My Dental Care Sdn. Bhd. v Muhammad Fadli Bin Embong (BA-12ANCC-33-08/2025)

(a) The 1st Defendant and the 2nd Defendant’s appeal is dismissed;

(b) The 3rd Defendant and the 4th Defendant’s appeal is allowed. Background facts [4] The 1st Defendant is a company that supplies medical and dental equipment. The 2nd Defendant operates several branches of dental clinics bearing the brand-name of “My Dental Care” (“the Dental Clinics”). At the same time, the 1st Defendant acts as an investment holding company for the 2nd Defendant, in which the 1st Defendant will look for potential investors to invest in the Dental Clinics. [5] The 3rd Defendant and the 4th Defendant are directors and shareholders of the 1st Defendant and the 2nd Defendant. [6] The 3rd Defendant and the 4th Defendant had represented to the Plaintiffs that they have the experience and expertise to manage and operate the Dental Clinics and that the business for the Dental Clinics is very lucrative and can generate good income (“the Representations”). [7] The 3rd Defendant and the 4th Defendant then offered to the Plaintiffs an opportunity to invest in the Dental Clinics. Based on the Representations that were made, the Plaintiffs agreed to invest with the 1st Defendant in order to open one (1) branch of the Dental Clinics at Kelana Jaya (“the Kelana Jaya Clinic”). Some of the Plaintiffs had paid an investment sum (“the Investment Sum”) amounting to Ringgit Malaysia Fifty Thousand (RM 50,000.00) only, whereas the others had paid the Investment Sum amounting to Ringgit Malaysia Forty-Nine Thousand Nine Hundred and Eighty-Three and Sen Four (RM 49,983.04) only. [8] Following the investments that were made by the Plaintiffs, the Plaintiffs were registered as shareholders in the 1st Defendant and share certificates (“the Share Certificates”) were issued to each of the Plaintiffs, evidencing payment for the shares (“the Shares”). [9] The Plaintiffs now state that the Representations that were made by the 3rd Defendant and the 4th Defendant were false: -

(a) The Defendants had failed to commence operations of the Kelana Jaya Clinic within the stipulated time frame;

(b) The Defendants had failed to ensure that the Kelana Jaya Clinic’s facilities were up to par and in accordance with the Representations;

(d) The Defendants failed to manage and operate the Kelana Jaya Clinic diligently in accordance with the Representations;

(e) The Defendants had failed to pay the investment return (“the Investment Return”) as agreed. [10] On 11/10/2023, the Plaintiffs attended a meeting with the Defendants (“the Meeting”) to settle their ongoing dispute. As a result of the Meeting, the Defendants agreed to refund the Investment Sum to each of the Plaintiffs within six (6) months. [11] Following the consensus that was reached in the Meeting, the 1st Defendant issued a letter dated 16/10/2023 (“the Mutual Agreement”), stating the following settlement terms: -

(a) That the Plaintiffs will transfer each of the Shares which they hold to MDC Asia Sdn Bhd (“MDC Asia”), which is a subsidiary of the 1st Defendant;

(b) In consideration of transfer of the Shares, the 1st Defendant will refund the Investment Sum to the Plaintiffs;

