Paragon Union Berhad v Prestamewah Development Sdn Bhd; Liw Jun Wai (W-02(NCC)(W)-1202-07/2014; W-02(NCC)(W)-1238-07/2014)

1.

SDN BHD LIW JUN WAI …..RESPONDEN-RESPONDEN Didengar Bersama DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANG KUASA RAYUAN) RAYUAN SIVIL NO: W-02(NCC) (W)-1238-07/2014 TEE GUAN PIAN .….PERAYU LIW JUN WAI DAN LAIN-LAIN .….RESPONDEN-RESPONDEN 2 [DALAM PERKARA GUAMAN NO: 22NCC-2053-2010 (BAHAGIAN DAGANG) (Dahulunya Mahkamah Tinggi Shah Alam Guaman Sivil No:

CHAW CHOI KEW @ CHOW CHOI KEW

PROJEK PERWIRA SDN BHD …..PLAINTIF-PLAINTIF

PARAGON UNION BHD ..…DEFENDAN-DEFENDAN 3 (DICANTUMKAN DENGAN PERKARA GUAMAN NO: D8-22-737-2009 PARAGON UNION BERHAD …..PLAINTIFF

LIW JUN WAI …..DEFENDAN-DEFENDAN) (DICANTUMKAN DENGAN PERKARA GUAMAN NO:

ASIA AVENUE SDN BHD …………PLAINTIF-PLAINTIF

PARAGON UNION BERHAD …….DEFENDAN-DEFENDAN)] ____________________________________________________________________________ 4 CORUM ALIZATUL KHAIR OSMAN KHAIRUDDIN, JCA ZABARIAH MOHD YUSOF, JCA HARMINDAR SINGH DHALIWAL, JCA

There are 2 appeals before us, namely: i) W-02(NCC)(W)-1202-07/2014 (Appeal 1202); and ii) W-02(NCC)(W)-1238-07/2014 (Appeal 1238), which arose from the decision of the learned High Court Judge dated 18.6.2014 after a full trial of 3 consolidated Suits, i.e.: i) 22NCC-2053-2010 (Suit 2053); ii) 22-737-2009 (Suit 737); and iii) 22-445-2009 (Suit 445).

The parties to the relevant Suits in the High Court are as follows: 5 Item Suit No: Plaintiff/s Defendant/s i) Suit 2053

Liw Jun Wai 2. Chaw Choi Kew @ Chow Choi Kew 3. Prestamewah Development Sdn Bhd 4. Bijak Gagah Sdn Bhd 5. Projek Perwira Sdn Bhd

Tee Guan Pian 2. Tan Hong Kien 3. Tan Onn Poh 4. Kong See Kuan 5. Paragon Union Berhad ii) Suit 737 Paragon Union Berhad

Prestamewah

Development Sdn Bhd Liw Jun Wai iii) Suit 445

Kong See Kuan 2. Asia Avenue Sdn Bhd

Liw Jun Wai

Quah Ban Hoo

Soong Kit Kong Julian

Benny Soh Seow Leng

Rohaizal bin Idris

Bijak Gagah Sdn Bhd 7. Paragon Union Berhad

In this judgment, whenever the word “Plaintiffs” or “Defendants” appears, it refers to the Plaintiffs and the Defendants in Suit 2053 at the High Court, as the parties in Suit 445 did not appeal against the decision of the learned trial Judge. Otherwise, they will be referred to by their names.

The subject matter of the appeals herein is in relation to transactions involving a series of 9 agreements, guarantees and indemnities, that were entered between Liw Jun Wai and/or his companies or nominees with Kong See Kuan and Tan Onn Poh as well as 6 companies controlled by them, namely Asia Avenue Sdn Bhd and Paragon Union Berhad. BACKGROUND: The 9 Agreements

As stated earlier, the appeals before us revolve around a series of 9 Agreements which are as follows: a) A Sales and Purchase Agreement between Liw Jun Wai and Prestamewah Development Sdn Bhd as vendors and Paragon Union Berhad as purchasers for all the shares in Dominion Park Sdn Bhd (hereinafter referred to as “the DPSB Agreement”); b) A letter of guarantee and indemnity given by Liw Jun Wai and Prestamewah Development Sdn Bhd to Paragon Union Berhad in respect of the DPSB Agreement (hereinafter referred to as “the DPSB Guarantee”); c) A Sales and Purchase Agreement between Kong See Kuan as vendor and Liw Jun Wai as purchaser for Kong See Kuan’s 75% stake in Asia Avenue Sdn Bhd (AASB) (hereinafter referred to as “the SPA with Kong See Kuan”); 7 d) A letter of guarantee and indemnity given by Liw Jun Wai to Kong See Kuan (hereinafter referred to as “Kong See Kuan’s Guarantee Agreement”); e) A loan agreement between Bijak Gagah Sdn Bhd and AASB (hereinafter referred to as “the Loan Agreement”); f) A Settlement Agreement between Projek Perwira Sdn Bhd and Paragon Union Berhad (hereinafter referred to as “the Settlement Agreement”); g) A letter of guarantee and indemnity given by Liw Jun Wai to Paragon Union Berhad in respect of the Settlement Agreement (hereinafter referred to as “the Paragon Guarantee Agreement”); h) A Sales and Purchase Agreement between Tan Onn Poh as vendor and Chaw Choi Kew @ Chow Choi Kew as purchaser for Tan Onn Poh’s 25% equity in AASB (hereinafter referred to as “the SPA with Tan”); and i) A personal guarantee given by Liw Jun Wai to Tan Onn Poh as regards a put and call option pursuant to Sales and Purchase Agreement with Tan Onn Poh (hereinafter referred to as “Tan’s Guarantee”). 8

Liw Jun Wai and Prestamewah Development Sdn Bhd received RM18 million from Paragon Union Berhad pursuant to the DPSB Agreement. The Parties:

For convenience and to appreciate the transactions involved, it is pertinent to state the background of parties, which are as follows.

Liw Jun Wai: i) majority shareholder as well as managing director of Prestamewah Development Sdn Bhd; ii) beneficial owner of all shares in Bijak Gagah Sdn Bhd and Projek Perwira Sdn Bhd; iii) owns 25% equity in Dominion Park Sdn Bhd (DPSB) while Prestamewah Development Sdn Bhd owns the remaining 75% equity in DPSB.

Chaw Choi Kew @ Chow Choi Kew: i) nominee of Liw Jun Wai; ii) holds Tan Onn Poh’s shares in AASB upon trust solely and absolutely for the benefit of Liw Jun Wai.

Tee Guan Pian: a) a qualified chartered accountant and certified public accountant; 9 b) from 1995-2008 practiced as a partner in an audit and accounting firm known as Messrs. Anuarul Azizan Chew & Co (“AACC”). Thereafter he was a partner in another audit and accounting firm known as UHY Diong Advisory (KL) Sdn Bhd (“UHY”). At all times Messrs. Anuarul Azizan Chew & Co. was the external auditor for AASB. UHY Diong Advisory (KL) Sdn Bhd was the auditor for Paragon Union Berhad for 2008.

Tan Hong Kien: i) Executive Director of Paragon Union Berhad; ii) nephew of Tan Onn Poh.

Tan Onn Poh: i) non executive director of AASB and Managing Director of Paragon Union Berhad; ii) owns 25% equity in AASB.

Kong See Kuan: i) owns 75% equity in AASB; ii) at all times a director of AASB.

Asia Avenue Sdn Bhd (AASB): i) owns 48.48% shares in Paragon Union Berhad; ii) majority shareholder of Paragon Union Berhad. 10

Paragon Union Berhad is a public listed company listed on the Bursa Malaysia at the material time. The pleaded case in Suit 2053:

In August 2008, Liw Jun Wai, Prestamewah Development Sdn Bhd, Bijak Gagah Sdn Bhd and Projek Perwira Sdn Bhd entered into 7 Agreements i.e.: i) DPSB Agreement; ii) DPSB Guarantee Agreement; iii) SPA with Kong See Kuan; iv) Kong See Kuan’s Guarantee Agreement; v) The Loan Agreement; vi) Settlement Agreement; vii) Paragon’s Guarantee Agreement.

In November 2008, Tan Onn Poh and Liw Jun Wai entered into the following 2 Agreements: i) SPA with Tan; ii) Tan’s Guarantee.

Tee Guan Pian and Tan Hong Kien were the representatives of Tan Onn Poh and Kong See Kuan. 11

Kong See Kuan, Tan Onn Poh and/or their agents, Tee Guan Pian and Tan Hong Kien, made various representations to the Plaintiffs inducing them to enter into the 9 Agreements.

After the 9 Agreements were executed, payments were made by Paragon Union Berhad to the Plaintiffs.

Although the 9 Agreements were ex facie lawful, the 9 Agreements formed a composite transaction and the 9 Agreements were designed and employed by Tee Guan Pian for one purpose only, namely to take over Paragon Union Berhad (Take-Over Scheme) without complying with the provisions of the Malaysian Code on Take-Over and Merger 1998 as well as the statutory provisions of the Securities Commission Act 1993, the Companies Act 1965 and the Listing Requirements of Bursa Malaysia.

A summary of the Take-Over Scheme is as follows: i) Paragon Union Berhad would purchase DPSB from Liw Jun Wai and Prestamewah Development Sdn Bhd for the sum of RM18 million. It was pleaded that representations were made by Tee Guan Pian and Tan Hong Kien that another RM10.5 million would be made available to Liw Jun Wai when he takes over Paragon Union Berhad (hereinafter referred to as “the representations”). This additional payment of RM10.5 million would be paid by Tan Onn Poh and Kong See Kuan. The actual 12 purchase consideration for DPSB Agreement was RM28.5 million; ii) Liw Jun Wai would utilize the proceeds of the sale to acquire Kong See Kuan’s shares in AASB through the Loan Agreement; iii) Tan Onn Poh’s shares in AASB would be directly acquired by Liw Jun Wai; iv) The Settlement Agreement was to resolve a long outstanding civil action between Paragon Union Berhad and the promoters of Paragon Union Berhad which needed to be settled before the Take-Over Scheme; and v) When the Take-Over scheme was completed: i) In respect of shareholding, Liw Jun Wai would have control of all the voting rights in AASB (which ultimately controls Paragon Union Berhad); ii) In respect of payment, Liw Jun Wai was only required to pay for Tan Onn Poh’s shares in AASB in order to have control over AASB and Paragon Union Berhad. Kong See Kuan’s shares in AASB would be funded by Paragon Union’s funds as a result of Liw Jun Wai’s capital injection. 13

It was pleaded that Tan Onn Poh and Kong See Kuan through their agents, Tee Guan Pian and Tan Hong Kien, made the representations to induce the Plaintiffs to enter into the 9 Agreements. (refer to paragraph 23 of the Statement of Claim in Suit 2053.) Subsequently, the Plaintiffs found out that the representations were not true, which resulted in the Plaintiffs instructing their solicitors to rescind the 9 Agreements.

