Tan Teck Ern v Dieh Siew Huat (BA-22NCC-35-03/2022)

BETWEEN TAN TECK ERN

CHEAH HOUY LING (NRIC NO: 791229-07-5558) … PLAINTIFFS

DIEH SIEW HUAT

CHIN CHIN SING@TAN CHENG BENG (NRIC NO: 430824-01-5521) … DEFENDANTS (Consolidated with Suit No. BA-22NCC-121-11/2019 in the High Court at Shah Alam pursuant to a Consent Order dated 17.11.2020) IN THE HIGH COURT OF MALAYA AT SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN WRIT SUMMONS NO: BA-22NCC161-11/2019

DIEH SIEW HUAT

CHIN CHIN SING@TAN CHENG BENG (NRIC NO: 430824-01-5521) … PLAINTIFFS

TAN TECK ERN

CHEAH HOUY LING (NRIC NO: 791229-07-5558) … DEFENDANTS _________________________________________________________ JUDGMENT Introduction 1. Two cases were heard together under a consolidation order dated 17.11.2020.

They are as follows:

Civil Suit No. BA-22NCC-35-03/2022, in which the plaintiffs are Tan Teck Ern and Cheah Houy Ling, and the defendants are Dieh Siew Huat and Chin Chin Sing@Tan Cheng Beng, and

(ii) In Civil Suit No. BA-22NCC-161-11/2019, Dieh Siew Huat and Chin Chin Sing@Tan Cheng Beng are the plaintiffs, and Tan Teck Ern and Cheah Huoy Ling are the defendants.

The case was heard under the Civil Suit No. BA-22NCC-35- 03/2022.

Tan Teck Ern and Cheah Huoy Ling will be referred to as the plaintiffs, while Dieh Siew Huat and Chin Chin Sing@Tan Cheng Beng will be referred to as the defendants.

The relevant documents marked during the trial are as follows: Enclosure No. Documents Exhibits 108 Agreed Facts AF 109 Issues to be tried IT 105 Plaintiff’s Summary of Case PS 107 Defendant’s Summary of Case DS 104 Bundle of Pleadings A 110 Common Bundle of Documents B1 125 Additional Common Bundle of Documents B2 122 1st plaintiff’s Witness Statement - Tan Teck Ern WSPW1 121 Defendant’s Witness Statement - Lee Wei Hong WSDW1 120 Defendant’s Witness Statement – Dieh Siew Huat

The facts of the case unfolded in a two-day trial.

The plaintiff’s witness is Dr Tan Teck Ern.

Defendants' witnesses are Lee Wei Hong and Dieh Siew Huat. Brief Facts of the Case 9. The plaintiffs entered a Joint Venture Agreement with the defendants on 9.2.2018.

The Joint Venture Agreement comprises two different parts.

The first part is for the plaintiffs to sell 70% of their shares in a company incorporated as Primo Aesthetic Sdn Bhd (from now on referred to as the Company).

The second part deals with the operation and management of the Company post-acquisition.

Clause 2 of the Joint Venture Agreement states that the Primo Aesthetic Sdn Bhd shares value was RM1.4 million.

The Joint Venture Agreement was executed without any due diligence exercise conducted by the defendants.

Notwithstanding the non-payment of the balance sum of RM700,000.00, the plaintiffs transferred 70% of the shares to the defendants on 15.5.2018.

The defendants were appointed as directors of the Company on 25.4.2018.

The second plaintiff had resigned as a director of the Company.

The defendants handled the majority ownership and control of the Company in mid-year 2018.

The defendant paid the plaintiff RM70,000.00 on 9.2.2018 and RM630,000.00 on 24.5.2018.

The balance of the purchase price of RM700,000.00 remained unpaid.

The plaintiff contends that the defendants made excuses and said they would pay later.

However, the defendants contend they had reasons for not settling the balance sum.

Meanwhile, the defendants and the first plaintiff started an aesthetic centre called RM Ritz Marquis in Setia Alam, Selangor.

The first plaintiff's version of the facts is that a letter of demand was issued to the defendants due to their failure to settle the balance purchase price of the shares and their interference with the first plaintiff’s role as the Company's managing director.

In the letter of demand dated 28.6.2019, the defendants were asked to terminate the Joint Venture Agreement.

The defendants were also asked to cease operating and managing the Company and give an account of its affairs.

On 10.7.2019, the defendants replied to the plaintiff’s demand letter.

The defendants agreed to the Joint Venture Agreement terminated.

However, the defendants alleged the plaintiffs were the parties who had breached the terms of the Joint Venture Agreement.

The defendants’ grievances were as follows:

Plaintiffs failed to provide accounts and documents to verify the figures and value within thirty days of executing the joint venture agreement.

