Bryan Teo Wee Xin and Carmen Yen Pei Ying for the 1st Respondent/Applicant v Dato’ Shamesh Jeevaretnam and Charlotte Diana Williams for the Petitioner (WINDING-UP PETITION NO. WA-28NCC-667-11/2020)

Companies Act 2016 (Act 777); And In the matter of the Rules of Court 2012. And In the matter the Companies (Winding-Up) Rules 1972 BETWEEN TAN PIT MOOI (NRIC: 740214-10-5208) …PETITIONER AND

JAIA SDN BHD (Company No: 201901041048(1350378-A)

JASMINE JANE MOHAN (NRIC: 770902-14-5008) 2

LAW WEN JIA

ANDY TAN KIAN KOK (NRIC: 700508-08-5007) …RESPONDENTS GROUNDS OF JUDGMENT (Enclosure 69)

In the Summons dated 14.9.2021 (Application), Jaia Sdn Bhd (1st Respondent) had applied to this Court pursuant to section 469 of the Companies Act 2016, Rule 6 and/or Rule 7 of the Companies (Winding Up) Rules 1972 and/or Order 92 rule of the Rules of Court 2012 for the following orders:

That leave is granted to the 1st Respondent to enter into and/or execute the proposed Deed of Settlement with Chris Plastow, Mark Pettitt, Protection Brands Pty Ltd (“Protection Brands”), Afterworx Pty Ltd (“Afterworx”) and MCS Capital

(ii) That leave is granted to the 1st Respondent to enter into and/or execute the proposed Variation Agreement with Protection Brands and MCS Capital Partners;

(iii) Costs in the cause; and 3

(iv) Further and/or other relief that this Honourable Court deems fit and proper.

The brief grounds for the Application are:

On 25.05.2021, this Honourable Court granted an order to stay the proceedings of Winding Up Petition (Enclosure 1) dated 24.11.2020 pending the hearing and final disposal of the Respondents’ appeal to the Court of Appeal dated 24.04.2021 against the decision of this Honourable Court in Enclosure 10 on 19.03.2021, subject to the following conditions: i. The Respondents are not allowed to sell or dispose the 1st Respondent’s assets by any means; ii. The Respondents are not allowed to enter into new contracts for and/or on behalf of the 1st Respondent; iii. The Respondents are not allowed to alter the shareholding structure of affairs of the 1st Respondent; iv. The 1st Respondent’s business trading and activities are allowed; and v. Leave of the Court is required if the Respondent are to carry out any of the items (i) to (iii) above. 4

On 20.03.2021, the 1st Respondent filed a Kuala Lumpur High Court suit under the suit number WA-22IP-14-03/2021 ( “IP Suit”) against the Petitioner and several other parties, inter alia, as follows:- i. Cristopher David Plastow, the 8th Defendant in the IP Suit ( “Chris Plastow”); ii. Mark Christopher Pettitt, the 9th Defendant in the IP Suit ( “Mark Pettitt”); and iii. Protection Brands, the 6the Defendant in the IP Suit (hereinafter Chris Plastow, Mark Pettitt and Protection Brands will be referred to collectively as the “Counterparties”).

The 1st Respondent has, since the commencement of the IP Suit, entered into negotiations talks with the Counterparties, Afterworx and MCS Capital to resolve the IP Suit and other matters relating to the IP Suit amicably, on a without admission as to liability basis, and the proposed terms of the settlement have been concluded and are set out in the proposed Deed of Settlement.

As part of the settlement, the 1st Respondent and Protection Brands (being one of the Counterparties) and MCS Capital will enter into the proposed Variation Agreement to vary the terms of the Agreement dated 09.12.2019 between the 1st 5 Respondent on one part and Protection Brands and MCS Capital partners on the other part.

The proposed Deed of Settlement and the proposed Variation Agreement will not impair or adversely affect the assets of the 1st Respondent.

Conversely, the proposed Deed of Settlement and the proposed Variation Agreement will significantly benefit and serve the interest of the 1st Respondent in improving the financial position and business of the 1st Respondent, and consequently, the Petitioner as the member/shareholder of the 1st Respondent.

The Petitioner (in her capacity as a member/shareholder of the 1st Respondent) will not be prejudiced or adversely affected by the proposed Deed of Settlement and the proposed Variation Agreement, and accordingly, will not be prejudiced if the Respondents’ application herein is allowed.