The Plaintiffs also pleaded that Tee Guan Pian and Tan Hong Kien owed fiduciary duties and/or common law duty of care to the Plaintiffs and they had both breached their respective duties to the Plaintiffs by reason of the matters set out above.

The Plaintiffs contended that the Take-Over Scheme, was devised in a manner that would circumvent statutory as well as the regulatory requirements of Bursa Malaysia namely section 6 (1) (a) and (4) of Malaysian Code on the Take-Over and Merger 1998 as well as other statutory provisions, namely section 132 C of the Companies Act 1965 and paragraphs 10.05 and 10.06 of Chapter 10 of the Listing Requirements of Bursa Malaysia, when Paragon Union Berhad entered into the DPSB Agreement without the consent of Paragon Union Berhad’s shareholders in an extra ordinary general meeting held for that purpose. 14

The Plaintiffs contended that the purchase price of the DPSB Shares were at all times RM28.5 million. The Defendants have contravened the law by reducing on paper the purchase price of the DPSB Shares to RM18 million to circumvent the law and statutory requirements so as to give the effect that the acquisition was not of substantial value, which would trigger the requirement under section 132 C (1) (a) of the Companies Act 1965.

The Plaintiffs sought for a declaration that the 9 Agreements be rescinded and an order that the Plaintiffs are entitled to set off the loss and damages suffered by them from the RM18 million received by the Plaintiffs pursuant to the sales and purchase agreement between Liw Jun Wai and Prestamewah Development Sdn Bhd as vendors and Paragon Union Berhad as purchaser for all the shares in Dominion Park Sdn Bhd (the DPSB Agreement). Save and except for this relief, the other claims and causes of actions (misrepresentation, breach of fiduciary duty and/or common law duty of care to the Plaintiffs) by the Plaintiffs were abandoned. The pleaded case in Suit 737:

Paragon Union Berhad alleged that Liw Jun Wai and Prestamewah Development Sdn Bhd had breached the DPSB Agreement and sought for the return of RM18 million which Paragon Union Berhad had paid to Liw Jun Wai and Prestamewah Development Sdn Bhd under the DPSB Agreement. Despite payment of RM18 million made 15 by Paragon Union Berhad, Liw Jun Wai and Prestamewah Development Sdn Bhd refused to transfer the shares in DPSB to Paragon Union Berhad.

In addition, Paragon Union Berhad is also claiming for ascertained and liquidated damages of RM1.8 million.

In Defence, Liw Jun Wai and Prestamewah Development Sdn Bhd pleaded that the DPSB Agreement was part of a composite transaction to implement the Take-Over Scheme and relied on the defence of set off. The pleaded case in Suit 445:

Kong See Kuan and AASB sued, amongst others, Liw Jun Wai, Bijak Gagah Sdn Bhd and Paragon Union Berhad.

The reliefs sought by the Plaintiffs was for a declaration that the Sales and Purchase Agreement between Kong See Kuan as vendor and Liw Jun Wai as purchaser for Kong See Kuan’s 75% stake in AASB, had been lawfully terminated. Except for Liw Jun Wai, Bijak Gagah Sdn Bhd and Paragon Union Berhad, the action was subsequently discontinued against the other Defendants. 16 In this suit, AASB had filed an application in Kuala Lumpur High Court for an interlocutory injunction, inter alia, to restrain Liw Jun Wai’s Directors in Paragon Union Berhad from acting as Paragon Union Directors until Paragon Union Berhad convene an EGM of its shareholders to remove Liw Jun Wai’s Directors in Paragon Union Berhad.

In Defence, Liw Jun Wai and Bijak Gagah Sdn Bhd pleaded that the SPA with Kong See Kuan was part of a composite transaction to implement the Take-Over Scheme and by reason of the matters pleaded in Suit 2053, Kong See Kuan and AASB have no claim against Liw Jun Wai and Bijak Gagah Sdn Bhd.

At the end of the full trial, the learned High Court Judge declared that the 9 Agreements are void and unenforceable for illegality. All other actions filed by the respective parties were dismissed and parties were ordered to bear their own costs.

In arriving at her decision, the learned trial Judge made the following findings of fact: i) that the 9 Agreements formed a single composite transaction with one sole purpose, namely to enable Liw Jun Wai to take 17 over Paragon Union Berhad, which is a public listed company (Take-Over Scheme); ii) the Take-Over Scheme was derived from the evidence of Liw Jun Wai which was corroborated by the evidence of Quah Ban Hoo; iii) the parties’ conduct in signing the 9 Agreements at the same time on 18.8.2008 in the same place i.e. “Regal House” proved that the 9 Agreements were part of a composite transaction; iv) Kong See Kuan’s admission in her affidavit (in support of her application for an injunction in Suit 445) corroborated Liw Jun Wai’ evidence on the existence of the Take-Over Scheme; v) Tee Guan Pian was the “master mind” of the entire Take-Over Scheme or mechanism upon which Paragon Union Berhad would be taken over; vi) Tan Hong Kien, who is an executive director of Paragon Union Berhad was actively involved in the implementation of the Take-Over Scheme; vii) the Take-Over Scheme of Paragon Union Berhad was successfully implemented, but was tainted by illegalities as it purported to circumvent various statutory as well as regulatory 18 requirements. The 9 Agreements are illegal because its object (the Take-Over Scheme) is:- a) forbidden by sections 33 B (1), (2), (4) and 157 (b) and (c) of the Securities Commission Act 1993 (SCA) read with section 6 (1) (a), (4) and 7 (a) of the Malaysian Code On Take-Over and Mergers 1998 (1998 Code), within the meaning of section 24 (a) Contracts Act 1950; b) of such a nature that if permitted, would defeat the aforesaid statutory provisions including stated in section 24

(b) of the Contracts Act 1950, and therefore the 9 Agreements are void. (Refer to paragraph 76 of the grounds of judgment of the learned trial Judge) viii) The parties participated and took active steps to conceal the illegalities and that parties are in pari delicto in respect of the illegalities; ix) Parties intended to circumvent the requirement under section 132 C (1) (a) of the Companies Act 1965 by intentionally reducing the consideration (to RM18 million when the actual purchase price was RM28.5 million) in the DPSB Agreement, 19 thus committing an offence under section 132 C (5) of the same; x) Liw Jun Wai had acted in concert with the other parties to enable him to take control of Paragon Union Berhad and thereby committed an offence under section 33 B (4) of the SCA 1993; xi) The learned trial Judge rejected the relief sought by Paragon Union Berhad for the refund of RM18 million. She held that Paragon Union Berhad had participated in the illegal transaction and did not come to court with clean hands. All the parties in this case had full knowledge of the illegality at the time when they entered into the 9 Agreements. Hence the learned trial Judge did not grant any relief under section 66 of the Contracts Act 1950 to Paragon Union Berhad.

Dissatisfied with the decision of the learned High Court Judge, Paragon Union Berhad and Tee Guan Pian appealed, which are Appeal 1202 and Appeal 1238 respectively.

It is pertinent to note at this juncture that, at the trial and during closing submission in the High Court, the Plaintiffs elected to proceed on illegality and abandoned their other pleaded case (which are for inducement and misrepresentation, breach of duty of care and breach of fiduciary duty) against Tee Guan Pian. The High Court then proceeded to dismiss the Plaintiffs’ Suit against Tee Guan Pian. 20 Although the learned trial Judge confirmed that the Plaintiffs have abandoned their claim against Tee Guan Pian at the submission stage after the conclusion of the trial, the learned trial Judge continued to make certain statements and findings of fact against Tee Guan Pian in her grounds of judgment. It was submitted by counsel for Tee Guan Pian that the remarks and findings of fact by the learned trial Judge in her grounds were unfounded and had grossly tarnished Tee Guan Pian’s name and reputation. The finding of facts had also caused serious injustice to Tee Guan Pian and damaged his reputation as a senior practicing auditor.

Counsel for Tee Guan Pian urged this Court to exercise its inherent jurisdiction to expunge the remarks made against Tee Guan Pian by the learned trial Judge to prevent abuse of process of court or otherwise to secure the ends of justice.

After hearing submissions from parties and perusing through the Appeal Records (AR), we hereby unanimously dismiss the appeal by Paragon Union Berhad (Appeal No 1202) in part. We however order that the Plaintiffs are to refund the RM18 million to Paragon Union Berhad.

We also dismiss the appeal by Tee Guan Pian (Appeal No 1238) which was to expunge the oral evidence of Tee Guan Pian at the trial 21 and the finding of facts by the learned trial Judge against Tee Guan Pian.

Our reasons for so doing now follow. Issues

The issues to be determined are: i) Whether the 9 Agreements constituted a composite Agreement to implement the Take-Over Scheme; ii) Whether the agreements are illegal (Issue on Illegality): a) What is the purchase consideration of the DPSB Agreement dated 19.8.2008; b) Whether there was a substantial acquisition of Paragon Union Berhad by the Plaintiffs. iii) If the agreements are illegal, whether parties are in pari delicto; iv) Whether Paragon Union Berhad is entitled to the refund of RM18 million which it had paid to the Plaintiffs for the DPSB Agreement; 22 v) Whether this court should expunge the remarks made by the learned trial Judge in relation to Tee Guan Pian that he is the mastermind of the whole Take-Over Scheme. A. Whether the 9 Agreements constituted a composite Agreement to implement the Take-Over Scheme

The Plaintiffs in Suit 2053 submitted that there was a Take-Over Scheme of Paragon Union Berhad if the 9 Agreements are considered together. It was contended that the 9 Agreements formed one transaction to facilitate the Take-Over Scheme whilst the Defendants contended the main SPA agreements, namely, the DPSB Agreement and the AASB Agreement are separate and independent Agreements as they are only privy to the parties in the agreements.