(c) The refund of the Investment Sum to each of the Plaintiffs shall be made within six (6) months from the date of execution of the Mutual Agreement (“the Expiry Date”). [12] However, the 1st Defendant failed to refund the Investment Sum to the Plaintiffs by the Expiry Date. [13] By a letter dated 18/7/2024 issued by the Defendants’ solicitor, the Defendants had sought for a two (2) months extension (“the Extended Expiry Date”) to pay the Investment Sum. [14] By a letter dated 2/8/2024 issued by the Plaintiffs’ solicitor, the Plaintiffs had agreed to the Extended Completion Date on the condition that the 3rd Defendant and the 4th Defendant execute personal guarantee (“the Personal Guarantee”) to guarantee the obligations of the 1st Defendant. However, the 3rd Defendant and the 4th Defendant did not do so. [15] Following the failure by the Defendants to adhere to the settlement terms in the Mutual Agreement, the Plaintiffs commenced an action against the Defendants. The SCJ allowed the Plaintiffs’ application for summary judgment on 30/7/2025. Summary of the decision by the SCJ [16] The SCJ decided that the issues raised by the Defendants has no merits and are mere denials. [17] The SCJ pointed out that the 1st Defendant’s company search report in the Companies Commission of Malaysia (“the SSM’s Record”) showed that the Plaintiffs have all been registered as shareholders. Therefore, the Defendants cannot deny receiving payments of the Investment Sum from the Plaintiffs. This is also fortified by the existence of the Mutual Agreement. [18] The SCJ also did not accept the Defendants’ argument that the payments were investment and not loans. The Defendants had then argued that since the payments were for investment, it cannot be refunded back to the Plaintiffs. The SCJ stated that pursuant to the Mutual Agreement, the 1st Defendant themselves agreed to return and refund the Investment Sum. [19] On the issue of whether the Meeting had actually taken place, the SCJ found that the fact that the Mutual Agreement and the transfer forms (“the Transfer Forms”) has all been signed by the Plaintiffs, this would be sufficient evidence to prove that the Meeting had taken place. [20] The SCJ had also found that although the Plaintiffs had failed to return the duly signed Mutual Agreement to the 1st Defendant, there still exists a valid and binding agreement between the 1st Defendant and the Plaintiffs as all the basic elements of a contract has been established. [21] Accordingly, based on the evidence in the affidavits, the SCJ found that: -

(a) There exists the Mutual Agreement;

(b) There exists the Transfer Forms;

(c) The Mutual Agreement and the Transfer Forms are not being disputed by the Defendants. [22] The SCJ then made the following orders against the Defendants: -

(a) That the Defendants refund to the Plaintiffs the Investment Sum within thirty (30) days;

(b) That the Defendants pay interest on the Investment Sum at the rate of 6% per annum from the date of investment until full payment;

