Wizard’) sometime in March 2016 and where Lead Wizard effectively diverted the 1st Defendant’s supply of raw materials to the 4th Defendant’s competitor, MNA Metal Resources Sdn Bhd (‘MNA Metal’) Condition 5: The 4th Defendant shall only pay down the debt due and owing to the 1st Defendant as and when the financials of the company allows it to do so

Despite outstanding debts of up to RM 15 million at its peak, no letter of demand has ever been issued by the 1st Defendant to the 4th Defendant;

The 4th Defendant would pay as and when its financials allow it to do so; Condition 6: The Ko Family shall continue to manage the affairs of the 4th Defendant company and shall have majority control of the board of directors of the 4th Defendant where the Plaintiffs would be entitled to appoint 4 out of 7 directors of the board of 4th Defendant

The initial draft SHA documents this agreement of the parties. This is evident in clauses 8.1(a), 8.2 and 8.3 of the draft SHA;

Although this was not eventually incorporated into the executed SHA, the Ko Family continued management of the 4th Defendant. The actual circumvention of control and management only came much later in December 2020. The 5th Defendant confirmed that after ‘buying over’ the 51% shares, he continued to let the Ko family run the 4th Defendant company;

The IPO Listing Prospectus of the 1st Defendant company acknowledged that the 4th Defendant (identified as Customer A in the prospectus) was managed by its minority shareholder (namely the Plaintiffs). The description of Customer A, the manner in which the 5th Defendant ‘owns’ 50.96% shares in Customer A through a 50% owned entity (the 2nd Defendant company) clearly points towards the 5th Defendant’s procuring of 50.96% shares in the 4th Defendant from the 1st Plaintiff;

The 5th Defendant testified that the purchase is conditioned upon the Ko Family continuing to stand as guarantors for the debt of the 4th Defendant company with the 5th and 6th Defendants not being required to stand as guarantors;

This was the reason as to why the 1st Defendant, after acquiring a majority stake, did not appoint anyone to the board. This was also the reason as to why Lead Wizard did not appoint anyone to the board until the appointment of one person, Mr Singara Velan sometime in 2017, one year after Lead Wizard’s acquisition. [34] Based on the aforesaid, it is the Plaintiffs’ case that the arrangement between the Plaintiffs and the 1st Defendant in respect of the Sale Shares was never intended to be an outright sale of the Sale Shares to the 2nd Defendant but was in fact a ‘loan cum share pledge’ arrangement. [35] Only the existence of the Loan Conditions would explain why the Plaintiffs had continued running and managing the 4th Defendant, the 1st Plaintiff continued providing advances to the 4th Defendant, the Plaintiffs continued standing as guarantors for the 4th Defendant’s debts to its banks and the 1st Plaintiff and his son, PW3 continued signing the audited accounts of the 4th Defendant. In fact, the 4th Defendant’s Statement of Financial Position as at 31.12.2020 revealed that the 1st Plaintiff had made personal advances to the company to the tune of RM2,365,032.00. According to the Plaintiffs, if indeed the Sale Shares were sold to the 1st Defendant, as minority shareholders, the Plaintiffs would not have conducted themselves in the aforesaid manner. Further as majority shareholder, the 1st Defendant would have assumed management of the 4th Defendant. [36] In reliance on the Loan Conditions, the Plaintiffs further contended that subsequent to the transfer of the Sale Shares to the 2nd Defendant, sometime until around March 2016, the 5th and 6th Defendants had wrongfully and in breach of the Loan Conditions surreptitiously sold their respective shares in the 2nd Defendant to Lead Wizard, the erstwhile 3rd Defendant in this action. ‘Erstwhile’ because the Plaintiffs’ case against Lead Wizard was struck-out by this Court on 29.03.2021. [37] In fact, the Plaintiffs contended that the 1st Defendant had proceeded on a surreptitious basis to sell its shares in the 2nd Defendant because the 1st Defendant knew that the said sale would be in breach of the Put Option under the Loan Conditions. [38] Although the Plaintiffs had no knowledge of the change of the shareholdings in the 2nd Defendant to Lead Wizard in March 2016, by their own admission, the Plaintiffs had come to know of the change in the shareholders of the 2nd Defendant to Lead Wizard sometime in July

In this regard, PW3 in his evidence-in-chief testified that he knew of it by at least July 2016, and he had informed the 1st Plaintiff of the same. The 1st Plaintiff in his evidence-in-chief confirmed so. [39] Thus, from the period July 2016 until sometime in mid-2020, the Plaintiffs and the 2nd Defendants now owned by Lead Wizard had co-existed as shareholders of the 4th Defendant. This is because with the sale of the shares in the 2nd Defendant to Lead Wizard, the 1st Defendant had withdrawn itself from the 4th Defendant, playing no roles at all save as supplier of raw materials to the 4th Defendant. [40] After co-existing for 3 years, towards the latter half of 2020, the Plaintiffs began to raise issues with the SSA and the SHA. By the Plaintiffs’ simultaneous letters of 09.12.2020 to, inter alia, the 1st, 2nd, 5th and 6th Defendants, the Plaintiff alleged that:

The 1st Plaintiff’s sale of his 51% shares in the 4th Defendant to the 1st Defendant/2nd Defendant was in fact a ‘loan’;

this was on terms that the 1st Defendant/2nd Defendant was to ‘sell back’ the Sale Shares to the 1st Plaintiff and in the meantime that the Plaintiffs were to have ‘majority control’ of the board of the 4th Defendant;

the SSA and SHA were entered into by the Plaintiffs under ‘duress and/or coercion’;