In coming to the conclusion that the 9 Agreements constituted a composite transaction to implement the Take-Over Scheme of Paragon Union Berhad, the learned trial Judge relied extensively on the following evidence:

(i) the various emails between the parties namely, Tee Guan Pian, Quah Ban Ho, Tan Hong Kien and Linda Goh;

Our perusal of the evidence, show that, they support the contention of the Plaintiffs that the 9 Agreements do form a composite transaction for the sole purpose of the taking over of Paragon Union Berhad. We say so for the following reasons:

45.1 We disagree with the submission of the Defendants that the 2 Sales and Purchase Agreements of the AASB shares are only privy to the parties stated therein. The 9 Agreements must be looked at together, the contents of which, disclose an arrangement between the various parties, which were executed simultaneously, which led to one primary aim, i.e. to facilitate the taking over of Paragon Union Berhad by Liw Jun Wai. 24 The plan of the Take-Over Scheme started with the sale of AASB shares belonging to Kong See Kuan and Tan Onn Poh to Liw Jun Wai or his nominees (Chaw Choi Kew @ Chow Choi Kew). These are the “SPA with Kong See Kuan” and the “SPA with Tan” as mentioned in paragraphs 5 (c) and 5 (h) of this judgment. The purchase of these AASB shares would result in Liw Jun Wai having control of Paragon Union Berhad as both Kong See Kuan and Tan Onn Poh were the only directors who held the shares of AASB. AASB in turn, owns the majority of the shareholding in Paragon Union Berhad. In the words of Tee Guan Pian, when he mooted the idea of taking over the target company to Liw Jun Wai, the taking over of Paragon Union Berhad involved the sale of shares of only 2 shareholders i.e. Kong See Kuan and Tan Onn Poh. The 2 guarantees and indemnities (the “DPSB Guarantee” and Kong See Kuan’s Guarantee” as mentioned in paragraphs 5

(b) and 5 (d) of this judgment) given by Liw Jun Wai to Paragon Union Berhad and Kong See Kuan are related to the SPA between Prestamewah Development Sdn Bhd and Paragon Union Berhad and the SPA between Liw Jun Wai and Kong See Kuan. The Loan Agreement dated 19.8.2008 is between Bijak Gagah Sdn Bhd and AASB (as mentioned in paragraph 5 (e) in this judgment), where Bijak Gagah Sdn Bhd had granted 25 to AASB, a friendly loan of RM29,778,000.00. The Loan Agreement was executed as a mechanism to be utilized to settle all amounts outstanding under the Share Sale Agreement by Liw Jun Wai to Kong See Kuan. The monies paid under the Loan Agreement to AASB and the amount received was to settle the outstanding amount due under the Share Sale Agreement to the shareholders. This was stated in the email dated 14.1.2008 from Quah Ban Hoo to Tee Guan Pian (Refer to page 360 of CB 3). It is an undisputed fact that Liw Jun Wai is the beneficial owner of all shares in Bijak Gagah Sdn Bhd.

45.2 In addition, evidence from the contemporaneous documents, i.e. the following emails, showed the link between the 9 Agreements:- i) Email dated 25.12.2007 from Tee Guan Pian to Quah Ban Ho (page 355-358 of CB 3) and the attachment thereto entitled “Project Paragon” which discussed together: a) Paragon Union Berhad’s purchase of DPSB for the purchase consideration of RM28.5 million to be paid in cash and internally funded by Paragon Union Berhad, which had to be agreed by Tan Onn Poh and Kong See Kuan; 26 b) “Cash and cash equivalent in Paragon” which meant funds in Paragon Union Berhad needed to implement the Take-Over Scheme; c) “To obtain a term loan to finance purchase of (DPSB) or sell off to 3rd party for cash”. Loan to be arranged by Tan Hong Kien or Liw Jun Wai, which referred to the Loan Agreement. Quah Ban Ho was to follow up on this; d) “Amount due to creditors (Kong See Kuan and Tan Onn Poh to agree….)” which related to the Court case; e) “consideration due to (Tan Onn Poh)” which was related to Liw Jun Wai’s purchase of Tan Onn Poh‘s AASB shares. Although Paragon Union Berhad and AASB are separate entities, the Take-Over Scheme require that steps were to be taken simultaneously with Tan Onn Poh and Kong See Kuan. ii) Email dated 14.1.2008 from Quah Ban Ho to Linda Goh (page 361 of CB 3) which referred to more than one contract and other matters related to the Take-Over Scheme:- 27 “Project PUB Agreements to be concluded:- i) Sale and purchase of 25% block of AVSB from TOP for RM5.0 million; ii) Sale and purchase of a company with JV rights from Datuk L for RM28.5 million. The cash received is to finance loan to AVSB; iii) Loan of RM27.5 million from Datuk L nominee company to AVSB to repay completely loan from Kong See Kuan at a discount…..” iii) Email dated 16.4.2008 from Quah Ban Ho to Tan Hong Kien (copied to Liw Jun Wai) (at page 381 of CB 3) which showed discussion on the following agreements:- a) DPSB Agreement; b) Dominion Guarantee; c) Payment schedule for the purchase of Tan Onn Poh‘s AASB shares; d) The thread of emails from 30.4.2008 to 15.5.2008 which discussed the Court case, the Loan Agreement, Liw Jun Wai’s guarantee to Kong See Kuan and the Settlement Agreement. iv) Email dated 22.5.2008 from Tan Hong Kien to Quah Ban Ho and Tee Guan Pian (copied to Liw Jun Wai) (at page 28 385 of CB 3) considered together with the DPSB Agreement, 2nd AASB Agreement and the Settlement Agreement:- a) “Basically we vet through 3 Agreements i.e. Dominion, TOP and 12.54 settlement.” b) “In this way, we will get tha (sic) ball rolling rather than still talking about the agreements. With the acquisition approved, the agreements will have to be completed asap by every party in order for the money to cross!”. v) Email dated 13.6.2008 from Tan Hong Kien to Quah Ban Ho, Tan Hong Kien ( at page 386 of CB 3) confirmed that he had spoken to Liw Jun Wai regarding both the Settlement Agreement and the 2nd AASB Agreement; vi) Email dated 18.7.2008 (copied to Liw Jun Wai), Tee Guan Pian informed Quah Ban Ho (page 392 of CB 3): “Please issue final draft for all agreements (sic) after incorporating comment from Madam Kong side by Monday. Target signing date is next Friday. Also please provide amended Settlement Agreement”; vii) Tee Guan Pian’s email dated 22.7.2008 to Linda Goh and Quah Ban Ho (copied to Tan Hong Kien and Liw Jun Wai) 29 (at page 393 of CB 3) discussed the 9 Agreements altogether which shows that they are part of the common scheme in a single composite transaction: “Today we manage to resolve a few issues as follows: a) Loan Agreement from BGSB to AASB - no further comments/pending draft final copy; b) KSK sale agreement - no further comments/pending draft final copy; c) TOP sale agreement-agreed to take out reference make on DPSB and replaced by a letter to clarify the extension for payment date………; d) Settlement Agreement-Linda (DW 4)/Ms Low (DW 5)/ HK (DW 2) to email to Quah (PW 5) the comments asap; e) Letter of Comfort (DPSB Guarantee) - waiting for Ms Low (DW 5); f) DPSB Agreement-Linda (DW 4) already emailed to HK (DW 2) and DW 2 to email to Quah (PW 5). Once Linda (PW 5) email back the draft final HK(DW 2) will see Mr. Michael and Lawyer Teoh (paragon Union Berhad’s directors) to convince them on the agreement.” viii) Linda Goh’s email dated 23.7.2008 to Quah Ban Ho (copied to Tee Guan Pian) ( page 409 CB 3) stated:

“Dear Quah, DPSB, PUB, AASB-KSK, TOP, Paragon, are signing the agreement simultaneously.

For DPSB Agreement, PUB pays to vendors: Dato Liw and Prestamewah in their equal shareholdings in DPSB 30 but KSK and TOP has (sic) to wait until FIC is approved (sic);

AASB and TOP do not get paid the initial consideration until FIC is obtained.” ix) Tan Hong Kien’s email to Liw Jun Wai dated 5.8.2008 (page 413 of CB 3) was “final amendment” to various agreements. That email stated: “Bro, TOP Agreed!! He will sign SPA now,…..(this refers to the AASB Agreement with Tan Onn Poh) He will sign all share transfer form in 60 days then the money will cross in one bullet payment on that date. (the date will be fixed same as the day FIC approved DPSB You need to check with Quah how come they deleted the put and call option for the RM1.5 mil shares?” x) Tan Hong Kien’s email sent at 11.18 am, 11.8.2008 to Tee Guan Pian, Linda Goh, Low Chooi Ping and Quah Ban Ho (at page 422 of CB 3), which discussed the latest development on the various agreements: “A) The letter to link DP n TOP has minor amendment:….. B) On the TOP Agreement (the AASB Agreement with Tan Onn Poh))…. C) Settlement Agreement)-pending Ms Low; 31 D) Letter of undertaking/guarantee-pending Ms Low (this refers to Liw Jun Wai 1’s Guarantee to Madam Kong-pending Ms Low Chooi Ping); E) Dominion agmt……” (“DP” refers to DPSB and “TOP” refers to Tan Onn Poh.) xi) Tee Guan Pian’s email sent at 3.03 pm on 11.8.2008 to Tan Hong Kien (at page 422 of CB 3) (copied to Linda Goh and Low Chooi Ping) said that: “Dato (Liew Jun Wai) will come out RM7 M + buying 1.5 m shares for the deal. Please assist on 2.3 million.” On the face of the 9 Agreements, nowhere the 9 Agreements state that Liw Jun Wai was required to pay anything. Therefore, on a balance of probability, this payment by Liw Jun Wai must therefore be a payment for the composite transaction in respect of the Take-Over Scheme; and xii) Quah Ban Ho’s email dated 11.8.2008 (page 432 of CB Volume 3) to Tee Guan Pian, Tan Hong Kien and Liw Jun Wai and the payment schedule, the source and the application of funds from all parties clearly proved a composite transaction to execute the Take-Over Scheme. During cross examination of Tan Hong Kien, he agreed 32 that there was his initial and handwriting date of “19.8.08” on the Table of payments.

