1. ) Litegrid Holdings Limited v 1. ) Capital Guaranteed Sdn Bhd (AA-22NCC-7-07/2019)

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1 IN THE HIGH COURT OF MALAYA AT IPOH IN THE STATE OF PERAK DARUL RIDZUAN CIVIL SUIT NO.: AA-22NCC-7-07/2019

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(ii) Two (2) Payment Directions dated 27.6.2014;

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(iii) The 1st Plaintiff’s Minutes of Meeting dated 27.6.2014;

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(iv) The 1st Plaintiff’s Shareholders Resolution dated 27.6.2014;

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(vi) The 2nd Plaintiff’s application form for telegraphic transfer dated 24.7.2014; and

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(vii) The 2nd Plaintiff’s HSBC bank statement dated 26.7.2014. S/N o2/8Iaqb0USCDbvzynaJA [4] The following facts are undisputed:-

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(ii) The said proposal was agreed by the 2nd Defendant, Jimmy and Robert; S/N o2/8Iaqb0USCDbvzynaJA

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(iii) Hence the first arrangement was made and documents were then prepared and signed by the 2nd Defendant (“the Original Arrangement”);

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(iv) Parties then decided that the Original Agreement was not suitable and had proposed the money be paid from the 2nd Plaintiff as an investment to reflect actual intention and purpose of the funds (“the New Arrangement”).

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(vi) Both Arrangements was intended to allow moneys to be given to Gary and Wilson as directors of the Plaintiff company to procure new clients and business opportunities in China and was not meant as a loan;

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(vii) The entire factual matrix of both arrangements were conducted with the full knowledge, approval and sanction of the board of directors of the Plaintiff including Robert, the real person in control;