the 5th and 6th Defendants had breached the Loan Conditions in disposing their respective shares in the 2nd Defendant to Lead Wizard as this constituted a disposal of the 2nd Defendant’s interest in the 4th Defendant without the 2nd Defendant first offering the Sale Shares to the Plaintiffs thus depriving the Plaintiffs of their ‘rights to regain full ownership and control’ of the 4th Defendant. [41] Arising from the aforesaid contention, the Plaintiffs are seeking in this action for, inter alia, an order that the 2nd Defendant to forthwith return the Sale Shares to the 1st Plaintiff in return for the receipt by the 2nd Defendant the sum of RM 3.8 million with interest or alternatively, for the Defendants to jointly and severally pay the 1st Plaintiff a sum equivalent to the difference between the market value of the Sale Shares and RM 3.8 million as loss or damages for breach of the Loan Conditions and or the SSA and SHA. [42] Quite apart from the aforesaid, subsequent to the 2nd Defendant becoming the majority shareholder of the 4th Defendant, the 2nd Plaintiff was removed as a director of the 4th Defendant even though she was still serving as a guarantor for the 4th Defendant at the material times. There were also repeated removals and re-appointments of the 3rd Plaintiff as a director of the 4th Defendant to make him subject to the yearly re-election pursuant to Article 68 of the 4th Defendant’s Constitution. This is notwithstanding the express terms of Clause 8.1(d) of the SHA where it is stipulated that the “…directors shall not be required to retire by rotation nor shall they be removed by the Company…”. [43] Not only were there resolutions made to retire the 1st and 2nd Plaintiffs without re-election and to periodically retire the 3rd Plaintiff only to re-elect him to stand as guarantor for the 4th Defendant, the 2nd Defendant as the majority shareholder further transferred to one Siti Baiduri and one Muhammad Iqram bin Zulkupri (‘Muhammad Iqram’), 1000 shares in the 4th Defendant to each of them in breach of the SHA and despite objections from the Plaintiffs. [44] The appointments of Siti Baiduri and Muhammad Iqram as additional directors of the 4th Defendant were for the sole purpose of pushing through resolutions without the consent of the Plaintiffs. In addition, there was a notice to appoint one Lamin bin Ismail (‘Lamin’), whose interests represents MNA Metal, a competitor of the 4th Defendant as an additional director of the 4th Defendant in replacement of the 1st Plaintiff. [45] Also, the Plaintiffs claimed that Lead Wizard has prioritized payments to itself through the 2nd Defendant over the personal advances made by the 1st Plaintiff, a minority beneficial owner of the 4th Defendant. PW3 testified that the constant chasing of Lead Wizard’s debt through the 2nd Defendant has left the Plaintiffs needing to manage and advance its own monies to the 4th Defendant. It seems that simultaneous with the sale of the 2nd Defendant’s shares to Lead Wizard, the 1st Defendant has also sold the debts due and owing from the 4th Defendant to Lead Wizard. [46] The Plaintiffs also claimed that the 2nd Defendant through the 5th and 6th Defendants had entered/caused to be entered agreements which effectively caused the cessation of raw material supply from the 1st Defendant to the 4th Defendant, causing shortage in the working capital of the 4th Defendant in complete disregard of the interests of the 2nd and 3rd Plaintiffs. [47] Based on the aforesaid, the Plaintiffs claimed that the 2nd Defendant as the majority shareholder of the 4th Defendant has conducted the business or affairs of the 4th Defendant in a manner which overrides or brushes aside the minority interests of the Plaintiffs. And whilst the directorship of the 1st and 2nd Plaintiffs are not normally considered as related to the rights of a shareholder, in the present case, the appointment and non-retirement of a director is the stipulated right of the Plaintiffs under the SHA. Furthermore, the transfer of shares to 3rd parties in contravention of the SHA is intended to side step the Plaintiffs’ preemptive rights under the agreement. [48] Accordingly, the Plaintiffs seek a declaration that the 2nd Defendant has conducted the affairs of the 4th Defendant in a manner oppressive to and or in total disregard of the Plaintiffs’ interests as members of the 4th Defendant and or is otherwise prejudicial to their rights as members of the 4th Defendant. [49] The 1st, 2nd, 5th and 6th Defendants categorically deny the existence of the Loan Conditions. There is absolutely no reference at all to the Loan Conditions in any of the contemporaneous documents during the entire period from 2014 to 2020. The conspicuous absence of any reference to the Loan Conditions lends support to their case that the SSA and the SHA were indeed intended to mean what were expressly provided therein, namely, a straightforward sale and purchase of the Sales Shares. [50] In any case, the Plaintiffs’ claims of unconscionable conduct, duress, coercion and or undue influence are not established by the facts adduced before the Court. The burden is on the Plaintiffs to discharge and they have failed miserably to do so. [51] More significantly, the 1st, 2nd, 5th and 6th Defendants claimed that the terms of the SSA have been affirmed by the Plaintiffs and that the SSA has been fully performed. [52] As regards the Plaintiffs’ claim pertaining to the breach of the pre-emption clause under the SHA for the sale of the shares of the 2nd Defendant to Lead Wizard in March 2016, the 1st, 2nd, 5th and 6th Defendants contended that the SHA was never notarized which was a pre-condition for its operation and enforcement. In any case, even if the SHA is valid and enforceable, there was no breach of the pre-emption clause thereunder as it was only the shares of the 2nd Defendant that were transferred. The 2nd Defendant continues to hold the Sales Share. Further, even if there is a breach, the Plaintiffs’ claim is barred by laches and or estoppel. [53] The 2nd and the 4th Defendants adopted the aforesaid contentions in defence of the Plaintiffs’ claims against it in respect of the breach of the pre-emption clause. As regard, the claim for oppression, the 2nd Defendant submitted that the breaches or complaints that the Plaintiffs are relying on are either interpersonal claims under the SHA or claims rightfully belonging to the 4th Defendant, if at all, and they do not give rise to an action in oppression. Court’s Deliberations [54] In this action, the Plaintiffs rest a significant part of their case on the existence of the ‘Loan Conditions’. Yet, it is a glaring fact that there is a total absence of any mention of the ‘Loan Conditions’ or of its breaches in any of the contemporaneous evidence throughout the relevant periods of time, namely:

in the discussion and negotiations from Jun 2014 leading up to the execution of the SSA on 19.12.2014;

from the time the SSA was executed on 19.12.2014 up until the time the Sale Shares were transferred in Sep 2015;

from the time when the Plaintiffs knew of the 5th Defendant and 6th Defendant sale of their respective shares in the 2nd Defendant to Lead Wizard circa Jul 2016 until sometime in December 2020;

or indeed at any time from 2017 to until 9.12.2020, which the Plaintiffs were working together with representative of Lead Wizard in the board of the 4th Defendant. [55] To be sure, the terms of the Loan Conditions themselves are not easy to appreciate. Essentially, they would work out to be this:

The 1st Defendant lends RM4 million to the 1st Plaintiff who in turn lends that RM4 million to the 4th Defendant who then used it to pay down its debt to the 1st Defendant;

For this, the 1st Plaintiff would transfer his 51% shares in the 4th Defendant but with the 1st Plaintiff having a right to redeem or buy it back with no specified time for it to be redeemed or bought back and with no price stated. And there is no mention that any interest is to be paid on the loan in the meantime;

The 1st Defendant is to supply the 4th Defendant a minimum of 1,600 metric tonnes of battery scrap per month, which the 4th Defendant would pay for this assured supply of battery scrap “as and when its financials … allows it to do so”. In other words, at the discretion of the 4th Defendant;

The Plaintiffs in the meantime shall remain in control of the management of the 4th Defendant. [56] Under the terms of the Loan Conditions aforesaid, the 1st Defendant would be barred from demanding the payment of the 4th Defendant’s outstanding debts to the 1st Defendant and yet obliged to continue the supply of the battery scrap at a minimum quantity. The 1st Defendant cannot decide to cease the supply of the battery scrap to the 4th Defendant. [57] In order to persuade this Court of the existence of the Loan Conditions, the Plaintiffs relied on the discussion between the Plaintiffs and the 1st Defendant during the Fund Raising Initiative which took place about 2 years prior to the SHA. However, based on the Plaintiffs’ own pleaded case, the discussion with the 1st Defendant based on the Loan Conditions had only commenced in mid 2014. [58] Reliance was also placed on the conduct of the parties post the SHA as evidence that the Loan Conditions were in fact being adhered to. But the conduct of the parties post the SHA can just as well be said to be consistent with the 5th Defendant’s narrative that what the 1st Plaintiff had entered into with the 1st Defendant was nothing more than a straightforward sale of his 4,400,000 shares in the 4th Defendant to the 1st Defendant for a purchase consideration of RM 4 million as provided for in the express terms of the SHA. [59] The 5th Defendant testified that the 1st Plaintiff was desperate to keep the 4th Defendant afloat even after the sale of Lot 1340 in 2012. Sometime in June 2014, an agreement in principle was reached for the 1st Defendant to purchase the Sale Shares from the 1st Plaintiff for a purchase consideration of RM 4 million. The understanding reached with the Plaintiffs was that the RM 4 million would be used to reduce the outstanding debts from the 4th Defendant to the 1st Defendant. This was to enable the 1st Defendant to continue to supply to the 4th Defendant which was the case post the sale of the Sale Shares. [60] Further, notwithstanding the fact that the 1st Defendant, through the 2nd Defendant, had majority control of the 4th Defendant, the 1st Defendant had agreed to the operation of the 4th Defendant to still be with the Plaintiffs because the Plaintiffs had the experience in the business. But, as the majority shareholder, the 1st Defendant had control of the finance of the 4th Defendant. This was not disputed. [61] According to the 5th Defendant, it was also the understanding between the parties that the 1st Defendant would not stand as guarantors for the 4th Defendant’s outstanding loans to the banks. [62] The Plaintiffs contended that after the sale of the Sale Shares, they had continued to make advances to the 4th Defendant whilst the 1st Defendant, as the majority shareholder did not do so at all. This was said to support the narrative that the 1st Defendant never treated the 4th Defendant as its company since the Sale Shares were merely ‘pledged’ as security. With respect, this is not true. The 1st Defendant had continued to supply battery scrap to the 4th Defendant even though it knew of the 4th Defendant’s poor financial predicament. The 5th Defendant had testified that the 1st Defendant had agreed to this only because it held the majority shares of the 4th Defendant. [63] As regard the pre-emption rights to the Sale Shares in the SHA, such rights are not unusual in private companies and pre-emption rights are very different from a right to redeem under a pledge. [64] In fact the Plaintiffs’ assertion that the consideration of RM 4 million for the Sale Shares was a gross undervalue is contradicted by the Plaintiffs’ own document to Dato’ Edward Lau on 12.8.2014 where the Plaintiffs themselves had valued the 4th Defendant’s shares at RM 0.35 per share. This put paid to the Plaintiffs’ contention that the grossly undervalued purchase price belies the true nature of the transaction, that it was a truth a loan and not a genuine sale. Whilst it is true that the Stamp Office had taken a different view on the value of the 4th Defendant’s shares, this Court places more weight to the Plaintiffs’ own valuation of their shares to that of the Stamp Office. [65] Thus, there is little to choose from between the Plaintiff’s narrative and that of the 5th Defendant’s. In such circumstances, it is much more satisfactory to rely on the contemporaneous documents. Useful reference in this regard can be made to the well-known case of Tindok Besar Estate Sdn. Bhd. v. Tinjar Co. [1979] 2 MLJ 229, where this was said by the then Federal Court:- “… For myself, I would with respect feel somewhat safer to refer to and rely on the acts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe his subsequent recollection or version of it, particularly if he is a witness with a purpose of his own to serve and if it did not account for the statements in his documents and writings. Judicial reception of evidence requires that the oral evidence be critically tested against the whole of the other evidence and the circumstances of the case. Plausibility should never be mistaken for veracity ...” [66] Based on the contemporaneous documents, this Court notes that there is a conspicuous absence of any reference at all to the Loan Conditions during the entire period from June 2014 until sometime in 9.12.2020. This undermines the Plaintiffs’ claim that the Loan Conditions were in fact the underlying premise of the agreement for the transfer of the Sale Shares to the 1st Defendant. [67] Accordingly, it is the judgment of this Court that the Plaintiffs have failed to discharge to burden of proof on the balance of probabilities that the ‘Loan Conditions’ as contended in fact existed. [68] In any event and even if I am wrong on the existence of the Loan Condition, based on the facts of this case, I hold that the Plaintiffs can no longer insist on the Loan Conditions as they have affirmed the terms of the SSA and the SHA. The SSA has also been performed. Let me explain. [69] It is not the Plaintiffs’ case that they were unaware that the document that was executed on 19.12.2014 was a sale and purchase of the Sale Shares and not a loan document. It is also not their case that they were unaware that the Loan Conditions were not incorporated into the SSA and the SHA. [70] Indeed, the very plank of the Plaintiffs’ submission is that they were fully aware on 19.12.2014 that the terms of the final SSA and SHA agreements were different from the earlier drafts forwarded to them on