(ii) Time was of the essence when providing the accounts and documents.

(iii) Only upon receiving the documents and accounts did the defendants realize that the value of the shares was not as represented by the plaintiffs.

(iv) This resulted in the purchase price not being RM1.4 million due to the non-disclosure of specific amounts and discrepancies in the accounts.

The first plaintiff failed, neglected, and refused to continue his duties as managing director.

(vi) The defendants discovered that the first plaintiff did not have a valid certificate and license to practice as an aesthetic doctor.

(vii) As the aesthetic clinic in Setia Alam had started, the defendants did not want to proceed with the business as they were now aware of its illegality.

For the reasons mentioned above, the defendants agreed to terminate the Joint Venture Agreement when the plaintiffs initiated it with a letter of demand dated 28.6.2019.

However, the plaintiff states that the defendants continue to operate and manage the Company and the Setia Alam Clinic.

The defendants also issued a letter to the first plaintiff on 10.10.2019 to remove him as company director.

Plaintiffs filed for an injunction application against the defendants.

The Court had granted an injunction order dated 18.11.2019 against the defendants.

The injunction order restrained defendants from carrying out their duty and responsibility as directors of the Company, enforcing any of their rights as shareholders of the Company, and being involved in all aspects of the operation and management of the Company and the Setia Alam Clinic, whether personally or through a third party.

The plaintiffs alleged that the defendants prevented the first plaintiff from entering the Setia Alam Clinic through its employees at the clinic.

Plaintiffs were denied access to the Company's management and financial records.

Meihome (M) Sdn Bd, the landlord of the Setia Alam Clinic, repossessed the premises of the Setia Alam Clinic.

The first defendant was the director and shareholder of Meihome (M) Sdn Bhd.

The first defendant was also the landlord for Meihome (M) Sdn Bhd, who had rented the premises for the Company.

This caused the Setia Alam Clinic to be closed down.

However, the Setia Alam Clinic became the premises for a new aesthetic clinic, Symphony Aesthetic Centre.

In addition, the Company, under the defendants' control, failed to pay the rental for the Johor Clinic.

The Johor Clinic tenancy agreement was not renewed.

It resulted in the termination of the tenancy agreement between the landlord in Johor and the company.

The plaintiffs state that the Company had lost the business premises and all the businesses.

The plaintiff contends that when the plaintiffs first filed the suit for the injunction order, they asked the defendants to account for the Company’s financial status and sought to return the Company to the plaintiff.

However, since the Company and Johor Clinic had ceased operations, they disabled the plaintiffs’ prayers for restitution.

As such, the plaintiffs seek alternative prayers as stated in paragraphs 26 (q), (r), (s), and (t) of the amended statement of claim dated 21.12.2022.

The defendant’s claims in Civil Suit No. BA-22NCC-161-11/2019 mirrors their defence in Civil Suit No. BA-22NCC-35-03/2022.

The issues to be tried are as follows:

Whether the Joint Venture Agreement dated 9.2.2018 (“the agreement”) been terminated due to the defendants' breach of contract, who failed to pay the remaining purchase price of RM700,00.00 for the acquired shares?

(ii) Whether the defendants ever raised any issues after receiving the documents as provided in Clause 3.3. of the agreements to the defendants?

(iii) Whether the defendants have restrained and omitted the first plaintiff’s position as the managing director in Primo Aesthetic Sdn Bhd (“the Company”) and the operation and management of the Setia Alam Clinic.

(iv) Whether the defendants have, without the plaintiff’s consent, registered the trademark of RM Ritz Marquis (“the RM Ritz Marquis”) where the plaintiffs are the original owner and beneficiary of the name and trademark of the RM Ritz Marquis.

Whether the defendant have opened a new aesthetic clinic known as Symphony Medical Centre HQ (“the symphony”) at Setia Alam and promoted the symphony by using the premises of the RM Ritz Marquis Clinic?

(vi) Whether the Company’s business has been closed due to the defendants’ or the plaintiffs’ action?

(vii) Whether the plaintiffs are entitled to the reliefs stated in paragraph 26 of the Amended Statement of Claim dated 21.12.2022?

(viii) Whether the plaintiffs have breached the Joint Venture Agreement prior to the defendants’ breach as alleged?

(ix) Whether the plaintiffs have misrepresented, deceived and defrauded the defendants into signing the Joint Venture Agreement?

Whether the plaintiffs have failed to disclose the company’s liabilities before, during and after the signing of the Joint Venture Agreement?

(xi) Whether the first plaintiff is a registered aesthetic practitioner in Malaysia?

(xii) Whether the Johor Clinic has the licence to operate as an aesthetic clinic?

