Cekap Asia Sdn. Bhd. v 1. ) Dato Sri Yap Seng Yew (BA-22NCC-18-02/2021)

DATO’ SRI YAP SENG YEW

DATIN SRI GAN LI LI

HONG LEONG INVESTMENT BANK BERHAD (NO. SYARIKAT: 10209-W) (sebelum ini dikenali sebagai MIMB Investment Bank Berhad) − DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] The Plaintiff’s claims against the Defendants are for a declaration that the Defendants have committed fraudulent misappropriation and breach of trust against the Plaintiff in transferring the 11,749,000 units Merces Shares belonging to the Plaintiff; an order for restitution to return the Merces Shares to the Plaintiff; and the payment for dividends from the year of 2006 to 2020 for the total sum of RM8,811,750.00. S/N 6/ygeEXW8kmUCE62p6reog [2] The Defendants had filed interlocutory applications for striking out and security for costs, whereby all the interlocutory applications were dismissed by this Court. On 28-9-2022, the Court of Appeal had allowed the Third Defendant’s appeal for striking out the Plaintiff’s claims. [3] On 19-7-2022, this Court had dismissed the application by the First and Second Defendants to re-amend the amended defence with costs. [4] The full trial dates only between the Plaintiff and the First and Second Defendants. The Parties [5] The Plaintiff (Cekap Asia Sdn Bhd) is aprivate limited company and has a registered address at Klang, Selangor. The First and Second Defendants are individual and are husband and wife. The First and Second Defendants are the former directors of the Plaintiff. The Re-amended Statement of Claim [6] The Re-amended Statement of Claim made pursuant to Order dated 31-5-2022 under O. 20 r. 5 Rules of Court 2012, pleaded as follows:

sometime around October 2004, the First and Second Defendants’ stockbroker named Leong & Co. Sdn was acquired by MIMB Investment Bank Berhad (which was then merged with the Third Defendant). S/N 6/ygeEXW8kmUCE62p6reog

Merces Holdings Berhad is a public limited company and on 24-6-2008 its name changed to Y&G Corporation Bhd. Merces Holdings Berhad/Y&G Corporation Bhd is in the business of investment and management services. [7] The Plaintiff pleaded that –

around 8-11-2004, Cekap Asia Sdn Bhd owned 11,749,000 units shares in Merces Holdings Berhad/Y&G Corporation Bhd, shares which formed the controlling block of Merces Holdings Berhad/Y&G Corporation Bhd since it was the major shareholder with the majority of the shares owned that is 23.04 in Merces Holdings Berhad/Y&G Corporation Bhd (after this is refer to as “Merces Shares”).

the Merces Shares were subsequently transferred out to the First and Second Defendants by the stockbroker in the stock market industry. The Plaintiff claimed that the transferred out of the Merces Shares to the First and Second Defendants was unlawful. [8] The Plaintiff claimed against the First and Second Defendants for –

fraudulent breach of trust in Cekap Asia Sdn Bhd.

unjust enrichment by the First and Second Defendants. S/N 6/ygeEXW8kmUCE62p6reog [9] By reason that the transferred out of the Merces Shares to the First and Second Defendants was unlawful, the Plaintiff has suffered loss and damages as follows:

loss for the misappropriated 11,749,000 units of Merces Shares being unlawfully transferred by the Third Defendant to the to the First and Second Defendants fraudulently on 27-4-

2006.

loss for the misappropriated Merces Shares for the total sum of RM6,344,460.00 (estimated value of Merces Shares at RM0.54 per share on 9-2-2021).

loss of dividends for the Merces Shares for the year 2006 till the year 2020 (15 years) amounting to RM8,811,750.00 (the dividend per share calculated at RM0.05 per share per annum). [10] The Plaintiff seeks the following reliefs from the First and Second

a declaration that the First and Second Defendants committed fraudulent breach of trust against the Plaintiff in misappropriating the 11,749,000 units of Merces Shares owned by the Plaintiff to the –

First Defendant = 6,000,000 units of Merces Shares.

(ii) Second Defendant = 5,749,000 units of Merces Shares. S/N 6/ygeEXW8kmUCE62p6reog

an order that the First and Second Defendants do return the 11,749,000 units of Merces Shares within 7 days from the date of this judgment to the Plaintiff.

payment for the loss of dividends for the Merces Shares for the year 2006 till the year 2020 (15 years) amounting to RM8,811,750.00 (the dividend per share calculated at RM0.05 per share per annum) to be paid by the First and Second Defendants to the Plaintiff.

General and exemplary damages to be assessed.

interest of 5% p.a. on the judgment sum for the relief in paragraph (c) above to be awarded by this Court from the date of this judgment until the full and final settlement of the judgment sum.

costs on a solicitor-client basis to be paid by the First and Second Defendants to the Plaintiff.

such order further deemed fit and expedient by this Court. The First and Second Defendants’ Amended Defence [11] The Amended Defence by the First and Second Defendants made pursuant to Order dated 27-4-2021 under O. 20 r. 5 Rules of Court 2012, pleaded as follows: S/N 6/ygeEXW8kmUCE62p6reog

the Plaintiff’s claim in its entirety is without merits and barred by the principle of res judicata and/or issue estoppel on the following reasons:

the First and Second Defendants rely in its entirety the decision of the High Court which was handed down after the a full trial in Shah Alam High Court Suit No.: 22-350- 2010 (refer to as “Suit 350”) in the course of Hearing.

(ii) the Plaintiff’s claim is without merit as the Plaintiff was merely a nominee holder pending the full disposition of the impugned shares of the Merces Shares by one Expo Electronics Sdn Bhd to the First and Second Defendants. The Plaintiff was merely a nominee and/or bare trustee. The First and Second Defendants had paid the full purchase of the Merces Shares and therefore are the undisputed beneficial owner of the Merces Shares.

(iii) the fact that the Plaintiff was merely a nominee and/or bare trustee who had provided no valuable consideration for the impugned shares was agreed and established in Suit 350 through inter alia the pleadings, the agreed facts and the grounds of judgment in Suit 350.

(iv) it was also conclusively held in Suit 350 that the First and Second Defendants paid the full purchase price for the Merces Shares and the Plaintiff was merely a nominee holder of the impugned shares. Suit 350, which S/N 6/ygeEXW8kmUCE62p6reog was commenced by Expo Electronics Sdn Bhd against the First and Second Defendants was dismissed with costs and the appeal to the Court of Appeal was struck off.

the Court is invited to lift and/or pierce the corporate veil as the current director of the Plaintiff is also a director of Expo Electronics Sdn Bhd (the plaintiff i Suit 350). In addition, the Plaintiff in this Suit is also represented by the same solicitors representing Expo Electronics Sdn Bhd in Suit 350. Therefore, the Plaintiff and Expo Electronics Sdn Bhd share a common director and common solicitor and hence the Plaintiff must have full knowledge of the matters and findings in Suit 350.

(vi) paragraphs 8 and 9 of the statement of claim are designed to mislead this Court as the Plaintiff, whether deliberately or not, chose to exclude the fundamental facts and findings established in Suit 350. The First and Second Defendants will rely on the full effect of the Decision in Suit 350.

(vii) the Plaintiff’s claim is tainted with bad faith, is frivolous and vexatious in nature and is clearly an abuse of process of the Court.

the First and Second Defendants pleads that it is agreed and established in Suit 350 that the First and Second Defendants had paid the full valuable consideration for the Merces Shares. S/N 6/ygeEXW8kmUCE62p6reog Instead the Plaintiff is put on strict proof that the Plaintiff has provided any valuable consideration at all for the Merces Shares to claim any beneficial right on the Merces Shares.

the fact that the Plaintiff was merely a nominee holder and/or bare trustee of the impugned shares, the First and Second Defendants pleaded that –

at the material time, the Plaintiff was a RM2.00 company with the First and Second Defendants as its sole shareholders.

(ii) there cannot be any purported misappropriation of shares when the Plaintiff was merely a nominee company and it had been pleaded, established and conclusively proven in Suit 350 and the First and Second Defendants had paid the consideration for the Merces Shares in full.

(iii) the Plaintiff was a bare trustee who had no beneficil right to the Merces Shares and was never intended as a beneficiary. The Plaintiff had full knowledge of the same and the present claim is merely a malicious, vexatious and frivolous attempt to relitigate the issues in Suit 350 in a repackaged claim. S/N 6/ygeEXW8kmUCE62p6reog

(iv) the Plaintiff took 15 years to commence this Suit. The Plaintiff indolence is clearly inconsistent with their claim that the Merces Shares are of significant value to the Plaintiff.

the Plaintiff was never the true beneficiary, had never provided any valuable consideration for the Merces Shares, was merely a bare trustee, had no beneficial interest and therefore do not qualify as a constructive trustee.

