Yeong Mun Fung v Hoo Voon Him (WA-22NCC-844-12/2024)

YEONG MUN FUNG (NRIC No.: 830703-14-5701)

TOO WAI HOONG (NRIC No.: 820131-14-5239)

LEONG CHUNG CHEN (NRIC No.: 780121-14-6103)

ON YONG WEE (NRIC No.: 800308-01-6267)

YONG SAI KENG (NRIC No.: 610519-08-5281) ...PLAINTIFFS AND HOO VOON HIM (NRIC No.: 810724-14-5235) …DEFENDANT S/N aYre4uxvEKAMxp9a7kWA GROUNDS OF JUDGMENT (Enclosure 6)

The Defendant moves this Court, by way of a Notice of Application, for orders under Section 10(1) of the Arbitration Act 2005 read with Order 69 Rule 10 of the Rules of Court 2012 that the writ action be stayed pending the reference of the dispute between the parties to arbitration.

The facts are fairly straight-forward.

The Plaintiffs are the registered and beneficial owners of shares in a group of companies known as the “31 Group”. The Defendant is the purchaser under a Share Sale Agreement dated 7 November 2023 (“SSA”).

Parties undertook various obligations under the SSA. The Plaintiffs allege that despite the Plaintiffs’ compliance with their obligations under the SSA, the Defendant delayed his performance obligations. Parties then entered into a series of negotiations. Various offers and counter-offers took place.

On 14 October 2024, the Plaintiffs issued a notice of demand requiring the Defendant to fulfil his contractual obligations under the SSA. The Defendant issued a Notice of Termination the very next S/N aYre4uxvEKAMxp9a7kWA day, on 15 October 2024 (“Notice of Termination”). The Plaintiffs subsequently commenced this action by Writ and Statement of Claim filed on 6 December 2024. The Plaintiffs claim certain declaratory reliefs against the Defendant, specific performance of the SSA, and damages.

The SSA contains a dispute resolution clause at Clause 18.7(b), which provides that any dispute arising out of or in connection with the SSA, including its existence, validity, or termination, shall be finally resolved by arbitration administered by the Asian International Arbitration Centre (AIAC). I will set out the clause in full.

18.7 Governing Law & Dispute Resolution

In the event of any dispute between Parties in connection with this Agreement, including any question regarding its existence, validity or termination, the Parties shall agree to mediation with one (1) representative from each Party and use their best endeavours to resolve the dispute amicably within thirty (30) days from the date a notice of dispute is sent by one (1) Party to the others. If for any reason the Parties hereto are unable to resolve the dispute amicably by the expiry of such period, such dispute shall be referred to and finally resolved by arbitration administered by the Asian International Arbitration Centre (“AIAC”) in accordance with the Arbitration Rules of the Asian International Arbitration Centre (“AIAC Rules”) for the time being in force, which rules are deemed to be incorporated by reference in this clause. The seat of the arbitration shall be Kuala Lumpur. The tribunal shall consist of three (3) arbitrators. The language of the arbitration shall be English. S/N aYre4uxvEKAMxp9a7kWA PARTIES’ COMPETING SUBMISSIONS

In seeking to stay the proceedings before this Court, the Defendant contends that Clause 18.7(b) constitutes a valid, binding, and operative arbitration agreement and that the subject matter of the action falls squarely within its scope.

The Plaintiffs oppose the stay on four principal grounds, namely: i. arbitration was not mandatory in light of Clause 13 of the SSA; ii. the Defendant had unequivocally elected litigation through his Notice of Termination; iii. the Defendant had taken steps in the proceedings; and iv. there was a substantial delay in invoking arbitration.

As can be seen, the Plaintiffs’ opposition to the stay application is not that there is no valid arbitration clause. The Plaintiffs contend that, on the facts, the Defendant is not entitled to invoke the arbitration clause in the SSA.

Clause 13 of the SSA reads as follows:

13.1 Breach by Vendors S/N aYre4uxvEKAMxp9a7kWA If at any time prior to Completion, any of the Vendors is in material breach of any of its obligations, covenants, undertakings and representations and warranties contained in this Agreement, and such breach is not rectified within thirty

Business Days (if such breach is rectifiable) or immediately (if such breach is not rectifiable) upon the Vendors' receipt of a written notice from the Purchaser of such breach, the Purchaser shall be entitled to terminate this Agreement by serving a notice in writing to such effect on the Vendors or to take such action as may be available to the Purchaser at law or in equity or as specified in this Agreement, to enforce the terms of this Agreement by way of specific performance or to claim damages which it has suffered or incurred as a result of such breach by the Vendor. (emphasis added)

The Plaintiffs submit that the phrase “at law or equity” in Clause 13.1 permits two distinct options to the Defendant. The first is to commence an action in court or, alternatively, to commence litigation.

In this regard, the Plaintiffs rely on the Defendant’s Notice of Termination, which reads as follows: “We refer to the above and the SSA.