(xiii) Whether the Joint Venture Agreement is void due to its illegality?

(xiv) Whether the plaintiffs are liable to return all the monies and benefits received from the defendants according to the Joint Venture Agreement?

(xv) Whether the first plaintiff has breached his fiduciary duty as the managing director of the Company?

(xvi) Whether the defendants properly and legally terminated the first plaintiff’s position as the Company's managing director?

(xvii) Whether the defendants are entitled to register the trademark logo of RM Ritz Marquis?

(xviii) Whether the defendants are entitled to the reliefs claimed in paragraph 72 of the Statement of Claim dated 18.11.2019 filed in Suit 161?

(xix) Whether the plaintiffs are liable to compensate the defendants for the loss suffered as a result of the Injunction Order dated 18.11.2019?

The Court narrows the 19 issues as follows:

Whether the plaintiffs failed to provide and deliver the relevant documents under Clause 3.3 of the Joint Venture Agreement?

(ii) Was there any misrepresentation of facts regarding the renovation costs of RM600,000.00 and the Company's equipment costs of RM400,000.00?

(iii) Whether the plaintiffs misled the defendants into believing the Company had no debts.

(iv) Is the first plaintiff a registered aesthetic practitioner in Malaysia, and what is the status of Johor Clinic?

Whether the first plaintiff abandoned his duty as the Company's managing director and only managed the Setia Alam branch until May 2019?

(vi) Have the plaintiffs contravened the terms stipulated in the Joint Venture Agreement by establishing two companies, AMPC Consultant Sdn Bhd and AMPC Cell Technology Sdn Bhd?

(vii) Have the plaintiffs breached the Joint Venture Agreement prior to the defendants’ breach as alleged?

(viii) Is the Company’s business closed due to the defendants’ or the plaintiffs’ action?

(ix) Whether the plaintiffs are entitled to the reliefs stated in paragraph 26 of the Amended Statement of Claim dated 21.12.2022? Deliberations and Findings of the Court

Whether the plaintiffs failed to provide and deliver the relevant documents under Clause 3.3 of the Joint Venture Agreement.

Under Clause 3.3. of the Joint Venture Agreement, the following documents shall be delivered to the defendants by the plaintiffs within thirty days from the date of the said agreement:

Stock list as of 31st January 2018;

(ii) Company’s management account for twelve calendar months up to 31st January 2018;

(iii) List up and details of machinery and equipment as of 31st January 2018;

(iv) All company’s bank statements for twelve calendar months up to 31st January 2018; and

List of clientele as of 31st January 2018.

This would result in the plaintiffs’ representation and the Company's valuation being correct.

However, the defendants submit that the plaintiffs failed to provide the complete set of documents to the defendants as stipulated in the Joint Venture Agreement.

The testimony of the defendant’s witness, Lee Wei Hong, is referred to support the defendant’s contention. (Refer to pages 71-72 of the notes of proceeding)

The defendants further stated that the plaintiff's witness, Tan Teck Ern, has not denied the lack of documents provided to the defendants.

In rebuttal, the plaintiffs, too, referred to Lee Wei Hang's testimony to prove that the first plaintiff had sent all the related documents to him by email on 21.3.2018.

This email is on pages 86 – 132 of CBOD (B1).

The testimony of Lee Wei Hong is reproduced to confirm the facts: [Refer to pages 69 – 71, Notes of Proceeding]

After perusing Lee Wei Hong's testimony, the Court is satisfied that the plaintiffs provided all the relevant documents to the defendants.

There was a delay of about twenty days at most, and the thirty-day timeframe was not complied with.

The Court agrees with the plaintiffs' submission that the twenty-day delay is not a cause for concern for the defendants.

This is evident from the defendants' conduct, who subsequently paid RM630,000.00 on 24.5.2018 without disputing or complaining about the delay.

Under Clause 3.1 (b) of the Joint Venture Agreement, it was obvious that the defendants were only obliged to pay RM630,000.00 after they were satisfied with the documents provided.

Therefore, the defendants' choice to pay RM630,000.00 on 24.5.2018 proves they were fully satisfied with the documents provided.

No evidence has been tendered before this Court to prove that the defendants informed the plaintiffs that the Joint Venture Agreement will be terminated if the relevant documents are not provided within the stipulated timeframe.

The court is mindful to refer to the testimony of Lee Wei Hong on pages 72 – 73 of the notes of proceeding as follows: [Refer to pages 72 – 73, Notes of Proceeding]

Considering the evidence before this Court, I find that the defendant agreed to and accepted the documents provided by the plaintiffs despite the twenty-day delay in delivering them to the defendants.