45.3 Further, the contents of the following 3 documents had contemplated a series of agreements to form a composite transaction to implement the Take-Over Scheme: a) As at 21.12.2007, the Letter of Offer from Ch’ng Beng Kian (Ch’ng Beng Kian of Messrs. Ch’ng, Suhanna & Co wrote to Tan Onn Poh) who acted for Liw Jun Wai, referred to the following agreements: i) Clause 4 referred to Liw Jun Wai’s proposed purchase of Tan Onn Poh’s AASB 25% block of shares in AASB which led to the AASB Agreement with Tan Onn Poh; ii) Clause 4 (b) provided as a condition precedent for Liw Jun Wai’s purchase of Tan Onn Poh’s AASB shares that Kong See Kuan’s AASB shares should also be sold to Liw Jun Wai. This provision clearly envisaged the AASB Agreement with Kong See Kuan; and iii) Clauses 4 (c) and 5 (b) clearly referred to what was later concluded as the DPSB Agreement. 33 b) In the Memorandum of Agreement dated 2.2.2008 (signed by Liw Jun Wai and Tan Onn Poh): i) Clause 3.2.1 (a) mentioned Liw Jun Wai’s purchase of Tan Onn Poh’s AASB shares. This agreement was subsequently signed i.e. the AASB Agreement with Tan Onn Poh; ii) Clause 3.2.1 (b) provided for the sale of all the issued and paid up share capital of DPSB. This agreement was subsequently signed i.e. the Dominion Park Agreement; iii) Clause 4.1 (a) stated that the consideration for Paragon Union Berhad’s NTA to be above RM70 million until full completion of the corporate exercise. In all probability this “corporate exercise” mentioned herein refers to the Take-Over Scheme; iv) Clause 4.1 (e) envisaged a sale and purchase agreement of Kong See Kuan’s AASB shares. This agreement was subsequently signed. c) Bijak Gagah Sdn Bhd’s Letter of Offer to AASB dated 16.4.2008: i) Clause 5.2 referred to the Loan Agreement; 34 ii) Clause 7.2 - Power of Attorney to be granted by AASB to Bijak Gagah Sdn Bhd; and iii) Clauses 7.3, 8.1 and 8.2 - transfer of all of AASB’s shares in Paragon Union Berhad to Bijak Gagah.

45.4 Clearly, the contents of the 9 Agreements are interlinked in its purpose and objective which ultimately resulted in Paragon Union Berhad being under the control of Liw Jun Wai, which was the ultimate goal of the plan.

45.5 Although it was submitted that, it was in evidence by the lawyer for the Plaintiffs, i.e. Ch’ng Beng Kian (PW 3) that he was never instructed by Liw Jun Wai to have the 2 Agreements, [i.e. Tan Onn Poh Shares Sale Agreement and the DPSB Agreement] to be a composite agreement, (refer to page 732 of the RA Bundle B) that is irrelevant, as it has been proven that they are connected. They have been shown to be inter related to buy over the AASB shares in order to have control of Paragon Union Berhad.

45.6 In Sri Kelangkota-Rakan Engineering JV Sdn Bhd [2001] 1 CLJ 779, which was referred to, by the learned trial Judge, this Court held that: “When all the agreements are read together what comes across with sharp clarity is the fact that a breach of any of the terms of one of the agreements triggers a breach of all the 35 agreements…In other words all these agreements are to be looked upon as forming part and parcel of one and the same transaction.” (emphasis is ours)

45.7 Applying what was held in Sri Kelangkota-Rakan Engineering JV Sdn Bhd (supra) to the facts in our present Appeal, the breach of the SPA with Kong See Kuan does not trigger the breach of the SPA with Tan Onn Poh. That was the point of submission by the Defendants. However, that is not the only aspect to be looked at here. The 2 SPAs were entered into by the Plaintiffs and it is to be looked into, with the other agreements, to ascertain the intention of the agreements being executed, that is to buy over AASB shares. The 2 SPAs (together with the other agreements) form part of a transaction to gain control of Paragon Union Berhad. In the case of Mohamed Isa & Ors v Abdul Karim & Ors [1970] 2 MLJ 165, it was held that: “It is settled rule of construction that where several documents forming part of one transaction are executed contemporaneously, all the documents must be read together as if they are one (see Manks v Whiteley [1912] 1 Ch 735). This principle was followed in Idris bin Haji Mohamed v Ng Ah Siew [1935] MLJ 257, where Terrell J at page 261 said: “It is a well known rule of construction that where the arrangement between parties is contained in several documents all executed simultaneously, all the documents must be read together to ascertain the intention of the parties, and it is 36 corollary from this that the intention must be gathered from the documents as a whole.” (emphasis is ours) The operational words as stated in Mohamed Isa & Ors v Abdul Karim & Ors (supra) are “several documents forming one transaction” and also where the arrangement between the parties is contained in several documents executed simultaneously.

45.8 If one were to peruse the contents of the several agreements, one would find that they constituted a composite transaction for the purpose of the taking over of Paragon Union Berhad. The arrangement of the parties was contained in the several agreements which were subsequently executed simultaneously at Regal House on 18.8.2008, which is AASB’s registered business address.

45.9 Therefore, the learned trial Judge did not err when she found that the 9 Agreements constitute a composite transaction to implement the Take-Over Scheme, when she relied on the contemporaneous documentary evidence which we have alluded to, in the preceeding paragraphs of this judgment.

45.10 It is also pertinent to note that Paragon Union Berhad in Kuala Lumpur High Court Suit No 22NCVC-574-2014 (Suit 574) had instituted proceedings against Low Chooi Ping, their lawyer, 37 and her partner, after Appeal 1202 was filed. In Suit 574, it was pleaded that: a) Looi Chooi Ping’s firm was negligent in advising Paragon Union Berhad in respect to the DPSB Agreement; b) The 9 Agreements including DPSB Agreement were used in a single transaction involving the taking-over of Paragon Union Berhad; and c) In defence, Low Chooi Ping’s firm pleaded, amongst others, that there was a scheme for Liw Jun Wai to take over Paragon Union Berhad.

45.11 Clearly, the averments in the pleadings of Suit 574 amounts to a judicial admission, which in law, stands on a higher footing than evidentiary admission (See Federal Court case of Yam Kong Seng v Yee Weng Kai [2014] 4 MLJ 478 at page 487D). Hence Paragon Union Berhad cannot be blowing hot and cold as to it’s stand on the single transaction issue for the purpose of the Take-Over Scheme. It is estopped from denying that the DPSB Agreement is part of the composite transaction in the taking over of Paragon Union Berhad. 38 B. Issue on illegality

Apart from concluding that the 9 Agreements constituted a composite transaction to implement the Take-Over Scheme, the learned High Court Judge also found that the Agreements were illegal, void and unenforceable, due to breaches of the following provisions: i) Section 132 C of the Companies Act 1965; ii) Chapters 10 and 11 of the Listing Requirements of Bursa Malaysia (Listing Requirements); and iii) Section 33 B (1) and (2) of the SCA read together with section 6 of the 1998 Code. Section 132 C (1) of the Companies Act 1950:

Section 132 C (1) (a) of the Companies Act 1965 provides that approval of company in a general meeting is required for the acquisition of an undertaking or property of a substantial value. Under section 132 C (1A) of the same, the term “substantial value” for a listed company shall mean the same value prescribed under the provisions of the Listing Requirements - i) which relates to acquisitions or disposals by a company or its subsidiaries to which such provision applies; and 39 ii) which would require the approval of shareholders at a general meeting in accordance with the Listing Requirements.

Section 10.06 of the Listing Requirements, requires a shareholders approval of a General Meeting for a transaction where the percentage ratio of the acquisition is equal to or exceeds 25% of the net tangible assets (NTA). Percentage ratio is defined under section 10.02 (h) as, among others, the value of the assets which are the subject matter of the transaction, compared with the net assets of the listed company.

A breach of section 132 C (1) (a) of the Companies Act 1965 is an offence under section 132 C (5) of the Companies Act 1965.

The Plaintiffs contend that the purchase of shares by Paragon Union Berhad in DPSB represented an acquisition of an undertaking of property of a substantial value which requires shareholders’ approval of a general meeting. The Plaintiffs contend that as no approval of shareholders was obtained, the purchase of DPSB by Paragon Union Berhad is in breach of section 132 C (1) (a) of the Companies Act 1965 read together with para 10.05 and 10.06 of the Listing Requirements. The learned trial Judge adopted these contentions by the Plaintiffs and found that the shareholders’ approval was required for the DPSB Agreement since the total consideration was RM28.5 40 million. She held that “based on the facts and circumstances of …case…on a balance of probabilities, parties intended to circumvent the requirement under section 132 C (1) (a) of the Companies Act 1965 by intentionally reducing the consideration in DPSB Agreement. Thus the DPSB Agreement is also forbidden by virtue of section 132 C (1) (a) and (5) of the Companies Act 1965.” (refer to paragraphs 58-65 of the grounds of judgment of the learned trial Judge). In this regard, it is crucial to ascertain the purchase price of the DPSB shares, to determine whether there has been an acquisition of a substantial value by Paragon Union Berhad, in order to determine whether section 132 C (1) and (2) of the Companies act 1965 applies. What was the purchase consideration of the DPSB Agreement:

The Plaintiffs relied on Clause 3 of the DPSB Agreement dated 19.8.2008 which states that the total purchase price of the DPSB Shares is RM28.5 million. The Defendants on the other hand contend that it is RM18 million. Parties agreed that if the purchase consideration for the DPSB Agreement is RM28.5 million, that would amount to an acquisition of a substantial value, whereby the requirement under section 132 C of the Companies Act 1965 must be complied with. It is otherwise, if the purchase price is RM18 million. 41

The learned trial Judge found that the purchase consideration was RM28.5 million, rendering the acquisition to be of a substantial value, therefore shareholders’ approval is required for the DPSB Agreement (para 62 of the grounds of judgment), as stipulated under section 132 C (1) (a) of the Companies Act 1965.

The learned High Court Judge accepted the evidence of Quah Ban Ho who testified that the DPSB Agreement was concluded at RM18 million to circumvent the need for shareholder’s approval. (Paragraphs 62 and 63 of the learned trial Judge’s grounds).

The learned trial Judge’s finding was also based on the following evidence :- a) a Memorandum of Agreement dated 20.2.2008 between Tan Onn Poh and Liw Jun Wai wherein: i) Clause 3.2.1 (b), (c) and 4.1 (f) provide RM28.5 million as the total consideration for the DPSB Agreement; ii) Clause 3.2.1 (c), 3.2.2 (a), (b) and 4.1 (b) wherein it provides that shareholders’ approval was required for the DPSB Agreement. b) at a meeting with MIMB Investment Bank Berhad on 4.3.2008 which was attended by Liw Jun Wai, Quah Ban Hoo, Tee Guan Pian and Tan Hong Kien, MIMB had already advised the need 42 for a shareholders’ approval for the DPSB Agreement. In an e-mail from MIMB’s Ms. Lee Yoke Wah (Ms Lee), it was stated that the cash consideration was RM28 million and there was a need for a shareholders’ approval. MIMB’s assistance was sought to obtain the shareholder’s approval.