The “Stayzon” brand was originally owned by certain Australian entities, namely Protection Brands and its affiliated company, MCS Capital.

The 1st Respondent entered into an agreement dated 09.12.2019 (“2019 Agreement”) with Protection Brands and MCS Capital (both as sellers) to acquire the “Stayzon” brand together with the business 6 related to the said brand including manufacturing, selling, distributing and marketing products under the “Stayzon” brand worldwide. Pursuant to the Agreement, the 1st Respondent acquired the assets, rights, benefits and interests of the “Stayzon” business including the intellectual property rights together with all goodwill, rights and benefits attached thereto, and the 1st Respondent became the sole proprietor of the “Stayzon” brand and the products bearing the “Stayzon” brand worldwide.

5.

On 20.03.2021, the 1st Respondent filed the “IP Suit” against the Petitioner and Counterparties, among other parties.

The IP Suit was filed against the Petitioner in regard to various wrongful or unlawful acts against the 1st Respondent, and/or breaches of fiduciary and/or statutory duties by the Petitioner as a 7 director and/or officer of the 1st Respondent. The IP Suit was also filed against the Counterparties for breach of confidence, copyright infringement, conspiracy to injure the 1st Respondent, breach of undertaking by Protection Brands under the 2019 Agreement, unlawful interference of trade and outstanding sum of RM15,539.16 owing by Protection Brands to the 1st Respondent.

After the filing of the IP Suit, the 1st Respondent and the Counterparties together with Afterworx and MCS Capital, entered into negotiations to resolve the IP Suit and other matters relating to the IP Suit amicably on a no admission as to liability basis.

However, on 25.05.2021, this Honourable Court granted an order to stay the proceedings of the Winding Up Petition (Petition) dated 24.11.2020 pending the hearing and final disposal of the Respondents’ appeal to the Court of Appeal dated 24.04.2021 against the decision of this Honourable Court in Enclosure 10 on 19.03.2021, subject to the following conditions:-

The Respondents are not allowed to sell or dispose the 1st Respondent’s assets by any means;

The Respondents are not allowed to enter into new contracts for and/or on behalf of the 1st Respondent;

The Respondents are not allowed to alter the shareholding structure or affairs of the 1st Respondent; 8

The 1st Respondent’s business trading and activities are allowed; and

Leave of the Court is required if the Respondents are to carry out any of the items (a) to (c) above. (hereinafter referred to as the “Conditional Stay Order”)

The 1st Respondent and the Counterparties, Afterworx and MCS Capital have since concluded their negotiation and finalized the proposed terms of settlement on a no admission as to liability basis. Accordingly, the 1st Respondent is now filing Application to seek the leave of this Court as required under the Conditional Stay Order dated 25.05.2021.

The IP Suit is currently ongoing and a case management is fixed on 09.11.2021 to update the High Court hearing the IP Suit on the status of the settlement and leave of this Honourable Court.

The proposed terms of settlement of the IP Suit and other matters relating to the IP Suit between the 1st Respondent on one part and the Counterparties, Afterworx and MCS Capital on the other part, without any admission as to liability, are set out in a proposed Deed of Settlement.

If this Application is granted, the 1st Respondent will then withdraw the IP Suit against the Counterparties with no order as to costs. The proposed Deed of Settlement is confidential and privileged and is conditioned on the proposed Deed of Settlement being produced to 9 this Honourable Court strictly for the purpose of obtaining leave pursuant to the Conditional Stay order.

Essentially, the proposed Deed of Settlement with encompass, inter alia, the following:-

Chris Plastow, on behalf of the Counterparties, will provide by way of a verifying affidavit required under the Rules of Court 2012, documents and responses to the proposed interrogatories as set out in the propped Deed of Settlement;

Protection Brands together with MCS Capital and the 1st Respondent will execute or enter into a written variation to the 2019 Agreement, in the form of Annexure C of the proposed Deed of Settlement, to vary certain terms of the 2019

The Counterparties, Afterworx and MCS Capital will not contest or oppose the registration and/or exercise by the 1st Respondent of any of the intellectual property rights transferred to the 1st Respondent pursuant to clause 1 of the 2019 Agreement;

The Counterparties, Afterworx and MCS Capital and their affiliates will not sell any Stayzon Products, or any similar or competing products, in any countries within Southeast Asia subject to the exceptions under the proposed Deed of Settlement; 10

The Counterparties, Afterworx and MCS Capital, whether on their own account or through any third parties, will cease to distribute or use the prior product labels contained in Annexure A to the statement of claim in the IP Suit; and

The 1st Respondent, and the Counterparties, Afterworx and MCS Capital release each other and their respective affiliates from any and all claims including those arising from or related to the subject matter of the IP Suit.

