3Q Resources (M) Sdn Bhd v Magnum Consortium Sdn Bhd (PA-22NCvC-182-11/2018)

MAGNUM CONSORTIUM SDN. BHD

SOLIDWIN PROPERTY SDN. BHD

HONG YEAM WAH

TEOH HAI HIN

KHAW TIEW CHAI

CHEN MUN HENG (NO. K.P: 670123-07-5073) … DEFENDAN-DEFENDAN A. INTRODUCTION [1] The Plaintiff action lies in the fraudulent deprivation and unlawful alienation of the Plaintiff's primary corporate assets—five valuable parcels of development land identified as Lot Nos. 35, 44, 45, 48, and 2816 in Seksyen 1, Bandar Butterworth, Pulau Pinang under No. Hakmilik Geran 22/07/2026 14:30:48 PA-22NCvC-182-11/2018 Kand. 283 5655, 5657, 5658, 5659 and 71105 respectively (collectively, "the 5 parcels of land"). [2] The Plaintiff’s claim herein seeks, among other reliefs, the following orders: [a] That the transfer transaction between the Plaintiff and the 1st Defendant be set aside and cancelled. [b] A declaration that the Sale and Purchase Agreement (SPA) dated 8.3.2010 and the transfer between the Plaintiff and the 1st Defendant are null and void ab initio. [c] That the transfer transaction between the 1st Defendant and the 2nd Defendant be set aside and cancelled. [d] That the registered ownership of the lands be returned to the Plaintiff immediately. [e] Alternatively, a declaration that the 1st Defendant holds the said properties as a constructive trustee for the Plaintiff. [f] Other reliefs as stated in paragraphs (ff)(i) to (j) of the Statement of Claim. [3] The 1st and 3rd Defendants included a Counter Claim against the Plaintiff and Lee Chai Seng (LCS): [a] that the Plaintiff’s action against them amounted to an abuse of the court’s process as it had entered into a valid SPA with the 1st Defendant, did not challenge the sale of the said 5 lands to the 1st Defendant, had received the consideration which was above the reserve price and had thereby averted winding up proceedings against it and bankruptcy proceedings against the guarantors, that against the said 4 individuals, including LCS. [b] that LCS had persistently and repeatedly instituted a sequence of manifestly misconceived, unjustified, vexatious and unsustainable applications/actions against the 1st Defendant in reliance of essentially the same issues, allegations and cause of action, which have no legal basis and with improper motive to unjustly harass the 1st Defendant in respect of the purchase of the said 5 lands by the 1st Defendant. [c] By way of the Counter Claim, the 1st Defendant and 3rd Defendant have claimed for general damages, exemplary damages, costs on a full indemnity basis and interest. In respect of LCS, 1st and 3rd Defendant have prayed for a declaration that LCS is a vexatious litigant and for an Order that he should be restrained from filing any further action against them in relation to or and/or in connection with the SPA. [4] In the Reamended Defence and Counterclaim dated 04.07.2024 (Enclosure111), the 2nd and 4th Defendant Counterclaims for the following:- [a] An order that the 2nd and 4th Defendants are entitled to claim from the Plaintiff contribution and/or damages and/or indemnity, for all losses, damages, costs, expenses or otherwise that may be incurred by the 2nd and 4th Defendants because of any legal claim/action/proceeding or liability experienced by the 2nd and 4th Defendants arising from the Plaintiff's actions in filing this Civil Suit and/or in encumbering (by way of private caveat or otherwise) the Properties/Lands ie Lots No. 44, 45 and 48, (all in Section 1, Bandar Butterworth, North Seberang Perai District, Penang held under Grant Title No. 5657, 5658 and 5659) and/or such new Lots after subdivision including but not limited to:- [i] Lot 10002 which has been developed for residential purposes which is a gated residential housing scheme under strata ownership/title with 138 residential house units and is known as "Orange Residence" (Certificate of Completion and Compliance issued on 18.05.2023); and [ii] Lot 10003 up to Lot 10063 has been developed for commercial purposes/shops which is sixty-one (61) commercial shop lots/offices have been developed and known as "Orange Avenue" (Certificate of Completion and Compliance issued on 30.12.2019); [b] General Damages; [c] Exemplary Damages; [d] An Order for Damages to be assessed by this Honourable Court; [e] Interest on Damages at the rate of 5% per annum from the Date of filing of the Writ herein (i.e. 15.11.2018) until the date of full settlement; [f] Costs on a full indemnity basis and on a solicitor-client basis; and [g] Such other reliefs or further orders deemed appropriate and expedient by this Honorable Court. [5] The Plaintiff contends that the initial roots of title and subsequent transfers orchestrating the disposal of these properties are fundamentally illegal, ultra vires, and void ab initio. The transaction was executed in bad faith by corporate actors who temporarily usurped the corporate machinery to strip the company of its assets before a pending appeal could restore the legitimate majority owners. Consequently, the Plaintiff seeks a full retransfer and restoration of the land titles, or alternatively, a declaration of a constructive trust and a complete account of profits. [6] The Plaintiff concludes that the collective maneuvering of the Defendants constitutes a calculated conspiracy to exploit a temporary legal vulnerability, subvert explicit judicial foreclosure mandates, and unjustly enrich themselves at the total expense of the Plaintiff company and its genuine stakeholders. [7] Accordingly, the Plaintiff prayed for full restitution under Section 66 of the Contracts Act 1950, an order declaring the original and subsequent transfers void, the return of the properties, an account of profits for the ongoing developments on the land, and substantial exemplary and punitive damages to penalize this high-handed corporate and land-title fraud. B. BACKGROUND [8] Around February 2004, Khaw Tiew Chai (the 5th Defendant), who was then the majority shareholder and director of the Plaintiff company, 3Q Resources (M) Sdn Bhd, invited LCS, Khaw Wooi Teong ("KWT"), Law Ah Lean ("LAL"), and Tan Ban Uu ("TBU") to invest in the company. The objective was to secure financial assistance to purchase the 5 parcels of land. Under this arrangement, LCS and the three incoming investors acquired 80,000 shares from 5th Defendant and 2 shares from Chen Mun Heng (the 6th Defendant), bringing the total corporate shareholding to 100,000 shares (LCS holding 50,000; 5th Defendant retaining 20,000; and KWT, TBU, and LAL holding 10,000 each). These individuals were subsequently formalized as directors of the Plaintiff between May 2004 and February 2005. [9] On 24 May 2004, the Plaintiff executed the SPA to acquire the 5 parcels of land, spanning approximately 28 acres, for a total purchase price of RM 27,962,829.00. To facilitate this transaction, LCS, KWT, LAL, and TBU advanced a sum of RM 2,796,283.00 on behalf of the Plaintiff to serve as the initial purchase deposit, with LCS personally advancing an additional RM 150,000.00 to secure an extension of time from the vendor. In recognition of these financial contributions, the Plaintiff's board allotted 2,946,283 ordinary shares to LCS and the three co-investors on 3 May