Our perusal of the Memorandum of Agreement dated 20.2.2008 show that the initial purchase price for the DPSB shares was at RM28.5 million. This is one of the salient terms of the memorandum of agreement which was initially proposed by Tee Guan Pian in his email dated 20.10.2007 (refer to pages 344 and 356 of CB Volume 3). The Defendants submitted that the said sum of RM28.5 million stated in the Memorandum of Agreement dated 20.2.2008, was subjected to an independent valuation and due diligence of DPSB. The Defendants referred to Clause 7 of the Memorandum which states, that it is “for the purposes of enabling the parties to negotiate and agree on the terms and conditions of the formal SPA….”. Therefore, the Defendant submitted that there is no finality in the terms for the sale of DPSB Shares and RM28.5 million is certainly not conclusive, if premised on the Memorandum of Agreement.

However, we found that, apart from the provision in the Memorandum of Agreement dated 20.2.2008, there is evidence of 43 various emails, the contents of which, suggest that the purchase price is RM28.5 million, namely: a. an email which was from Tee Guan Pian which consists of attachments thereto which can be found at pages 354, 356, 359, 360, 364, 394, 410 and 413 in the CB Volume 3. At page 356, wherein it refers to “purchase of private limited company Dominion Park Sdn Bhd (DPSB) active in property development for purchase consideration of RM28.5 million to paid [sic] in cash and internally funded by Paragon….”; b. the email at page 359 of CB Volume 3 which is between Tee Guan Pian and Liw Jun Wai whereby there is attached a letter which states “loan for Kong See Kuan - RM27.5 million”; c. the email from Tee Guan Pian to Quah Ban Ho where it mentioned about the loan agreement to Kong See Kuan, which relates to the Bijak Gagah Loan which is one of the 9 Agreements.

In addition, there was a valuation done by Raine & Horne pursuant to the instructions from Paragon Union Berhad for purposes of acquisition, to value the Development Rights belonging to DPSB which can be found at page 3049 of RA Part C, specifically at page 3047 where the valuation arrived at was RM28 million. Further, there is an email from MIMB to Paragon Union Berhad and Tee Guan Pian where it mentioned the other valuation at RM54 million (page 376 of CB Volume 3). 44

The Plaintiffs maintained all along that the purchase consideration was RM18 million, however, PW 3 (Ch’g Beng Kian), the solicitor acting for Liw Jun Wai, gave evidence that RM28.5 million was the firm price but on paper it was made to appear as RM18 million due to the side arrangement of RM10. 5 million (Refer to the evidence of Ch’ng Beng Kian at page 7243 of RA Part B Volume 3). This is consistent with the evidence of Liw Jun Wai, namely RM10.5 million would be made available to Liw Jun Wai when he takes over Paragon Union Berhad.

Tan Onn Poh said that the original price was RM28 million but later it was changed to RM18 million. His evidence was contradictory to the valuation done by Raine and Horne. The valuation documents was Paragon Union Berhad’s and this is a Part B documents where admissibility is not an issue. It was only on the question of weight to be considered by the court. Nobody gave evidence on behalf of Paragon Union Berhad.

The learned trial Judge relied largely on the evidence of Quah Ban Ho, who did not even know about the arrangement of RM10.5 million. However, it was also in the evidence of Quah Ban Ho who said that the reduced price from RM28.5 million to RM18 million was to circumvent the EGM approval (refer to page 807 RA Volume 3 Part B) 45

The evidence also showed that, as early as 21.12.2007, the letter of offer from Messrs Ch’ng, Suhanna & Co to Tan Onn Poh (page 2294 of RR Jilid 8 Bahagian C, paragraph 4 (c)) already state the requirement precedent of the shareholders approval for the DPSB Agreement. Further, as rightly pointed out by the learned trial Judge, the Memorandum of Agreement dated 20.2.2008 between Tan Onn Poh and Liw Jun Wai provided: a. RM28.5 million as the total consideration for the DPSB Agreement - Clauses 3.2.1 (b), (c) and 4.1 (f) of the Memorandum Of Agreement; b. EGM approval was required for the DPSB Agreement - Clause 3.2.1 (c ), 3.2.2 (a), (b) and 4.1 (b). In the MIMB meeting on 4.3.2008 in MIMB’s office which was attended by, amongst others, Liw Jun Wai, Quah Ban Ho, Tee Guan Pian and Tan Hong Kien, MIMB had already advised the need for EGM approval for DPSB Agreement. This can be seen from the following: i) email from MIMB’s Ms Lee dated 5.3.2008 to Tee Guan Pian, Tan Hong Kien and Quah Ban Ho stating that the “cash consideration for the DPSB Agreement was RM28 million and there was a need for EGM Approval.” Further MIMB’s assistance was sought to advise and assist Paragon Union Berhad to obtain EGM Approval; and 46 ii) subsequent to the said MIMB’s email, Tan Hong Kien and Quah Ban Ho each sent 2 separate email dated 7.3.2008 where none of these 2 emails deny the RM28.5 million consideration for the DPSB Agreement. Nor did these 2 emails deny the need for the EGM Approval as advised by MIMB in its email.

From the evidence, even before the DPSB Agreement was signed, there were already contemporaneous documents showing that the purchase consideration for DPSB Agreement was at RM28.5 million. It was also in evidence during cross examination by the defence counsel, whereby the defence counsel tendered the valuation report by Raine and Horne which states valuation was at RM54 million. This was the first valuation done and it was based on projection of profits. This was the report which was referred to by MIMB at the MIMB meeting. There was another valuation report by Raine and Horne at RM28.5 million which came subsequent to the MIMB meeting because of the necessity for the valuer to comply with the Security Commission’s requirements in respect of the valuation of the purchase of the property. There was no valuer called at the trial to verify the valuation. In any event, the second valuation was under Part B of the Bundle of document. Even so, whichever valuation report is referred to, the purchase consideration cannot be RM18 million and in all probability, it is RM28.5 million. This is to be read together with the 3 contemporaneous documents, i.e. 21.12.2007 letter of offer from Messrs Ch’ng, Suhanna & Co, Memorandum of Agreement dated 20.2.2008 and the MIMB Meeting attended by Liw 47 Jun Wai, Quah Ban Ho, Tee Guan Pian and Tan Hong Kien, which all referred to the purchase consideration at RM28.5 million for the DPSB Agreement.

Premised on the oral evidence and the contemporaneous documentary evidence, they lend support to the finding that the purchase price for the DPSB Agreement was RM28.5 million. The learned trial Judge did not err when she concluded that the purchase price was RM28.5 million.

Coming back to section 132 C (1) (a) of the Companies Act 1965, it was established that prior and post the DPSB Agreement, the net tangible asset of Paragon Union Berhad was in excess of RM73 million. This brings the ratio of percentage of the net tangible asset of Paragon Union Berhad to 39.4%, which is an acquisition of substantial value, coming within the realm of section 132 C (1) (a) of the Companies Act 1965 and the Listing Requirements.

Consequently, as there has been no shareholders’ approval of a general meeting for the DPSB Agreement, there is a breach of section 132 C (1) (a) and (1A) of the Companies Act 1965 read together with paragraphs 10.05 and 10.06 of the Listing Requirements. The learned trial Judge did not err when she made the findings that the DPSB Agreement is forbidden by virtue of section 132 C (1) (a) of the Companies Act 1965. 48 Section 33 B of the SCA - Mandatory General Offer:

It is a mandatory requirement under section 33 B (1) and (2) of the Securities Commission Act 1993 (SCA) read together with section 6 of the 1998 Code that a person who acquires or proposes to acquire control in a public listed company, must make a general offer to all existing shareholders of the said listing company. Failure to do so constitutes an offence under section 33 B (4) of the SCA which states: “33B (1) A person who makes a take-over offer shall do so in accordance with the provisions of the Code and any ruling made under subsection 33A(4).

(a) An acquirer; or

(b) An acquirer who holds more than 33 % but less than 50% of the voting shares of a company and such acquirer or intends to acquire in any period of six months more than 2 % of the voting shares of the company.

(a) has obtained control in a company; or

(b) Holds more than 33 % but less than 50% of the voting shares of a company and such acquirer acquires in any period of six months more than 2 % of the voting shares of the company. shall extend an offer to the offeree shareholders in accordance with the requirements of this Code.

The mandatory general offer requirement to existing shareholders, is a statutory obligation of an acquirer of 33% or more issued shares of a public listed company.

It was submitted by the Defendants that the whole purpose of the 9 Agreements was to avoid the general offer. This can be seen from the earliest email dated 20.10.2007 (page 344 of CB Jilid 3) from Tee Guan Pian to Melvin M Marks where it is stated “…..the concept is to avoid GO”. This was when the whole purpose of the transaction was mooted.

The finding of the learned trial Judge after referring to the case of Securities Commission v Up Famous Sdn Bhd [2010] 4 CLJ 638 which followed Petaling Tin Bhd v Lee Kian Chan [1994] 1 MLJ 657 and applying it to our present case, is that all parties in this case, including Liw Jun Wai, had acted in concert to enable Liw Jun Wai to take control of Paragon Union Berhad. Liw Jun Wai failed to make a Mandatory General Offer to the existing shareholders of 50 Paragon Union Berhad, thereby offending the provisions of section 33 B (4) of the SCA which states: “Any person who contravenes subsection (1), (2) or (3) shall be guilty of an offence and shall on conviction be punished with a fine not exceeding one million ringgit or imprisonment for a term not exceeding ten years or both.”

In this regard it is important to determine the following: i) Who is the acquirer; ii) Whether the acquirer has obtained 33% control or more of Paragon Union; iii) Who are the parties acting in concert; iv) Whether the circumstances in our case triggered the requirement of the Mandatory General Offer; v) Whether there has been a breach of the SCA and the 1998 Code. At the same time, it is pertinent to note the following evidence: a) Chaw Choi Kew purchased Tan On Poh’s 25% shares in AASB. The sale of shares Agreement was dated 13.11.2008 between Tan Onn Poh and Chaw Choi Kew. (page 2222 J-7C of RA); b) the Announcement by Paragon Union to Bursa Malaysia on the particulars of substantial security holder on 13.11.2008 (page 3660 J-12C of RA); 51 c) Sale of Shares between Liw Jun Wai and Kong See Kuan dated 19.8.2008 (pages 2147 of J-7C of RA); d) Letter of termination dated 5.3.2009 from Kong See Kuan to Liw as to the Sale of Shares Agreement (page 2358 J-8C of RA). Who is the acquirer/proposed acquirer and whether the acquirer/proposed acquirer has obtained control of Paragon Union:

“Acquirer” is defined in SCA in section 33 as: “1) In this Division- “Acquirer” means-a. A person who acquires or proposes to acquire control in a company whether the acquisition is effected by the person or by an agent; or b. Two or more persons who, acting in concert, with one another, acquire or propose to acquire control in a company, whether the acquisition is effected by the persons or by an agent;” “company” in relation to a company being taken over means a public company. “control” in relation to an acquisition of shares means the acquisition or holding of, or entitlement to exercise or control the exercise of, voting shares of more than thirty-three per centum in a company.”