17.12.2014 and also the fact that in both the drafts, the Loan Conditions had been omitted. It is the Plaintiff’s case that although they had objected to the omission of the Loan Conditions from the SSA and the SHA, they had nevertheless executed the same under condition of duress, coercion and or undue influence at the office of DW2, the solicitors for the 1st, 2nd, 5th and 6th Defendants. The Plaintiffs claimed that the omission of the Loan Conditions was deliberate and was achieved through a series of unconscionable conduct by the 5th Defendant. [71] The Plaintiffs have devoted a substantial part of their written submission on establishing the existence of duress, coercion or undue influence and unconscionable conduct. However, for the reasons that I shall now give, it is unnecessary for this Court to make a finding on the same. [72] Duress, coercion or undue influence and unconscionable conduct are accepted and recognized vitiating factors which will render an agreement voidable at the option of the innocent party. This means that for the purpose of the present case, assuming that the Plaintiffs are able to establish the existence of such duress, coercion or undue influence or unconscionable conduct, this must mean that the Plaintiffs are entitled to rescind the SSA and the SHA and refused to perform the obligations stipulated therein. However, if the Plaintiffs, notwithstanding the duress, undue influence and or unconscionable conduct choose to affirm the agreements, the Plaintiffs can no longer be permitted to rescind the agreements thereafter. The affirmation is irrevocable. In other words, an election once made is irreversible [See: Sargent v ASL Developments Ltd (1974) 131 CLR 634 at p 655]. [73] In the present case, the Plaintiffs claimed that even though they were aware that the Loan Conditions were not incorporated into the SSA and the SHA, nevertheless they had to accept and sign the same because the 5th Defendant had threatened to wind up the 4th Defendant for the debts that it owed the 1st Defendant and the 5th Defendant further threatened to cease the supply of raw material to the 4th Defendant. [74] But the Plaintiffs did not take any steps to rescind or terminate the SSA and or SHA after the execution of the same. On the contrary, the Plaintiffs had proceeded to perform the obligations stipulated thereto without any objections. More specifically, the Plaintiffs readily accepted the payment of RM 4 million which was used to reduce the 4th Defendant’s debts to the 1st Defendant. This is notwithstanding the fact that the payments of the RM 4 million were not made strictly in accordance with the terms of the SSA. The Plaintiff further agreed to hand over the Sale Shares to the 2nd Defendant which shares were registered in September 2015. The Plaintiffs had also proceeded to permit the 1st Defendant to have control of the finance of the 4th Defendant as agreed. As regards the SHA, the Plaintiffs proceeded to procure the 3rd Plaintiff to sign the SHA and subsequently returned the same to the 1st Defendant’s solicitors, albeit belatedly. [75] By the Plaintiffs’ aforesaid conduct, the Plaintiffs must be taken to have affirmed the SSA and the SHA based on the terms as provided therein and surely are no longer permitted to assert that the Loan Conditions (even if they in fact exist) form part of the terms of the SSA and the SHA. The issues of misrepresentation, duress or undue influence and or unconscionability can no longer be relied upon once the Plaintiffs affirmed the SSA and the SHA. This is so even assuming that the Plaintiffs are able to establish the misrepresentation, duress or undue influence and or unconscionability as alleged. [76] The Plaintiffs claimed that there was no affirmation as they were subject to continuing duress, coercion and or undue influence of the 1st Defendant as the 4th Defendant could not afford for the 1st Defendant to insist on the payment of its outstanding debts immediately and or the 1st Defendant ceasing the supply of battery scrap to the 4th Defendant. [77] With respect, if the 1st Defendant were to demand the immediate payment of the debts due from the 4th Defendant, it would be entirely within the 1st Defendant’s legal rights to do so. The fact that the 4th Defendant may not be able to meet such demand because of its own cash flow issues cannot constitute duress or coercion or undue influence. As regard the supply of the battery scraps, the Plaintiffs have not adduced any evidence that the 4th Defendant was incapable of sourcing from other suppliers in the event the 1st Defendant were to cease its supply. On the contrary, by PW3’ own testimony, after Lead Wizard had taken over control of the 2nd Defendant, the 1st Defendant had drastically reduced its supply of the battery scrap to the 4th Defendant. This however did not stop the 4th Defendant from continuing its business by sourcing its supplies from other third parties at all. In fact, PW3 testified that the 4th Defendant was doing well even after the 1st Defendant had ceased supplying to the 4th Defendant. Accordingly, I am not persuaded that there was a ‘continuing’ duress or coercion or undue influence as contended by the Plaintiffs. [78] During oral submission, learned counsel for the Plaintiffs had sought to avoid the consequence of the affirmation by contending that the doctrine of unconscionability can stand on its own to have the SSA and the SHA set aside. Heavy reliance was placed in the judgment of the Court of Appeal in Said Marwi v Chan Hwan Hua & Anor [2001] 1 MLRA 1 where Gopal Sri Ram JCA opined that our Courts should recognize a wider doctrine of inequality bargaining power as capable of giving rise to the application of unconscionable bargain in a contract such that the Court will not permit the enforcement of the bargain. His Lordship called for ‘a fairly flexible approach aimed at doing justice according to the particular facts of a case’. [79] Based on the aforesaid, the Plaintiffs contended that the 1st Defendant had taken advantage of its much superior position as the creditor and main supplier of battery scrap to the 4th Defendant and the 4th Defendant’s weaker position as a company faced with adverse financial predicament, depending on the 1st Defendant for its survival and the ‘docile’ nature of the Plaintiffs who were foreigners and not legally represented during the discussions with the 1st Defendant to extract the Plaintiffs’ acceptance of the SSA and the SHA without the Loan Conditions. [80] Again, I see no merits in the Plaintiff’s contention both in law and in facts. [81] Firstly, the doctrine of unconscionable conduct can have no application in the present case for the simple reason that the SSA has been completely performed. Indeed, learned counsel for the Plaintiffs was unable to refer to any case law which states otherwise. [82] Secondly, the Plaintiffs have not demonstrated how the terms of the SSA and the SHA as expressed and agreed are harsh, oppressive or unconscionable. On the contrary, the terms that the 1st Defendant is not entitled to seek immediate payment of the 4th Defendant’s outstanding debts at all and that the 1st Defendant is not permitted to cease the supply of the battery scrap to the 4th Defendant despite not being paid could justifiably be construe as unconscionable to the 1st Defendant, [83] Accordingly, the Plaintiffs’ rights if at all will have to be based on the express terms of the SSA and the SHA as agreed. If indeed there are breaches of the SSA and or SHA, the Plaintiffs’ will have to identify the specific clauses in the said SSA and or SHA that are breached by the Defendants and sue on the same. This brings me to the pre-emption rights and the transfer of the 5th and 6th Defendants’ shares in the 2nd Defendant to Lead Wizard. [84] In this regard, it is claimed that the 2nd Defendant had breached Clause 6.1 of the SHA which requires the 2nd Defendant to obtain the consent of the other existing shareholders or to first make an offer to the other shareholders before selling their shares to a third party. More specifically, the relevant clauses stipulate: Clause 6.1 ‘The Parties agree that each of the Shareholders shall not, directly or indirectly, sell, transfer, assign, mortgage, charge or otherwise dispose or encumber its beneficial interest in the shareholding or part thereof in the Company except:

….

With the prior written consent of the other Shareholders provided that any transferee shall enter into a deed or other suitable documentation agreeing to be bound by all the terms of this Agreement; or

In accordance with the provisions of Clause 7 hereof.

…’ Clause 7 in turn sets out the procedure to follow for any shareholder of the 4th Defendant who wishes to sell its shares in compliance with the rights of the other existing shareholders who are given a pre-emption rights over the said shares. [85] In this regard, the 5th and 6th Defendants had sold their respective shares in the 2nd Defendant to Lead Wizard sometime in March 2016. The Plaintiffs claimed that the said sale was in breach of the Clauses 6.1 and 7 of the SHA. [86] The aforesaid issue involves the determination of several issues, namely, the validity and or enforceability of the SHA as the Defendants are claiming that the SHA is not valid and or enforceable. Further, even if the SHA is valid and enforceable, the Defendants claimed that there was no breach of the said pre-emptory clause. [87] According to the Defendants, there was an agreed requirement that the SHA was to be signed by the 3rd Plaintiff before a Notary Public in order for the SHA to be effective and operative between the parties. The 3rd Plaintiff was at the material times in South Korea and the SHA was to be couriered to him for his execution before a Notary Public and thereafter the SHA was to be returned to the 1st Defendant. In other words, according to the Defendants, it was a condition to the SHA being effective and operative. [88] This was not done, nor was the SHA returned to the Defendants. The SHA was only subsequently returned to the 1st Defendant’s solicitors’ office sometime in January 2015 but without notarization. Further, the SHA was never referred to nor mentioned by any parties subsequent to its execution. This lends support to the Defendants’ claim that the SHA was never operative. [89] The Plaintiffs, on the other hand, contended that the validity and enforceability of the SHA does not required the attestation of the 3rd Plaintiff’s signature before a Notary Public. The SHA is valid and enforceable from the very fact that there is no dispute that all the parties had executed the same. Further, the duly executed SHA was in fact returned to the 1st Defendant’s solicitors by the 3rd Plaintiff sometime in January 2015 and there was no objection that the SHA was not operative and or valid. [90] To my mind, the fact that no one had brought up or mentioned the SHA after the execution of the same or complained about it since does not mean that the SHA is not valid and or unenforceable. The notarization is intended to certify the authenticity of the signature to be appended to a document. Thus, in this case, the Defendants had required for the 3rd Plaintiff’s signature appended to the SHA to be notarized since the 3rd Plaintiff was in South Korea at that time and the Defendants wanted a neutral third party to verify his signature. [91] However, it is my judgment that the fact that the 3rd Plaintiff’s signature was not ultimately notarised is of no moment as there is no dispute as regards the authenticity of the 3rd Plaintiff’s signature that has been appended to the SHA. In fact, it was never put to the Plaintiffs that the signature in the SHA was not the 3rd Plaintiff’s. More importantly, there is no evidence at all that the SHA will be operative and or effective only if the SHA is notarized be a Notary Public. The testimony by DW2 confirmed that the 3rd Plaintiff was only informed by her cover letter that the SHA needed to be signed before a Notary Public. She acknowledged that the SHA itself does not require the 3rd Plaintiff’s signature to be notarized for it to be valid. [92] Accordingly, it is my judgment that the SHA is a valid and enforceable agreement binding on the parties who are privy to the same. [93] The 2nd Defendant however contended that there has been no breach of the SHA, specifically of Clauses 6.1 and 7, as alleged by the Plaintiffs. [94] It is contended that by Clause 1.1, “Company” is defined as “Intercedar Industry (M) Sdn. Bhd.”, that is to say the 4th Defendant and “Shareholders” is defined as “collectively A, B, C”, who are the 2nd Defendant, the 2nd Plaintiff (Han) and the 3rd Plaintiff respectively. [95] Clause 6.1 speaks that “each of the Shareholders shall not, directly or indirectly, sell, transfer, assign, mortgage, charge or otherwise dispose of an encumber its beneficial interest in the shareholding or part thereof in the Company except” inter alia with the consent of the other shareholders. Clause 7 is similar, it speaks of restrictions upon the “right of the Shareholders to sell, transfer, assign, or otherwise dispose of their respective shareholdings in the Company”. [96] Based on the aforesaid, according to the 2nd Defendant, on a plain construction of the SHA and the Clauses 6.1 and 7, the restrictions, if any, are upon the shareholders, i.e. in the context here – the 2nd Defendant, not disposing off directly or indirectly its shareholding in the 4th Defendant. Since what was sold was the 5th Defendant’s and the 6th Defendant’s shares in the 2nd Defendant, the 2nd Defendant has never relinquished the shares of the 4th Defendant. As such, there is no breach by the 2nd Defendant of Clauses 6.1 or 7 of the SHA. [97] In is further contended that the construction or interpretation that the Plaintiffs seek to put on Clauses 6.1 and 7 of the SHA to extend to a disposal of the shares in a shareholder of the 4th Defendant, namely in this case the 2nd Defendant, amounts to nothing more than an attempt to re-write the SHA. [98] In any case, it is contended that even if the construction or interpretation that the Plaintiffs seek to put on Clauses 6.1 and 7 of the SHA can be accepted, the Plaintiffs’ claim of a breach will still fail. For when the alleged breach of it happened, from the time the Plaintiffs had knowledge, which was circa July 2016, there was no action or even complaint taken by the Plaintiffs about it, such that they must be clearly considered to have acquiesced to the breach. Laches or estoppel must clearly apply. [99] In examining this issue, the Court starts with the testimony of the 5th Defendant that he had used the 2nd Defendant as a vehicle for the 1st Defendant to purchase the Sale Shares. In other words, the 2nd Defendant was merely a nominee of the 1st Defendant in acquiring the Sale Shares. This means that the shares of the 2nd Defendant held by the 5th and 6th Defendants were beneficially owned by the 1st Defendant. After all, the evidence shows that the purchase consideration for the Sale Shares were paid by the 1st Defendant. [100] Thus, the disposal of the shares of the 2nd Defendant by the 5th and 6th Defendants was in truth a disposal of the Sale Shares by the 1st Defendant to Lead Wizard. There is therefore a need for the 1st Defendant to obtained a written consent from the 2nd and 3rd Plaintiffs to the disposal or sale which clearly was not the case here. This means that the 1st Defendant ought to have offered the Sale Shares to the Plaintiffs under the pre-emption clause which it had failed to do. [101] However, notwithstanding the breach of the pre-emption clause by the 1st Defendant, it is my judgment that the Plaintiffs are precluded from enforcing on their rights thereto by reason of their acquiescence and omission to take any positive actions for the period from 2017 to 2020. They are also estopped by convention from exerting their rights. I will elaborate. [102] It is disclosed during cross examination of the 1st Plaintiff that the Plaintiffs knew of the fact that MNA Metal had purchased the shares of the 2nd Defendant from the 5th and 6th Defendants sometime in July