To settle the remaining balance, the Plaintiff secured a commercial banking loan from Malayan Banking Berhad ("Maybank") amounting to RM 38,000,000.00, utilizing a registered Form 16A charge over the 5 parcels of land as primary security, with LCS executing personal guarantees. [10] Corporate governance was disrupted when 5th Defendant initiated a series of legal actions to regain control. On 3 October 2005, the 5th Defendant commenced Originating Summons No. 24-1537-2005 ("the 1st action") seeking to annul the share transfers and allotments made to LCS and the three other investors. The High Court dismissed the 5th Defendant's action on 27 January 2006, a decision subsequently affirmed by the Court of Appeal and the Federal Court. However, the 5th Defendant launched a second suit via Civil Suit No. 22-467-2009 (Suit 467) to set aside the 2006 High Court decision. On 27 January 2010, the High Court granted an Order in Terms under Order 14A of the Rules of Court, effectively stripping LCS and the investors of their directorships and shares, which placed the 5th Defendant in absolute, unilateral control of the Plaintiff company—a decision immediately appealed by LCS and the investors under Civil Appeal No. P-02(IM)-330-10. [11] Concurrently, the Plaintiff defaulted on its loan obligations to Maybank, triggering foreclosure proceedings. On 16 April 2007, Maybank obtained a High Court Order for Sale to sell the 5 parcels of land via public auction. Following multiple setting-aside attempts by the 5th Defendant, the Deputy Registrar ordered a public auction on 30 September 2009 at a reserve price of RM 33,961,000.00. This order was later modified on appeal by the High Court on 15 September 2009, which directed that the plots be sold sequentially at an elevated cumulative reserve price of RM 51,233,000.00. Rather than letting the court-ordered public auction proceed, the 5th Defendant—acting under the authority of the temporary 27 January 2010 Order—bypassed the auction pool. On 8 March 2010, the Plaintiff executed a private SPA to sell all 5 parcels of land directly to the 1st Defendant for RM 38,000,000.00, ignoring a formal warning notice dated 4 March 2010 served by M/s Syarikat Ng & Anuar against proceeding with the transaction. Maybank subsequently filed a notice of discontinuance regarding the foreclosure after receiving the redemption sum, which released LCS as a guarantor. [12] The structural landscape shifted significantly in the years following the private sale. In 2011, the Court of Appeal allowed the appeal of LCS and the co-investors against Suit 467, granting them "liberty to apply for a restoration to status quo ante." Armed with this order, LCS attempted to enter a Registrar's Caveat over the lands under Originating Motion No. 25-16-2011, which the 1st Defendant successfully intervened in and set aside on the grounds that it was a bona fide purchaser. Years later, via an SPA dated 25 August 2016, the 1st Defendant sold 3 out of the 5 plots (Lot Nos. 44, 45, and 48) to the 2nd Defendant) for a purchase price of RM 92,815,233.00, financed via a commercial charge to CIMB Bank Berhad. [13] The 2nd Defendant subsequently subdivided the 3 plots into individual qualified titles and completed extensive developments, building a 61-unit commercial project known as "Orange Avenue" (CCC issued 30 December 2019) and a 138-unit gated residential scheme known as "Orange Residence" (CCC issued 18 May 2023), selling most units to third-party individual buyers. Finally, in November 2018, having fully reinstated their corporate standings in the Plaintiff company, LCS and the lawful board initiated the current action (Suit 182) to set aside the root transfers to the 1st Defendant as void ab initio, seeking a full retransfer of titles or alternative declarations of constructive trust and accounts of profit. C. PLAINTIFF’S SUBMISSION AGAINST THE 1ST DEFENDANT [14] The Plaintiff contends that the primary acquisition of the 5 parcels of land by the 1st Defendant via the SPA is fundamentally illegal, ultra vires, and void ab initio. [15] The private treaty sale was executed in flagrant, direct defiance of a subsisting High Court Order for Sale dated 16.4.2007, which explicitly mandated that the land be sold exclusively through a transparent public auction under the supervision of the court. By bypassing the court machinery to orchestrate a private disposal at a depressed price of RM 38,000,000.00 (far below the court-ordered sequential reserve price of RM 51,233,000.00), the transaction constitutes a serious abuse of the process of the court and is a legal nullity. [16] The Plaintiff submits that the 1st Defendant’s registered titles are completely defeasible. Under Section 340(2)(c) National Land Code 1965 (NLC), the titles were acquired unlawfully through an invalid process that subverted a judicial order. Under Section 340(2)(b) NLC, the registration was carried out by means of an insufficient or void instrument, as the corporate actors executing the transfer lacked the legal capacity to do so. Under Section 340(2)(a) NLC, the transaction was steeped in fraud and misrepresentation, fueled by bad-faith collusion between the 5th Defendant and the corporate steering minds of the 1st Defendant. [17] Since the 1st Defendant dealt directly with the Plaintiff company (then unlawfully controlled by the 5th Defendant), it stands strictly as an immediate purchaser rather than a subsequent purchaser. Consequently, the statutory protection of a bona fide purchaser for valuable consideration under the proviso to Section 340(3) NLC is completely unavailable to the 1st Defendant. [18] The Members’ Circular Resolution passed on 3.3.2010 to authorize the multi-million-ringgit land disposal was structurally invalid from inception, as it directly contravened Section 132C of the Companies Act

The resolution failed to garner the legitimate statutory approval of the lawful majority shareholders (LCS and his co-investors), who had been unconstitutionally forced out of their positions by a temporary High Court order that was subsequently overturned on appeal. [19] The transaction being void, the Plaintiff moves for full restitution and the return of the 5 parcels of land under Section 66 of the Contracts Act 1950, alongside an order discarding the 1st Defendant's hollow counter-claim. D. PLAINTIFF’S SUBMISSION AGAINST THE 2ND DEFENDANT [20] The Plaintiff submits that the 2nd Defendant cannot claim the shelter of being an innocent, subsequent third-party purchaser regarding the 3 parcels of land it purports to have bought from the 1st Defendant. [21] Absence of Good Faith (Bona Fide): To enjoy statutory protection under the proviso of Section 340(3) NLC, a subsequent purchaser must prove it acted in absolute good faith and without notice of any title defects. The Plaintiff contends that the 2nd Defendant failed to exercise proper, standard commercial diligence. Had the 2nd Defendant conducted reasonable