In respect of the sale of shares of AASB, there are 2 Sale and Purchase Agreements, namely: 52 i) between Liw Jun Wai and Kong See Kuan (75% AASB share transaction); ii) between Chaw Choi Kew and Tan Onn Poh (25% AASB share transaction).

As to the Sales and Purchase Agreement between Chaw Choi Kew and Tan Onn Poh, Chaw Choi Kew acquired 25% of the shares of Tan Onn Poh in Asia Avenue. Chaw Choi Kew paid Tan Onn Poh for the shares, who then transferred the voting rights in the shares to Chaw Choi Kew. Therefore Chaw Choi Kew controlled 12.12% in Paragon Union Berhad.

As for the Sale and Purchase Agreement between Liw Jun Wai and Kong See Kuan (which was for the purchase of 75% of shares in AASB) the sale of shares was terminated as Liw Jun Wai failed to pay the balance purchase price to Kong See Kuan. Hence, there was no transfer of Kong See Kuan’s shares in AASB to Liw Jun Wai. Therefore, it was submitted by the Defendant that Liw Jun Wai never had any voting rights in AASB nor in Paragon Union Berhad. At any point in time, the register of shares never reflected Liw Jun Wai as an indirect/direct shareholder of Paragon Union Berhad. Counsel for the Defendants submitted that Liw Jun Wai never acquired any substantial shareholding of Paragon Union Berhad, therefore the threshold of 33% test was never triggered for the Mandatory General Offer to take effect. 53

With respect we are unable to agree with the aforesaid submission, as the definition of “acquirer” clearly includes any person “who acquires or proposes to acquire control in a company….”. Although Liw Jun Wai subsequently failed to acquire a substantial portion of the AASB shares, he falls within the definition of “a person who proposes to acquire…” and his proposal to acquire the AASB’s shares would definitely cross the threshold of 33% requirement.

Therefore, it is the statutory obligation of Liw Jun Wai to make the Mandatory General Offer as the “acquirer” who proposes to take control of Paragon Union Berhad vide the 2 separate Sales and Purchase Agreements through the purchase of AASB’s shares with Kong See Kuan and Tan Onn Poh’s shares respectively.

The onus is on the “acquirer”, Liw Jun Wai to make a Mandatory General Offer to other shareholders.

The learned trial Judge concluded that the Take-Over Scheme was successfully executed and all parties have participated in the Take-Over Scheme and had committed an offence by failing to comply with section 33 B (1), either as a principal or as an abettor to circumvent the requirement of a Mandatory General Offer to enable Liw Jun Wai to take control of Paragon Union Berhad. She held that in this regard all parties had committed an offence under section 33 B (4) of the SCA. 54

We found that the learned trial Judge did not err when she made such findings. Whether the parties are in pari delicto:

The learned trial Judge found from the evidence that the parties were in pari delicto. Premised on the said evidence, the learned trial Judge found that there is illegality in respect of the 9 Agreements and by virtue of section 24 of the Contracts Act 1950 the 9 Agreements are void and unenforceable.

We found that the learned trial Judge did not err in this respect for the following reasons: a) it was in evidence that the working paper or the proposal (via email 20.10.2007) on Paragon Union Berhad was known to Tee Guan Pian, Liw Jun Wai and Quah Ban Ho. The working papers were discussed, negotiated, amended and put into writing by parties i.e. Liw Jun Wai, Tan Hong Kien, Kong See Kuan. Although Tee Guan Pian is not a party to the Agreements and not an agent nor representative of Tan Onn Poh, Kong See Kuan, AASB and Paragon Union Berhad, from the evidence, he was the one who hatched the idea of taking over Paragon Union Berhad. There was evidence of several meetings between Tee Guan Pian and Liw Jun Wai and subsequently with Tan Hong Kien to discuss details of taking over of Paragon Union Berhad. 55 Tan Hong Kien was roped in as he had access to the current financial accounts of Paragon Union Berhad which would greatly assist parties in the Take-Over Scheme. It was also in evidence that Tee Guan Pian cautioned Liw Jun Wai to keep those discussions private and confidential for fear of penal consequences. b) It was submitted by the Defendants that there is no evidence to show that Tee Guan Pian gave the working paper to Tan Hong Kien, Tan Onn Poh, Kong See Kuan, AASB and Paragon Union Berhad. That may be true, but from the evidence, namely, the subsequent meetings and the emails between parties and their lawyers showed that they were very much aware of the Take-Over Scheme and the 9 Agreements of which they are privy to, whether directly or indirectly: i) As early as 20.10.2007, Tee Guan Pian’s email already advised on the circumvention of a mandatory offer- “Concept is to avoid GO”; ii) The email from Tee Guan Pian dated 4.12.2007 to Liw Jun Wai and Quah Ban Ho with the attachment entitled “Project Papa which stated in para 3.3 as follows: “3.3. New Code will be coming out most probably early 2008 which GO threshold will be revised from 33% to 30 %. There would be GO implication again….” 56 c) The Defendant submitted that the Plaintiffs pleaded in their claim at paragraph 28 B (f) that Paragon Union Berhad knew of the infringement of the laws, however no evidence was adduced to prove as such. What is in evidence is that, Paragon Union Berhad made public announcements of the DPSB Agreement to Bursa Malaysia. Paragon Union Berhad is in the business of property development and had just completed and sold off its Paragon Heights Project and was looking for new ventures. Paragon Union Berhad expected that the acquisition of DPSB could improve its earnings and cash flow when the property is being developed. Hence, the Defendants submitted that there is no evidence of any intention on the part of Paragon Union Berhad to advance an unlawful purpose. However, that submission cannot stand, as it failed to take into account that there has not been a disclosure of Raine & Horne’s 1st valuation report which had a valuation of RM54 million, to Paragon Union Berhad’s shareholders and directors (other than Tan Hong Kien and Tan Onn Poh). Paragon Union Berhad had announced to Bursa and the public on 19.8.2008 that the DPSB Agreement was made pursuant to Raine & Horne’s 2nd valuation report. Clearly, Bursa and the public had been misled as to the true value of the DPSB Agreement. d) All parties knew of the RM28.5 million value of the DPSB development rights but reduced it to RM18 million to bypass 57 unlawfully the EGM approval requirement. This was to circumvent the need to have the EGM Approval for the DPSB Agreement. e) Low Chooi Ping (Paragon Union Berhad’s lawyer), who is a senior lawyer testified that he was aware that a person who has control by virtue of the 1st and the 2nd AASB Agreements must obtain exemption from the Securities Commission to make a mandatory offer. Further, Low Chooi Ping also confirmed that the Loan Agreement and Kong See Kuan’s Power of Attorney were drafted for the purpose of the Take-Over Scheme (Q & A No 25-38 of Notes of Proceedings).

Therefore, premised on the abovementioned evidence, the learned trial Judge was not wrong when she concluded that the Agreements were illegal and that the parties were in pari delicto or “in equal fault”.

The learned trial Judge also held that all parties have acted in concert to enable Liw Jun Wai to take control of Paragon Union Berhad. A party acting in concert is defined in Section 33 (2) of the SCA 1993 as: “2) …… “persons acting in concert” shall be construed as a reference to persons who, pursuant to an agreement, agreement or understanding, co –operate to- 58 a) acquire jointly or severally voting shares of a company for the purpose or obtaining control of that company; or b) act jointly or severally for the purpose of exercising control over the company.” “Acquirer” has been defined in section 33 (1) (ii) of the Act to include “two or more persons who, acting in concert with one another, acquire or propose to acquire control in a company”. Section 33 (4) of the SCA and section 2 (4) of the 1998 Code provide that: “………..an agreement, arrangement or understanding means an agreement, arrangement or understanding whether formal or informal, whether written or oral, whether express or implied, or whether or not having legal or equitable force.”

It was submitted by the Defendants that, in one of the Sale and Purchase Agreements, Kong See Kuan is the vendor in the sales transaction of shares, hence she would be divested of her interests therein. Therefore, she could not be acting in concert when she no longer had any interest in the shares when she sold off her interests. Similarly with Tan Onn Poh, when he sold his shares in Asia Avenue Sdn Bhd to Chow Chaw Kien, he can no longer be acting in concert. However, we disagree with such submission, as the wide definition of “acquirer” under section 33 (1) of SCA 1993 covers all parties 59 herein and under section 33 B (2) SCA, they are to make a mandatory offer.

The definition of “persons acting in concert” in section 33 (2) (a) and

(b) of the SCA is couched in very wide terms. Paragraph (a) talks about “co-operate to acquire jointly or severally, voting shares of a company for the purpose of control,” whilst paragraph (b) mentioned “act jointly or severally for the purpose of exercising control of a company”. Paragraph (b) covers all acts of cooperation which would be caught within the definition of “acting in concert”…to exercise control of a company. Hence Kong See Kuan and Tan Onn Poh would fall within “persons acting in concert”. Whether Kong See Kuan and Tan Onn Poh would be divesting their interest in the shares, is immaterial. They have “acted in concert” with the Plaintiffs to acquire Paragon Union Berhad.

Under section 6 (1) (a) and (4) of the 1998 Code, an “acquirer” who has obtained control of Paragon Union Berhad, is required to make a mandatory offer. Section 7 (a) of the 1998 Code prohibits the “acquirer” from appointing any director to Paragon Union Berhad before sending an “offer document” to implement the mandatory offer. The mandatory requirement has been explained by the Supreme Court in Petaling Tin Bhd v Lee Kian Chan (supra) which states that: 60 “…the policy of the Code is to require a new controller to give an opportunity to the other shareholders of quitting the company and sharing in the price paid for the control or its consolidation because the character of the company, in a sense, may have changed.”

The Plaintiffs failed to make a mandatory offer as “acquirers” which constituted an offence under section 33 B (2) and 4 of the SCA 1993.

Accordingly the act of Paragon Union Berhad, Liw Jun Wai, Tee Guan Pian, Tan Hong Kien, Kong See Kuan and Tan Onn Poh constituted a breach of section 6 (1) (a), 4 and 7 of the 1998 Code, read with section 33 B (1) and (2) of the SCA 1993.