This is clear from the 1st Plaintiff’s answers to the following questions during cross examination: Okay fine, I will help you there. According to your Question No. 16 in your witness statement, the second paragraph of your answer, yes you had said “We did not know why the Defendant ceased supply abruptly in April 2016, I was then informed by my son Koh Kyung Hwan that the late Abu Hanifah had informed him that the MNA had purchased shares in the 2nd Defendant from the 5th and 6th Defendant.” Yes. Yes and your son will be giving evidence I think that he was told by the late Abu Hanifah in July of 2016. Yes? Yes. Yes, now you say this upset you a great deal because you say this breach the so called loan conditions, is that your case? Yes. Yes but yet again you did nothing then. Yes or no you did nothing about didn’t complaint, didn’t protest? I didn’t do anything. Didn’t do anything ya. In fact the first time you ever brought up this loan, so called loan conditions etc and made a complaint about it was actually on the 9th of December 2020 when you issued a letter of demand or letter before action which is at Bundle B4, pages 112-113, do you see the letter, have a look at it. Okay, I will read it to you, “I refer to the above matter.” Firstly this is a letter you sent to Heng Hup, Sia Kok Chin and Lau Hok Soon, right? B1, B5 and B6? That is right. [103] Notwithstanding the Plaintiffs’ knowledge of the 2nd Defendant’s breaches of the Clauses 6.1 and 7 of the SHA in July 2016, the Plaintiffs did not take any positive step to object to the transfer to Lead Wizard at all. In fact, not only was there no such objection, the Plaintiffs even accepted the 2nd Defendant’s new representative, Singara Velan (‘DW3’) on the board of directors of the 4th Defendant sometime in May