(vi) an order for the restitution is impossible.

the Plaintiff’s claim is time barred by section 6 of the Limitation Act 1953 as the Merces Shares were transferred to the First and Second Defendants since in or around 7-4-2006.

the Plaintiff has no locus standi to commence this Suit in view that its holding company, Expo Electronics Sdn Bhd is in liquidation and there is no pleading whatsoever from the Plaintiff that the Plaintiff has the requisite permission from the liquidator to commence this Suit. Amended Reply to the First and Second Defendants’ Amended Defence [12] The Plaintiff denied that the principle of res judicata and/or issue estoppel is not applicable in this Suit because the Plaintiff is a separate entity from Expo Electronics Sdn Bhd. S/N 6/ygeEXW8kmUCE62p6reog [13] Suit 350 that was relied and referred by the First and Second Defendants is not relevant to the Plaintiff’s claim. The reasons are –

the parties in Suit 350 is between Expo Electronics And The First and Second Defendants & Anor.

Expo Electronics Sdn Bhd’s claim is for the outstanding amount in the sum of RM13,000,000.00 from First and Second Defendants (and another individu).

in this Suit (the present Suit), the Plaintiff’s claim against all the Defendants is for the return of 11,749,000 units Merces Shares from the First and Second Defendants.

all merits in the Plaintiff’s claim has never been disposed and /or in Suit 350. [14] It is undisputed that the First and Second Defendants had admitted that the Merces Shares are own/belong to the Plaintiff (Cekap Asia Sdn Bhd). And it is also undisputed that in Suit 350 that the Plaintiff (Cekap Asia Sdn Bhd) is the legal owner of the Merces Shares. [15] The Merces Shares were transferred to the First and Second Defendants since in or around 7-4-2006 was made unlawfully. [16] There is no issue that the same solicitors representing the Plaintiff in this Suit and in the Suit 350. Cekap Asia Sdn Bhd had the full discretion to choose its solicitors. No conflict involved. S/N 6/ygeEXW8kmUCE62p6reog [17] The First and Second Defendants have the burden of proof that they had paid in full the consideration for the Merces Shares. The Plaintiff is not required to proof that the Plaintiff has provided any valuable consideration at all for the Merces Shares to claim any beneficial right on the Merces Shares. [18] The Plaintiff was not “merely a nominee holder and/or bare trustee of the impugned shares” and the First and Second Defendants must proof. The First and Second Defendants had inconsistent in their statements in Suit 350 vis-a-vis in this Suit (the present Suit). The First and Second Defendants had maliciously, intentionally and misleadingly to confuse this Court. [19] The First and Second Defendants are the dual directors in Cekap Asia Sdn Bhd at the material time and they had fraudulently used their capacity as the directors to transfer the Merces Shares to their own names without making any payments for the purchase price of the Merces Shares. [20] The Pliantiff’s claim is based on fraud therefore it is not time barred. [21] The Plaintiff as the legal owner of the Merces Shares as admitted by the First and Second Defendants in Suit 350 has te locus standy to bring this Suit against the First and Second Defendants S/N 6/ygeEXW8kmUCE62p6reog The Chronology of Material Events [22] The First and Second Defendants had filed the chronology of material events (Bundle F) as per the table below−

8-9-2001 Cekap Asia Sdn Bhd (“Cekap Asia”) was incorporated.

11-10-2004 Dato’ Sri Yap Seng Yew and Datin Sri Gan Li Li were appointed as the directors of Cekap Asia.

8-11-2004 Expo Electronics Sdn Bhd (“Expo Electronics”) and Dato’ Sri Yap Seng Yew and Datin Sri Gan Li Li agreed to enter into the sale and purchase of 15,009,000 units of Merces Holdings Berhad’s shares (“Merces Shares Sale Transaction”).

17-3-2010 Writ and Statement of Claim for Shah Alam High Court Civil Suit No.: 22-350-2010 (“Suit 350”) was filed by Expo Electronics against Dato’ Sri Yap Seng Yew, Datin Sri Gan Li Li and one Tan Kak Teck to claim for the purported balance purchase price of RM13,000,000.00 from the Merces Shares Sale Transaction 5. 21-10-2011 Cekap Asia was struck off from the register of the Companies Commission of Malaysia (“CCM”) for being a dormant company. S/N 6/ygeEXW8kmUCE62p6reog Date Events 6. 4-5-2012 Expo Electronics was wound up in Petition No.: 26NCC1-93-10/2011.

10-12-2014 Expo Electronics’s claim in Suit 350 was dismissed by the Shah Alam High Court with costs.

16-3-2015 Grounds of Judgment in Suit 350 was provided by Suraya Othman J in Expo Electronics Sdn Bhd v. Dato’ Sri Yap Seng Yew [2015] MLJU 2326.

26-5-2015 Expo Electronics’s appeal in Suit 350 was struck out by the Court of Appeal.

8-3-2018 Expo Electronics filed an Originating Summons against the CCM in the Kuala Lumpur High Court, Originating Summons No.: WA-24NCvC-131-03/2018 (“OS 131”) to inter alia reinstate Cekap Asia in the register of the CCM.

28-6-2018 The Court in OS 131 had allowed Cekap Asia to be reinstated in the register of the CCM.

15-7-2019 Abu Bakar bin Ahmad, the director of Expo Electronics and Syed Nagiff bin Syed Mokhtar were appointed as the directors of Cekap Asia.

10-2-2021 Writ and Statement of Claim for Shah Alam High Court Civil Suit No.: 22NCC-18- 02/2021, was filed by Expo Electronics S/N 6/ygeEXW8kmUCE62p6reog Date Events current suit has been filed by Cekap Asia against Dato’ Sri Yap Seng Yew, Datin Sri Gan Li Li and Hong Leong Investment Bank Berhad. [23] The learned counsel for the Plaintiff in reply to the written submission, submitted that the “purported chronology of material events” is based on unpleaded facts. The Plaintiff’s contentions [24] The Plaintiff’s pleaded case from the beginning are that the First (Yap Seng Yew [Dato’ Sri]) and Second (Gan Li Li [Datin Sri]) Defendants had fraudulently breach of trust in misappropriating the 11,749,000 units of shares owned by the Plaintiff in Merces Holdings Bhd (“the Merces Shares”). Merces Holdings Bhd now be known as Y&G Corporation Bhd. [25] The Plaintiff had pleaded that the First and Second Defendants had committed fraudulent breach of trust in transferring 11,749,000 of Merces Shares to themselves without consideration. S/N 6/ygeEXW8kmUCE62p6reog [26] The learned counsel for the Plaintiff had written the chronology of material events as in paragraph 6 of the written submission and briefly as follows: Merces Shares (11,749,000 units) owned by the Plaintiff/Cekap Asia Sdn Bhd 27-4-2006: the First and Second Defendants as the directors of Cekap Asia Sdn Bhd had issued 2 letters to the stockbroker, EONCap Securities Sdn Bhd (now known as Hong Leong), instructing and authorizing the sale of 11,749,000 units Merces Shares from Cekap Asia Sdn Bhd to the First and Second Defendants. The total purchase price of Merces Shares is RM6,451,557.07 5-5-2006: the stockbroker had sold and transferred the Merces Shares from Cekap Asia Sdn Bhd to the First and Second Defendants The First and Second Defendants did not and never pay the purchase price of Merces Shares is RM6,451,557.07 S/N 6/ygeEXW8kmUCE62p6reog [27] The learned counsel for the Plaintiff then expands its submission as follows:

as the owner of 11,749,000 units of Merces Shares, the Plaintiff is the legal beneficial or the ultimate owner of this units Merces Shares.

the conduct of the First and Second Defendants who purchased the 11,749,000 units of Merces Shares from the Plaintiff is an admission that the ownership of the Merces Shares is belong to the Plaintiff. [28] In supporting of its averment, the Plaintiff cited section 2 of Securities Industry (Central Depositories) Act 1991 [Act 453] that defines the words “beneficial owner” – ‘ “beneficial owner”, in relation to deposited securities, means the ultimate owner of the deposited securities who is the person who is entitled to all rights, benefits, powers and privileges and is subject to all liabilities, duties and obligations in respect of, or arising from, the deposited securities, and does not include a nominee of any description;’. [29] The Plaintiff put its firm stand that the 11,749,000 units of Merces Shares is belong to them and the Plaintiff is the ultimate owner of the deposited securities. The proofs are –

Merces Holdings Berhad’s announcement dated 5-5-2006 declaring that the Plaintiff had ceased as a substantial S/N 6/ygeEXW8kmUCE62p6reog shareholder of 11,749,000 of the ordinary shares @ RM1.00 each. The date of cessation is on 27-4-2006 and the circumstances by reason of which a person ceases to be a substantial securities Holder is “Off market deals whereby 6,000,000 shares was disposed to its directors, Dato’ Sri Yap Seng Yew and 5,749,000 shares to Datin Sri Gan Li Li. The announcement and notice are made pursuant to Form 29C of the Companies Act 1965 (refer to Bundle B2 at page 32).