Moreover, the defendants' conduct in making the payment of RM630,000.00, although the request documents were provided twenty days later, estopped them from raising it as an issue.

The defendants' conduct in not complaining nor making a formal application to serve the relevant documents also negatively affected the defendants' grievance.

Finally, by paying RM630,000.00, the defendants proved that they were satisfied with the document provided.

(ii) Was there any misrepresentation of facts regarding the renovation costs of RM600,000.00 and the company's equipment costs of RM400,000.00?

The value of the 70% shares was RM1.4 million.

The defendants made payment for the sum of RM700,000.00.

The defendants contended that the valuation price was inaccurate upon receiving documents from the plaintiffs.

The following matters were purported to be inaccurate representations by the plaintiff:

Costs for the renovation works and equipment are said to be unreasonable and highly inflated;

(ii) Some of the equipment allegedly owned by the plaintiffs was leased from a third party. Therefore, this equipment is a liability and not an asset of the company.

(iii) the non-disclosure of RM494,555.00, the amount due and owing to the first plaintiff as director’s fees.

It maintained to the defendants that the non-disclosure mentioned above by the plaintiffs was fatal.

Fatal in that the undisclosed liabilities will affect the Company's shares valuation, which was RM1,400,000.00 when the Joint Venture Agreement was executed.

Dieh Siew Huat testified that he relied on the plaintiffs' credibility, integrity, and honesty regarding the said valuation.

He agreed that no due diligence exercise was conducted before executing the Joint Venture Agreement.

According to the defendants, upon scrutiny of the accounts, it was discovered that the renovation and equipment costs were only RM582,799.84 and not RM1,000,000.00 as the first plaintiff’s representation.

They further discovered an existing Hire Purchase Agreement under which the Company is leasing “one piece of a new unit of Ultra Shape Power Serial No.: R16200005 and one unit of Mabel Plus Revolutionary Multi-Polar RF System Serial No: DY45016026” from Pac Lease Berhad.

The total cost of leasing the equipment was RM583,972.00 [Hire Purchase Agreement dated 11.1.2017 referred to pages 162 – 163 of CBOD (B1)].

Thirteen installments had been paid for the leasing when the Joint Venture Agreement was executed.

The balance sum was RM333,865.00.

There was also an outstanding sum of RM494,555.00 director’s fees not paid to the first plaintiff.

Upon discovering the misrepresentations above, the defendants submit that the plaintiff misrepresented the Company's valuation.

Therefore, the defendants refused to pay the remaining purchase price of the shares.

The defendants want to terminate the Joint Venture Agreement because of the plaintiffs' numerous misrepresentations.

Upon perusing the terms and conditions stipulated in the Joint Venture Agreement, it is evident that the parties to the contract pre-agreed on the renovation cost of RM600,000.00 and the equipment cost of RM400,000.00.

The fact that the renovation cost and the cost of equipment are pre-agreed and can be derived from the evidence of the first defendant as follows: [Refer to pages 67 – 68, Notes of Proceeding]

The first defendant’s testimony demonstrates that he waived his right to due diligence, as the Joint Venture Agreement already provided a one million ringgit guarantee.

This is established as there is no requirement or term under the Joint Venture Agreement regarding a due diligence exercise being carried out on the Company before or after executing the Joint Venture Agreement.

The first defendant testified that Lee Wei Hong solely handled the calculation of the Company's valuation.

He had also testified that he was unsure of RM582,799.84 as Lee Wei Hong handled it.

Based on the evidence, both the plaintiffs and the defendants waived the due diligence exercise on the Company, and the pre-agreed amount was RM 600,000.00 for the renovation costs and RM400,000.00 for the equipment costs.

The amount RM582,799.84 and not RM1,000,000.00 put forward by the defendants was said to be calculated by Lee Wei Hong.

The valuation calculation can be found on page 324 of CBOD (B1).

The Court accepts the plaintiff’s submission that the purported valuation is not supported by supporting documents or an explanation of how the cost of RM582,799.84 was derived.

Lee Wei Hong’s evidence supports the above submission. It is as follows: [Refer to pages 73 – 74, Notes of Proceeding]

No evidence was adduced in Court to show how Lee Wei Hong arrived at RM582,799.84.

Interestingly, Lee Wei Hong was not connected to the company.

Therefore, the Court disregards Lee Wai Hong's purported valuation of the costs.

(iii) Whether the plaintiffs misled the defendants into believing the Company had no debts.

Regarding the equipment, the defendants paid thirteen months' installments of the hire purchase after signing the Joint Venture Agreement.

The defendants raised no protest or question at all material time.

Considering the facts above, the Court entirely agrees with the plaintiffs' contention that the defendants cannot suddenly complain about the valuation of the equipment when the plaintiffs initiated a lawsuit against them.