With the sale of the shares in the 2nd Defendant to Lead Wizard, the 1st Defendant had exited from the 4th Defendant and in its place, a representative of Lead Wizard had been appointed as a director of the 4th Defendant. [104] Whilst it is true that the Plaintiff had objected to DW3 being made a cheque signatory, the fact remains that Lead Wizard had board representation from 2017 and thereafter both the representatives of Lead Wizard and the Plaintiffs were working together as members of the 4th Defendant’s Board of Directors responsible for the management of the company. [105] Also, according to the testimony of Francis Tan (‘DW4’), who was a director of Lead Wizard, he had, following the execution of the sale and purchase agreement dated 29.3.2016 acquiring the shares of the 2nd Defendant from the 5th and 6th Defendants, gone to the office of the 4th Defendant and met with PW3, the 1st Plaintiff’s son and was warmly received. At no time did the Plaintiffs ever raise the SHA or alleged breaches of the terms thereto with DW3 and or DW4 or for that matter with the 1st, 5th and 6th Defendants. [106] In addition, contemporaneous with the transfer of ownership of the 2nd Defendant, Lead Wizard had also taken over the debts of the 4th Defendant to the 1st Defendant. As the new majority shareholder of the 4th Defendant, Lead Wizard also did not demand for the immediate payment of the debts from the 4th Defendant. This represents an indirect financial assistance to the 4th Defendant by Lead Wizard. [107] In short, the Plaintiffs knew of the change in the beneficial ownership of the Sale Shares in July 2016, they did nothing. Sometime in May 2017, DW3 was appointed as Lead Wizard’s nominated director to the 4th Defendant. The Plaintiffs accepted the appointment. Sometime in September 2017, when DW3 was proposed to be a cheque signatory of the 4th Defendant, the Plaintiffs objected but the objection was not based on the breach of the pre-emption clause. In the meantime, the Plaintiffs continue to work with Lead Wizard in the management of the 4th Defendant and continued to enjoy the indulgence given by Lead Wizard on the debts due and payable to them. It was only on 9.12.2020 after a lapse of more than 3 years that the Plaintiffs suddenly awoke to their right to claim for the breach of the pre-emption clause. [108] I find the Plaintiffs’ conduct most dilatory and by their continued inaction and positive working together with the new shareholder, it is my judgment that it would be unjust to permit the Plaintiffs to now insist on enforcing the pre-emption rights under Clause 6.1 and 7 of the SHA. By their inaction, the Plaintiffs have acquiesced to the sale and are prohibited by laches from proceeding with their claims. [109] The circumstances of this case also attract another ground that will deny the Plaintiffs’ claim. [110] Defendants had proceeded post the transfer of ownership of the 2nd Defendant on the assumption that there was either no pre-emption rights in respect of the transfer of the Sale Shares or that such pre-emption right, if at all it exists, would not be insisted upon by the Plaintiffs. To my mind the circumstances of the case have given rise to an estoppel by convention which makes it unconscionable for the Plaintiffs to now assert as against the 1st, 2nd, 5th and 6th Defendants the pre-emption rights stipulated in Clauses 6.1 and 7.1 of the SHA. [111] Estoppel by convention was explained in the case of Dixon and another v Blindley Heath Investments Ltd and others [2015] EWCA Civ 1023 by Hildyard J as follows: ‘[72] Estoppel by convention is a form of estoppel that was originally developed by the common law courts (see Legione v Hately (1983) 152 CLR 406 at 430) largely in the context of binding parties to agreed recitals in deeds (a paradigm example of ‘estoppel in pais’). Traditionally it was conceived as a rule of evidence that precluded the party estopped from leading evidence to rebut the recital or assumption. However, and especially since the decision of this court in Amalgamated Investment and Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1981] 3 All ER 577, [1982] QB 84, its principles have largely been explained in equitable terms and expanded as another variant of equitable estoppel. [73] Estoppel by convention is not founded on a unilateral representation, but rather on mutually manifest conduct by the parties based on a common, but mistaken, assumption of law or fact: its basis is consensual. Its effect is to bind the parties to their shared, even though mistaken, understanding or assumption of the law or facts on which their rights are to be determined (as in the case of estoppel by representation) rather than to provide a cause of action (as in the case of promissory estoppel and proprietary estoppel); and see Snell’s Equity (33rd edn, 2015) at 12–012. If and when the common assumption is revealed to be mistaken the parties may nevertheless be estopped from departing from it for the purposes of regulating their rights inter se for so long as it would be unconscionable for the party seeking to repudiate the assumption to be permitted to do so (and see, for example, Norwegian American Cruises A/S (formerly Norwegian American Lines A/S) v Paul Mundy Ltd, The Vistafjord [1988] 2 Lloyd’s Rep 343 at 353 in the judgment of Bingham LJ, as he then was)’ [112] Hence in the instant case, this Court finds that both the Plaintiffs and the 1st Defendant and or its nominees, had, in respect of the sale of the beneficial ownership of the Sale Shares to Lead Wizard, proceeded on the presumption that the SHA either never existed or enforceable between them or that the Plaintiffs would not be insisting on their pre-emption rights under Clauses 6.1 and 7.1 of the SHA. That this was the case is clear since the Plaintiffs never objected to the sale even after coming to know of the same in July 2016, did not object to the 1st Defendant exiting the 4th Defendant, did not object to the appointment of Lead Wizard’s representative to the 4th Defendant’s Board of Directors, did not object to the assignment of the 1st Defendant’s debts to Lead Wizard and significantly had proceeded to work harmoniously with Lead Wizard as the majority shareholder of the 4th Defendant. [113] In the process, the Plaintiffs had enjoyed the benefits of Lead Wizard’s restraint from seeking the immediate payment of the 4th Defendant’s debts under the assignment and consenting to the Plaintiffs’ management of the 4th Defendant, including the payment of the Plaintiffs’ salaries. To my mind the mutual dealings between the Plaintiffs and Lead Wizard during the period from 2017 to 2020 are sufficient to convey to the 1st Defendant and to Lead Wizard the assumption that the Plaintiffs had no issues with the change in the beneficial ownership of the Sale Shares from the 1st Defendant to Lead Wizard at all. For the Plaintiffs to now insist on reversing the entire sale and purchase of the beneficial ownership of the Sale Shares would be unconscionable and prejudicial to the 1st Defendant and Lead Wizard. Oppression [114] Finally, the Plaintiffs have pleaded in paragraph 41 of their Re-Amended Statement of Claim that ‘… the 2nd and 3rd Defendants have through the acts and or omission of the 7th and 8th Defendants, conducted the affairs of the 4th Defendant in a manner oppressive to and or in total disregard of the Plaintiffs’ interests as members of the 4th Defendant and or is otherwise prejudicial to their rights as members’. [115] No particulars have been pleaded in support of the ‘acts or omission’. Learned counsel for the Plaintiffs nevertheless relied on paragraph 39 of the Re-Amended Statement of Claim where particulars of the ‘acts and or omission of the 7th and 8th Defendants’ were pleaded. These ‘acts and omission’ can be summarized as follows:

The 2nd Plaintiff was not re-elected and or was removed as a director of the 4th Defendant on 19.18.2020 despite her standing as a personal guarantor to loan granted by SME Bank to the 4th