From the evidence, the Take-Over Scheme had been successfully executed and Liw Jun Wai had control of Paragon Union Berhad’s Board of Directors from 6.11.2008 when his nominees were appointed to the Board of Paragon Union Berhad. It is clear that all parties here had acted in concert to enable Liw Jun Wai to take over control of Paragon Union Berhad.

Parties also committed the following acts: i) Acting in furtherance of the commission of an offence under section 33 B (2) and 4 of the SCA which is an offence under section 157 (b) SCA and is punishable with the same punishment under section 33 B (4) SCA; and 61 ii) Abetting or being engaged in a criminal conspiracy in respect of the commission of an offence under section 33 B (2) and (4) SCA which is an offence under section 157 (c) SCA and is punishable with the same punishment under section 33 B (4)

In addition, there were also breaches by the parties of paragraphs 11.06, 11.07 and 11.08 of the Listing Requirements. Section 11.06 of the same, provides that “an offeree must send to all holders of other classes of shares and convertible securities of the company, whether or not such securities are covered by the take over offer, a copy of all documents which it is required by law to be sent to the holders of the shares subject to the take over offer”. Section 11.07 of the Listing Requirements provides for the persons who must make immediate announcements to the Exchange of the total number and price of all voting shares in the offeror and the offeree. This includes the offeror, the offeree and all persons acting in concert with the offeror. Clearly, this was not done by the parties in this case. Section 11.8 provides that “an offeror must make an immediate announcement to the Exchange of the total number of voting shares to which the take-over offer relates: 62

For which acceptances of the take-over offer have been received after the posting of the offer document by the offeror to offeree shareholders;

Held by the offeror and all persons acting in concert with the offeror at the time of posting of the offer document to offeree shareholders; and

Acquired or agreed to be acquired during the offer period…” Conclusion: The Effect of the 9 Agreements:

It is clear that the 9 Agreements are not enforceable due to Section 24 (a), (b) and/or (e) of the Contracts Act 1950 whereby the consideration or object of an agreement is lawful unless: a) it is forbidden by law; b) it is of such a nature that, if permitted, it would defeat any law; c) the court regards it as opposed to public policy.

Therefore in view of the illegalities, the 9 Agreements: a) are forbidden by section 33 B (1), (2), (4) and 157 (b) and (c ) of the SCA read with section 6 (1) (a), (4) and 7 (a) of the 1998 Code within the meaning of section 24 (a) of the Contracts Act 1950; 63 b) if permitted would defeat the statutory provisions stated in the above paragraph (a) as provided in section 24 (b) Contracts Act 1950.

The DPSB Agreement is therefore forbidden by: a) section 132 C (1) (a) and (5) CA 1965 within the meaning of section 24 (a) Contracts Act 1950; and b) if permitted would defeat section 132 C (1) (a) and (5) Companies Act 1965 as provided in section 24 (b) Contracts Act 1950.

In addition, the 9 Agreements are also void under section 24 (e) of the Contracts Act 1950 as they are against public policy. The rationale for the mandatory offer as enunciated in Petaling Tin Bhd v Lee Kian Chan (supra) is to protect the investing shareholders of Paragon Union Berhad and the investing public. This is to ensure that the acquisition of voting shares or control of the companies takes place in an efficient, competitive and informed market. This is precisely the mischief of section 33 A (5) of the SCA. Failure to observe the mandatory requirement will undermine Bursa locally to the detriment of the Malaysian Capital Industry.

The EGM Approval requirement is consistent with public interest which demands good corporate governance from Malaysian 64 companies, especially public listed companies as in Paragon Union Berhad.

The Listing Requirements govern all public listed companies and their directors and advisors. This is to ensure the integrity and to protect the lawful administration of Bursa and also to protect the investing public in general. If the Listing Requirement is breached, as in the present case by entering into the agreements, such agreements are void as being against public policy.

The 9 Agreements are therefore void and unenforceable for illegality. Refusal to grant relief to Paragon Union Berhad:

The learned trial Judge did not grant relief for the refund of RM18 million to Paragon Union Berhad which had been paid to the Plaintiffs.

The learned trial Judge also held that the parties were aware of the breaches when they entered into the Agreements. Hence Paragon Union Berhad did not come with clean hands as it had participated in the illegal transaction. This was the distinguishing feature that the learned trial Judge found in Tan Chee Hoe & Sons Sdn Bhd v Code Focus Sdn Bhd [2014] 3 CLJ 141 and said that the plaintiff came clean there from the beginning. This was in contrast to our present appeal where Paragon Union Berhad never pleaded illegality 65 nor restitution but sought instead for the remedy of breach of contract and claimed for liquidated damages under the contract (refer to paragraph 95 of the learned trial Judge’s grounds of judgment). Further, the learned trial Judge also found that Paragon Union Berhad had breached the 1998 Code, section 132 C (1) (a) of the Companies Act 1965 and Section 33 of the SCA, as compared to Tan Chee Hoe & Sons (supra) where it was only a breach of section 132 C of the Companies Act 1965. Hence, the learned trial Judge was unable to provide relief for the refund of the RM18 million under section 66 of the Contracts Act 1950, as Paragon Union Berhad had participated in the illegal transaction and that its hands were tainted as such.

We disagree with the findings of the learned trial Judge in this respect, namely, the basis in refusing to grant the relief sought by Paragon Union Berhad for the refund of the RM 18 million paid to the Plaintiffs for the following reasons.

The learned trial Judge had fallen into error as to the actual pleaded relief of Paragon Union Berhad in Suit 737 when she said that Paragon Union failed to plead for the refund of the RM18 million. Our perusal of the Statement of Claim by Paragon Union Berhad for Suit 737 at the High Court, at page 119-120 of RA Volume 1 Part A, shows that Paragon Union Berhad did seek in its relief, for the refund of RM18 million (Refer to para 20 and 21 of the Statement of Claim). 66

We disagree with the learned trial Judge’s evaluation of the facts in Tan Chee Hoe & Sons (supra) when the learned trial Judge said that there are distinguishing facts which justified the Federal Court granting the refund of the deposit paid under the void agreement. The facts therein disclosed the plaintiff and the defendant entered into a Sale and Purchase Agreement (SPA) to purchase the defendant’s shares in Chee Hoe Sdn Bhd. The defendant’s only asset is a piece of land. The completion date of the SPA was subjected to 2 conditions i.e. approval of the Foreign Investment Committee and approval by the defendant’s shareholder at EGM for the intended sale. The plaintiff paid 10% deposit i.e. RM1.6 million. Simultaneously with the SPA, the plaintiff executed a document (side letter) whereby the plaintiff agreed to waive the defendant’s obligations vis-à-vis the conditions precedent, notwithstanding that one of the condition precedent i.e. the approval of the defendant’s shareholders at EGM was mandated by section 132 C of the Companies Act 1965. Subsequently, disputes arose between parties and by the completion date, neither the balance purchase price nor vacant possession had been exchanged between parties. The defendant terminated the sales and purchase agreement and forfeited the deposit sum. The plaintiff filed a suit in Kuala Lumpur High Court claiming for refund of the deposit. The High Court dismissed the claim stating that the waiver by the plaintiff as to the defendant’s obligation was valid and did not render the Sale and Purchase Agreement void. The Court of Appeal however reversed the decision of the High Court whereby it held, inter alia, that the 67 mandatory requirement under section 132 C of the Companies Act 1965 could not be waived, the side letter was ineffective and void, but the SPA was not void but only voidable at the plaintiff’s option. The Court of Appeal held that the defendant had breached the SPA and ordered the refund of the deposit of RM1.6 million to the plaintiff, in addition for damages to be assessed. At the Federal Court, it was held that the SPA was invalid and void as it was performed in a manner which is against the law. The Federal Court also found that the parties had knowingly and consciously participated in the contravention of the statutory requirement under section 132 C of the Companies Act 1965. The order for damages was set aside but it affirmed the order for refund of the deposit pursuant to section 66 of the Contracts Act 1950.

Clearly, the learned trial Judge’s evaluation of the facts in Tan Chee Hoe (supra) is misconceived. The parties in Tan Chee Hoe (supra) did not come with clean hands from the beginning. They willfully and knowingly breached section 132 C of the Companies Act when they entered into the SPA. Further, it is irrelevant whether the breach is in relation to one section of the law or breaches of multiple provisions of the law, as either way, is unlawful.

The facts in Tan Chee Hoe (supra) bear some resemblance and similarity with the facts in our present appeal. 68 In Tan Chee Hoe & Sons (supra), the parties were in pari delicto when they consciously waived the requirements of section 132 C of the Companies Act 1965 for the intended sale and purchase agreement. The plaintiff premised its entire claim on the terms of the SPA which was found to be void. Essentially, the plaintiff was attempting to enforce a void contract. The Federal Court applied Section 66 of the Contracts Act 1950 and ordered 10 % deposit of RM1.6 million to be restored to the plaintiff. As held by the Federal Court: “The SPA in this case become void when the mandatory statutory requirement of shareholders’ approval was not obtained and was consciously waived by the parties at the time when it was executed. Therefore S. 66 of the Contracts Act 1950 came into play i.e. that the defendant who had received an advantage (in the form of the 10% deposit of RM 1.6 million) under the void agreement or contract (the SPA) is bound to restore it to the plaintiff from whom he received it.”. Similarly in our case, the 9 agreements became void due to breaches of the various statutes as enumerated in paragraphs 92-95 of our judgment, rendering them illegal and unenforceable. In the circumstances, applying Tan Chee Hoe & Sons (supra), section 66 of the Contracts Act 1950 comes into play and the plaintiffs are bound to restore the RM18 million that it had received under the DPSB Agreement to Paragon Union Berhad. In ordering the RM18 million to be restored to Paragon Union Berhad, we are not enforcing the DPSB Agreement (which has become a void contract) but we are 69 instead enforcing the restitutionary principle as encapsulated in section 66 of the Contracts Act 1950.