(c) That the 1st Defendant completes the share transfer transaction from the Plaintiffs to the 1st Defendant within sixty (60) days. Summary of the Defendants’ case (in supporting this appeal) The Mutual Agreement is not valid and binding [23] The Defendant state that the Plaintiffs had failed to return the signed copies of the Mutual Agreement. The Defendants argue that Section 7 of the Contracts Act 1950 states that acceptance must be communicated. As the signed copies of the Mutual Agreement have not been delivered back to the Defendants, the Defendants submit that the Mutual Agreement is not valid as there was no communication of acceptance. No evidence to show that the Meeting had taken place [24] The Defendants also submit that there is no documentary evidence to prove that the Meeting had actually taken place. There were no minutes prepared to show that the Meeting had actually being conducted. Therefore, the Defendants argue that the validity of the Meeting can only be proven by way of witnesses’ testimony in a trial. No investment agreement being exhibited [25] The Defendants state that there were no investment agreements that were exhibited in order to prove the Plaintiffs’ claims. The Defendants also argue that the Plaintiffs had only invested into the shares of the 1st Defendant. However, the investment into the Kelana Jaya Clinic actually involves another company, MDC Sinergi Sdn Bhd (“MDC Sinergi”). The Defendants contend that the Plaintiffs did not sign any agreements with MDC Sinergi, hence there was no actual investments made towards the Kelana Jaya Clinic. Therefore, the Defendants argue that whether or not there exists a binding contract between the parties can only be decided in a trial, and not to be decided by way of summary judgment. The payments made by the Plaintiffs are for investments, and not loans [26] The Defendants argue that the Investment Sum paid by the Plaintiffs are categorised as investments, and not as a loan. The Plaintiffs are registered as shareholders. The essence and principle of an investment would be that all investments come with a risk. This means that even if the investment fails to yield profits, it would not be possible for the Plaintiffs to request for a refund of their principal sums. By ordering the Defendants to refund the Investment Sum, the SCJ had erred and had failed to recognize the distinction between an investment and a loan. Evidence of payment by the Plaintiffs to the 1st Defendant is doubtful [27] The Defendants argue that the SCJ had erred by merely referring to the SSM Records to conclude that the Plaintiffs are investors, without actually ascertaining the actual amounts that were paid by each of the Plaintiffs. The Defendants state that that were no agreements or documents exhibited. There are also differences in the amounts that were paid. Some amounts were alleged to have been RM 50,000.00, whilst other amounts have been identified as RM 49,983.04. As there are no supporting evidence, there are questions as to what are the sums that were actually paid. [28] The Defendants also point out that there are discrepancies in the number of shares that is stated in the SSM’s Records. The allegation that the Representations are false have not actually been proven [29] The Defendants state that there is no evidence to prove that the Representations are false. For example, on the allegation that the Defendants had failed to commence operations of the Kelana Jaya Clinic within the stipulated time frame, there is no evidence to show or suggest what is the “stipulated time frame”. [30] As such, the allegations that the 3rd Defendant and the 4th Defendant had made the Representations cannot be decided by way of summary judgment. The Defendants argue that the allegation of misrepresentations are all triable issues. Letter dated 18/7/2024 issued by the Defendants’ solicitor is marked as a “without prejudice” communication [31] The Defendants argue that the letter dated 18/7/2024 issued by the Defendants’ solicitor to sought for the Extended Expiry Date has been issued on a “without prejudice” basis. As such the said letter should not be admissible in Court. The 3rd Defendant and the 4th Defendant cannot be made personally liable [32] The Defendants argue that the 3rd Defendant and the 4th Defendant cannot be made personally liable as the Plaintiffs have not proven the accusation of fraud. The Defendants also point out that the issue of fraud and the issue of personal liability was never covered by the SCJ in her grounds of judgment. [33] The Defendants state that the principle of separate legal entity should apply and that the corporate veil may only be pierced in exceptional circumstances. In this case, there is no such evidence adduced by the Plaintiffs and the Personal Guarantee was never signed by the 3rd Defendant and the 4th Defendant. Therefore, any losses from the investment are to be borne by the 1st Defendant alone. Summary of the Plaintiffs’ case (in opposing this appeal) The Mutual Agreement is not valid and binding [34] The Plaintiffs argue that the Mutual Agreement has already been executed by the Plaintiffs. Just because the Mutual Agreement was not returned to the Defendants does not make the Mutual Agreement invalid. No evidence to show that the Meeting had taken place [35] The Plaintiffs point out to the fact that the Plaintiffs’ solicitors, M/s Khairul Fadzli Amin & Co had issued a letter dated 30/10/2023 to the Defendants’ solicitors, M/s Shukor & Associates. The letter dated 30/10/2023 had expressly referred to the Meeting held on 11/10/2023. Thereafter, M/s Shukor & Associates had actually given reply via a letter dated 15/12/2023, which encloses the copies of the Mutual Agreement and the Transfer Forms. [36] The Plaintiffs argue that the reply by M/s Shukor & Associates goes to show that the Defendants themselves had admitted that the Meeting had taken place. No investment agreement being exhibited [37] The Plaintiffs point out that their claim is strictly based on the Defendants’ failure to adhere to the terms of the Mutual Agreement. It has got nothing to do with the investment agreement. As such, the issue of the investment agreement should not arise at all. Moreover, the Plaintiffs are all already registered as shareholders. The payment made by the Plaintiffs are for investments, and not loans [38] The Plaintiffs aver that the terms of the Mutual Agreement clearly states that the Defendants agree to refund the Investment Sum to the Plaintiffs. Therefore, there is no reason to argue whether such sums are investments or loans. Evidence of payment by the Plaintiffs to the 1st Defendant are doubtful [39] The Plaintiffs argue that there is no requirement for them to prove that they have made payments. The fact is that the Plaintiffs have all been registered as shareholders. If the Defendants are disputing such payments, it is akin to the Defendants disputing all of the Plaintiffs’ shareholdings. The Mutual Agreement also clearly shows that the payments have all been made. The allegation that the Representations are false have not actually been proven [40] The Plaintiffs argue that the Representation were non-issues in this case as the Plaintiffs’ claim is in respect of the Mutual Agreement, and not on the misrepresentations. Letter dated 18/7/2024 issued by the Defendants’ solicitor is marked as a “without prejudice” communication [41] Although it has been marked as “without prejudice”, the Plaintiffs argue that the said letter can still be referred as the Defendants themselves have referred to in their affidavit-in-reply. Findings by the Court The Mutual Agreement is not valid and binding [42] I am not able to accept the Defendants’ argument that, just because the signed copies of the Mutual Agreement have not been delivered to the Defendants, there was no valid contract due to the fact that there was no communication of acceptance in accordance with Section 7 of the Contracts Act 1950. [43] Acceptance need not be by way of delivery of the signed copies of the Mutual Agreement. Acceptance may be express (oral or in writing) or implied from conduct. The Defendants cannot feign ignorance of the facts. The series of correspondence between the Plaintiffs’ solicitors, M/s Khairul Fadzli Amin & Co and the Defendants’ solicitors, M/s Shukor & Associates show that the Defendants are well aware that the Mutual Agreement has been executed by the Plaintiffs, hence the issue of non-communication of acceptance does not arise: -