The 1st Plaintiff’s son, Kyung Hwan was not re-elected as a director on 27.6.2019; he was subsequently re-appointed as a director to serve as a personal guarantor but on 19.8.2020 was again not re-elected. However, on 3.9.2020, he was re-appointed as a director because of an impending loan from Public Bank Berhad so that he can serve as a personal guarantor. This constant re-appointment had made Kyung Hwan subject to yearly retirement pursuant to Article 68 of the Constitution of the 4th Defendant;

The 4th Defendant failing to repay the 1st Plaintiff’s personal advances and instead there was an expectation that the 1st Plaintiff continue to finance the operation of the 4th Defendant;

Notwithstanding the shortage of capital, the 2nd Defendant had caused the debt due and owing to the 1st Defendant to be repaid as a matter of preference and priority;

The 8th Defendant i.e. Dato’ Francis Tan who was also a director in a competitor company failed to declare his conflict of interest;

The 2nd Defendant had caused the transfer of 1000 shares held by the 2nd Defendant to one Siti Baiduri and the transfer of a further 1000 shares held by the 2nd Defendant to one Muhammad

The 2nd Defendant had changed the cheque signatories of the bank accounts maintained by the 2nd Defendant at the board meeting on 23.12.2020;

The 2nd Defendant had sought to appoint one Lamin bin Ismail as an additional director of the 4th Defendant. [116] The Plaintiffs’ claim based on oppression does not appear to be the primary focus of their action. In fact, this is the first time that I come across a claim for oppression being made as an incidental cause of action to a main claim for breach of a share sale agreement and a shareholders’ agreement. As a result, many of the allegations on oppression were unfortunately not fully developed or focused at the trial. [117] The issue relating to the 2nd Plaintiff’s removal as a director of the 4th Defendant and the issue relating to the constant appointment and re-appointment of PW3 as a director of the 4th Defendant are both complaints affecting the rights of the 2nd Plaintiff and DW3 qua directors and not shareholders. In fact, DW3 is not even a shareholder of the 4th Defendant. Neither is he a party to this action. [118] Even if the 2nd Plaintiff and DW3 were to be treated as the nominee directors of both the 2nd Plaintiff and the 3rd Plaintiff under the terms of the SHA, the Plaintiffs’ complaints if at all are matters coming within the SHA and relate to inter-shareholder disputes and not the affairs of the 4th Defendant. In ISM Sdn Bhd v Queensway Nominees (Asing) Sdn Bhd & Ors [2021] 7 MLJ 506, our Court made reference to the case of How Yew Kong v Sakae Holdings Ltd [2018] SGCA 33 where the Singapore Court of Appeal in an action based on section 216 of the Singapore Companies Act which is in pari materia with our section 346 of the Companies Act 2016 opined as to the possible situations where breaches of shareholders agreement may not give rise to an action for oppression. Sundaresh Menon CJ states: "One can easily conceive of possible situations where a shareholders' agreement in fact specifically concerns the affairs of the company in question. The JVA in the present case is an example of just such an agreement as it spells out, among other things, the business of the Company (cl 6), the composition of the Company's board of directors (cl 7) and the proceedings of directors' meetings (cl 8). In our judgment, it is only where the complaint relates purely to inter-shareholder disputes, so that neither the company nor its affairs are implicated' (emphasis added) that an action under s 216 will be unavailable (see Corporate Law at para 11.041).” [119] As regard the complaint relating to the delay or non-payment of the 1st Plaintiff’s advances to the 4th Defendant, this is not a shareholder matter as the 1st Plaintiff himself is not a shareholder of the 4th Defendant. [120] The fact that the 4th Defendant has caused the debts due to the 1st Defendant to be paid as a matter of preference or priority is also not a shareholder matter. It is for the 4th Defendant to determine as a matter of business judgment how its debts to creditors are to be paid. There is no suggestion that no actual debts were in fact due to the 1st Defendant from the 4th Defendant. [121] Further issues relating to directors having conflict of interest are matters between the 4th Defendant and the individual directors. If in fact any of the directors have acted in breach of their duties to act in the interest of the company, it is for the 4th Defendant to take up the necessary actions. [122] It must be plain that the 2nd Defendant’s transfers of 1,000 of its shares in the 4th Defendant each to Siti Baiduri and Mohammad Iqram also cannot amount to oppression of the Plaintiffs. Neither have the Plaintiffs demonstrated how the change of the cheque signatories at the 4th Defendant’s board meeting on 23.12.2020 prejudiced them as shareholders. In fact, apart from complaining about the change in the cheque signatories, nothing more was proffered as to any actions taken, by the cheque signatories that may have prejudiced the interests of the minority shareholders. [123] Hence, for the reasons above, the Plaintiffs’ claim based on oppression under section 346 of the Companies Act 2016 cannot be sustained. Conclusion [124] In the premises, the Plaintiffs’ action is dismissed with costs fixed at RM 90,000.00 payable to the 1st, 5th and 6th Defendant and costs fixed at RM 60,000.00 payable to the 2nd and 4th Defendants respectively subject to payment of allocator. For avoidance of doubt, the Plaintiffs are to bear the costs on a joint and several basis. Dated on the 7th day of December 2022 ONG CHEE KWAN J Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 COUNSEL:

Mr. Lee Hoe Leong together with Ms. Loh Sook Fun for Plaintiff

Mr. Conrad Young for 1st, 5th and 6th Defendants

Mr. Sunther Tulasi together with Mr. Ahmad Amir Mahmood for 2nd and 4th Defendants Messrs. Amir & Rajpal Ghai (Kuala Lumpur)

Tindok Besar Estate Sdn. Bhd. v. Tinjar Co. [1979] 2 MLJ 229 2. Sargent v ASL Developments Ltd (1974) 131 CLR 634 3. Said Marwi v Chan Hwan Hua & Anor [2001] 1 MLRA 1 4. Dixon and another v Blindley Heath Investments Ltd and others [2015] EWCA Civ 1023 5. ISM Sdn Bhd v Queensway Nominees (Asing) Sdn Bhd & Ors [2021] 7 MLJ 506 6. How Yew Kong v Sakae Holdings Ltd [2018] SGCA 33

Section 216 of the Singapore Companies Act 2.