The proposed Variation Agreement, between the 1st Respondent, Protection Brand and MCS Capital as set out in Annexure C of the proposed Deed of Settlement will encompass, inter alia, the following:

Clauses 2 to 8 of the 2019 Agreement to be deleted and/or cancelled;

The 1st Respondent, Protection Brands and MCS Capital shall release each other from any and all claims against each other, under or arising from Clauses 2 to 8 of the 2019 Agreement, whether arising in the past or otherwise; and

Protection Brands and MCS Capital shall withdraw their termination notices to the 2019 Agreement.

Therefore, to execute and/or enter into the proposed Deed of Settlement and proposed Variation Agreement, the 1st Respondent seeks leave from this Court to do the same. 11 1st Respondent’s Submissions

The 1st Respondent had submitted amongst others that:

the court has the inherent power, discretion and jurisdiction to make any order to allow the Application and to prevent any injustice and maintain status quo of the parties herein;

the proposed settlement and variation will benefit the 1st

the substratum of the 1st Respondent remains unchanged.

In opposing the Application, the Petitioner had submitted that:

section 469 of the Companies Act 2016 was not applicable;

the proposed Deed of Settlement and Variation Agreement alters the affairs of the 1st Respondent and that the 1st Respondent has failed to take any steps to validate the said transactions;

the proposed Deed of Settlement and Variation Agreement are not in the best interest of the 1st Respondent and that the same would only paralyse the 1st Respondent’s trade; 12

the Application will not absolve the 1st Respondent from potential liabilities and monetary payments as the 1st Respondent has failed to produce any documentary evidence of its financial standing;

as the transaction had taken place after the commencement of the Petition, the Court has a discretion make an order for validation.

In coming to my decision herein, I agree with the Petitioner that Section 469 of the Companies Act 2016 is not applicable to the Application herein as the said section states: “Powers of Court on hearing petition for winding up

(1) On hearing the petition for winding up, the Court may, by order –

dismiss the petition with or without costs;

adjourn the hearing conditionally or unconditionally; or

make any interim or any other order that the Court thinks fit.”

It is therefore clear that any order under the said section 469 of the Companies Act 2016 must therefore be made at the hearing of the Winding Up Petition (Petition) and not at this stage of the matter i.e pre the Petition hearing. See the decision in Prolink Marketing Sdn Bhd v Ambank Islamic Berhad [2012] 4 MLRH 205. 13

I am however exercising my discretion to hear the Application and decide on the matter based on this Court’s inherent jurisdiction and fact of the Conditional Stay Order and its terms therein as mentioned above.

Accordingly, after considering the respective submissions of the parties, and perusing the 2019 Agreement, proposed Deed of Settlement and Variation Agreement, I found as follows:

Clause 4 of the 2019 Agreement, as seen in exhibit JAIA-1 of enclosure 70, states: “4. The Buyer agrees to pay royalty to the Seller at a rate of five per cent (5%) on the net sales in respect of the Products, for the period of twelve (12) calendar months following the date of this Agreement (“First Twelve Months Period”) at the end of the First Twelve Months Period. For each of the subsequent twelve (12) months’ periods (each “Twelve Months Period”), the Buyer and the Seller will determine on an annual basis the rate of the royalty that will apply to each subsequent Twelve Months Period, but the rate will not exceed five per cent (5%) of the net sales in respect of the Products for the corresponding period. The Buyer also agrees:

to provide to the Seller a copy of its quarterly sales report in relation to the Products; 14

to provide to the Seller a copy of its audited accounts or extract of its audited accounts in relation to the Products, within thirty (30) days after such audited accounts are available; and

that on the reasonable request of the Seller, to provide the Seller with reasonable access to any records or reports in the possession of the Buyer and which directly relate to the sales of the Products in respect of the immediately preceding Twelve Months period, to enable the Seller to conduct an audit of the sales of the Products in respect of the corresponding period.”