The hire purchase of the equipment was to facilitate the Company's operation and generate income for the company

The equipment was utilized for the company to provide the necessary beauty services.

Regarding the amount owing to the first plaintiff of RM494,555.00, the Court is satisfied with the first plaintiff’s explanation that no demand for the sum has been made. Therefore, it is a non-issue.

Reference is made to the evidence of Lee Wei Hong as follows: [Refer to pages 77 – 78, Notes of Proceeding]

It is an amount owed to the first plaintiff for purchasing the equipment.

Since the first plaintiff chose not to demand the amount of RM494,555.00 from the Company, and he is prepared to waive it, the Court agrees with the plaintiff’s submission that it cannot constitute a breach of warranty under the Joint Venture Agreement as alleged by the defendants.

(iv) Is the first plaintiff a registered aesthetic practitioner in Malaysia, and what is the status of Johor Clinic?

According to the defendants, the first plaintiff represented himself as a qualified doctor.

The first plaintiff also informed the defendants that he had been doing the aesthetic business for a few years.

Upon visiting the plaintiff’s clinic in Johor, the defendants were convinced that the first plaintiff was a qualified doctor running a legitimate aesthetic business.

The first defendant gave evidence in Court that the first plaintiff performed two aesthetic treatments on him at the Johor Clinic.

The Court heard that the first defendant later discovered that the first plaintiff was not a qualified practitioner to perform aesthetic treatments.

A suspicion arose from the first plaintiff, who employed Dr. Nicholas Tan to administer aesthetic services at the Setia Alam Clinic, instead of the first plaintiff, who did the same services himself.

This led Lee Wei Hong to search, and it was found that the first plaintiff did not have a Letter of Credentialing and Privileging (LCP).

LCP is a special license for medical practitioners to operate aesthetic clinics and perform aesthetic treatments.

The defendants referred to the list of practitioners with LCP recognized by the Ministry of Health in Malaysia on pages 278 - 323 of CBOD (B1)].

The first plaintiff's name was not on the list.

It was discovered that the Johor Clinic was an “Anti-Aging and

This was evident from the advertising licence issued by the Majlis Bandaraya Johor Bahru.

The defendants also pointed out discrepancies in the plaintiff’s pleading and the documents filed in court. They are: “(i) At paragraph 7 of the Plaintiff’s Amended Statement of Claim in the BOP marked as A at page 13, the plaintiffs pleaded that “syarikat tersebut beroperasi di Johor di mana plaintif-plaintif telah menubuhkan satu pusat estetik di bawah nama dan gara RM Ritz Marquis (Anti-Aging & Aesthetic Clinic) pada 22.11.2015 (pusat estetik Johor)”.

(ii) In recital (a) of the JVA in the CBOD marked as B1 on page 8, it was stated that “the company is in the business of aesthetic clinic with specialties that focus on …”

These facts were of utter importance to the defendants, who alleged they were shareholders of a business without a valid licence.

The defendants contend that a fundamental breach entitles them to terminate the Joint Venture Agreement.

They further contend that the Joint Venture Agreement is void ab initio due to its illegality.

In perusing the evidence before this Court, there is no evidence that the first plaintiff had informed the defendants that he had an LCP license.

There is no mention of an LCP license in the Joint Venture Agreement.

The Court is satisfied with the explanation and conduct of the first plaintiff, who engaged Dr. Nicholas Tan, who had an LCP license, to facilitate the running of the aesthetic clinic in Setia Alam.

On any given occasion, considering that LCP is not mentioned as a condition precedent for the defendants to purchase shares in the Company, it cannot be equivalent to a breach of the Joint Venture Agreement.

The defendants’ allegation that the core business in the Johor Clinic was illegitimate is unfounded.

It is abundantly proven the facts alleged by the defendants were not proven in this Court.

In addition, the defendants testified in Court that they had no idea or proof of what the first plaintiff did precisely in the Johor Clinic.

Evidence of Lee Wei Hong is worth being analysed: [Refer to page 80, Notes of Proceeding]

The featured evidence by the first defendant that he was given two aesthetic treatments by the first plaintiff to be treated with caution.

The first defendant testified that the first plaintiff gave him two aesthetic treatments.

He never mentioned the treatments performed for the Court to evaluate and decide factually whether they were “aesthetic treatments.”

The first defendant's statement did not add weight to the truthfulness and accuracy of the facts presented before this Court.

In conclusion, the Court decided that the above issue is not proved.

Whether the first plaintiff abandoned his duty as the company's managing director and only managed the Setia Alam branch until May 2019.