legal and corporate verifications, it would have discovered the highly publicized, ongoing rounds of litigation, the subsisting High Court Order for Sale, and the structural invalidity of the 1st Defendant's root of title. [22] Constructive and Actual Notice: The corporate linkages, timing of the secondary transaction, and surrounding circumstances strongly demonstrate that the 2nd Defendant possessed either constructive or actual notice of the sharp corporate maneuvering used to extract the land from the Plaintiff. Since the root of title stems from an entirely void and illegal transaction (the 1st Defendant's SPA), and because it lacked genuine bona fides, the 2nd Defendant’s registration over the 3 parcels must be set aside, and the land titles must be restored to the Plaintiff. E. PLAINTIFF SUBMISSION AGAINST THE 3RD DEFENDANT [23] The Plaintiff contends that the 3rd Defendant, acting as the director and controlling mind of the 1st Defendant, is personally liable for orchestrating the fraudulent deprivation of the Plaintiff's primary corporate assets. [24] Actual Knowledge and Defiance of Warnings: The Plaintiff points to the undeniable fact that an explicit, formal legal notice dated 4.3.2010 was issued by M/s Syarikat Ng & Anuar and served directly on the 3rd Defendant. This letter explicitly cautioned and warned him not to proceed with the purchase of the 5 parcels of land, formally putting him on notice regarding the severe defects in 5th Defendant’s authority and the unresolved shareholder litigation. [25] Fraudulent Collusion and Tortious Liability: In total disregard of this clear legal warning, the 3rd Defendant proceeded to execute the unlawful private SPA just four days later, on 8.3.2010. The Plaintiff submits that the 3rd Defendant actively colluded with the 5th Defendant to exploit a temporary, deeply contested court order to rapidly strip the Plaintiff of its land. This calculated course of action constitutes a civil conspiracy to injure the Plaintiff, direct participation in land fraud under Section 340(2)(a) NLC, and warrants the imposition of heavy personal liability, including the dismissal of his joint counter-claim. F. PLAINTIFF’S SUBMISSION AGAINST THE 4TH DEFENDANT. [26] The Plaintiff contends that the 4th Defendant played an active, secondary role in facilitating and executing the unlawful land transfers, serving as a critical accessory to the wider scheme. [27] Knowledge of Regulatory and Judicial Non-Compliance: As a key actor involved in the transactions, the 4th Defendant had full knowledge (or turned a blind eye to the fact) that the properties were subject to active judicial foreclosure proceedings by Maybank and that a private treaty sale was legally prohibited. [28] Accessory Liability in Corporate/Land Fraud: The Plaintiff submits that the 4th Defendant assisted in executing instruments of transfer that he knew—or ought to have known—were built upon an ultra vires and invalid Members' Circular Resolution. By providing the structural and administrative support necessary to finalize a void transaction, the 4th Defendant is jointly and severally liable for the resulting economic loss suffered by the Plaintiff. G. PLAINTIFF SUBMISSION AGAINST THE 5TH DEFENDANT. [29] The Plaintiff submits that the 5th Defendant (currently a bankrupt) acted in egregious breach of his statutory, fiduciary, and common law duties as a director to completely pillage the Plaintiff company for personal benefit and vendetta. [30] Fiduciary Breach and Fraudulent Misappropriation: While holding temporary, absolute control of the corporate machinery via an Order in Terms in Suit 467 (which was later dismissed and overturned by the Court of Appeal), the 5th Defendant owed a strict fiduciary duty to act in the absolute best interests of the Plaintiff and its body of creditors. Instead, the 5th Defendant used his fleeting control to deliberately subvert a High Court auction order and push through a private sale at an undervalued price of RM 38,000,000.00. [31] Exacting Corporate Vendetta: The Plaintiff contends that the 5th Defendant’s sole motivation was to quickly liquidate the 5 parcels of land to a cooperative buyer (the 1st Defendant) before the Court of Appeal could inevitably restore LCS and the co-investors to their rightful positions. By acting with gross dishonesty, executing an invalid resolution under Section 132C of the Companies Act, and causing the permanent dissipation of the company's sole development assets, the 5th Defendant perpetrated a fraud on the company and its legitimate shareholders. H. PLAINTIFF’S SUBMISSION AGAINST THE 6TH DEFENDANT [32] The Plaintiff contends that the 6th Defendant acted in lockstep with the 5th Defendant to provide the necessary corporate appearance of a majority decision to rubber-stamp the illegal land transfer. [33] The 6th Defendant actively participated in and signed the invalid Members’ Circular Resolution dated 3.3.2010. As a founding shareholder who had previously dealt with the incoming investors, the 6th Defendant was fully aware that LCS and the others had advanced millions of ringgits to save the land and had been allotted the vast majority of the company's shares. [34] By voting for and signing off on the immediate disposal of the company's entire asset base in total exclusion of the true majority owners, the 6th Defendant acted in bad faith and in breach of his basic duties. The Plaintiff submits that the 6th Defendant’s actions directly facilitated the execution of a void instrument of transfer, making him jointly liable for the fraud and the destruction of the Plaintiff’s corporate viability. I. PLAINTIFF’S SUBMISSION ON EXEMPLARY DAMAGES [35] The Plaintiff submits that the collective conduct of the 1st, 2nd, 3rd, 4th, and 6th Defendants transcends mere commercial negligence or a contractual breach. Their actions represent a calculated, bad-faith conspiracy to bypass judicial mandates, exploit a temporary legal vulnerability, and rapidly transfer highly valuable development land to the severe detriment of the Plaintiff and its true owners. The conscious disregard for the High Court's Order for Sale and the prompt ignoring of formal legal warning notices demonstrate an insolent and high-handed attitude toward the rule of law. Accordingly, the Plaintiff submits that this is a textbook case for the award of substantial exemplary and punitive damages against the participating Defendants to penalize their behavior and deter future corporate and land-title fraud. J. SUBMISSIONS OF THE 1ST, 2ND, 3RD, 4TH AND 6TH DEFENDANTS [36] The Defendants submit that the disposal of the five parcels of land by way of private treaty on 8.3.2010 was lawful and valid notwithstanding the existence of the earlier Order for Sale obtained by Maybank. [37] Pursuant to Section 266(1) NLC, a chargor retains the statutory right to redeem charged property at any time before the completion of a judicial sale. This principle has been affirmed by the Federal Court in United Malayan Banking Corp Bhd v Chong Bun Sun [1994] 2 CLJ 673. The evidence establishes that the Plaintiff exercised this right by procuring the 1st Defendant as purchaser, whose purchase monies were utilized to redeem the charged properties. [38] The testimony of PW3, the Maybank's solicitor, confirmed that the full redemption sum was received by Maybank, resulting in the discontinuance of the foreclosure proceedings and the release of the original titles. Upon redemption, the Order for Sale ceased to have operative effect and there was therefore no legal impediment to the private treaty transaction. [39] The Defendants submit that all corporate approvals and resolutions relied upon in the transaction were valid and binding at the material time. When the SPA was executed on 8.3.2010, the 5th Defendant was lawfully exercising control over the Plaintiff pursuant to the subsisting High Court Order dated 27.1.2010 in Suit No. 22-467-2009. The Plaintiff failed to obtain any stay of execution or injunctive relief against the operation of that order before the transaction was completed. [40] The Defendants were entitled to rely upon the official records maintained by the Companies Commission of Malaysia, which reflected the 5th and the 6th Defendant as the registered directors and shareholders of the Plaintiff. The Defendants were also furnished with duly executed Directors' and Members' Circular Resolutions authorizing the transaction. [41] Applying the Indoor Management Rule established in Royal British Bank v Turquand [1856] 119 ER 474, third parties dealing with a company are entitled to assume that its internal requirements and procedures have been properly complied with. Furthermore, pursuant to Section 127 of the Companies Act 1965, the acts of registered directors remain valid notwithstanding any subsequent challenge to their appointments or authority. The subsequent reversal of the High Court Order cannot retrospectively invalidate transactions lawfully entered into by third parties acting in good faith reliance upon subsisting court orders and official corporate records. [42] The Defendants submit that both the 1st Defendant and the 2nd Defendant are bona fide purchasers for valuable consideration whose interests are protected under Section 340 of the NLC. [43] Prior to acquiring the properties, the 1st Defendant conducted the requisite land and corporate searches which revealed that the lands were registered in the Plaintiff's name and were free from caveats, adverse claims, encumbrances, or court orders prohibiting disposal. The 1st Defendant paid valuable consideration amounting to RM38,000,000.00, which was subsequently utilized to redeem the Plaintiff's indebtedness to Maybank. [44] The 2nd Defendant subsequently acquired three of the parcels from the 1st Defendant in 2016 for valuable consideration amounting to RM92,815,233.00 after conducting independent searches which likewise revealed no caveats, adverse claims or encumbrances affecting the titles. Even if the Plaintiff's allegations against the 1st Defendant were accepted (which are denied), the 2nd Defendant remains a subsequent purchaser protected by the doctrine of deferred indefeasibility under Section 340(3) NLC. [45] The Defendants deny the allegations of fraud, collusion and conspiracy. The evidence demonstrates that the transaction was negotiated through an independent property broker and concluded at arm's length for substantial commercial consideration exceeding the reserve price fixed by Maybank [46] The Plaintiff relies heavily on warning letters and alleged verbal communications. However, no injunction, caveat or restraining order was ever obtained by the Plaintiff. Mere receipt of warning letters or knowledge of shareholder disputes does not constitute fraud within the meaning of Section 340(2)(a) NLC. [47] The Federal Court in Pekan Nenas Industries Sdn Bhd v Chang Ching Chuen & Ors [1998] 1 CLJ 793 made clear that fraud requires actual dishonesty or a deliberate intention to cheat. The Plaintiff has failed to produce any credible evidence demonstrating fraudulent conduct on the part of any of the Defendants. [48] The allegations of conspiracy are further undermined by the Plaintiff's own failure to properly prosecute its claim against the 5th Defendant, whom its witnesses identified as the principal wrongdoer. The 5th Defendant was an undischarged bankrupt at the commencement of these proceedings, yet the Plaintiff failed to obtain the requisite statutory leave or properly effect service upon him. Consequently, the alleged mastermind of the conspiracy never participated in these proceedings. [49] The Defendants submit that the present action constitutes an impermissible attempt to relitigate matters that have already been determined by the courts. The validity of the 2010 transaction has been extensively litigated in prior proceedings, including Originating Motion No. 25-16-2011, the related Court of Appeal proceedings, and applications in Suit 467. [50] The courts in those proceedings recognized the validity of the transaction, the payment of consideration, the absence of encumbrances affecting the lands, and the status of the purchasers. The Plaintiff is therefore barred by the doctrines of res judicata, issue estoppel and cause of action estoppel from reopening the same issues in the present action. [51] The Plaintiff received and retained the full benefits arising from the transaction. The purchase monies were utilized to discharge the Plaintiff's indebtedness to Maybank, prevent foreclosure of the charged lands, and release personal guarantees associated with the Plaintiff's liabilities. Having accepted and enjoyed the benefits of the transaction, the Plaintiff is estopped from simultaneously seeking to invalidate the very transaction from which it benefited. [52] The Plaintiff's alternative claims for a constructive trust, account of profits and retransfer of the lands are unsustainable both in law and equity. Following the transfers, the Defendants expended substantial sums developing the lands into major commercial and residential projects. The 1st Defendant invested more than RM104 million in development expenditure, while the 2nd Defendant invested approximately RM193 million in obtaining approvals, subdivision works and construction. Numerous third-party purchasers, financiers and strata title holders have since acquired interests in the developed properties. These parties are not before the Court. [53] To set aside the transactions at this stage would cause manifest prejudice to innocent third parties and result in substantial unjust enrichment to the Plaintiff, which would effectively recover the lands while retaining the benefits of the RM38 million redemption payment. [54] The Defendants submit that the Plaintiff has failed to discharge its burden of proof under Sections 101 and 102 of the Evidence Act 1950. The evidence establishes that the impugned transaction was lawful, that the corporate approvals were valid, that the purchasers acted in good faith for valuable consideration, and that no fraud, conspiracy or collusion has been proven. [55] Accordingly, the Plaintiff's claim ought to be dismissed with costs, and judgment entered in favour of the Defendants together with the reliefs sought in the respective Counterclaim K. WITNESSES [56] A total of nine (9) witnesses testified during the trial. The Plaintiff called four (4) witnesses. The 1st and 3rd Defendants jointly called two (2) witnesses, while the 2nd and 4th Defendants jointly called two (2) witnesses. The 6th Defendant called one (1) witness. [a] Plaintiff [i] Tan Ban Uu - PW1 WSPW1 - Retired [ii] Lee Siew Mooi - PW2 WSPW2 – Retired [iii] Arivanandhan a/l Venugopal - PW3 WSPW3 – Advocate & Solicitor [iv] Lee Chai Seng - PW4 -WSPW4 [b] 1st and 3 Defendants [i] Oh Han Loon - DW1 WSDW1 Advocate & Solicitor [ii] Dato Seri Hong Yeam Wah DW2 – WSDW2 Director [c] 2nd and 4th Defendants [i] Teoh Hai Bim - DW3 WSDW3 - Director [ii] Teo Hai Him - DW5 WSDW5 - Businessman [d] 6th Defendant [i] Chen Mun Heng - DW4 WSDW4 – Engineer L. DOCUMENTS [57] At the commencement of trial, both parties agreed that all documents contained in Part B of the Bundle of Documents would be admitted into evidence, with their authenticity not in dispute, subject to cross-examination on their contents where relevant. The documents were not individually marked as exhibits but were referred to during the proceedings by way of pagination and reference to the agreed and marked Bundle of Documents. M. ANALYSIS AND FINDINGS [58] Having carefully considered the pleadings, contemporaneous documents, oral testimony of the witnesses, written submissions of all parties, and the applicable statutory and judicial authorities, this Court now makes the following findings on the principal issues arising in this action. [59] At this juncture, the Court notes that the 5th Defendant was already an undischarged bankrupt at the time the present action (Suit 182) was commenced. [60] At the core of the dispute is the Plaintiff’s challenge to the validity of the private treaty disposal of the subject lands pursuant to the SPA dated 8.3.2010, the legality of the corporate approvals authorizing the transaction, and the alleged defeasibility of the titles subsequently acquired by the Defendants. [61] The Plaintiff contends that the transaction was tainted by fraud, corporate illegality, and deliberate circumvention of a subsisting Order for Sale dated 16.4.2007. The Defendants, on the other hand, maintain that the transaction constituted a lawful redemption exercise sanctioned by Maybank, undertaken pursuant to valid corporate authority, and protected under the statutory framework of the National Land Code 1965. [62] The Plaintiff’s primary contention is that the SPA is void ab initio because the lands were disposed of through a private treaty sale notwithstanding the existence of the High Court Order for Order for Sale dated 16.4.2007, which contemplated disposal by way of public auction. [63] The evidence establishes that, notwithstanding the issuance of an Order for Sale, the chargor retained its statutory right of redemption under Section 266(1) NLC at all material times prior to the completion of the auction process. The authorities of Kimlin Housing Development Sdn. Bhd. v. Bank Bumiputra Malaysia Bhd [1997] 3CLJ 274 (SC). and Leong Moh Sawmill Co. Sdn. Bhd. v. Standard Chartered Bank [1997] 2 CLJ 131 (CA) make clear that such right of redemption remains exercisable until the fall of the hammer and cannot be extinguished merely by the existence of an earlier judicial order for sale. [64] The documentary evidence, including the redemption letter issued by Maybank dated 24.9.2010 and the testimony of PW3, confirms that Maybank accepted the redemption sum of RM30,000,000.00, discontinued the foreclosure proceedings, and released the original titles. Upon acceptance of the redemption sum, the foreclosure process effectively ceased by operation of law. [65] The Court therefore finds that the private treaty transaction constituted a lawful redemption arrangement accepted and implemented by Maybank itself. In those circumstances, the Plaintiff cannot subsequently impugn the transaction on the basis that the earlier Order for Sale had contemplated disposal through public auction. [66] Further, any alleged non-compliance with the procedural mechanism contemplated by the Order for Sale would primarily concern Maybank that obtained the order. The Plaintiff corporation itself benefited directly from the transaction through the discharge of its liabilities and release from foreclosure proceedings. Accordingly, this Court finds that the SPA was neither unlawful nor void on the ground alleged. [67] The Plaintiff further contends that the Members’ Circular Resolution dated 3.3.2010 authorizing the disposal of the lands contravened Section 132C of the Companies Act 1965 because the alleged beneficial majority shareholders were excluded from participation. [68] The undisputed evidence shows that, at the material time, the affairs of the Plaintiff company were governed by the subsisting High Court Order dated 27.1.2010 made in Suit 467. By virtue of that order, the 5th Defendant together with the 6th Defendant had been restored to corporate control and were reflected as the lawful directors and shareholders in the records maintained by the Companies Commission of Malaysia. [69] The evidence of DW1 establishes that the 1st Defendant conducted the requisite corporate searches and relied upon the official corporate records and the operative court order existing at the material time. [70] The Court accepts the Defendants’ submission that third parties dealing with a company are entitled to rely upon the doctrine commonly referred to as the Indoor Management Rule as established in Royal British Bank v. Turquand [1856] 119 ER 474 and was applied by the Court of Appeal in Badan Pengurusan Tiara Duta v. Timeout Resources Sdn Bhd [2014] 8 CLJ 133; [2014] 5 MLRA 500; [2015] 1 MLJ 110. (see also Pekan Nenas Industries Sdn Bhd v. Chang Ching Chuen & Ors [1997] 2 MLRA 202; [1998] 1 MLJ 465; [1998] 1 CLJ 793; [1998] 1 AMR 169 [FC]. External parties are not ordinarily obliged to investigate internal disputes or speculate on the possible future reversal of subsisting court orders. [71] The legal position was further reinforced by the principle recognised in Ann Joo Steel Berhad v. Pengarah Tanah Dan Galian Pulau Pinang [2019] 9 CLJ 153 (FC), namely that a court order remains valid and binding until formally set aside. The Federal Court held that

there is a legal presumption that an order of a court is validly made, unless it was obtained by fraud, etc. The 1995 order was made by the High Court with unqualified participation of all relevant parties, represented by their respective counsel. A court order that is regularly made could not be ignored on the belief of a party that it is a nullity. Any such attempt would militate against the basic legal position that a regularly made order of court must be observed at all costs. A party bound by that order of a court has no business deciding for himself that a binding order of a court need not be observed because, in his view, it is not valid. There will be no end to litigation if parties are allowed to determine, for themselves that any order of the court would be observed or otherwise. One may apply to set aside an order of a superior court but it must be made in a direct and specific proceeding filed for that purpose be it in the same proceedings or a separate one. It could not be contested merely by raising it as defences in a suit, as being undertaken in these appeal [72] The Plaintiff did not obtain any stay of execution or injunctive relief restraining the operation of the order dated 27.1.2010 prior to the execution of the SPA. The subsequent appellate developments therefore cannot retrospectively invalidate corporate acts lawfully undertaken pursuant to an operative court order and clean corporate registry records. [73] In the premises, this Court finds that the corporate approvals and resolutions relied upon for the execution of the SPA were valid and legally effective at the material time. [74] The Plaintiff seeks to impeach the Defendants’ titles under Section 340(2) NLC on the grounds of fraud, unlawful acquisition, and void instruments. The evidence demonstrates that the 1st Defendant acquired the lands through an arm’s length commercial transaction facilitated through ordinary conveyancing procedures. The consideration paid under the SPA amounted to RM38,000,000.00, a figure exceeding the prevailing reserve price fixed by Maybank. [75] The Plaintiff relies heavily on warning letters allegedly issued by its solicitors. However, mere notice of an existing dispute does not, without more, establish actual fraud or dishonesty. The applicable standard requires proof of conscious dishonesty or actual knowledge of fraudulent conduct, as recognized in Pekan Nenas Industries Sdn Bhd v. Chang Ching Chuen (Supra). [76] The Plaintiff failed to adduce evidence demonstrating that the 1st Defendant knowingly participated in any fraudulent scheme or acted dishonestly in completing the transaction. The Court further finds that the 2nd Defendant occupies the position of a subsequent purchaser for valuable consideration under Section 340(3) of the NLC. The evidence establishes that the 2nd Defendant acquired the relevant parcels approximately six years later pursuant to a separate commercial transaction supported by independent land searches disclosing no adverse encumbrances or caveats. [77] The principles articulated in by the Federal Court Pushpaleela R Selvarajah v. Rajamani Meyappa Chettiar and other appeals [2019] 3 CLJ 441 apply squarely in favour of the 2nd Defendant. A subsequent purchaser who acquires property in good faith, for valuable consideration, and in reliance upon clear register documents is entitled to statutory protection. The Federal Court held that:

A subsequent purchaser in good faith and for valuable consideration enjoys immunity from adverse claim to this title. As between the competing claims of the original owner and the subsequent purchaser in good faith and for valuable consideration, the latter would be entitled to ownership of the subject land. The first defendant who conducted searches on the register and purchased the land in good faith and for valuable consideration had, upon registration as the proprietor on the register document of title, acquired an indefeasible title, notwithstanding that the second defendant's title itself was defeasible. Hence, subsequent transfer of the land to the first defendant and the registration thereof, in the name of the first defendant, was indefeasible by reason that the first defendant was the bona fide purchaser for valuable consideration. Thus, a replacement title in continuation generated by the land registry, when the original issue document of title was at all material times in the possession of the original owner, was valid and capable of validly passing title to the purchaser. [78] The Plaintiff’s allegations concerning verbal warnings allegedly communicated before the incorporation of the 2nd Defendant are unsupported by the objective chronology of events and are incapable of displacing the statutory protection afforded to a bona fide subsequent purchaser. [79] Having evaluated the totality of the evidence, the Court finds that the Plaintiff has failed to establish fraud or collusion within the meaning of Section 340(2)(a) NLC. Accordingly, the Court finds that the titles of both the 1st and 2nd Defendants are indefeasible. [80] A significant feature of the Plaintiff’s case is that the alleged fraud and conspiracy were attributed principally to the 5th Defendant. Both PW1 and PW4 expressly identified the 5th Defendant as the alleged mastermind behind the impugned transaction and the alleged misappropriation of the sale proceeds. [81] The evidence shows that the 5th Defendant was already an undischarged bankrupt at the time this action was commenced. The Plaintiff neither obtained the requisite leave from the Director General of Insolvency pursuant to Section 8(1) of the Insolvency Act 1967 nor successfully effected service of the writ and cause papers upon him. Consequently, KTC never entered appearance, filed a defense, or participated in the proceedings. Despite these serious allegations, the Plaintiff failed to properly prosecute its claim against him. [82] The Court accepts the Defendants’ submission that this omission materially undermines the Plaintiff’s conspiracy claim. The authorities, including Lim Chee Tat v. Maybank Islamic Bhd [2023] 9 CLJ 708 [CA], establish that proceedings commenced against an undischarged bankrupt without the requisite leave are fundamentally defective. The Court of Appeal held that:

Section 8(1) of the Act clearly stipulates that in the commencement of any action or any other legal proceeding against a bankrupt person in respect of the debt upon which the action or proceeding ought to be commenced, the creditor shall first obtain leave of the court except stated otherwise in the Act. Without leave being obtained at first instance, no creditor has any remedy against either a debtor's property or person, nor can a creditor proceed with or commence any legal proceeding for the debt. At the time of filing of the writ action, the appellant was already an undischarged bankrupt and, no leave was obtained pursuant to s. 8(1) of the Act and the cause papers in Suit 198 were not served on the Director General of Insolvency ('DGI'). There was a clear breach of s. 8(1) of the Act and therefore, the JID ought to be set aside ex debito justitiae. [83] More importantly, where the Plaintiff’s own pleaded case attributes the alleged fraudulent design primarily to 5th Defendant. the failure to properly prosecute the alleged principal tortfeasor renders the conspiracy claim structurally deficient. [84] The Court is not persuaded that liability may simply be transferred onto the remaining Defendants in the absence of proof establishing their knowing participation in any unlawful scheme. [85] The Court further finds merit in the Defendants’ submissions concerning res judicata and equitable estoppel. The validity of the 2010 land transaction has previously been litigated in earlier proceedings involving substantially similar issues, including proceedings in Originating Motion No. 25-16-2011 and applications filed in Suit 467. The earlier courts had already declined to invalidate the transfer and had recognized the status of the purchaser’s title. [86] The Plaintiff is therefore precluded from re-litigating issues that have already been conclusively determined between the parties or their privies. To permit repeated challenges to the same transaction would constitute an abuse of the process of the Court. [87] The evidence also demonstrates that the Plaintiff accepted and retained the benefits arising from the transaction. The sale proceeds were utilized to discharge substantial indebtedness owing to Maybank, avert foreclosure proceedings, and release personal guarantees associated with the company’s liabilities. The Plaintiff cannot simultaneously retain the financial benefits derived from the transaction while seeking to invalidate the very transaction from which those benefits arose. [88] In addition, the evidence establishes that the 2nd Defendant subsequently undertook substantial development activities upon the lands at considerable financial expense, including the construction of commercial and residential projects involving third-party purchasers and strata titles. [89] The Federal Court decision in Dream Property Sdn Bhd v. Atlas Housing Sdn Bhd [2015] 2 CLJ 453 recognises that equitable relief ought not to be granted where it would produce manifest injustice or unjust enrichment. The Federal Court held that:

It would remain manifestly unfair and unjust for the plaintiff to be enriched to the extent of the full commercial value of the mall, while having only to pay for the costs of its physical construction to the defendant. The defendant was entitled to a monetary award in the sum equivalent to the current market value of the mall excluding the market value of the land without the mall. The consequence of this order was that after paying the said monetary sum to the defendant, the plaintiff would from then on enjoy the full benefit of a completely constructed mall on the land. This would unquestionably place the plaintiff in a far better position than it would have been had the plaintiff not entered into the SPA with the defendant. [90] The Court is satisfied that granting the relief sought by the Plaintiff at this stage would severely prejudice innocent third parties and produce inequitable consequences wholly disproportionate to the Plaintiff’s complaints. [91] At the conclusion of the trial and prior to the decision of this case, the Court directed the parties to file further submissions on the relevance and application of the Federal Court decision in Setiakon Engineering Sdn Bhd v Mak Yan Tai & Anor [2024] 5 MLJ 460 (FC), which had been cited by the Plaintiff and objected by the Defendants. The Court has considered the parties’ respective additional submissions together with the authorities relied upon therein. [92] The Plaintiff places substantial reliance on the decision in Setiakon Engineering in support of its contention that the impugned transactions were tainted by illegality and that such illegality is sufficient to invalidate the subsequent dealings concerning the subject land. The Plaintiff further submits that notwithstanding the Federal Court's subsequent order for a rehearing, the decision remains binding or, at the very least, highly persuasive authority. [93] The Defendants, on the other hand, contend that Setiakon Engineering ought not to be accorded significant weight in view of the Federal Court's order directing a rehearing. The Defendants further submit that the Plaintiff's reliance on the case is misplaced because the issue before this Court ultimately falls to be determined within the statutory framework of section 340 NLC, and not solely by reference to general principles of illegality. [94] Having considered the respective submissions, this Court accepts that the reasoning contained in Setiakon Engineering cannot simply be disregarded merely because a rehearing has been ordered. Until expressly overturned, the judgment continues to exist as a judicial pronouncement and may retain persuasive value, particularly insofar as it discusses the effect of illegality and transactions undertaken in contravention of statutory requirements. [95] However, this Court is equally mindful that the precedential force of Setiakon Engineering cannot be equated with that of a final and unchallenged Federal Court authority. The fact that the matter has been directed for rehearing necessarily diminishes the certainty and authoritative weight ordinarily attached to a Federal Court decision. Accordingly, the Court is of the view that Setiakon Engineering should be approached with caution and should not be treated as conclusively determining the issues arising in the present case. [96] More importantly, this Court agrees with the Defendants that the Plaintiff's reliance on Setiakon Engineering does not dispense with the requirement of bringing the present case within the ambit of section 340 NLC. The issue before this Court is not merely whether there were irregularities, breaches of statutory provisions, or even illegality in the antecedent transactions. Rather, the crucial inquiry is whether the alleged defects are of such a nature as to render the impugned registration liable to be set aside under the statutory exceptions recognized by section 340 NLC. [97] In the Court's judgment, Setiakon Engineering cannot be read as establishing a universal proposition that every unlawful or irregular transaction automatically defeats a subsequently registered title. Such an interpretation would be inconsistent with the Torrens system embodied in the NLC, which accords primacy to the principle of indefeasibility of title subject only to the limited exceptions expressly provided by statute. [98] The Court further finds merit in the Defendants' submission that there is an important distinction between the validity of an underlying transaction and the indefeasibility of a subsequently registered interest. Even assuming for the sake of argument that there were defects affecting the Sale and Purchase Agreement or the corporate approvals relied upon by the Plaintiff, such defects do not automatically lead to the conclusion that the registered title must be invalidated. The Plaintiff must still establish, by admissible and cogent evidence, that the circumstances fall within the recognized statutory exceptions under section 340 NLC. [99] Accordingly, while this Court accepts that Setiakon Engineering may provide persuasive guidance on the Court's approach towards transactions tainted by illegality, the Court is unable to accept the Plaintiff's submission that the authority, standing alone, is determinative of the present dispute. The applicability of section 340 NLC remains the central issue, and the Plaintiff must succeed or fail on the evidence adduced and the extent to which such evidence satisfies the statutory requirements for defeating an otherwise registered title. [100] In the premises, this Court finds that the Defendants' submissions on the limited precedential value and applicability of Setiakon Engineering are, with respect, more persuasive. Whilst the decision may be considered as persuasive authority, it does not displace the statutory scheme under section 340 NLC, nor does it relieve the Plaintiff of the burden of proving that the impugned registration falls within one of the recognized exceptions to indefeasibility. The Court therefore declines to treat Setiakon Engineering as conclusive authority for the propositions advanced by the Plaintiff. Counterclaim of the 1st and 3rd Defendants against 1st Plaintiff and LCS. [101] The essence of the Counterclaim of the 1st and 3rd Defendants is that the Plaintiff's action constitutes an abuse of process and that LCS had allegedly commenced a series of vexatious proceedings against them arising from the sale and purchase of the five parcels of land. On that basis, they seek general damages, exemplary damages, costs on a full indemnity basis and a declaration that LCS is a vexatious litigant. [102] However, the Court finds that the mere institution of legal proceedings does not, without more, amount to an abuse of the process of the Court. A litigant is entitled to invoke the jurisdiction of the Court to ventilate grievances and assert legal rights which he genuinely believes exist. The fact that the Plaintiff's claims may ultimately fail does not automatically render the proceedings vexatious, frivolous or an abuse of process. [103] More importantly, the 1st and 3rd Defendants have not produced sufficient evidence demonstrating that the present action was commenced mala fide, without reasonable cause, or for any collateral purpose. The allegations that the proceedings were intended solely to harass the 1st Defendant remain bare assertions unsupported by cogent evidence. [104] The Court further notes that the relief sought against LCS, namely a declaration that he is a vexatious litigant and an order restraining him from commencing future proceedings, is an extraordinary remedy. Such relief cannot be granted merely because a party has previously instituted multiple proceedings. Clear evidence of persistent abuse of the judicial process must be established. In the present case, the Court is not satisfied that the evidential threshold necessary to justify such a declaration has been met. [105] In the absence of proof of abuse of process, malice, improper motive or legally recognizable loss suffered by the 1st and 3rd Defendants, the claims for general damages, exemplary damages and other consequential reliefs cannot succeed. Counterclaim of the 2nd and 4th Defendants against the Plaintiff [106] The Counterclaim of the 2nd and 4th Defendants seeks contribution, damages and indemnity for losses, costs and liabilities which they may allegedly incur arising from the filing of the present action and the lodgment of private caveats over the lands in question. [107] The Court finds that this Counterclaim is fundamentally speculative in nature. The pleaded losses are largely contingent upon future claims, future proceedings, or liabilities which may or may not arise. No actual loss, liability or damage suffered by the 2nd and 4th Defendants has been established through credible evidence. [108] The law requires that a claimant prove not only the existence of a legal wrong but also actual loss flowing from such wrong. In the present case, the 2nd and 4th Defendants have failed to adduce sufficient evidence quantifying any loss allegedly suffered as a result of the Plaintiff's filing of this suit or the lodging of caveats. [109] While reference was made to the development of the lands into the projects known as Orange Residence and Orange Avenue, the Court finds that no evidence was tendered to establish that the Plaintiff's actions directly caused any identifiable financial loss, delay, liability or diminution in value suffered by the 2nd and 4th Defendants. The alleged losses remain unparticularized and unproven. [110] Furthermore, the Court is unable to discern any legal basis upon which the Plaintiff should indemnify the 2nd and 4th Defendants merely for exercising its right to commence legal proceedings and pursue remedies recognized by law. Unless the proceedings are shown to be malicious, frivolous or an abuse of process, which has not been established in this case, the commencement of an action cannot by itself give rise to a claim for indemnity or damages. [111] The claims for general damages, exemplary damages and damages to be assessed must likewise fail as the 2nd and 4th Defendants have not established any actionable wrongdoing on the part of the Plaintiff nor proven any loss warranting such awards. [112] In the final analysis, the Court finds that all the Defendants' Counterclaims are unsupported by sufficient evidence and are not made out on a balance of probabilities. The allegations of abuse of process, vexatious conduct, entitlement to indemnity, contribution, damages and other consequential reliefs have not been proven. [113] Accordingly, the Counterclaims of the 1st, 2nd, 3rd and 4th Defendants are dismissed with costs. [114] For all the foregoing reasons, the Court finds that the Plaintiff has failed to establish fraud, illegality, or defeasibility of title under Section 340 of the National Land Code 1965. The evidence instead demonstrates that: [a] the private treaty transaction constituted a lawful redemption exercise accepted by the chargee bank, Maybank; [b] the corporate resolutions and mandates relied upon at the material time were legally valid; [c] the Defendants acquired and dealt with the lands in good faith and for valuable consideration; [d] the Plaintiff failed to properly prosecute the alleged principal wrongdoer central to its own conspiracy allegations; and [e] the present action is barred by principles of res judicata, estoppel, and equitable considerations arising from the Plaintiff’s acceptance of the benefits of the transaction. [115] Accordingly, the Plaintiff’s claim against the 1st, 2nd, 3rd, 4th, and 6th Defendants is dismissed with costs as follows: - [a] Costs of RM50,000.00 to be paid by the Plaintiff to the 1st and 3rd Defendant; [b] Costs of RM50,000.00 to be paid by the Plaintiff to the 2nd and 4th Defendant; and [c] Costs of RM30,000.00 to be paid by the Plaintiff to the 6th Defendant. [116] The counterclaims of the respective Defendants are dismissed with costs as follows: - [a] Costs of RM50,000.00 to be paid by the 1st and 3rd Defendant to the Plaintiff and LCS; [b] Costs of RM50,000.00 to be paid by the 2nd and 4th Defendant to the Plaintiff. Dated 3 June 2026 SGD (Rozana binti Ali Yusoff) Judge High Court of Penang Counsels for the Plaintiff : M.S Rajendran Yogeswaran A/L Yoganathan Messrs Yoges & Co. Counsels for the 1st & 3rd Defendant : A. Suppiah Shamsul bin Jamil Fatin Maisarah Messrs Presgrave & Matthews Counsels for the 2nd & 4th Defendant : Karin Lim Ai Ching Nicholas Lim Cheah Pei Shan Messrs Lim Leng Han & SF Tho Counsels for the 6th Defendant : V. Amareson Amareson & Meera