Mr. Lim Litt (DW-1), director at Ferrier Hodgson MH Sdn Bhd, who testified for the Liquidator of Expo Electronics had explained that from Form 29C, it shows that Cekap Asia is the owner or particulars of substantial shares equities that means, Cekap Asia owns these ordinary shares. DW-1 also in affirmative and agreed that 11,749,000 units Merces Shares held by Cekap Asia was the 11,749,000 units Merces Shares. [30] In opposing the contention by the First and Second Defendant that Cekap Asia is merely a nominee to park the shares in year 2004, the learned counsel for the Plaintiff submitted that this is baseless position and no evidence to prove before this Court. [31] The learned counsel for the Plaintiff submitted that all the evidence tendered by the Plaintiff in the trial had shown, Cekap Asia is the ultimate owner of the Merces Shares. The proofs are – S/N 6/ygeEXW8kmUCE62p6reog

Cekap Asia (when registering the securities account) is merely the First and Second Defendants’ authorised nominee in holding the Merces Shares on their behalf. As in the provision under section 25(5) of Act 453 – Section 25. Securities accounts.

No person shall deal in deposited securities without first having a securities account.

An authorized depository agent which deals in deposited securities as principal shall, in relation to such dealing, open and maintain a securities account with the central depository.

A central depository may establish different types of securities accounts for different classes of persons.

Every securities account opened with a central depository shall be in the name of the beneficial owner of the deposited securities or in the name of an authorized nominee.

The person opening the securities account shall make a declaration in such manner as may be specified in the rules of the central depository that he is the beneficial owner of the deposited securities or the authorized nominee, as the case may be. S/N 6/ygeEXW8kmUCE62p6reog

Any person who contravenes subsection (1), (2) or (5) shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding three million ringgit or to imprisonment for a term not exceeding ten years or to both.

the two witnesses called by the Defendant that is DW-1 and Puan Haslina binti Mohammed Fesal Arbee (DW-2), in their replies to the cross-examination questions by the learned counsel for the Plaintiff had stated that – • the names of the First and Second Defendants never appeared and recorded in the CCM documents to prove that they are the shareholders of Cekap Asia. • DW-1 agreed that Cekap Asia belongs to the equity holders. The First and Second Defendants are not the shareholders then the Merces Shares are not belonging to the directors. • when the document title “Particulars of shareholder” been referred to DW-2, she agreed that the First and Second Defendants’ names are not registered as the shareholders. • in her testimony based on the CCM’s document, DW-2 stated that the First and Second Defendants never become the shareholders of Cekap Asia. S/N 6/ygeEXW8kmUCE62p6reog

the two Letters of Instruction And Authorization dated 27-4- 2006 that were signed by the First and Second Defendants had proved that being the directors of Cekap Asia, they had instructed and authorized EONCAP Securities Sdn Bhd (known as Hong Leong) to sell the Merces Shares and then to credit the whole of the net proceeds from the sale of the Shares to the First and Second Defendants’ accounts. [32] The learned counsel for the Plaintiff submitted that the Plaintiff had successfully proved that the 11,749,000 units of Merces Shares were owned/belonged to Cekap Asia. The act/conduct of the First and Second Defendants’ purported act of “purchasing” means that the First and Second Defendants had admitted Cekap Asia is the owner of the 11,749,000 units of Merces Shares. [33] The Plaintiff referred to the documents in Bundle B2 at pages 33 – 36 that the announcement made by Merces Holdings Berhad dated 5-5- 2006 announced the First and Second Defendants had acquired the 11,749,000 units of Merces Shares. [34] Failure to prove that the First and Second Defendants had paid RM6,451,557.07 for the purchase price of the total 11,749,000 units of Merces Shares had shown that the Plaintiff had successfully prove its claims against the First and Second Defendants. S/N 6/ygeEXW8kmUCE62p6reog The Decision on 3-2-2023 [35] On 3-2-2023, after evaluating, analysing and examining the whole evidences and documents, the Plaintiff’s claim is allowed as follows:

deklarasi bahawa Defendan Pertama dan Defendan Kedua telah salah nyata frod dan pecah amanah terhadap Plaintif bagi saham berjumlah 11,749,000 unit saham Merces Holdings Berhad. Saham Merces Holdings Berhad itu adalah milik Plaintif.

pemulangan saham berjumlah 11,749,000 unit saham Merces Holdings Berhad oleh Defendan Pertama dan Defendan Kedua kepada Plaintif dalam masa 21 hari dari tarikh Penghakiman ini.

dividen untuk saham Merces Holdings Berhad tersebut berdasarkan kepada Annual Reports of Y&G Corporation Bhd (dahulunya dikenali sebagai Merces Holdings Berhad) bagi tahun 2014, 2015 dan 2016 pada kadar RM0.05 bagi seunit saham dan keseluruhannya berjumlah RM1,762,350.00.

faedah 5% setahun bagi perenggan (c) di atas bermula dari tarikh Penghakiman ini sehingga penyelesaian penuh dan muktamad.

kos guaman dibayar oleh Defendan Pertama dan Defendan Kedua kepada Plaintif atas dasar peguam cara – anakguam. S/N 6/ygeEXW8kmUCE62p6reog Evaluations and Findings of this Court [36] The battle in this legal action about the shares is not only faced by this Court at Shah Alam High Court, this case was before the Kuala Lumpur High Court too. [37] The questions for this Court’s determination are –

whether the First and Second Defendants had committed fraudulent misappropriation and breach of trust against Cekap Asia in transferring the Merces Shares belonging to Cekap Asia in total of 11,749,000 units Shares?

whether the Merces Shares was paid by the First and Second Defendants to Cekap Asia?

whether the First and Second Defendants committed fraud or fraudulent breach of trust or misappropriated the Merces Shares?

whether an order for restitution i.e. to return the Merces Shares to Cekap Asia can be allowed?

whether the Plaintiff is entitled for payment of dividends from the year of 2006 to 2020 for the total amount of RM8,811,750.00? S/N 6/ygeEXW8kmUCE62p6reog And/or in brief, this Court must determines these questions –

fraudulent breach of trust in Cekap Asia Sdn Bhd by the First and Second Defendants.

unjust enrichment by the First and Second Defendants. [38] The Plaintiff had called only one witness for its case that is Syed Nagiff bin Syed Mokhtar (Datuk)/PW, the director of the Plaintiff (Cekap Asia). The Plaintiff supposed to call the Second Defendant (Gan Li Li [Datin Sri]) as its subpoena witness but before the Plaintiff close its case, the learned counsel for the Plaintiff stated that they are not calling the Second Defendant as a witness since the testimony of the Second Defendant is believed to be repeatitious of the First Defendant. PW replies during the cross-examination: [39] The learned counsel for the First and Second Defendants quoted the answers/replies by the sole witness of the Plaintif that is PW and from the testimony, the First and Second Defendants firmly said that there is no fraudulent misappropriation and breach of trust against Cekap Asia in transferring the Merces Shares belonging to Cekap Asia in total of 11,749,000 units Shares; the Merces Shares was paid for by the First and Second Defendants to Cekap Asia; an order for restitution ie to return the Merces Shares to Cekap Asia should not be allowed; and the Plaintiff is not entitled for payment of dividends from the year of 2006 to 2020 for the total amount of RM8,811,750.00. S/N 6/ygeEXW8kmUCE62p6reog [40] From the testimonies of PW, the learned counsel for the First and Second Defendants submitted that − • based on the SSM report in Bundle B4, page 25, the Plaintiff did not filed its accounts. • the Plaintif has no ability to pay and to finance for 11,749,000 shares that it claim to be its own. • the Plaintiff is RM2.00 company. • 11,749,000 shares came into the name of Cekap Asia because this was part of the block transferred from Expo Electronics Sdn Bhd. All the shares were belonging to Expo. • from the history of PW’s directorship in Merces Holdings, PW was the independent, non-executive director of Merces Holdings Bhd from 2002 to 2005. • the role and responsibility as a director under a company which is listed on Bursa requires that the directors and the board of directors of Merces Holdings Bhd to report and announce any acquisition or cessation of substantial interests in the shares in Merces Holdings Bhd. S/N 6/ygeEXW8kmUCE62p6reog • the announcement was made in respect of the acquisition of 11,749,000 units shares of Merces Holdings Bhd to the First and Second Defendants. At this time, PW was no longer a director of Merces Holdings Bhd. PW agreed that the disposal of that Merces Shares was after his resignation. [41] Having considered the evidence pertaining the acquisiotion of the Merces Shares, it is clear and undisputed that –

of market deal whereby 6,000,000 ordinary shares were acquired from Cekap Asia, a private company jointly controlled by the First and Second Defendants (Dato’ Sri Yap Seng Yew and his wife, Datin Sri Gan Li Li).