Business Days from 15 October 2024, i.e. by 24 October 2024, return any part of the Purchase Price to us, failing which shall attract a late payment interest at the rate of eight per cent (8%) per annum as well before or after any judgment or demand on the accumulated unpaid amount commencing from the day after the due date until the date of payment of the same. All our rights are hereby expressly and fully reserved.”

It is the Plaintiffs’ contention that the Defendant, by alluding to Clause 13 in his Notice of Termination in his pre-action conduct, has evinced a clear intention to waive his right to resort to arbitration.

The Plaintiffs also contend that there has been substantial delay in the making of the stay application. The Defendant had requested the Plaintiffs’ solicitors to mention the matter on the Defendant’s behalf, filed an unconditional appearance without reservating the right to have the matter referred to arbitration and only filed the present application some 33 days after receipt of the Writ and Statement of Claim. Cumulatively, these events are said to be a bar to the Defendant’s application for a stay. S/N aYre4uxvEKAMxp9a7kWA

Section 10(1) of the Arbitration Act 2005 mandates a stay where there is a valid arbitration agreement unless the agreement is null and void, inoperative, or incapable of being performed. In the present case, the validity of the dispute resolution clause in the SSA is not in issue.

It follows that the bases of the Plaintiffs’ objections to the Defendant’s stay application must turn on the facts of the case. In Airbus Helicopters Malaysia Sdn Bhd v Aerial Power Lines Sdn Bhd [2024] 2 MLJ 471, the Court of Appeal held that the court must undertake a fact-sensitive assessment of whether the Defendant’s conduct evinces a clear and unequivocal intention to abandon arbitration.

The Court of Appeal emphasised that waiver or election depends on conduct that objectively demonstrates an intention to proceed with litigation. The Court added: “If there is a prima facie arbitration agreement the party commencing litigation would be in breach of such an agreement and when objected to by a defendant promptly, the court would generally grant a stay of the court proceedings unless the defendant had evinced a clear and unequivocal intention to proceed with the suit and not to be bound by the arbitration agreement.”

As such, where a defendant’s conduct traverses beyond procedural safeguards and enters into active engagement inconsistent with an S/N aYre4uxvEKAMxp9a7kWA intention to refer a dispute to arbitration, a stay pending arbitration would ordinarily be refused.

The Plaintiffs place heavy reliance on the language of the Notice of Termination. The Plaintiffs also allude to the fact that as a highly sophisticated, experienced, and commercially astute businessman, the Defendant, being the author of the Notice of Termination must be taken to have understood the election available to him in Clause

Therefore, when the Defendant threatened litigation, made reference to interest payable “before or after any judgment” and omitted any reference to arbitration in the Notice of Termination, the Defendant had clearly evinced an intention to abandon arbitration as a means of resolving the dispute between the parties.

I think the Plaintiffs’ submission in this regard is misplaced.

First, notwithstanding the alleged business acumen of the Defendant, the isolated reference to the word “judgement” cannot, viewed objectively and in context, amount to a clear and unequivocal election to litigate. The Notice of Termination was issued prior to the commencement of proceedings. It was not drafted in juridical terms. The language employed is equally consistent with the enforcement of rights culminating in an arbitral award. Such an award, by statute, is capable of recognition as a judgment of this Court. S/N aYre4uxvEKAMxp9a7kWA

The Plaintiffs relied on the case of Universiti Utara Malaysia v KIC Management Sdn Bhd [2015] MLJU 980 in support of their proposition. This case, in turn, referred to Flacker Shipping Limited v Glencore Grain Limited [2002] EWCA Civ. 1068, which held as follows: “So far as waiver by election is concerned, the basic proposition is that where two possible remedies or courses of action are to his knowledge open to X and he has communicated his intention to follow one course or remedy in such a manner as to lead Y to believe that his choice has been made, he will not later be permitted to resile from that position (see Scarf v Jardine

7 App Cas 345 per Lord Blackburn at 360-1 and Kammins Ballroom Co v Zenith Investments (Torquay) Ltd [1970] 2 All ER 871; [1971] AC 850. Waiver by election is essentially an illustration of the general principle that a party to a contract may not both approbate and reprobate: see the classic exposition of Isaacs J in Craine v Colonial Mutual Fire Insurance Ltd [1920] 28 CLR 305 at 327–328.”

First, the above cases re-state a trite principle of law. However, neither of the cases concerns a matter where the central dispute was on a stay pending reference to arbitration. Secondly, there is nothing in the Notice of Termination that can be said to amount to a waiver by election by the Defendant. Thirdly, the Notice of Termination clearly ends with the reservation of the Defendant’s rights. Such words are not mere puff; they must be taken to mean that the Defendant reserves his rights as provided by law and in the SSA, which extends to reserving his rights in relation to the dispute resolution mechanism provided under the SSA. Finally, and crucially, Clause 13 is not a dispute resolution clause. It is a clause S/N aYre4uxvEKAMxp9a7kWA that merely expounds the rights of a purchaser in the event of a default.