(a) Khairul Fadzli Amin & Co’s letter dated 30/11/2023, requesting for the documents to be forwarded to them;

(b) Shukor & Associates’ letter dated 15/12/2023, enclosing the Mutual Agreement and the Transfer Forms for execution;

(c) Khairul Fadzli Amin & Co’s letter dated 11/7/2024, confirming the execution of the Mutual Agreement. Paragraph (2) of Khairul Fadzli Amin & Co’s letter dated 11/7/2024 states as follows: - “(3) Untuk makluman tuan, anakguam kami juga telah pun menandatangani dokumen-dokumen yang telah dikemukakan oleh pihak tuan termasuk “Mutual Agreement” bertarikh 16/10/2023 yang mana adalah sesuatu yang telah dipersetujui melalui perbualan di antara peguam kami dan peguam tuan sebelum ini bahawa dokumen-dokumen tersebut akan diserahkan kepada pihak tuan selepas wang-wang pelaburan anakguam kami dimasukkan oleh anakguam tuan ke dalam akaun anakguam (“client’s account”) firma tuan sebagai pemegang taruhan (“stake holder”).” [44] The acceptance of the Defendants’ offer is made by way of the Plaintiffs signing the Mutual Agreement. The communication of the acceptance is made by way of the correspondence between the parties. Therefore, the communication of acceptance is complete as the Defendants are well aware of the execution of the Mutual Agreement by the Plaintiffs. No evidence to show that the Meeting had taken place [45] The Plaintiffs claim against the Defendants is pursuant to the breach of the terms of the Mutual Agreement. Therefore, regardless of whether the Meeting had or had not taken place would have no effect on the Plaintiffs’ claim. The Meeting has been overtaken by events, in this case, by the Mutual Agreement. As such, it would be irrelevant to dwell on the issue of whether there are no documentary evidence or minutes to show that the Meeting had actually taken place. [46] In any event, the series of correspondences between the parties would show that the Meeting had actually taken place: -

(a) Khairul Fadzli Amin & Co’s letter dated 30/11/2023 (paragraph 2);

(b) Khairul Fadzli Amin & Co’s letter dated 11/7/2024 (paragraphs 2, 4, 6 and 8);