on 27-4-2006, the First and Second Defendants as the directors of Cekap Asia Sdn Bhd had issued 2 letters to the stockbroker, EONCap Securities Sdn Bhd (now known as Hong Leong), instructing and authorizing the sale of 11,749,000 units Merces Shares from Cekap Asia Sdn Bhd to the First and Second Defendants. The total purchase price of Merces Shares is RM6,451,557.07.

on 5-5-2006, the stockbroker had sold and transferred the Merces Shares from Cekap Asia Sdn Bhd to the First and Second Defendants. No proof of payments for the purchase of the Merces Shares. S/N 6/ygeEXW8kmUCE62p6reog [42] As highlighted by the learned counsel for the First and Second Defendants, the core question is who owns the beneficial interest of the Merces Shares? [43] The learned counsel for the First and Second Defendants submitted that –

the Plaintiff only relied on the 2 letters of instruction and authorization dated 27-4-2006 i.e. to transfer the Merces Shares from Cekap Asia to First and Second Defendants respectively. As agreed by PW during the cross-examination that the Plaintiff’s claims that the First and Second Defendants had committed fraudulent misappropriation is based on these 2 letters only.

PW had admitted that he had no personal knowledge of the Merces Shares Sale Transaction between the First and Second Defendants and Expo Electronics that consisting the 11,749,000 units shares. PW filed this Suit against the First and Second Defendants based solely on information provided by one Dato’ Edward Lee and PW. PW was not briefed by Abu Bakar Ahmad who is a director in Cekap Asia and Expo Electronics. [44] The learned counsel for the First and Second Defendants submitted in paragraph 15 of the main written submission that by the conclusion of the above, this Court will be apprised that the Plaintiff has failed to prove its case on a balance of probabilities because – S/N 6/ygeEXW8kmUCE62p6reog

at all material times the beneficial interests of the Merces Shares belonged to the First and Second Defendants and therefore no payment needed to be made when the Merces Shares were transferred from the Plaintiff. The 2 letters of instruction and authorization were mere formality.

the Plaintiff did not pay for the Merces Shares. The Plaintiff was merely a bare trustee and therefore has no beneficial interest to claim for the Merces Shares.

the Plaintiff is merely a vehicle and a facade used by Expo Electronics to conceal the identity of the true Plaintiff behind this Suit to circumvent Suit 350 so that the application of res judicata and/or issue estoppel could be avoided. The true Plaintiff is none other than Expo Electronics.

the Plaintiff’s claim is time-barred by statute and/or the doctrine of acquiescence and laches. [45] This Court finds that the learned counsel for the First and Second Defendants “urged” this Court to dismiss the Plaintiff’s claim solely on the testimony of PW and the 2 letters. The number of witness does not matter as long as PW can explain and establish “what he asserts must prove”. As the Plaintiff is the asserting party, the Plaintiff must prove its case on a balance of probabilities (see the case of Formosa Resort Properties Sdn Bhd v. Bank Bumiputra Malaysia [2010] 6 CLJ 530). S/N 6/ygeEXW8kmUCE62p6reog [46] The 2 letters of instruction and authorization dated 27-4-2006 i.e. to transfer the Merces Shares from Cekap Asia to First and Second Defendants respectively were using the letterhead of the Plaintiff (Cekap Asia) to the stockbroker, EONCap Securities Sdn Bhd (now known as Hong Leong), instructing and authorizing the sale of 11,749,000 units Merces Shares from Cekap Asia Sdn Bhd to the First and Second Defendants. The total purchase price of Merces Shares is RM6,451,557.07. None of the representative from the stockbroker was called as a witness. This Court only relied on the documentary evidence. [47] It is easy for the learned counsel for the First and Second Defendants to submit that the 2 letters are merely a formality. [48] During the trial, the learned counsel for the First and Second Defendants had produced 2 documents that are the notice of EGM and the Independent Advice Circular To The Shareholders which was strongly objected by the learned counsel for the Plaintiff. The learned counsel for the Plaintiff’s objections are as follows (refer to Note of Proceedings at pages 96 to 110). [49] The Independent Advice Circular To The Shareholders is a downloaded document in relation to the Conditional Take-Over Offer by Malaysian International Merchant Bankers Berhad on behalf of Cekap Asia Sdn Bhd as the Offeror And Yap Seng Yew and Gan Li Li as Ultimate Offerors. This Circular is dated 18-2-2005. S/N 6/ygeEXW8kmUCE62p6reog [50] The learned counsel for the First and Second Defendants tried hardly to tender the Circular in order to bash the evidence by PW and the First and Second Defendants had successfully proved that the beneficial interests of the Merces Shares belonged to them and not the Plaintiff. [51] Also in the written submission, the learned counsel for the First and Second Defendants submitted that the ownership of the Merces Shares is belong/own by the First and Second Defendants. The proofs are through –

Suit 350

(ii) Bursa Announcements

(iii) Previous Shareholders and Ownership of Cekap Asia that are Puan Haslina binti Mohamed and Puan Suzlita binti Nasron Suit 350: [52] The learned counsel for the First and Second Defendants submitted that pursuant to Suit 350, the total purchase price for the entire Merces Shares was RM5.25 m and the First and Second Defendants were the purchasers who had paid the full purchase price for the acquisition of the entire Merces Shares from Expo Electronics. [53] As such, the learned counsel for the First and Second Defendants submitted that the Plaintiff was only a nominee holding 11,749,000 units of Merces Shares on behalf of the First and Second Defendants. S/N 6/ygeEXW8kmUCE62p6reog [54] The learned counsel for the First and Second Defendants submitted that another proof is from the admission by PW that there is no proof that the Plaintiff had ever paid for the Merces Shares. [55] In my grounds of judgment (GoJ) that dismissed the First and Second Defendants’ application to strike out the Plaintiff’s claims, the excerpts on my GoJ are as follows: “Res judicata and issue estoppel [5] On the issues of res judicata and estoppel, D1 & D2 relied heavily on Shah Alam High Court Suit 350 −

in the pleadings of the Shah Alam High Court in Suit 350 which was commenced by Expo Electronics against the Applicants for the sum of RM13,000,000.00 which Expo Electronics claimed were the balance purchase price of the Merces Shares.

Expo Electronics claimed that the total price for the sale of the Merces Shares were RM23,000,000.00. It is admitted by Expo Electronics that the Applicants had paid RM10,000,000.00 for the transaction and therefore, they claimed for the purported balance RM13,000,000.00.

after a full trial in Suit 350, Suraya Othman J inter alia held that: • the Applicants had paid the full purchase price for the acquisition of the Merces Shares from Expo S/N 6/ygeEXW8kmUCE62p6reog Electronics. • the Applicants did not owe Expo Electronics the purported RM13,000,000.00. • Cekap Asia was merely a nominee holder of the Merces Shares on behalf of the Applicants pending the full disposition of the Merces Shares by Expo Electronics to the Applicants. • the Applicants had paid the full purchase price of the Merces Shares and therefore are the undisputed beneficial owner of the said shares. • Suit 350 was therefore dismissed with costs and the appeal to the Court of Appeal was subsequently struck off. • Suit 350 has therefore reached its finality.