Hence, we are of the view that, as the DPSB Agreement has been found to be void due to illegality, and the money had passed to the Plaintiffs, it is unjust to let the Plaintiffs gain from such illegality. What more in this case, as the Plaintiffs are very much an active participant to the illegality. In fact, it was Liw Jun Wai with Tee Guan Pian who initiated the Take-Over Scheme. To refuse the refund would be to condone a windfall to the Plaintiffs out of the illegality. That would result in a disproportionate consequence between the Plaintiffs and the Defendants, bearing in mind that both are equally at fault. Hence, to remedy the situation, we found that restitution is the proper recourse. We are putting parties back to their original position before they entered into the illegal agreement. In the words of Bingham LJ in Saunders v Edwards [1987] 1 WLR 1116, at page 1134 at paragraph B : “Where issues of illegality are raised, the courts have (as it seems to me) to steer a middle course between two unacceptable positions. On the one hand it is unacceptable that any court of law should aid or lend its authority to a party seeking to pursue or enforce an object or agreement which the law prohibits. On the other hand, it is unacceptable that the court should, on the first indication of unlawfulness affecting any aspect of a transaction, draw up its skirts and refuse all assistance to the plaintiff, no matter how serious his loss nor how disproportionate his loss to the unlawfulness of his conduct……. 70 …the courts have tended to adopt a pragmatic approach to these problems, seeking where possible to see that genuine wrongs are righted so long as the court does not thereby promote or countenance a nefarious object or bargain which it is bound to condemn. Where the plaintiff’s action in truth arises directly ex turpi causa, he is likely to fail as he did in Alexander v Rayson (1936) 1 K.B. 169…..Where the plaintiff has suffered a genuine wrong, to which allegedly unlawful conduct is incidental, he is likely to succeed, as he did in Bowmakers Ltd v Barnet Instruments Ltd [1945] KB 65….” Bingham LJ in his judgment in Saunders v Edwards (supra) further held that cases seemed to suggest that there are no rigid rules for or against the application of ex turpi causa defence (See Singh v Ali [1960] A.C. 167 which was referred to by the Federal Court in Tan Chee Hoe & Sons (supra) and Palaniappa Chettiar v Arunasalam Chettiar [1962] A.C. 294), as it involves issues on public policy and to some extent on the circumstances of each case.

In this case, Liw Jun Wai had received an advantage when he received RM18 million as purchase consideration under the DPSB Agreement. He should restore the advantage that he had received i.e. to refund RM18 million that he had received from Paragon Union Berhad. In fact it was held in Tan Chee Hoe & Sons (supra) that “being a void contract, by virtue of the Contracts Act 1950, the court of law may order restoration of whatever consideration or advantage paid or given under that contract…..” 71

Counsel for the Plaintiff submitted that the Federal Court in Tan Chee Hoe (supra) failed to consider the legal principle as enunciated in the case of New Churulia Coal Co Ltd v Union of India AIR 1956 Cal 138 where in its judgment the said Court ruled at page 144: “[22] It is therefore apparent that the obligation to pay compensation or to restore the benefit received under a void agreement is completely different from that under the agreement itself. The obligation to make compensation in respect of the contract discovered to be void is like a phoenix that can be raised again by one of the parties from the dead ashes of its former self. Before the new right can come into being the old right must die; the cause of action under Section 65, Contract Act cannot exist side by side with the cause of action under the contract itself.” In this respect, we are of the view that the abovesaid legal principle as enunciated in New Churulia Coal Co Ltd v Union of India (supra) would not have any significant effect on our findings as far as restitution to Paragon Union Berhad is concerned. Firstly, the case cited by learned counsel is a High Court case of Calcutta, India, which is not binding on this court. Secondly, by making this order for restitution under section 66 of the Contracts Act 1950, this Court is not enforcing rights under the contract which is found to be void. In addition, it is to be borne in mind that there are criminal consequences, as a result of such act 72 which is outside the purview of this civil court. The order for restitution of the money merely return the parties to their previous position before the conclusion of the illegal contract and prevent the plaintiffs from benefiting by unjust means.

Hence, we are of the view that, the RM18 million ought to be refunded to Paragon Union Berhad based on the Federal Court decision in Tan Chee Hoe & Sons (supra). Appeal by Tee Guan Pian to expunge the impugned references to him and the findings of fact by the learned trial Judge:

Counsel for Tee Guan Pian submitted that the evidence in relation to an unpleaded point cannot be relied upon and as a consequence of the withdrawal of the claim against Tee Guan Pian, none of his oral evidence should have been referred to, by the learned trial Judge so as to arrive at the finding that Tee Guan Pian was the mastermind of the illegal scheme.

We are however not persuaded by these arguments. Although the claim against Tee Guan Pian was withdrawn, the plea of illegality was never withdrawn. It remained until the end of the trial and the declaration sought was stated in the relief prayed for.

A perusal of the notes of proceedings disclosed that, there was no request nor application made by Tee Guan Pian nor his solicitors at 73 the trial, when the withdrawal of the claim against him was recorded that, any evidence in reference to him was to be expunged. Neither were there terms recorded nor imposed when the claim against him was withdrawn. O 21 r 3 of the Rules of Court 2012 states that the withdrawal of any particular claim made by any party may only be done with leave of the court and the Court may impose such terms as it thinks just. There were no terms recorded upon the withdrawal of the claim against Tee Guan Pian.

In addition, the findings of the learned trial Judge as to the role played by Tee Guan Pian in the alleged Take-Over Scheme was not based solely on the evidence of Tee Guan Pian but a conglomeration of the evidence from the emails, meetings, letters as well as oral evidence from the other witnesses as well. The learned trial Judge based her findings on the role played by Tee Guan Pian premised on the several emails of which he was the author, evidence of Liw Jun Wai, Tan Hong Kien, Kong See Kuan’s lawyer and Quah Ban Hoo.

The Court is in no position to sever the evidence which refers to the role played by Tee Guan Pian without affecting the entire suit. The reliance by counsel for Tee Guan Pian on the case of Adams Offshore Ltd v TL Offshore Sdn and Hallin Marina Systems Int Ltd and Another (Third Party) [2009] 1 LNS 197 is misplaced. There, the withdrawal to the counterclaim renders it no longer relevant. However, in the present Appeal, the issue with regards to the illegality remained a live issue until the end of the 74 Appeal. Hence, his evidence which relates to the issue of the illegality of the Agreements is relevant and cannot be severed from the evidence adduced at the trial. The evidence in relation to the role played by Tee Guan Pian remains relevant to the entire suit.

Hence, the application by Tee Guan Pian to expunge the findings of the learned trial Judge in respect of his role in the alleged illegal scheme is unfounded. We therefore dismissed the said application. Effect of the abandonment of the claim against Tee Guan Pian:

Counsel for the Defendants submitted that as the claim against Tee Guan Pian was abandoned by the Plaintiffs, the court is no longer seized of jurisdiction to make any findings of fact against Tee Guan Pian, as the averred cause of action has been removed from adjudication. This is because the substratum of the Plaintiffs’ claim against Tee Guan Pian is no longer before the court. It was further submitted that when the claim against Tee Guan Pian was abandoned, the court is not entitled to make any findings of fact against Tee Guan Pian. In essence, it was submitted that as a result of the withdrawal of the claim against Tee Guan Pian, the court should not refer to any of the oral evidence of Tee Guan Pian to arrive at a finding that Tee Guan Pian was the master mind of the take over scheme. 75 The Defendant submitted that the effect of the abandonment of the claim by the Plaintiffs against Tee Guan Pian had not been addressed by the learned trial Judge in reference to Paragon Union Berhad.

The effect of the abandonment of claim by a party has been illuminated by this Court in the case of Perwira Affin Bank Berhad v Sardar Mohd Roshan Khan [2011] 5 CLJ 886 where it was stated that: “[25] Given the Plaintiff’s aforesaid express and repeated admission that his claim against the 1st defendant (D1) was not based on the tort of negligence and that the Plaintiff has no cause of action in tort against the 1st defendant, we find that the Plaintiff has unequivocally abandoned his claim based on the tort of negligence against the 1st defendant. This abandonment must now be viewed in the light of the plaintiff’s pleaded case, which was firmly founded on the tort of negligence. This is clearly demonstrated in the plaintiff’s Statement of claim. [26] Plainly, the Plaintiff’s aforesaid express and repeated admission has removed the substratum of his claim.”

However, as we have explained in the preceding paragraphs, we are of the view that despite the abandonment of the claim by the Plaintiffs against Tee Guan Pian, his oral evidence remains intact. The court is entitled to use his oral evidence, wherever relevant to determine the issue of illegality and the role he played in the transactions. The crux of the Plaintiffs’ claim is premised on a Take-Over Scheme of Paragon Union Berhad, a public listed company, an 76 idea mooted by Tee Guan Pian. It was pleaded in para 27 B (b) (i) in the Statement of claim that it was due to the proposal by Tee Guan Pian that the illegality was mooted and /or laws circumvented. It was alleged by the Plaintiffs that Tee Guan Pian had put up a working paper to that effect.

Hence the court is entitled to apply whatever relevant evidence adduced by Tee Guan Pian to make any findings that it deems fit, in so far as it relates to the issue of illegality, in accordance to the evidence before it.

In addition, it appears that the appeal by Tee Guan Pian is against the reasons of the learned trial Judge that she premised her decision on. Essentially, there was no order made against Tee Guan Pian by the learned trial Judge, as the Plaintiffs have abandoned their claim against Tee Guan Pian. Therefore effectively, there is no order of the learned trial Judge by which Tee Guan Pian could appeal against. Conclusion:

For the reasons stated above, we hereby dismiss the appeal by Paragon Union Berhad (Appeal No 1202) in part with no order as to costs. We hereby order that the Plaintiffs are to refund the RM18 million to Paragon Union Berhad, as per the reliefs prayed for in paragraphs 20 (a) and 21 (a) of the Statement of Claim in Suit 737 which are as follows:- 77 i) Prestamewah Development Sdn Bhd to pay Paragon Union Berhad RM13,500,000.00; ii) Liw Jun Wai to pay Paragon Union Berhad the sum of RM4,500,000.00. We accordingly set aside part of the order of the learned High Court Judge that refused to grant relief for the refund of the RM18 million to Paragon Union Berhad.

The appeal by Tee Guan Pian (Appeal No 1238) is dismissed with costs of RM5,000.00 to be paid to the Respondents subject to allocatur and the deposit is refunded. Signed by: Zabariah Mohd Yusof Judge Court of Appeal Malaysia Date: 16.03.2018 78 COUNSEL: Dato’ Murali Menon & Nor Adilah for the Appellant in Appeal No.1202 [Messrs. Jaffar Menon] Nahendren Navaretnam, Alex Chan & Denis Goh for the Respondent (Appeal 1202 and 1238) [Messrs. Wong Kian Kheong] Malik Imtiaz, Pavendeep Singh, Mohd Rizal for the Appellant in Appeal No 1238 [Messrs. Bahari & Bahari]