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(viii) The 2nd Defendant took out USD400,000 and passed them to Gary and Wilson (and USD10,000 to Robert) as agreed between parties on various dates. [12] It was the Defendants’ averment that as the money had been dutifully passed to the directors of the Plaintiffs as intended and agreed by the parties from the onset, the 1st Defendant ought not be held liable to repay the said sum to the Plaintiffs. S/N o2/8Iaqb0USCDbvzynaJA [13] The Defendants further averred that in addition to the above reasons, the 2nd Defendant had at all material time discharged his duties as a director in good faith and pursuant to the instructions and/or authority of the other director being Jimmy and Robert, the ultimate person in control of the Plaintiffs. [14] The main issue which arose for the determination of this court was whether the monies disbursed was for the purpose of loan. COURT’S FINDINGS [15] The Plaintiff’s main case is for the recovery of the interest free loan in the sum of USD400,000.00 which was disbursed by the 2nd Plaintiff to the 1st Defendant (“the Loan”). [16] The said disbursement of monies was not disputed by the parties. However, the Defendants had contended that the USD400,000.00 was disbursed by the 2nd Plaintiff to the 1st Defendant for the purpose of investment instead of a loan as claimed by the Plaintiffs as evident from the application forms for the telegraphic transfers which states the purpose of payment as an ‘investment’. [17] In dealing with conflicting evidence the duty of the Court is explained by the Court of Appeal in Guan Teik Sdn Bhd v. Hj Mohd Noor Hj Yakob & Ors [2000] 4 CLJ 324 where Siti Norma Yaakob JCA had held as follows:- S/N o2/8Iaqb0USCDbvzynaJA “In cases where conflicting evidence are presented before a court, it is the duty of the court not only to weigh such evidence on a balance of probabilities but it is also incumbent upon the court to look at all the surrounding factors and to weigh and evaluate contemporaneous documents that may tend to establish the truth or otherwise of a given fact. In this instance the learned trial judge discredited the evidence of the appellant, accepted the evidence of the respondents wholeheartedly and disregarded the contemporaneous documents totally. We say that he had erred as he had failed to direct his mind as to the probative effect of the contemporaneous documents. He should, after accepting the respondents' evidence, weighed it against the contemporaneous documents and evaluate whether such documents support the respondents' oral testimony. We say that this evaluation exercise is most crucial for it must be remembered that the respondents were testifying to events that happened eighteen years ago whilst the contemporaneous documents speak of matters then existing at the time such documents, were issued.” (Emphasis added) [18] Reference was made to another Court of Appeal case of AB Latef & Associates (M) Sdn Bhd v. Govindasamy Suppiah [2016] 10 CLJ 1 where Idrus Harun JCA (as he then was) had stated as follows:- S/N o2/8Iaqb0USCDbvzynaJA “[14] We wish to express our understanding of the law in the event the court is presented with conflicting evidence by parties in the course of a trial. It is, we apprehend, a duty incumbent upon the court, that where it faces such a situation, to undertake a critical evaluation of the sworn evidence which it has admitted including contemporaneous documentary evidence presented before it. Needless to say, the court should not ignore the significance of the probative value of documents existing, issued or used as the case may be, during the occurrence of an event as witnesses testify to events that occurred several years ago. In this case, the parties testified to events that took place 13 years before the commencement of this suit, whilst the contemporaneous documents speak of matters existing at the time such documents were issued or used and accordingly the contemporaneity of the documents to the event in question that is, the purchase of the said property, would make it more reliable evidence or could lend credence to the oral testimony of witnesses. The relevancy and reliability of contemporaneous evidence without doubt holds true and can be of great assistance to a judge in ascertaining the truth of the matter. The relevant excerpts from the judgment of Chang Min Tat FJ in Tindok Besar Estate Sdn Bhd v. Tinjar Co [1979] S/N o2/8Iaqb0USCDbvzynaJA 1 LNS 119; [1979] 2 MLJ 229 clearly postulated the legal position as follows: For myself, I would with respect feel somewhat safer to refer to and rely on the facts 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.” (Emphasis added) [19] The Plaintiffs had in the present case produced the company resolutions and minutes of meeting confirming the said transaction as a loan. [20] The Defendants had through Defendant’s witness (DW2) stated that the said documents relied on by the Plaintiffs pertained to the Original arrangement which was abandoned and/or superseded by the New Arrangement. It was thus the Defendants’ submission that the documents executed in respect of the original arrangement no longer applied. [21] DW2 further testified that minutes of meeting and passed company resolutions on the New Arrangement were prepared by Jimmy and signed by all parties including DW2. S/N o2/8Iaqb0USCDbvzynaJA [22] The Defendants had submitted that the burden is on the Plaintiffs to adduce evidence and to call Gary, Wilson or Robert to rebut the existence of the new arrangement. [23] I find it pertinent at this juncture to set our briefly the legal principle relating to burden of proof. I shall begin with the fundamental principle that the burden of proof lay throughout on the Plaintiffs to prove their claim against the Defendants. It is plain that the legal burden to prove on allegation lies on the party making the assertion (see Sections 101 to 103 Evidence Act, 1950). Until and unless the legal and evidentiary burden of proving its claim is discharged, the burden does not shift to the defendant to prove its defence, no matter how weak the defence might be (per Lim Yee Lan JCA in Sumbang Projeks Sdn Bhd v. Tenaga Nasional Berhad [2014] 4 CLJ 323). [24] In International Times & Ors v. Leong Ho Yuen [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 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. S/N o2/8Iaqb0USCDbvzynaJA 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 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.” [25] 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 and this burden shifts from one side to the S/N o2/8Iaqb0USCDbvzynaJA other according to the weight of the evidence. To differentiate the sense used, the "burden of proof" in s. 101 is "burden of proof", while the "burden of proof" in s. 102 and 103 is dubbed "onus of proof". In some jurisdictions, the s. 101 "burden of proof" is labelled "legal burden" while the s. 102 burden of proof" is referred to as "evidential burden" (see Yeohata Machineries Sdn Bhd & Anor v Coil Master Sdn Bhd & Ors [2015] MLJU 545). [26] The fact in issue that must be proven by the Plaintiffs is that the monies disbursed was for the purpose of the loan in order for the Plaintiffs to be entitled to the reliefs sought for in this case. In the event the Plaintiffs fail to prove these facts on a balance of probabilities, its case must necessarily fail. [27] Having carefully scrutinised all evidence adduced before this court, it is in my considered view that the Plaintiffs had produced sufficient contemporaneous documents to prove that the sum of USD400,000.00 was disbursed to the 1st Defendant as loan. [28] The burden now shifts to the Defendant to lead evidence to conclusively prove that the monies disbursed was for the purpose of investment. [29] It was the Defendants who had asserted that the monies were disbursed for the purpose of investment arranged by Gary, Wilson and Jimmy and/or Robert and that the sum was subsequently disbursed to Gary, Wilson and Robert. The duty thus behoves on the Defendants to prove that these facts as alleged exists. S/N o2/8Iaqb0USCDbvzynaJA [30] Not a shred of evidence was however adduced by the Defendants proving that monies disbursed was for the purpose of investment or that there exists a new arrangement between parties safe and except for the self-serving oral testimony of the 2nd Defendant. [31] It is the duty of this court to consider all credible documentary evidence instead of accepting inherently improbable and partial oral testimony as emphasised in the Court of Appeal case of Theow Say Kow @ Teoh Kiang Seng, Henry v. Graceful Frontier Sdn Bhd & Ors [2020] 1 LNS 52 as follows:- “All these pieces of strong and credible evidence ought to have been considered by the learned Judge instead of accepting inherently improbable evidence, which frequently came across as contrived and partial. Having carefully perused the records of appeal and having considered the submissions and the grounds of judgment, we find ourselves in full agreement with learned counsel for the appellant that the evaluation and appreciation of evidence was not fair or balanced. Relevant contemporaneous documents such as those that we have discussed above were not considered or properly examined with the learned Judge frequently misdirecting himself. In these circumstances, the decision reached was plainly wrong and was one which no reasonable judge could have reached.” S/N o2/8Iaqb0USCDbvzynaJA [32] Bearing the above principles in mind and based on the factual matrix of the case, it is thus in my conclusive finding that the Plaintiffs had proved their case, on the balance of probabilities, to the satisfaction of this court. The Defendants are thus found liable to repay the total sum of USD400,000.00 being the interest free loan which was granted by the 2nd Plaintiff to the 1st Defendant. Breach of Fiduciary Duties [33] The Plaintiffs had further claimed that the 2nd Defendant had breached his fiduciary duty as a director of the Plaintiffs in failing to ensure the repayment of the loan granted by its due date. [34] The Defendants had on this issue submitted that the Plaintiffs had failed to prove that the 2nd Defendant had acted in breach of his fiduciary duties for the following reasons:-

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(ii) General damages for the total sum of RM50,000.00 to be paid by the 2nd Defendant to the Plaintiffs for breach of fiduciary duties;

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(iii) Interest of 8% on all judgment sum awarded from the date of this judgment to the date of full settlement;

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(iv) Costs of this action to be paid by the Defendants to the Plaintiffs. Dated: 07.11.2022 -signed- (ABDUL WAHAB BIN MOHAMED) JUDGE HIGH COURT OF MALAYA IPOH, PERAK S/N o2/8Iaqb0USCDbvzynaJA Peguamcara Tetuan K.S. Su & Mah bagi pihak Perayu Peguamcara & Peguambela No. 79, Jalan Istana, Taman Istana, 30000 Ipoh Perak Darul Ridzuan Tel: