AW GEOK LIP v 1. ) Shai Meng Choon (BA-12BNCvC-39-09/2023)

SEA PAPER INDUSTRIES SDN. BHD. (No. Syarikat: 197801000640) (sebelum ini dikenali sebagai South East Asia Paper

SHAI MENG CHOON ... RESPONDEN-RESPONDEN [DALAM MAHKAMAH SESYEN DI PETALING JAYA DI NEGERI SELANGOR DARUL EHSAN GUAMAN SIVIL NO.: BB-B52NCVC-58-10/2021 ANTARA AW GEOK LIP (NO. K/P: 640218-01-5295) ... PLAINTIF 15/08/2024 16:38:30 BA-12BNCvC-39-09/2023 Kand. 33 S/N UF/dnwP9ekav3UTrHMVahg SEA PAPER INDUSTRIES SDN. BHD. (No. Syarikat: 197801000640) (sebelum ini dikenali sebagai South East Asia Paper Products Sdn. Bhd.) ... DEFENDAN SHAI MENG CHOON ... PIHAK KETIGA

This is the Appellant’s/Plaintiff’s appeal against the decision of the learned Sessions Court Judge (SCJ) dismissing the Appellant’s/Plaintiff’s claim against the First Respondent/Defendant and ordering the Appellant/Plaintiff to pay costs of RM10,000.00 to the Second Respondent/Third Party.

For ease of reference, parties will be referred to as they were in the Court below.

The Plaintiff’s claim against the Defendant is for the payment of RM1 million, alternatively, RM675,000.00, as commission.

The Plaintiff asserted there was an agreement between the Plaintiff and the Defendant, facilitated by the Third Party, Remus (whose actual name is Shai Meng Choon), wherein the Plaintiff was appointed by the Defendant to introduce a buyer for the Defendant.

In exchange for introducing the buyer, the Defendant allegedly agreed to pay the Plaintiff a commission of RM1 million.

The learned SCJ dismissed the Plaintiff’s claim against the Defendant with costs of RM20,000.00.

The learned SCJ also dismissed the Defendant’s claim for indemnity against the Third Party and ordered the Plaintiff to pay costs of RM10,000.00 to the Third Party.

Hence, this appeal by the Plaintiff against the decision of the learned SCJ dismissing his claim against the Defendant and the costs awarded against the Third Party.

The Plaintiff, a director of Awetex Engineering & Trading Sdn. Bhd. (AWETEX), managed sales and marketing for AWETEX.

The Defendant, previously known as South East Asia Paper Products Sdn. Bhd. from 10.02.1978 to 24.03.2021, is a private limited company.

The Third Party, Shai Meng Choon (known as Remus), was employed by the Defendant as the Marketing and Sales Manager during the relevant period.

AWETEX has been supplying machinery to the Defendant since 2017, and the Plaintiff has known the Third Party since that time due to his role with the Defendant.

Muda Holdings Bhd. (MUDA), a longstanding client of AWETEX, expressed an interest in acquiring new companies in 2018.

In January 2019, the Plaintiff inquired with the Third Party about the possibility of the Defendant being acquired by another company, mentioning that an interested buyer was available. The Third Party agreed to discuss this with his employer.

The Plaintiff contended that the Third Party, acting on behalf of the Defendant, communicated and negotiated with the Plaintiff regarding the potential acquisition. Based on their longstanding relationship, the Plaintiff agreed to act as an intermediary to introduce MUDA to the Defendant.

On 20 February 2019, the Plaintiff requested the Defendant to sign three documents (Letter of Entitlement to Professional Fees, Letter of Confidentiality and Letter of Authority), but these were not signed and returned.

Despite the lack of signed documents, the Plaintiff and Defendant allegedly entered into an oral agreement by 2 March 2019, which included the following terms: a. The Plaintiff would introduce a potential buyer to the Defendant. b. The sale would include the Defendant's assets and ongoing business. c. The sale price was approximately RM20,000,000.00. d. The Defendant would pay the Plaintiff RM1,000,000.00 as a commission for the introduction. e. The Defendant could approach other potential buyers if the Plaintiff's introduced party did not finalise the acquisition within a year. f. The Defendant could not engage with the Plaintiff's introduced party after one year if the acquisition were not finalised.

On 11 March 2019, the Third Party, on behalf of the Defendant, confirmed the terms of the oral agreement and added the following: a. The Defendant would declare the commission payable to the Plaintiff. S/N UF/dnwP9ekav3UTrHMVahg b. The commission would not be documented. c. The commission would be paid upon the Defendant's acquisition. d. The Plaintiff would be deemed to have provided his service and entitled to the commission if his introduced party proceeded with the acquisition.

19.

The Plaintiff and Defendant performed their respective roles, with the Plaintiff facilitating the introduction and subsequent acquisition.

After the site inspection on 2 April 2019, MUDA contacted the Defendant to commence the acquisition process.

The Plaintiff and Defendant agreed to wait for MUDA to finalise the acquisition after one year (the varied term).

MUDA signed the Acquisition Agreement with the Defendant’s shareholder, Yee Lee Corporation Bhd. (Yee Lee), on 19 February 2021.

The Plaintiff fulfilled his obligations under the oral agreement when MUDA acquired the Defendant for RM22,500,000.00.

MUDA became the sole shareholder of the Defendant by purchasing 3,000,000 shares from Yee Lee by 25 March 2021, after which the Defendant was renamed Sea Paper Industries Sdn. Bhd.

The Plaintiff claimed the Defendant breached the oral agreement, the additional terms, and the varied terms by failing to pay the agreed commission.

The Defendant made two settlement proposals to the Plaintiff: a. RM50,000.00 on 24 February 2021, requiring an invoice. b. RM80,000.00 on 27 February 2021, also requiring an invoice.

The Plaintiff argued that he has been unjustly deprived of the agreed commission, while the Defendant has unjustly benefited from his services.

On 1 October 2021, the Plaintiff filed this action against the Defendant for breach of the oral agreement, the additional terms, and the varied terms. S/N UF/dnwP9ekav3UTrHMVahg

Following the Full Trial, the learned SCJ dismissed the Plaintiff’s claim against the Defendant and the Defendant’s indemnity claim against the Third Party.

The SCJ dismissed the Plaintiff’s claim against the Defendant based on the following grounds: a. There was neither a written nor an oral agreement between the Plaintiff and the Defendant. The alleged agreement by the Plaintiff lacked precision, clarity, and certainty. b. There was no privity of contract between the Plaintiff and the Defendant. c. The Defendant was merely an 'object' of purchase, meaning only Yee Lee, as the shareholder, had the authority to deal and make decisions regarding the sale of the Defendant’s shares. d. The Third Party, being just an employee of the Defendant, did not have the authority to make any decisions related to the sale of the Defendant or to enter into an agreement with the Plaintiff. e. The purported agreement discussed in the WhatsApp conversation was merely a discussion between the Plaintiff and the Third Party. f. The Plaintiff was uncertain about the exact amount of the commission to which he was entitled. S/N UF/dnwP9ekav3UTrHMVahg

I am reminded that an appellate court should be slow in interfering with a finding of fact by a trial court (see: Sornaratnam & Anor v Ramalingam [1981] 1 MLJ 24; Privy Council case of Tan Chow Soo v Ratna Ammal [1969] 2 MLJ 49; China Airlines Ltd. v Maltran Air Corp Sdn. Bhd. (formerly known as Maltran Air Services Corp Sdn. Bhd.) and another appeal [1996] 2 MLJ 517; Herchun Singh & Ors v Public Prosecutor [1969] 2 MLJ 209 at 211.

The principles governing the appellate court’s interference with the trial court’s findings as enunciated in Sivalingam a/l Periasamy v Periasamy & Anor [1995] 3 MLJ 395 is particularly useful here. The Court of Appeal held: “It is trite law that this court will not readily interfere with the findings of fact arrived at by the court of first instance to which the law entrusts the primary task of evaluation of the evidence. But we are under a duty to intervene in a case where, as here, the trial court has so fundamentally misdirected itself, that one may safely say that no reasonable court which had properly directed itself and asked the correct questions would have arrived at the same conclusion. In a case such as this where the task of the court is to determine where the probable truth of the case lies, one can do no better than to recall to mind the words of Viscount Simon (who was in the majority) in The ‘Eurymedon’ (1942) 73 Lloyd LR 217: S/N UF/dnwP9ekav3UTrHMVahg The appellants, therefore, start in this House under the considerable handicap that there are concurrent findings of fact against them. [Which, we hasten to add, is not the case here.] I am far from saying that in these circumstances the House has no jurisdiction to allow the appeal but it would need very clear and convincing reasoning to justify us in overthrowing what has already been decided. If it could be shown that the course of events affirmed by the learned judge could not have occurred, that would be an excellent reason for reversing his view – in these mundane happenings there is no more conclusive argument than non est credendum quia impossibile. If the impeached decision were shown to be an unwarranted deduction based on faulty judicial reasoning from admitted or established facts, that might lead to its reversal. If there were so overwhelming a body of valid testimony for the view that has been rejected that a reasonable man would feel bound to accept it, the appeal would succeed.” [emphasis added]

Furthermore, the Federal Court case of Ng Hoo Kui & Anor. v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67 had clearly demonstrated under what circumstances an appellate court ought to warrant an intervention: - “THE LAW IN APPELLATE INTERVENTION [33] ‘It was a long settled principle, stated and restated in domestic and wider common law jurisprudence, that an appellate court should not interfere with the trial judge’s S/N UF/dnwP9ekav3UTrHMVahg conclusions on primary facts unless satisfied that he was plainly wrong’ (the Supreme Court of United Kingdom in McGraddie v McGraddie and another [2013] 1 WLR 2477). [34] The ‘plainly wrong’ test operates on the principle that the trial court has had the advantage of seeing and hearing the witnesses on their evidence as opposed to the appellate court that acts on the printed records. The test was pioneered by the House of Lords in Clarke v Edinburgh and District Tramways Co 1919 SC (HL) 35, when it adjudicated on the ability of an appellate court to reconsider the facts of a particular case, when there is already findings of fact by the lower court. In this regard, Lord Shaw’s judgment is pertinent when His Lordship said: ‘When a judge hears and sees witnesses and makes a conclusion or inference with regard to what is the weight on balance of their evidence, that judgment is entitled to great respect, and that quite irrespective of whether the Judge makes any observation with regard to credibility or not. I can of course quite understand a Court of Appeal that says that it will not interfere in a case in which the Judge has announced as part of his judgment that he believes one set of witnesses, having seen them and heard them, and does not believe another. But that is not the ordinary case of a cause in a Court of justice. In Courts of justice in the ordinary case things are much more evenly divided; witnesses without any conscious bias towards a conclusion may have in their demeanour, in their manner, in their hesitation, in the nuance of their expressions, in even the turns of the eyelid, left an impression upon the man who saw and heard them which can S/N UF/dnwP9ekav3UTrHMVahg never be reproduced in the printed page. What in such circumstances, thus psychologically put, is the duty of an appellate Court? In my opinion, the duty of an appellate Court in those circumstances is for each Judge of it to put to himself, as I now do in this case, the question, Am I-who sit here without those advantages, sometimes broad and sometimes subtle, which are the privilege of the Judge who heard and tried the case – in a position, not having those privileges, to come to clear conclusion that the Judge who had them was plainly wrong? If I cannot be satisfied in my own mind that the Judge with those privileges was plainly wrong, then it appears to me to be my duty to defer to his judgment. [35] Lord Shaw’s judgment was adopted by Viscount Sankey LC in Powell v Streatham Manor Nursing Home [1935] AC 243 when His Lordship made the following observation at p 250: ‘What then should be the attitude of the Court of Appeal towards the judgment arrived at in the Court below under such circumstances as the present? It is perfectly true that an appeal is by way of rehearing, but it must not be forgotten that the Court of Appeal does not hear the witnesses. It only reads the evidence and rehears the counsel. Neither is it a reseeing Court … On an appeal against a judgment of a judge sitting alone, the Court of Appeal will not set aside the judgment unless the appellant satisfies the Court that the judge was wrong and that his decision ought to have been the other way. Where there has been a conflict of evidence the Court of S/N UF/dnwP9ekav3UTrHMVahg Appeal will have special regard to the fact that the judge saw the witnesses.’ … [37] In much later years, the House of Lords had the occasion to consider on the same issue in Watt (or Thomas) v Thomas [1947] AC 484, namely, when was it appropriate for an appellate court to set aside the judgment of the court on findings of fact at first instance, and it held that: ‘When a question of fact has been tried by a judge without a jury, and it is not suggested that he has misdirected himself in law, an appellate court in reviewing the record of the evidence should attach the greatest weight to his opinion, because he saw and heard the witness, and should not disturb his judgment unless it is plainly unsound. The appellate court is however free to reverse his conclusion if the grounds given by him therefore are unsatisfactory by reason of the material inconsistencies or inaccuracies or if it appears unmistakably from the evidence in reaching them, he has not taken proper advantage of having seen and heard the witnesses or has failed to appreciate the weight and bearing of circumstances admitted or proved. … [60] The aforesaid cases illustrate the highly deferential attitude adopted by appellate courts in the United Kingdom towards reviewing findings of fact by the trial court. The test is not whether the higher court feels that it would have reached a different conclusion on the same facts as the S/N UF/dnwP9ekav3UTrHMVahg trial court, but whether or not the decision by the lower court on findings of fact was reasonable. In other words, if the trial judge’s decision can be reasonably explained and justified, then appellate courts should refrain from intervention. … [151] It is not sufficient for the Court of Appeal to reverse the findings on fact merely because on a particular point of evidence, it disagreed with the conclusion made by the trial court on whether one party or the other is to be believed on the evidence that they gave in court. Although there may be inconsistencies in the evidence which could mean that another judge would have been persuaded to reach a different conclusion, this is not relevant when considering if a trial judge’s findings of fact could be overturned. The task of the trial judge is hard enough, without having to deal with every single piece of evidence which may emerge in the course of the trial. If such a requirement was to be imposed on a trial judge then their task in hearing a case would be very tedious and the time taken to produce judgments would increase…” [emphasis added]

As discussed above, it is trite law that appellate intervention is warranted if the trial judge failed to evaluate the evidence and issue before him in its entirety and made bare findings of fact with no justifiable reason to substantiate them (MMC Oil & Gas Engineering Sdn. Bhd. v Tan Bock Kwee & Sons Sdn. Bhd. [2016] 2 MLJ 428). Upon perusal of the Records of Appeal and having considered the written and oral submissions by the parties, I S/N UF/dnwP9ekav3UTrHMVahg find an appellate intervention is not warranted. My reasons are stated below.

It is undisputed that before 19 February 2021, the Defendant was wholly owned by Yee Lee. As such, only Yee Lee had the authority to deal with the Defendant’s shares.

The evidence indicates that the “Share Sale and Purchase Agreement” dated 19 February 2021 was executed between Yee Lee and MUDA. Additionally, the “Directors’ Resolution in Writing” dated 15 February 2021 was signed by Lim Ee Young, the Managing Director of Yee Lee, and representatives of MUDA.

Although the Defendant is a separate legal entity from its shareholder as established in Aron Salomon (Pauper) v A Salomon and Company, Limited [1897] AC 22 and Ong Leong Chiou & Anor v. Keller (M) Sdn Bhd & Ors [2021] 3 MLJ 622, the sale of its shares must be determined by its shareholder, Yee Lee, through a member’s resolution.

Furthermore, pursuant to section 70 of the Companies Act 2016 (CA 2016), “A share or other interest of a member in a company is personal property and transferable in accordance with section 105” of the CA 2016.

Consequently, the Defendant cannot sell itself, as it does not own itself; the shares are owned by the shareholders, Yee Lee.

Therefore, the Defendant and/or the Third Party had no authority and right to engage, appoint or enter into any agreement - oral or otherwise - with the Plaintiff for the introduction of an interested buyer to acquire shares belonging to Yee Lee. Only Yee Lee had the authority and right to enter into such an agreement with the Plaintiff.

Accordingly, any commission alleged by the Plaintiff for the sale of the shares would have required determination and approval by Yee Lee, not the Defendant or the Third Party. There was no such evidence presented to the Court.

Given that the Plaintiff’s case hinges on the claim that an oral agreement was made with the Defendant to introduce an interested buyer in exchange for an RM1 million commission, even if such an agreement existed, it would be invalid and unenforceable without evidence of approval by Yee Lee as the shareholder.

Moreover, if the alleged agreement existed, the Plaintiff should have brought an action against Yee Lee, not the Defendant. However, Yee Lee is not a party in this case, as the Plaintiff did not initiate action against Yee Lee.

Consequently, the learned SCJ was correct in determining that there was no privity of contract between the Plaintiff and the Defendant.

The Plaintiff’s dealings were with the Third Party, who was merely an employee and the Acting General Manager of the Defendant. The Plaintiff asserted that an oral agreement was made with the S/N UF/dnwP9ekav3UTrHMVahg Defendant through the Third Party. However, there is no evidence that the Third Party had the authority to enter into any agreement with the Plaintiff.

After reviewing the evidence in its entirety, I agree with the learned SCJ’s finding that there is no evidence supporting the existence of a written or oral agreement between the Plaintiff and the Defendant and/or the Third Party. The Plaintiff failed to present a clear, explicit, and unambiguous account of the facts pertaining to the alleged agreement.

The WhatsApp messages relied upon by the Plaintiff do not establish that an agreement existed. After reviewing the conversations, I find they merely suggest a discussion between the Third Party and the Plaintiff regarding the Plaintiff’s intention to receive the RM1 million commission.

The Plaintiff failed to produce any other contemporaneous documents to substantiate the existence of the alleged agreement. The learned SCJ found that the Letter of Entitlement to Professional Fees, Letter of Confidentiality and Letter of Authority presented by the Plaintiff were unsigned documents.

The importance of contemporaneous documents was underscored in Tindok Besar Estate Sdn Bhd v. Tinjar Co [1979] 2 MLJ 229, the Federal Court held that: - “Nevertheless the learned trial judge expressed himself to be completely satisfied with the veracity of the S/N UF/dnwP9ekav3UTrHMVahg respondent's witnesses and their evidence. He purported to come to certain findings of fact on the oral evidence but did not notice or consider that the respondent's oral evidence openly clashed with its contemporaneous documentary evidence. For myself, I would with respect feel somewhat safer to refer to and rely on the acts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe his subsequent recollection or version of it, particularly if he is a witness with a purpose of his own to serve and if it did not account for the statements in his documents and writings. Judicial reception of evidence requires that the oral evidence be critically tested against the whole of the other evidence and the circumstances of the case. Plausibility should never be mistaken for veracity.” [emphasis added]

Regarding the costs awarded to the Third Party, I find that the amount of RM10,000.00 is within the range permitted under Order 59, rule 23 of the Rules of Court 2012. Moreover, costs are at the discretion of the Court, and I find the amount to be fair.

Having considered the evidence in its entirety, I find that the learned SCJ did not err in her findings of fact and law. Her conclusions are based on the evaluation of evidence presented before the Court. There are no substantial and compelling reasons for this Court to disagree with her findings.

For the reasons stated above, I, therefore, ordered that the Plaintiff's appeal be dismissed with costs of RM10,000.00 to the Defendant and RM5,000.00 to the Third Party. Dated: 15 August 2024 -sgd-JAMHIRAH ALI JUDICIAL COMMISSIONER High Court of Malaya at Shah Alam (NCVC 1) To the parties’ solicitors: For the Appellant : T.Nadarajah & Mohamad Izzat Izzuddin Bin Ibrahim (Messrs. H T Lim & Partners) For the 1st Respondent : Ho Kee Tong & Lee Guo Wen (Messrs. Gan, Ho & Razlan Hadri) For the 2nd Respondent : Ernest Balasingam (Messrs. Gibb & Co.)