The Applicants submit that res judicata and/or issue estoppel are applicable for the following reasons:

Cekap Asia Was Merely A Nominee: In Suit 350, Expo Electronics pleaded and confirmed in their own statement of claim that Cekap Asia was merely the nominee holder of the impugned Merces Shares. Based on Expo Electronics’s own statement of claim and statement of agreed facts, it cannot be disputed that Cekap Asia’s own holding company has previously pleaded and agreed that Cekap Asia was merely a nominee company in holding the shares on behalf of the S/N 6/ygeEXW8kmUCE62p6reog Applicants. As such, Cekap Asia is now estopped from repackaging a new suit under the guise of a claim that they were the beneficial owner of the impugned shares when Expo Electronics, the holding company, have previously themselves confirmed that Cekap Asia was merely a nominee in the transaction.

(ii) Finality of Litigation: The Shah Alam High Court had rightfully held in Suit 350 that the Applicants herein had paid the full purchase price and therefore they are the undisputable legal and beneficial owners of Merces Shares. Again, in Expo Electronics’ own statement of claim and agreed facts, they have pleaded that the Applicants had made at least RM10,000,000.00 payment for the transaction and acquisition of the shares. On the other hand, not only is Cekap Asia merely a RM2.00 company, there was no evidence whatsoever proffered by Cekap Asia that they made any payment of consideration at all for the acquisition of the said shares. As such and as confirmed in Suit 350, since the Applicants had made the full purchase price for the acquisition of the shares, the Applicants were fully entitled to transfer the Merces Shares from Cekap Asia. In view that the issues in relation to the Merces Shares S/N 6/ygeEXW8kmUCE62p6reog had been fully ventilated before a court in a full trial and the appeal was then struck out, the law is trite that Cekap Asia and/or Expo electronics shall not be allowed to take a second bite of the cherry by filing this Suit. Cekap Asia shall be estopped from raising the same issue. Thus, by reason of the applicability of the principles of res judicata and issue estoppel, Cekap Asia’s claim must therefore fail in order to prevent a re-litigation of the same issues as otherwise it would be a clear abuse of process and/or amount to an interference of the administration of justice. Further, even though Cekap Asia and Expo Electronics are two separate entities, it is pertinent to note that Expo Electronics is the ultimate holding company of Cekap Asia and it holds 100% of shares in Cekap Asia. It must also be mentioned that Expo Electronics acquired the ownership of Cekap Asia through and after the completion of the share sale transaction. Therefore, it is undeniable that Expo Electronics is the true party behind this suit. It is crucial to note that Cekap Asia and Expo Electronics has a common director, namely Abu Bakar bin Ahmad. He would have full knowledge of the facts and decision S/N 6/ygeEXW8kmUCE62p6reog in Suit 350 before the present suit is commenced. However, it is striking that Abu Bakar bin Ahmad refused to affirm any affidavit at all even after the Applicants have specifically referred to his name and his explicit knowledge of Suit 350 in the affidavit in support.