Clause 11.1 of the Joint Venture Agreement provided for the first plaintiff to be appointed as the company's managing director.

The defendant contends that the first plaintiff managed the Setia Alam Clinic until May 2019.

He stopped coming to the Setia Alam Clinic without any forthcoming reasons.

The defendants submit that the first plaintiff has failed to produce any evidence in Court to prove that he has been going to the Setia Alam Clinic and continuing to perform his duties as the Company's managing director.

During cross-examination, Lee Wei Hong testified that he didn’t know the first plaintiff’s involvement as the Company's managing director.

The first plaintiff's report of abandoning his work contained only the complaints he heard from others.

The notes of proceeding on page 79 are as follows: [Refer to page 79, Notes of Proceeding]

What was said by Lee Wei Hong is purely hearsay evidence.

The Court applies the principle in the case of Leong Hoong Khie v Public Prosecutor & Another Case [1986] CLJ (Rep) 179, a Federal Court decision that held as follows: “The general rule is that hearsay evidence is not admissible as proof of a fact which has been stated by a third person. This rule has been long established as fundamental principle of the law evidence. To quote Lord Normand in Taper v R [1952] AC 480 at 486: The rule against the admission of hearsay evidence is fundamental. It is not the best evidence, and it is not delivered on oath. The truthfulness and accuracy of the person whose words are spoken by another witness cannot be tested by cross-examination and the light which his demeanour would throw on his testimony is lost. In our opinion, another reason is the danger that hearsay evidence may be concocted, fabricated and tailored to suit the witness’s testimony.”

The disturbing turn of events was when the first defendant testified that he was aware of the first plaintiff’s visit to the Setia Alam Clinic on 3.5.2019, 6.5.2019, 7.5.2019, 13.5.2019, 14.5.2019, 10.6.2019, and 6.7.2019. (refer to page 141 of the notes of proceeding).

This fact supported the first plaintiff’s evidence that he had visited the Setia Alam Clinic for client appointments on 3.5.2019, 6.5.2019,

7.5.2019, 13.5.2019, 14.5.2019, 10.6.2019, and 6.7.2019.

The first plaintiff had testified that the defendants had changed the locks for the front door of the Setia Alam Clinic on 6.7.2019.

The first plaintiff contends that the locks changed after issuing the termination notice dated 28.6.2019.

The first plaintiff was denied access to the Setia Alam Clinic.

In any event, from the perusal of the notes of evidence, it is evident that the defendants failed to notify the first plaintiff regarding the allegation that the first plaintiff had abandoned to perform his duty as the Company's managing director.

The Court agrees to the plaintiff’s submission that this allegation is baseless.

(vi) Have the plaintiffs contravened the terms stipulated in the Joint Venture Agreement by establishing two companies, AMPC Consultant Sdn Bhd and AMPC Cell Technology Sdn Bhd?

According to the defendants, an SSM search revealed that the plaintiffs had established two companies in their names.

The two companies are:

APMC Consultant Sdn Bhd (incorporated on 2.4.2019); and

(ii) APMC Cell Technology Sdn Bhd (incorporated on 1.4.2019).

The defendants further contend that the first plaintiff's denial that both these companies are not in competition with the Company is unsustainable.

The reasons are that both Companies are for cell-related businesses.

This directly raises a conflict of interest. The plaintiffs allegedly breached Clause 13 of the Joint Venture Agreement.

The Courts, upon perusing the SSM searches [refer to pages 216 – 227 of CBOD (B1)], discovered that the nature of business of APMC Consultant Sdn Bhd and APMC Cell Technology Sdn Bhd is not related to aesthetic business.

APMC Consultant Sdn Bhd dealt with consultants' activities other than those of architecture, engineering, and management consultants.

APMC Cell Technology Sdn Bhd dealt with medical laboratories.

The first plaintiff testified during the trial and confirmed that both Companies do not deal in aesthetic business.

The only evidence referred to by the defendants, the brochure [refer to pages 136 – 137 of CBOD (B1)], doesn’t indicate that it was for the two Companies owned by the first plaintiff.

The defendants failed to inform the first plaintiff that he contravened Clause 13 of the Joint Venture Agreement by setting up the two Companies above.

In truth, the defendants only conducted the SSM searches on 18.10.2019, much later than the date of the first plaintiff’s dismissal as the managing director of the Company on 1.10.2019 [refer to pages 70 of CBOD (B1)].

The Court cannot derive a finding of fact that the first plaintiff had acted in a conflict of interest by setting up the two companies.

The defendants did not provide this Court with any plausible evidence that these two companies were conducting the same type of business as the Company.

As such, there is no evidence of any conflict of interest or business competition between the company and the said two companies.