Accordingly, the factual substratum which underpinned the findings of waiver or election in the Plaintiffs’ cited case is wholly absent in the present case. On a fact-sensitive assessment, I am unable to conclude that the Defendant had, by words or conduct, demonstrated a clear and unequivocal intention to abandon arbitration. Whether The Defendant Had Taken Steps In The Proceedings And Whether There Was Substantial Delay In Invoking Arbitration.

The Plaintiffs submit that the Defendant had requested the Plaintiffs’ solicitors to mention on the Defendant’s behalf during e-review and sought an extension of time to enter Appearance. The Defendant had also entered an Unconditional Appearance. These acts allegedly amount to taking steps in the proceedings.

The Plaintiffs rely on the case CLLS Power System Sdn Bhd v Sara Timur Sdn Bhd [2015| 11 MLJ 485 and Sanwell Corp v Trans Resources Corp Sdn Bhd & Anor [2002] 2 MLJ 625 in support of this submission concerning waiver by election.

With respect, those authorities are materially distinguishable on their facts.

In each of the cases relied upon by the Plaintiffs, the party resisting arbitration had taken substantive and positive steps in the S/N aYre4uxvEKAMxp9a7kWA proceedings which could only be explained on the basis that the party had elected to have the dispute resolved by the court, such as the filing of pleadings going to the merits, active participation in interlocutory applications touching on substantive rights, or invocation of the court’s adjudicative jurisdiction beyond procedural safeguards.

That is not the factual position here. The Defendant did not file any pleading on the merits, did not invoke the Court’s jurisdiction to obtain substantive relief, and did not conduct himself in a manner inconsistent with reliance on the arbitration agreement. The steps relied upon by the Plaintiffs, namely, a request for a mention, an application for extension of time, and the filing of an appearance under the present Rules, are, as a matter of settled law, defensive and procedural in nature.

It is settled that a request for an extension of time or the filing of an appearance does not amount to taking a step in the proceedings (see: Airbus Helicopters Malaysia Sdn Bhd v Aerial Power Lines Sdn Bhd [2024] 2 MLJ 471), where the Court held that such steps are procedural safeguards and do not constitute a waiver of arbitration rights.

Accordingly, applying the very principles articulated in the Plaintiffs’ own authorities, I find that those cases do not assist the Plaintiffs on the facts of the present case. S/N aYre4uxvEKAMxp9a7kWA

As for delay, the Plaintiffs submit that the stay application was filed on 8 January 2025, 33 days after the Defendant received the Plaintiffs’ Writ and Statement of Claim on 6 December 2024.

On the alleged delay of 33 days, I take note that the Appearance was entered on 20 December 2024 and the Notice to Stay in the present application was filed on 8 January 2025. This is the applicable timeline computation, as the Plaintiff had acceded to the extension of time to file the Appearance in any event. Barring the intervening public and weekend holidays, the Defendant took about 10 days to file the notice of application from the date of entry of appearance. I therefore hold that there is no undue or inordinate delay by the Defendant. The Defendant had in fact acted promptly in filing the application. S/N aYre4uxvEKAMxp9a7kWA

Having considered the Plaintiffs’ objections to the application carefully and most anxiously, I am unable to agree that the Defendant, by his act(s) and/or omission(s), had elected to abandon his rights under Clause 18.7(b) of the SSA to have the dispute between the parties referred to arbitration. The said clause is valid and binding on the parties, and this Court must give effect to the intention of the parties that has been so clearly expressed and employed in the language of the clause.

I therefore granted an order in terms of the Defendant’s Notice of Application with costs, with the effect that the action was stayed, pending reference to arbitration. Dated the 30th day of December 2025 -sgd- ……………………………………………………………………… MUHAMMAD ADAM @ EDWARD BIN ABDULLAH Judicial Commissioner High Court (Commercial Division NCC 4) High Court of Kuala Lumpur In the Federal Territory, Malaysia S/N aYre4uxvEKAMxp9a7kWA Counsel for the Plaintiffs : Jonathan Khaw Messrs. Chern & Co. Counsel for the Defendant : Carlreen Ang Messrs. Fahri, Azzat & Co.

Airbus Helicopters Malaysia Sdn Bhd v Aerial Power Lines Sdn Bhd [2024] 2 MLJ 471 2. Universiti Utara Malaysia v KIC Management Sdn Bhd [2015] MLJU 980 3. Flacker Shipping Limited v Glencore Grain Limited [2002] EWCA Civ. 1068 4. CLLS Power System Sdn Bhd v Sara Timur Sdn Bhd [2015| 11 MLJ 485 5. Sanwell Corp v Trans Resources Corp Sdn Bhd & Anor [2002] 2 MLJ 625 6. Airbus Helicopters Malaysia Sdn Bhd v Aerial Power Lines Sdn Bhd [2024] 2 MLJ 471

Section 10(1) of the Arbitration Act 2005 2. Order 69 Rule 10 of the Rules of Court 2012 S/N aYre4uxvEKAMxp9a7kWA