(iii) The Applicants submit that the authorities above apply on all fours to the present case as it is obvious that Cekap Asia is being used by Expo Electronics to re-litigate the issues in Suit 350 in a repackaged suit. [39] This Court is attracted by the written submission of the learned counsels for the D1 & D2 − “[23] More importantly, Merces Holdings Bhd at all material times is an entity listed in the Malaysian Stock Exchange and is subject to strict scrutiny and compliance. It would be illogical if not impossible for shares, especially the controlling block to be transferred to the Applicants fraudulently without catching the attention of the authorities. [24] Any transfer of shares involving Merces would have gone under heavy scrutinization by the Bursa and all requirements were satisfied at the time of transfer.”. S/N 6/ygeEXW8kmUCE62p6reog [40] For finality of the litigation, this Court must hear the evidence by all the witnesses to be called. By just relying on the grounds of judgment in Suit 350, there is no finality of litigation between the parties.”. [56] The full trial allows this Court to understand and analysis the evidence before her to determine the issue whether the First and Second Defendants were the purchasers who had paid the full purchase price for the acquisition of the Merces Shares. [57] The Court of Appeal had dismissed the application by First and Second Defendants to strike out the Plaintiff’s claims, therefore there should be any issues about “Cekap Asia and/or Expo electronics shall not be allowed to take a second bite of the cherry by filing this Suit.”; “Cekap Asia shall be estopped from raising the same issue.” and “Cekap Asia is being used by Expo Electronics to re-litigate the issues in Suit 350 in a repackaged suit.”. [58] This Court is of the view that after passing the “bad experience” when the attempt to strike out the Plaintiff’s claims in the interlocutory application, the First and Second Defendants then filed another interlocutory application to re-amend its defence. This Court had dismissed that application and the decision by this Court was affirmed by the Court of Appeal. The First and Secon Defendants should use and study its case thoroughly for the full trial and the burden of proof is on the shoulder of the First and Second Defendant who assert that they had paid the paid the full purchase price for the acquisition of the Merces Shares. S/N 6/ygeEXW8kmUCE62p6reog [59] Without giving up, the First and Second Defendants had made an attempt to injunct this Court from hearing this trial by way of an application for injunction at the Kuala Lumpur High Court. The application was dismissed by Yang Arif. [60] Next, when the learned counsel for the First and Second Defendants want to tender the Circular with the intention so called to refresh the memory of PW, the objection by the learned counsel for the Plaintiff is allowed. Bursa Announcements: [61] Having examined the submission by the learned counsel for the First and Second Defendants that “Bursa Announcements made at the time of the Merces Sale Transaction recorded and recognized that the First and Second Defendants were the purchasers of the entire Merces Shares and that the First and Second Defendants were substantial shareholders of Merces Holdings Berhad by virtue of their indirect shareholding of Merces Shares through Cekap Asia”, should be taken as the only proof about the ownership of Merces Shares. [62] From the moment this Court dismissed the interlocutory applications by the First and Second Defendants, this Court would like to hear “something” straight from the horse’s mouth. The First and Second Defendants were the directors of the companies should have personal knowledge together with the documents on the ownership of Merces Shares. If the First and Second Defendants had paid the sum, show the proof. Failure to do so, means that the First and Second Defendants must pay the Plaintiff, restitution to return the Merces Shares to the Plaintiff and S/N 6/ygeEXW8kmUCE62p6reog the outstanding dividends. These are the crux of the entire Plaintiff’s claims. Previous Shareholders and Ownership of Cekap Asia that are Puan Haslina binti Mohamed and Puan Suzlita binti Nasron: [63] DW-1 (Mr Lim Litt) is the First and Second Defendants subpoena withess who has the personal knowledge about the affairs of Expo Electronics Sdn Bhd. DW-1 is also was designated by the liquidator to take charge of Expo Electronics’ files since Dato’ Heng Ji Keng has been appointed some time in 2012. Since Day 1, DW-1 was involved in Expo Electronics. [64] DW-1 said that when Suit 350 was filed at the Shah Alam High Court, Expo Electronics was not in liquidation. DW-1 agreed with the learned counsel for the First and Second Defendants that it was only midway through the course of this litigation that it was wound up. DW-1 was also the witness in Suit 350. [65] To recall his memory on Suit 350, DW-1 had answered the questions put to him during the examination-in-chief the learned counsel for the First and Second Defendants as follows (refer to notes of proceeding at pages 157-192: “From memory, Yang Arif we understand from the records that the company Expo owned approximately about 15 million ordinary shares in a public listed company called Merces Holdings Berhad, Merces Berhad and it was sold to the Defendants prior to our appointment and RM10 million was the, S/N 6/ygeEXW8kmUCE62p6reog what we understand was the total consideration was approximately RM23 million as far as documents have shown. RM10 million was paid and there was a RM13 million balance unpaid, based on the writ that was filed, Yang Arif. Expo was suing Dato’ Yap and Datin Gan for RM13 million for the balance purchase price which Expo claims to be RM23 million. In respect of the purchase by Dato’ Yap and Datin Gan of 15,009,000 shares in Merces Holdings Berhad.”. [66] According the DW-1, in Suit 350, Abu Bakar Ahmad, the director of the Plaintiff had gave instruction to file Suit 350. DW-1 also affirmed affidavits on Expo Electronics’ behalf to ask the Court for a reinstatement of Cekap Asia in 2018. DW-1 also testified that the relationship between Expo Electronics and Cekap Asia Sdn Bhd, Cekap Asia Sdn Bhd is a subsidiary company of Expo Electronics. [67] In DW-1’s answers during the examination-in-chief the learned counsel for the First and Second Defendants as follows (refer to notes of proceeding at pages 157-192, DW-1 had stated that – • Yang Arif, we didn’t pay cash. It was reinstated based on the records of the company previously, reinstated then Expo becomes the shareholder of the two shares, Yang Arif. • Q: Do you agree that Cekap Asia was held by the High Court of Shah Alam as the nominee of 11,749,000 shares, nominee of Dato’ Yap and Datin Gan? S/N 6/ygeEXW8kmUCE62p6reog A: I think if you said it was held by High Court, I agree but I do not state that it was a nominee. • Q: So the shares were transferred to the Defendants and their nominee, it was the High Court decision. So do you agree that based on this judgment, Cekap Asia is held to be a nominee? This is part of the agreed facts that you filed in Court in suit 350 isn’t it, Mr Lim? A: Yes, so based on this judgement, yes. Q: Based on this judgement. But based on the agreed facts also it was stated to be a nominee, isn’t it? Correct? A: I can’t recall exactly but if it’s agreed, it was agreed at that time, then yes Suit 350, Cekap Asia is the nominee. • Q: But yet you didn’t do an audit on Cekap Asia Sdn Bhd? You did not check whether there are any recoverable or receivables by Cekap Asia that could be used as an asset to pay creditors of Expo Electronics, correct? A: At that juncture no, Yang Arif, because it was reinstated so there wasn’t a need be, it will be zero. Q: Yes. But then if it is, if there is a receivable, it would have been captured in the books of Cekap Asia Sdn Bhd, correct? If there are any receivables. A: As far as I understand, Yang Arif, it was dissolved. S/N 6/ygeEXW8kmUCE62p6reog Q: If there are any receivables. Mr Lim? A: It would be zero that means the accounts will be zero. Q: Ok, so if it’s zero there are no receivables? A: Yes, it’s dissolved already at that point in time, was strike out, it would be zero. • Q: Expo Electronics became a shareholder in 2020 and for years 2021 you didn’t file any audited financial statement for Cekap Asia Sdn Bhd also, correct? A: That is the board of directors to file. [68] The learned counsel for the Plaintiff stood up and objected to the line of questions asked by the learned counsel for the First and Second Defendants to its own subpoena withess (DW-1) – “My Lady, I have an objection. The objection is this. Are we talking about how Cekap Asia has been governed, is it in pleaded, is it an issue to be tried, nothing. So whether they filed, what you said, audited statement, these things are governance issues, administrative issues of Cekap Asia. There’s no point to these questions. No relevance. It’s simply to taint Cekap Asia.”. Next objection by the learned counsel for the Plaintiff – “My Lady, this now I have an objection. Again, we are going into the S/N 6/ygeEXW8kmUCE62p6reog issues of what is behind the curtains of things which I’ve never asked my learned friend about, let’s say Y&G Corporation which now owns these shares through Dato’ Seri Yap Seng Yew and Gan Li Li, what is happening in the running of that company, I’m not asking. I’ve never put it down in my pleadings, it has no relevance. Same thing here, no relevance. This is to elicit answers again based on what is happening in the other suits, My Lady, with respect. The other suits which they have consistently filed and also that application before Justice Liza Chan which we are taking up on inter parte. So these questions are not necessary and I challenge my learned friend to show me the pleading on Dato’ Edward Lee Hock Soon, dia punya kerja, dia punya skop, dia punya itu, ini, I challenge them to show me.”. [69] When asked by the Court the First and Second Defendants’ defence pertaining to the objections raised by the learned counsel for the Plaintiff, the learned counsel for the First and Second Defendants said that “This is piercing the veil of incorporation to find out” and “No, My Lady we did not raise this in the pleading. It was raised by Datuk Syed Nagiff that he was the one who spoke to Dato’ Edward Lee”. [70] The learned counsel for the Plaintiff cited the case of Pacific Forest Industries Sdn Bhd & Anor v Lin Wen-Chih & Anor [2009] 6 MLJ 2931 where the Federal Court in had held on the law against raising of unpleaded facts or issue is trite had that − “[14] The nature of our system is adversarial. This means that the judge has to listen to submissions or cases put by each party to an action. He then decides the case based on evidence and S/N 6/ygeEXW8kmUCE62p6reog submissions put by both parties…In civil cases however, the burden placed on both parties is equally balanced. The successful party is the one that is able to prove to the court on the balance of probability that his case is more probable. That is on facts. The claimant has to plead his case in the statement of claim while the defendant pleads in his statement of defence. In short, both parties are aware of the other party's case. In fact, both parties would know the facts but also the documents, if any, that are going to be relied upon by his opposite party… [17] The effect of a judge making a decision on an issue not based on the pleadings and without hearing the parties on that particular issue would be in breach of the Latin maxim audi alteram partem, which literally means, to hear the other side, a basic principle of natural justice.”. [71] In my GoJ dismissing the interlocutory application by the First and Second Defendants to re-amend its defence, I have decided as follows: “[31] The new paragraphs of 16B, 16C, 16D, 16E, 16F, 16G, 16H are 7 new paragraphs subsequent to paragraph 16 of the D1 and D2’s defence. The gist in these new paragraphs were about the same issues as in paragraph 12 as amended at the first time in 27-4-2021. D1 and D2 should amend paragraph 16 simultaneously as D1 and D2 did the amendment for paragraph 12. S/N 6/ygeEXW8kmUCE62p6reog [32] The reinstatement of the Plaintiff was made by the Kuala Lumpur High Court. Any dispute on the validity of the Court’s Order must be made to the Kuala Lumpur High Court. The existence of the Plaintiff’s company came alive due to the Court’s Order. [33] As per the Federal Court’s decision, definitely this Court would like to determine the real question in controversy between the parties. But the amendments proposed by D1 and D2 had changed the real question in issue between the parties to be raised on the pleading for the purpose of adjudication between the parties. This Court could not allow such amendments. [34] The objection by the Plaintiff in the application made by D1 and D2 at last stage showed that such amendments should not be allowed because it cause injury and cause injustice to the Plaintiff these amendments cannot be sufficiently compensated by costs or other terms imposed by the court. [39] This legal suit between the Plaintiff and the Defendants are well written in the pleadings and parties should be ready to present this case in the full trial. Let the parties argue on all the issues raised. The application is not the way to let the Plaintiff win its case nor the D1 & D2. The best evidence produced before this Court in the full trial will resolved the claims. [41] The proposed amendments that are based on the reinstatement of the Plaintiff is not a sudden discovery found by D1 and D2. S/N 6/ygeEXW8kmUCE62p6reog [42] The proposed amendments sought by D1 and D2 are not to reflect a clearer and more concise picture to this Court and the parties involved, given the factual matrix of this case but it had changed the whole pleaded defence. [43] Therefore, this application to make re-amendments is not bona fide and it will cause prejudice to the Plaintiff.”. [72] The line of questions by the learned counsel for the First and Second Defendants to its own subpoena witness in order “to invite this Court to lift and/or pierce the corporate veil to reveal the true Plaintiff behind Suit – Expo Electronics. Cekap Asia Sdn Bhd is merely a façade used to conceal the true identity of the Plaintiff in this Suit in order to prevent the application of res judicata and issue estoppel” are just an afterthought and trying to confuse the real Plaintiff with Suit 350. [73] After analyzing the facts pertaining to the real Plaintiff (Cekap Asia Sdn Bhd), I cannot disagree with the submission by the learned counsel for the Plaintiff that − “12. As submitted, both Suit 350 and the present Suit are distinct and dissimilar. Suit 350 & Present Suit Are Suits By Separate Legal Entities

The Plaintiff in Suit 350 is Expo, whereas the Plaintiff in the present Suit is Cekap Asia, as such both suits concerned different legal entities. S/N 6/ygeEXW8kmUCE62p6reog

As such, any concession made by Expo in Suit 350 is not binding on Cekap Asia in the present Suit based on the doctrine of separate legal entities.

In this regard, Yap and Gan had sought this Honourable Court to lift/pierce the corporate veil between Expo and Cekap Asia, so as to “reveal the true Plaintiff” in this present Suit.

The law on lifting/piercing on corporate veil is trite where the sanctity of corporate veil must be upheld in the absence of findings of fraud or unconscionable conduct on the part of Cekap Asia, which abuses the doctrine of corporate personality.

In this respect, Yap and Gan’s reliance on the case of Ong Leong Chiou v Keller (M) Sdn Bhd [2021] 3 MLJ 622 5 to substantiate their stance in lifting/piercing the corporate veil between Expo and Cekap Asia is misplaced.

The decision in Ong Leong Chiou is distinguishable as it is a case where the corporate veil was lifted/pierced upon findings of fraudulent wrongdoings on the part of the companies.