(ii) the effect of the proposed Deed of Settlement and Variation Agreement would in essence relinquish all the previous and future claims for royalties under the above mentioned clause as well as absolve the 1st Respondent from potential liabilities;

(iii) as a result of the above, there would be substantial savings to the 1st Respondent company;

(iv) the Variation Agreement as seen in Annexure C of the proposed Deed of Settlement at exhibit JAIA-4 of enclosure 70, states that Protection Brands and MCS Capital will release and discharge the 1st Respondent in respect of its claim and vice versa wherein no monetary payments and/or future financial exposure will be payable to either Protection Brands and MCS Capital; 15

the 2019 Agreement in respect of the 1st Respondent’s asset in regards to the Stayzon brand and products is preserved i.e the intellectual property, goodwill and business relating to the same;

(vi) Afterworx and MCS Capital will not contest or oppose the registration and/or exercise by the 1st Respondent of any intellectual property rights transferred to the latter;

(vii) the above will mean that the 1st Respondent can continue with the business relating to the Stayzon brand and /or products.

The Petitioner had submitted that the proposed Deed of Settlement and Variation Agreement are not in the best interest of the 1st Respondent and that the same would only paralyse the 1st Respondent’s trade and that the Application will not absolve the 1st Respondent from potential liabilities and monetary payments. With respect, the Petitioner has not shown any evidence to this Court to corroborate their said contentions.

I therefore agree with the 1st Respondent that the proposed Deed of Settlement and the Variation Agreement, will absolve the 1st Respondent from potential liabilities and monetary payments to Protection Brands and/or MCS Capital. This will subsequently result in an improved financial position of the 1st Respondent which will benefit and serve the best interest of the 1st Respondent. 16

I also find that accordingly, the substratum of the 1st Respondent, being to inter alia operate the business to supply, market, sell and distribute the Stayzon products in the various jurisdictions remains unchanged.

It is my further view that the proposed Deed of Settlement and Variation Agreement will also leave more disposable assets to the creditors of the 1st Respondent company in the event the same is wound up.

As the proposed Deed of Settlement also provides for copies of documents to be furnished to the parties thereto, the 1st Respondent will be in a position to obtain further documents and/or evidence to strengthen its claim, in the IP suit against the other Defendants therein. This, as contended by the 1st Respondent, will save resources and/or capital whereby the costs and legal expenses in the IP Suit will be reduced substantially.

After reading the said proposed Deed of Settlement and Variation Agreement, this Court further holds that:

the assets of the 1st Respondent will not be adversely affected or dissipated; and

(ii) the value of and/or rights the Petitioner’s shares in the 1st Respondent will not be reduced and/or altered and will remain intact 17

I therefore find, more importantly, that the Petitioner will in turn benefit from the proposed Deed of Settlement and Variation Agreement and will not be prejudiced by the Application.

Finally, I will now turn to the Petitioner’s contention that as the transaction had taken place after the commencement of the Petition, the Court has a discretion make an order for validation pursuant to Section 472(1) of the Companies Act 2016 which provides: “(1) Any disposition of the property of the company, other than an exempt disposition, including any transfer of shares or alteration in the status of the members of the company made after the presentation of the winding up petition shall, unless the Court otherwise orders, be void.”

With respect, I find the Petitioner’s submission as misconceived, as the Application is premised on the Conditional Stay Order granted by this Court which had amongst others allowed the 1st Respondent to apply to this Court for leave to carry out any of the restrictive conditions imposed by this Court as per the terms of the said Conditional Stay Order.

In the circumstances, bearing in mind that the Application in Enclosure 69 was made in the course of the Winding Up Petition as well as pursuant to the Conditional Stay Order granted by this Court dated 25.5.2021, this Court holds that the rights of the creditors will not be prejudiced by the same and this court will therefore be granting leave to the 1st Respondent to enter into the Proposed Deed of Settlement as prayed for in prayer 1 of the same and to enter into the Variation Agreement as prayed for in prayer 2 subject 18 to all the necessary 1st Respondent’s corporate/company’s approvals and resolutions as maybe required. Costs shall be in the cause. Dated: 10th day of January 2021 sgd. NADZARIN WOK NORDIN JUDICIAL COMMISSIONER KUALA LUMPUR HIGH COURT Parties: Bryan Teo Wee Xin and Carmen Yen Pei Ying for the 1st Respondent/Applicant [Messrs Joel & Mei] Dato’ Shamesh Jeevaretnam and Charlotte Diana Williams for the Petitioner [Messrs Jeeva Partnership]