(vii) Have the plaintiffs breached the Joint Venture Agreement prior to the defendants’ breach as alleged?

The defendants referred to Section 40 of the Contracts Act 1950.

Section 40 of the Contracts Act 1950 is as follows: “When a party to a contract has refused to perform or disabled himself from performing, his promise in its entirety, the promise may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.”

The defendants urged this Court to consider the plaintiffs as conducting all the above breaches. The maxim that “no person shall be entitled to take advantage of his own wrong” is applied in the context of Section 40 of the Contracts Act 1950.

The defendants submit that the non-payment of RM700,000.00 cannot be considered a breach.

The dictum in the case of Gimstern Corporation (M) Sdn Bhd & Anor v Global Insurance Co Sdn Bhd [1987] 1 MLJ 302 was applied in Su Wee Lip @ Philip Su v Hj Lassim Abdul Rahman [2009] 1 MLJ 580 where the principle was re-emphasised as follows: “It is a settled principle of general application that a person should not be permitted to take advantage of his own wrong. When applied in the sphere of contract law, it expresses itself in the proposition that a guilty party ought not to be permitted to take advantage of his own breach of contract.”

The defendants vehemently stressed the importance of the delivery of the documents. They referred to Section 56 (1) of the Contracts Act 1950, which empowers option to an aggrieved party to terminate a contract when time is of the essence.

Time was of the essence, and not insisting on the payments when it was due to condoning the alleged breach.

In Berjaya Times Square Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M-Concept Sdn Bhd [2010] 1 MLJ 597, it was held: “The starting point is to recognise that in an action for breach of contract it is the court that determines who is the innocent party and who is the guilty party. The only issue that remains is whether – as held by the learned trial judge – the respondent as the innocent party is entitled to rescind, the contract…”

Applying the above principle, this court decided that the facts proved that the plaintiffs are the innocent party compared to the defendants.

The defendants' first and foremost concern is that the relevant documents must be served within thirty days from the date of the Joint Venture Agreement.

There was a delay of about 20 days, which was evidence of Lee Wei Hong.

It was contended by the defendants the failure to provide the relevant documents formed a material breach of the contract.

This court has no evidence that the defendants repudiated the contract, although they claimed the plaintiffs had breached it.

It was stated in Clause 3.1 (b) of the Joint Venture Agreement that the defendants were only obliged to make the balance payment of RM630,000.00 upon being satisfied with the documents provided by the plaintiffs.

The defendants' conduct in paying the balance sum of RM630,000.00 to the plaintiffs on 24.5.2018, nearly two months after being furnished with the relevant documents, proves that they were satisfied with the documents provided.

Hence, their conduct estopped them from raising the plaintiffs' late delivery of the relevant documents.

In the case of Industrial & Commercial Realty Co Ltd v Merchant Credit Pte Ltd (1980) 1 MLJ 208, it was held: “The doctrine of estoppel has been explained by Lord Denning in his book, The Discipline of Law at p. 217: Estoppel is not a rule of evidence. It is not a cause of action. It is a principle of justice and of equity. It comes to this: when a man, by his words or conduct, has led another to believe in a particular state of affairs, he will not be allowed to go back on it when it would be unjust or inequitable for him to do so, Dixon J put it in these words: “The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations.”

The court also found that the defendants failed to notify the plaintiffs of all the alleged breaches before 10.7.2019 at any given time.

The plaintiffs sent a letter of demand dated 28.6.2019 to terminate the joint venture agreement due to the defendants’ continuous failure to pay the balance purchase price of the shares.

In the said letter, the plaintiffs also demanded that the defendants cease the operation of the Company and give a statement of accounts as to the affairs of the Company.

Only then did the defendants raise numerous allegations on the breaches in the Joint Venture Agreement by the plaintiffs through their previous solicitors via a letter dated 10.7.2019.

The fact that the plaintiffs initiated legal proceedings against the defendants in the first instance strengthens the plaintiff's position as the innocent party in this case.

Considering that the plaintiffs chose to terminate the Joint Venture Agreement before all the allegations made by the defendants, the only inference that can be drawn is that these breaches are purely an afterthought by the defendants to evade payments to the plaintiffs.

The legal principle enunciated in Su Wee Lip @ Philip Su v Hj Lassim Abdul Rahman [2009] 1 MLJ 580 applies to the plaintiffs' case, as the defendants breached the contract by not paying the balance sum due to the plaintiffs after the plaintiffs transferred the shares to the defendants as per the Joint Venture Agreement.

The defendants shall not take advantage of their breach of contract by diverting the facts and alleging that the plaintiffs had numerous violations of the agreement, which caused them not to pay the balance sum for the transfer of the shares.