In this present Suit, Yap and Gan had failed to:

19.1 plead fraud (whether common law or equity) on the part of Cekap Asia; S/N 6/ygeEXW8kmUCE62p6reog

19.2 plead any unconscionable wrongdoings on the part of

19.3 lead evidence on fraud and/or unconscionable wrongdoings on the part of Cekap Asia; 19.4 prove that fraud and/or unconscionable wrongdoings had been committed by Cekap Asia.

Due to Yap and Gan’s failure to satisfy the threshold above, the doctrine of separate legal entities applies between Expo and Cekap Asia.”. Whether the First and Second Defendants are the shareholders in Cekap Asia Sdn Bhd (the Plaintiff)? [74] DW-1’s testimonies during the cross-examination by the learned counsel for the Plaintiff had answered that from the Companies Commission Malaysia’s record (CCM/SSM), in particular the list of shareholders for Cekap Asia Sdn Bhd (refer to Bundle B2 at pages 8 to 11), the names of the First and Second Defendants did not appear and at all and never appeared to be the shareholders. Only the names of PW (Syed Nagiff Syed Mokhtar), Abu Bakar Ahmad, Haslina binti Mohammed Fesal Arbee and Suzlita binti Nasron are listed as the in and out shareholders (Change of Shareholding) in Cekap Asia Sdn Bhd. S/N 6/ygeEXW8kmUCE62p6reog [75] Pertaining to the certificates of shares in Cekap Asia Sdn Bhd with the names of the First and Second Defendants (refer to Bundle B2 at pages 1& 2), DW-1 agreed that the First and Second Defendants were the registered shareholder one ordinary share RM1 each. Based on this documentary evidence, the First and Second Defendants just remained as shareholders in Cekap Asia Sdn Bhd as per the certificates but not the shareholders as recorded by CCM. [76] To support its submission, the learned counsel for the Plaintiff cited the decision by the Court of Appeal in Takashimaya Construction & Development Sdn Bhd & Anor v My Influx Sdn Bhd and Another Appeal [2019] MLJU 15627, Her Ladyship Zabariah Mohd Yusof JJCA had instructively held that: “28. [116] …it is trite law that when a document is placed in part B document, it does not mean that the truth of the contents are automatically proven (Refer to Court of Appeal decision in Tay Chye Huat v Astral Supreme Berhad [2016] AMEJ 2193). Although a document is in Part B, which means that the authenticity or the making of the document is not disputed, the contents must still be proven. Section 101 of the Evidence Act 1950 provides that one who asserts a fact, must prove that fact. In the present appeal, it is for the plaintiffs to prove the contents of the term sheet by calling the maker, as the terms sheet appears to be crucial to prove that there was a “Buy Out” by the defendants… S/N 6/ygeEXW8kmUCE62p6reog

To emphasise based on the authority above, the crux of what the Court had held is “Although a document is in Part B…the contents must still be proven.”.

Yap and Gan’s version of their ownership over Cekap Asia is not credible as they have failed to prove the truth of the contents of the said “Share Certificates”.”. This Court agree. [77] DW-1 had explained clearly the difference between the directors and shareholders, shareholders have the rights to the dividends, the directors who are not the shareholders are not entitled to the shares. The directors’ role only on the management of the company. The company is not belong to the directors. [78] For clarity, the notes of proceedings are produced as follows: Q: Owned. Belonged/owned by Dato’ Sri Yap Seng Yew and Gan Li Li. After seeing all these records before the Court, would you agree with that assumption? A: I disagree, Yang Arif. Q: Why would you disagree? A: It doesn’t show in the SSM record, Yang Arif. S/N 6/ygeEXW8kmUCE62p6reog Q: Exactly. Now, whilst you are here, I want to make the best of your testimony, Mr Lim. So, few more questions, very few more. Now, as you heard from my learned friend’s questions, the line taken by the Defendants is that Cekap Asia was merely a nominee company. So, this company held, this cannot be disputed, held Merces’ shares which was public listed company shares. They held it as an asset, that’s our version, alright? So now, let me take you to the word registered shareholders, ... A: Yang Arif, my understanding registered shareholder, SSM will be the owner and shareholders of, owner of the…owner that’s holding the shares. Q: See this is what actually happened here, which hasn’t been gone into and I want to take you here. You see now, let’s look at the date of this notice. It’s the, if you look at the last paragraph there, before the line, date of notice is 05/05/2006. You can see that? A: Yes, Sir. Q: Ok, and this, I do not think this is disputed but this is an announcement from Bursa Malaysia. Alright, Mr Lim? It’s not stated but it has been gotten from Bursa Malaysia, but never mind. A: Yang Arif, it’s a filing. S/N 6/ygeEXW8kmUCE62p6reog Q: Ok. Now Mr Lim, very importantly, particulars of substantial securities holder name Cekap Asia Sdn Bhd. What does that mean? Please explain to the Court. A: From this form Yang Arif, it shows that Cekap Asia is the owner, or particulars of substantial shares equities that means, Cekap Asia owns this ordinary shares. Q: You have to speak louder, Mr Lim. Sound subdued. A: Yang Arif, the form shows that Cekap Asia has been a substantial shareholder, and hold these securities as stated. Q: Right. A: In the form. Q: So, Merces Holding Berhad, particulars of substantial securities holder, name Cekap Asia Sdn Bhd. Does it mean that Cekap Asia was a substantial securities holder of Merces’ shares? Does it mean that? A: Yes, Yang Arif. Q: Ok. Let’s now zoom in to the amount of that substantial securities owned by Cekap Asia. If you look at the number of securities disposed, it is 11,749,000, which is our case actually. S/N 6/ygeEXW8kmUCE62p6reog Q: So, would I be correct to say the substantial securities of Merces shares held by Cekap Asia, was 11,749,000 Merces shares? A: Yes, Yang Arif. [79] Eventhough DW-1 is the witness (subpoena witness) for the First and Second Defendants, his evidences specifically in explaining the documents are neutral and not to protect the First and Second Defendants. DW-1 “do solemnly, sincerely and truly declare and affirm that the evidence which I shall give in this case shall be the truth, the whole truth and nothing but the truth”. [80] DW-1’s evidence has helped this Court to find out who is the real Plaintiff and whether th Plaintiff’s claim is a repackaged claim. The testimony of Puan Haslina binti Mohammed Fesal Arbee (DW-2) [81] The role of Puan Haslina as the DW-2 is vital to understang the creation of Cekap Asia Sdn Bhd. [82] DW-2 previously worked at Marumas Sdn Bhd, the nature of company business is selling new company or shelf company. DW-2 remembered and admitted that she was the shareholder of RM1.00 in Cekap Asia Sdn Bhd when it was incorporated on 8-9-2001. From the year 2001 to 2020, she and her colleague named Suzlita binti Nasron were the shareholders in Cekap Asia Sdn Bhd. S/N 6/ygeEXW8kmUCE62p6reog [83] On 11-10-2004, the First and Second Defendants were the directors in the same company. Haslina and Suzlita did not and never know the First and Second Defendants. [84] Marumas Sdn Bhd will prepare the shelf company and sell the company. Cekap Asia Sdn Bhd was incorporated and later sold to the First and Second Defendants who later been appointed as the directors. The company secretary to Cekap Asia Sdn Bhd will take the necessary action to change the directors’ names etc. [85] When DW-2 was referred to documents in Bundle B2 at pages 8 and 9, DW-2 agreed with the learned counsel for the Plaintiff, that the documents i.e Form 44 and Form 49 of the Companies Act 1965 that is a Notice of Situation of Registered Office and of Office Hours and Particulars of Changes for Cekap Asia Sdn Bhd, signed by the First Defendant, stated that – • DW-2 and Suzlita had resigned as the directors in Cekap Asia Sdn Bhd on 12-10-2004. • one day before (11-10-2004) DW-2 and Suzlita had resigned as the directors in Cekap Asia Sdn Bhd, the First and Second Defendants were appointed as the directors in Cekap Asia Sdn Bhd. S/N 6/ygeEXW8kmUCE62p6reog [86] DW-2 also agreed with the question posed by the learned counsel for the Plaintiff that based on the documents – • the First and Second Defendants’ names were not listed as the shareholder. • when DW-2 and Suzlita left Cekap Asia Sdn Bhd, on 6-9-2020, their shares were then held by PW and Abu Bakar bin Ahmad. • as at year 2006 while still being the shareholders in Cekap Asia Sdn Bhd, DW-2 and Suzlita were not informed about selling any assets of Cekap Asia Sdn Bhd. [87] Both of the First and Second Defendants’ witnesses had clearly stated that the First and Second Defendants were not the shareholders in Cekap Asia Sdn Bhd. [88] The learned counsel for the First and Second Defendants firmly and strongly submitted that the First and Second Defendants had paid the full amount of the Merces Shares but this Court left in lacuna who had received the payments? From the evidence, the selling and/or transferred of the Merces Shares were made to the First and Second Defendants. The First and Second Defendants had received and benefitted from the transactions and not the Plaintiff. The documents referred to in the trials had proven that the money “out from Cekap Asia Sdn Bhd” and “in to the First and Second Defendants”. S/N 6/ygeEXW8kmUCE62p6reog [89] I refer to a book title “Essential Company Law in Malaysia – Navigating the Companies Act 2016, Secon Edition by Chan Wai meng at page 95 – “3.4.3 Body corporate with perpetual existence and separate legal entity

3.99 Upon the incorporation of the company, every person whose name is stated as a member in the application for incorporation shall become a member of the company. This person together with persons whose names appear in the company’s register of members from time to time shall be the members of the company and together they shall be a body corporate [s 18(2)].