(c) Khairul Fadzli Amin & Co’s letter dated 2/8/2024 (paragraph 2, 3 and 4). It would be incredulous, after the series of correspondences between the parties, for the Defendants to now dispute whether the Meeting had actually taken place. No investment agreement being exhibited [47] Again, I would state here categorically that the Plaintiffs’ claim is grounded upon the Mutual Agreement. The Plaintiffs’ claim has got nothing to do with the background events. As such, all issues relating to the non-disclosure of the investment agreement are immaterial and irrelevant. The Mutual Agreement is a valid and binding contract. The offer is for the 1st Defendant to pay the Investment Sum to each of the Plaintiffs, in consideration of the Plaintiffs transferring the Shares to a third party, MDC Asia. The claim here is strictly for breach on the part of the Defendants to adhere to the terms of the Mutual Agreement. [48] In any event, I would also agree with the Plaintiffs’ contention that the Plaintiffs have all been registered as shareholders and the Share Certificates have already been issued to each of the Plaintiffs. The payments made by the Plaintiffs are for investments, and not loans [49] Again, I would state here that the Plaintiffs’ claim is based on the Mutual Agreement. Therefore, the issue of distinction between an investment and a loan is not relevant. [50] In any event, the Mutual Agreement states that the Plaintiffs would be required to transfer the Shares to a third party, MDC Asia. This would mean that the Defendants are not refunding the capital. The transfer of shares by the Plaintiffs to MDC Asia would be treated as a transfer of shares, and not a reduction of share capital. Evidence of payment by the Plaintiffs to the 1st Defendant doubtful [51] Again, I would state here that the Plaintiffs’ claim is purely based on the Mutual Agreement. Therefore, the question as to what are the sums that were actually paid by the Plaintiffs is not relevant. [52] In any event, I would also state that Paragraph (2)(i) of the Mutual Agreement had clearly identified the price to be paid to each of the Plaintiffs will be at RM 50,000.00 each. This is the amount that has been agreed to be paid by the Defendants. Hence, any attempt to indulge in a backtracking exercise would be waste of judicious time. The allegation that the Representations are false have not actually been proven [53] The issue on the Representations have clearly been overtaken by events of the Mutual Agreement. Any attempt to relook into this issue would be irrelevant and of no effect. Letter dated 18/7/2024 issued by the Defendants’ Solicitor is marked as a “without prejudice” communication [54] I do not think that the letter dated 18/7/2024 is a privileged document. A “without prejudice” letter is a privileged document that specifically relate to negotiations aimed at a settlement between parties in a dispute. This is not the case here. The Mutual Agreement has already been executed. There are no settlement negotiations at this juncture of time. The 3rd Defendant and the 4th Defendant cannot be made personally liable [55] On this issue, I agree with the Defendants’ contention that the issue was never covered by the SCJ in the grounds of judgment. The 3rd Defendant and the 4th defendant did not sign any Personal Guarantee. Hence, the 3rd Defendant and the 4th Defendant cannot be made personally liable as the Plaintiffs have not proved the accusation of fraud. Conclusion [56] Accordingly, for the reasons above, the 1st Defendant and the 2nd Defendants’ appeal is dismissed with costs fixed at RM 5,000.00; whereas the 3rd Defendant and the 4th Defendant’s appeal is allowed. Postscript It has been prevalent for companies to approach investors from the general public as a form of fundraising exercise. In return of the investment sum, investors will be allotted ordinary shares. This practice ought to be discouraged. Where such investors do not participate in the management of the company, ideally, such public investors should be allotted with preference shares. The focus will be on its preferential right to a fixed (and usually) cumulative dividend which is payable and of profits in priority to dividends on ordinary shares, and to a return of capital. In this respect, companies would be required adhere to the provisions of the Capital Market and Services Act 2007 and the Guidelines on Offer of Shares by Unlisted Public Companies to Sophisticated Investors issued by the Securities Commission Malaysia. A copy of the Information Memorandum in respect of such fundraising exercise would have to be deposited with the Securities Commission of Malaysia. Dated the 13th day of January 2026 (SEOW HOCK PENG) JUDICIAL COMMISSIONER HIGH COURT OF MALAYA SHAH ALAM, SELANGOR Counsel: For the Appellants : Suzanawati Ismail (Defendants) Nur Aisyah Mohd Azhan (Messrs Suzana Ismail & Partners) For the Respondents : Muhammad Daniel Roslan (Plaintiffs) Siti Atikah Othman (Messrs Mahani Ibrahim & Associates)