Section 56 of the Contracts Act 1950 is favourable to the plaintiffs.

The principle in the Damansara Realty Bhd v Bungsar Hill Sdn Bhd [2011] 6 MLJ 464 applies to the plaintiff's case as the defendants failed to pay the balance due sum per Clause 3.1 (c) of the Joint Venture Agreement.

The Court has dealt with each alleged plaintiff’s breach against the defendants in detail above.

All the allegations are baseless and not supported by credible evidence.

(viii) Is the Company’s business closed due to the defendants’ or the plaintiffs’ action?

The evidence before this court is that the plaintiffs initiated a letter of demand dated 28.6.2019 to terminate the Joint Venture Agreement.

In that demand letter, the plaintiffs also informed the defendants to cease operating and managing the Company and required them to provide the plaintiffs' account of the company's affairs.

In response to the letter of demand dated 28.6.2019, the defendants agreed to terminate the Joint Venture Agreement but alleged that the plaintiffs had breached the agreement's terms in the defendants' letter dated 10.7.2019.

Notably, the Company only called for two Board Meetings on 11.9.2019 and 1.10.2019 to remove the first plaintiff as the managing director after being served with the letter of demand from the plaintiffs.

The defendants issued a letter dated 10.10.2019 to the first plaintiff to remove him as the company's managing director.

Under that, the first plaintiff filed an injunction application against the defendants.

On 18.11.2019, the court granted an injunction order against the defendants, in which the defendants were restrained, among other things, from carrying out their duty and responsibility as the Company's directors, enforcing any of their rights as shareholders, and participating in all aspects of the Company's operation and management and the Setia Alam Clinic.

The first plaintiff was denied access to the Setia Alam Clinic.

While the injunction order was still in force, Meihome (M) Sdn Bhd, the first defendant being the director and shareholder, repossessed the premises of the Setia Alam Clinic for non-payment of rentals as the property belonged to them.

This caused the Setia Alam Clinic to be closed down.

Evidence shows that the rentals for the Johor Clinic were also not paid. Eventually, the Johor Clinic was closed down.

The Company had lost its business premises and businesses and was no longer viable as a going concern.

The defendants alleged that on 11.11.2019, officers from CKAPS visited the Setia Alam Clinic and ordered it to be closed due to non-compliance with the requirements to operate the clinic.

They referred to the CKAPS report on pages 263-267 of CBOD

Dr. Nicholas Tan was the doctor in charge during the inspection by the CKAPS officers on 11.11.2019 at about 11.30 am.

In considering the facts, the court found that the first plaintiff could not be held responsible for the operation of a clinic because he was no longer the Company's managing director.

Upon perusing the report on page 267 of CBOD (B1) it is stated as follows: “In the proses of closing down the premis PIC – akan meletak jawatan sehingga bulan Disember “

The report's contents do not prove that the clinic was ordered to close due to non-compliance with the requirements to operate it.

The court finds the defendants allegation baseless.

In sum, the court ruled that although the plaintiffs ignited the cessation of the business at the Setia Alam Clinic by applying for an injunction order, the defendants complimented it by taking full responsibility to ensure the entire businesses in Shah Alam and Johor were put to an end.

(ix) Whether the plaintiffs are entitled to the reliefs stated in paragraph 26 of the Amended Statement of Claim dated 21.12.2022?

The plaintiffs claimed for prayers under paragraphs 26 (q), (r), (s), and (t) of the amended statement of claim dated 21.12.2022.

Based on all the evidence in the trial, the balance of probabilities proves that the sale of shares took place.

The shares had been duly transferred to the defendants under the Joint Venture Agreement.

The Court ruled that it was fair for the defendants to pay RM700,000.00. Interest, as prayed, was allowed, and costs were also allowed.

In prayers 26 (q), (r), (s), and (t) of the Amended Statement of Claim dated 21.12.2022, the plaintiffs did not pray for an order for damages.

Therein, no order for damages was made.

As mentioned above, the defendants' defence in suit No. BA- 22NCC-35-03/2022 mirrors its case in suit No.BA-22NCC-161- 11/2019.

After evaluating the evidence before this court, it was decided that the defendants failed to prove their case based on the balance of probabilities. Hence, their case against the plaintiffs is dismissed with costs. Dated: 19th March 2024 (INDRA NEHRU SAVANDIAH) Judicial Commissioner High Court of Malaya Shah Alam. Selangor Date of Decision: 5 January 2024 Counsels: For the Plaintiffs: Joseph Ting & Bruce Toh Hsiang Chen, [Tetuan Joseph Ting & Co.] For the Defendants: Collin Goonting & Darren Tay Theng Hong, [Tetuan Collin Goonting & Associates]