3.100 If the company is a company with a share capital, then he is also known as a shareholder [s 18(3)].

3.101 Thus, members/shareholders of a company are persons whose names appear in the company’s register of members [see also s 2(1)].

3.102 According to s 20, the body corporate enjoys a separate legal entity with an existence that does not depend on the identity of its members. Members come and members go, but the company continues to exist until it is removed from the register.”. [90] Here, when Cekap Asia Sdn Bhd was first incorporated, its members and shareholders of RM1.00 shares were Haslina and Suzlita. Cekap Asia Sdn Bhd was sold to the First and Second Defendants. S/N 6/ygeEXW8kmUCE62p6reog [91] Haslina and Suzlita still in Cekap Asia Sdn Bhd and only after they sold their shares and resigned as directors of Cekap Asia Sdn Bhd, the First and Second Defendants, PW and Abu Bakar bin Ahmad are members as well as directors of Cekap Asia Sdn Bhd. For shareholding in Cekap Asia Sdn Bhd, the names of the shareholders must be in the register. Certificates of Shares are just a paper and no original Certificates of Shares were tendered before this Court. [92] According to the First Defendant who is DW-3, DW-3’s evidences –

his wife (the Second Defendant) and him (the First Defendant) not sure whether their names are in the share register. But during the cross-examination, DW-3 agreed that their names were not in the shares register. DW-3 do not know and not sure why their names were not in the share register.

the certificates of shares were issued to the First and Second Defendants because “this share belong to us, and even though it was in this nominee company, this nominee company both me and my wife were the two directors.”.

the First and Second Defendants bought the shares and they were given the certificates of shares and they do not know whether their shareholdings were registered with CCM (SSM) or not.

the 11,749,000 Merces Shares were merely parked in Cekap Asia Sdn Bhd and then transferred to the First and Second Defendants. S/N 6/ygeEXW8kmUCE62p6reog

Cekap AsiaSdn Bhd is giving the power to its directors, which the First and Second Defendants, in opening of an account to execute all CDS documents with Malaysian Central Depository Sdn Bhd were made by the First and Second Defendants, for and on behalf of Cekap Asia.

the First and Second Defendants had opened another (different) CDS accounts without Cekap Asia Sdn Bhd’s chop. [93] From the evidences of DW-3, this Court will refer to the case of Lai Fee & Anor v. Wong Yu Vee & 3 Ors [2022] 1 LNS 387, where the Federal Court held as follows: “The word ‘fraud’ is also defined under s. 17 of the Contracts Act

According to Sinnadurai, Law of Contract, Fourth Edition 2011 at para. [5.07], fraud is defined ‘to include certain acts which are committed with intent to induce another party to enter into a contract.’ Section 17 sets out five types of different acts which constitute fraud. These include ‘a promise made without any intention of performing it’ and ‘any other act fitted to deceive’: s. 17(c) and (d), Contracts Act 1950. The standard of proof in civil cases involving proof of fraud or fraudulent conduct is on the balance of probabilities (Sinnaiyah & Sons Sdn Bhd v. Damai Setia Sdn Bhd [2015] 7 CLJ 574 FC). S/N 6/ygeEXW8kmUCE62p6reog The existence of fraud is a question of fact. It is dependent on the circumstances of each particular case. Fraud must mean actual fraud, i.e., dishonesty of some sort (PJTV Denson (M) Sdn Bhd & Ors v. Roxy (Malaysia) Sdn Bhd [1980] 1 LNS 55 FC). It is fraud if it is proved that there was the taking of a risk which there was no right to take which would cause detriment or prejudice to another. It need not be proved that the defendant knew at the time when debts were incurred that there was no reasonable prospect of creditors ever receiving payment of their debts. It was enough if the defendant realised at the time when the debts were incurred that there was no reason for thinking that funds would be available to pay the debt when it would become due or shortly thereafter. These words import a criterion that is partly subjective and partly objective (Regina v. Sinclair [1968] 1 WLR 1246); Whether there was any intention on the part of the defendants to defraud or to carry on any fraudulent purpose is a question of fact to be inferred from the surrounding circumstances and the subsequent conduct of the defendants, especially the concealment of material facts (Rahj Kamal bin Abdullah v. PP [1998] 1 SLR 447; LMW Electronics Pte, supra). S/N 6/ygeEXW8kmUCE62p6reog [94] In applying the Federal Court’s decision into this Suit, this Court on the balance of probabilities had decided that the Plaintiff (Cekap Asia Sdn Bhd) is the beneficial owner of the Merces Shares. The First and Second Defendants head failed to contradict the evidence via the testimony of the Plaintiff’s witness and also the First and Second Defendants’ witnesses that the First and Second Defendants did not pay Cekap Asia a sum of RM6,451,557.07 for the “purchase” of 11,749,000 units of Merces Shares. [95] The First and Second Defendants had committed fraudulent breach of trust committed against Cekap Asia for their failure to pay the total purchase price of RM6,451,557.07 towards the so-called “purchase” of 11,749,000 units of Merces Shares. As dual directors of Cekap Asia, the First and Second Defendants had executing the Letters, leading to Cekap Asia’s lost of ownership over the said Merces Shares. Whether the Plaintiff is merely a nominee and/or bare trustee? [96] Based on the document in Bundle B2 page 15, Cekap Asia had signed a declaration to declare that the dealings in securities Cekap Asia Sdn Bhd is the principals and not a mere nominee of the 11,749,000 units of Merces Shares. [97] The Form was executed by the First and Second Defendants as dual directors of Cekap Asia Sdn Bhd (the Plaintiff) when opening the securities account for Cekap Asia Sdn Bhd, declaring that all the dealings in respect of its trading account bearing Account No: CZ 0983 shall be carried out for Cekap Asia Sdn Bhd as principal. This dealing showed that S/N 6/ygeEXW8kmUCE62p6reog Cekap Asia Sdn Bhd shall hold the shares as the principal, beneficial owner/ultimate owner of the shares and its dealings and no mention that Cekap Asia Sdn Bhd is merely hold the shares as “nominee or as parking lot/place” for the First and Second Defendants. [98] The requirement set forth under subsection 25(5) of Act 453 and the interpretation of the term “beneficial owner” as ultimate owner and does not include a nominee of any description had strengthen the Plaintiff. This statute had prevails over the Companies Act 1965 and/or 2016 based on the reason that Act 453 as opposed to Companies Act 1965 is a statute specifically designed to govern the dealings of publicly traded shares (i.e Merces Shares). Conclusion [99] As such, I have no hesitation in concluding that what were done by the First and Second Defendants were dishonest according to the ordinary standards of reasonable and honest people. [100] As such, I allow the Plaintiff’s claims with costs. Dated: 6 April 2023. RoziBainon ( ROZI BINTI BAINON ) Judicial Commissioner High Court NCvC12 Shah Alam S/N 6/ygeEXW8kmUCE62p6reog The Counsels: For the Plaintiff: Dinesh Praveen Nair with Low Ming Yung (PIC) Tetuan Dinesh Praveen Nair, Kuala Lumpur For the First & Second Defendants: Terence Chan Kah Meng with Lui Kar Yee & Yeap Xi Jin Tetuan Lim Kian Leong & Co., Kuala Lumpur S/N 6/ygeEXW8kmUCE62p6reog