CHAN CHEH SHIN v Lim Thiam Huat [Tindakan Terhadap D1 Telah Ditarik Balik Pada 8.12.2021] (BA-22NCvC-391-09/2019)

LIM THIAM HUAT

WOO MUN CHEE

LINDA HOOI (NO. PASPORT: A33609442) … DEFENDAN GROUNDS OF JUDGMENT A.

This is a judgment after full trial. 25/06/2026 14:50:28 BA-22NCvC-391-09/2019 Kand. 254 S/N ikHhBwVFlkKYzfG43tlPug

Initially, the Plaintiff seeks USD3,500,000.00 in restitution from all the Defendants under the law of unjust enrichment.

After being served with the cause papers in this civil suit, the First and Third Defendants have repaid USD2,800,000.00 to the Plaintiff, resulting in the discontinuance of this civil suit against them.

The Plaintiff now seeks the remaining USD700,000.00 in restitution from the Second Defendant. B.

After discontinuing the civil suit against the First and Third Defendants, the Plaintiff proceeded with a full trial against the Second Defendant.

On 30 November 2022, the Plaintiff obtained a judgment against the Second Defendant.

In that judgment, the Learned High Court Judge (now JCA) ordered the Second Defendant to return the sum of USD700,000.00 to the Plaintiff. S/N ikHhBwVFlkKYzfG43tlPug

Her Ladyship also ordered the Second Defendant to pay interest at 5% per annum from the date of judgment until the judgment sum is fully and finally settled, and to pay costs of RM50,000.00, subject to an allocatur fee.

On appeal, the Court of Appeal remitted this case to the High Court to enable this Court to decide the Plaintiff’s claim in accordance with the law of the Republic of Palau.

For the re-trial, both parties agreed to rely on the evidence given during the first full trial and to produce their own expert witness from the Republic of Palau to comply with the direction of the Court of Appeal.

As both expert witnesses are Palauan citizens and residing in the Republic of Palau, the full trial was conducted via the Zoom application on 10 March 2026 and 13 March 2026.

Mr. Gunagand Semdiu Decherong testified as the expert witness for the Plaintiff (“PW1”). He served as Executive Commissioner of the Financial Institution Commission (“FIC”) of the Republic of Palau from October 2002 to December 2021. PW1 is now the Operations Manager at Pacific Building Technologies, Micronesia Inc in the Republic of Palau. S/N ikHhBwVFlkKYzfG43tlPug

Mr. Carl Quay Polloi testified as the expert witness for the Second Defendant (“DW1”). He served as a Senior Judge of the Land Court of the Judiciary of the Republic of Palau from September 2007 to February 2018. DW1 is now a practising attorney at law in the Republic of Palau. C. THE RELEVANT LAW ON EXPERTS GIVING EVIDENCE ON

Regarding the law on experts giving evidence on foreign law, I am guided by the Federal Court’s decision in Jabatan Pendaftaran Negara & Ors v. A Child & Ors (Majlis Agama Islam Negeri Johor, Intervener) [2020] 2 MLRA 487, which held that: “[289] This position of the law is well-entrenched in our law and in all common law jurisdictions. In Semenyih Jaya Sdn Bhd v. Pentadbir Tanah Daerah Hulu Langat & Another Case [2017] 4 MLRA 554, this court held that legally suborning a High Court judge to the opinion of assessors (which is not too dissimilar from leaving legal decisions to experts) is an unlawful usurpation of judicial power. On another note, GP Selvam J noted as follows in H156 [1999] SLR 756, at p 764: “The function of an expert on foreign law is to submit the proposition of foreign law as fact for the consideration of the court. The court will then make its own finding of what the foreign law is. Even though the expert may submit his conclusions, he must present the materials and the grounds he uses to make S/N ikHhBwVFlkKYzfG43tlPug those conclusions. The expert may not usurp the function of the court and present his finding. Further he cannot decide the issue by applying the law to the facts without setting out the law and reasoning process.” D.

Asia Pacific Commercial Bank, Inc. (“APC Bank”) is a licensed financier operating in the Republic of Palau.

APC Bank has an authorised capital of USD1,405,000.00, divided into 1,405,000 ordinary shares, fully paid up by all the Defendants at USD1.00 each.

The Plaintiff intended to buy APC Bank from the Defendants.

The Defendants agreed to sell their 100% shares in APC Bank to the Plaintiff.

On 5 May 2017, the Plaintiff and Defendants entered into a sale and purchase agreement of the Defendants’ shares in APC Bank (“SPA”).

Under the SPA, the Plaintiff agreed to purchase 100% of the Defendants’ shares in APC Bank for USD3,500,000.00, subject S/N ikHhBwVFlkKYzfG43tlPug to the SPA’s terms and conditions, including obtaining approval from the FIC.

Following the execution of the SPA, the Plaintiff paid USD3,500,000.00 to the Defendants.

However, the Defendants did not transfer their 1,405,000 ordinary shares in APC Bank to the Plaintiff because FIC’s approval had not been obtained.

So, the Plaintiff commenced this civil suit against the Defendants for breach of contract and sought the return of

The First and Third Defendants returned a total of USD2,800,000.00 to the Plaintiff after signing a settlement agreement on 28 July 2021. After that, this civil suit against them was discontinued.

The Second Defendant, however, refused to return the balance of USD700,000.00 to the Plaintiff.

The Plaintiff claimed that the Second Defendant unjustly enriched himself by withholding USD700,000.00 from the Plaintiff while continuing to hold his shares in APC Bank. S/N ikHhBwVFlkKYzfG43tlPug E.

The main issues for this Court to determine are as follows:

who should apply to the FIC for approval of the acquisition of the Defendants’ shares in APC Bank (“Issue No.1”); and

is the Second Defendant entitled to forfeit the USD700,000.00 paid by the Plaintiff when there has been no approval from FIC, and the Second Defendant is still holding his shares in APC Bank (“Issue No.2")? F. ANALYSIS ISSUE NO.1

The first issue I need to address is who should apply to FIC for approval of the acquisition of the Defendants’ shares in APC Bank.

The Learned Counsel for the Defendant relied on DW1’s opinion and contended that FIC’s approval must be submitted only by the Plaintiff for the following reasons: S/N ikHhBwVFlkKYzfG43tlPug

since the Palau Financial Institution Act and Palau Institution Commission Regulation Prudential Regulation (FIC-PR-08) Fit & Proper Requirements (“Fit & Proper Requirements”) did not specify who must seek approval from FIC, the parties were at liberty to agree among themselves on who should submit the application for approval to FIC; and

in this case, the parties have agreed that the Plaintiff should seek FIC’s approval, as provided in Clause 6.2 of the SPA.

I am unable to agree with the argument advanced by Learned Counsel for the Defendant for the reasons set out below.

Although DW1 was a former Senior Judge at the Land Court of the Judiciary, he only dealt with land cases.

In giving his testimony, DW1 offered his theoretical opinion based on the terms and conditions of the SPA, rather than on the actual procedures involved in the FIC’s approval process. Ok. Alright. And so, if that is the case, Mr. Polloi, the opinion which you are giving here, Mr Polloi, is based S/N ikHhBwVFlkKYzfG43tlPug on your theoretical understanding of contract law. Agree? Contract law. Yes And this opinion is not based on your practical experience of actually applying for a FIC transfer from the bank to another purchaser. Right? Yes. I was asked to look on the law and I looked at the law.” [Emphasis added]

DW1 also admitted that he had never submitted any application for approval to FIC. Alright. So, I am putting to you, Mr. Polloi, you do not have any practical experience in making any application for share transfer to the FIC in Palau. Do you agree? Correct.” [Emphasis added]

PW1 worked at FIC for nineteen years, from 2002 to 2021 and his last position at FIC was Executive Commissioner.

During his time there, PW1 drafted regulations, reviewed submissions and advised the FIC Governing Board on their suitability for approval. In short, PW1 was well-versed in FIC approval procedures. S/N ikHhBwVFlkKYzfG43tlPug

According to PW1, the approval process at FIC under the Fit & Proper Requirements is as follows:

the licensed financier, in this case, APC Bank, must notify the FIC of any intended transfer of shares by any of its shareholders to the FIC regardless of the percentage of shares involved: But it has to be made, what I’m saying is it has to be made in reference to Mr Chan, who is the purchaser of those shares. The purchaser has to put their personal information and financial information on the documents and the forms as it is presented on Appendix A. And then the bank, as the licensed entity that is selling his shares, the process goes that they go and submit those information to the Financial Institution Commission. Or maybe I’m not getting your question clearly. Sorry. Apologies if that’s the case. Would you agree with me as a matter of practicality that in light of this confidential and sensitive personal information, only the transferee is in a position to submit them to the FIC? No Sir.” [Emphasis added] S/N ikHhBwVFlkKYzfG43tlPug

the purchaser should furnish the information outlined in Appendix A of the Fit & Proper Requirements to the licensed financier, who will then submit the application for FIC’s approval.

all applications for approval to the FIC must be made by the licensed financiers and not the purchasers; and

Clause 6.2 of the SPA was not made in accordance with the FIC’s approval process.

PW1’s role at FIC was not purely administrative as contended by the Learned Counsel for the Second Defendant. You were asked a question, just now, by Counsel No.2, Mr. Mithran Poobalan, whether your role in FIC was mainly administrative. Your answer was. “No it is ministerial” Yes Can you explain what you meant by that. Ministerial, administrative diminishes the role into basic administrative work. What I do as the executive commissioner, right, is when it comes to first of all, I recommend and push for execution of lets, say, assessing fines on banks that don’t adhere to the law. I execute orders to remove board members or S/N ikHhBwVFlkKYzfG43tlPug shareholders who violate the law. So its, there is some punitive measure of the position. And when it comes to licensing or in this case, as it shown in the exhibit that it was a whole bank purchase. I would, after evaluating and working with a team, would then be giving recommendations only, on whether an application is fit to be approved and why, or fit not to be approved and why not, to the board who ultimately makes the decision on those matters.” [Emphasis added]

PW1’s evidence is also supported by contemporaneous documents exchanged between the solicitors acting for the Plaintiff and Defendants in the SPA transaction. S/N ikHhBwVFlkKYzfG43tlPug

Via a letter dated 28 November 2017 from Messrs Liew, Julia Tun Hari, the Plaintiff’s solicitors in the SPA transaction, informed Messrs Fadzil & Eddin, the Defendants’ solicitors, that FIC had requested the Defendants to obtain formal approval for the share transfer to the Plaintiff (“First Contemporaneous Document”). S/N ikHhBwVFlkKYzfG43tlPug

Via a letter dated 3 January 2018, Messrs Liew, Julia Tun Hari, confirmed that Dato’ Fadzil had informed Mr Hari Chandran that the Defendants were working to resolve the pending FIC transfer issues in the Republic of Palau (“Second Contemporaneous Document”). S/N ikHhBwVFlkKYzfG43tlPug

The Second Defendant cannot simply ignore his obligation under Clause 13.1 of the SPA.

Under Clause 13.1 of the SPA, each party to the SPA is required to take necessary steps to give effect to the SPA.

It is important to note that Clause 13.1 of the SPA does not exclude the Second Defendant from performing necessary steps to give effect to the SPA.

Despite the First and Second Contemporaneous Documents, the Defendants, as owners of APC Bank, did not submit an application to FIC for approval of the Plaintiff's acquisition of their shares in APC Bank.

DW1 also agreed to contact the FIC to learn the procedures for applying for approval. Since you are saying that the contract is silent as to who must make the application, I am now suggesting to you, Mr. Polloi, that parties must seek clarifications from FIC and not S/N ikHhBwVFlkKYzfG43tlPug determine among themselves, on what they want to do. Do you agree or disagree with me? I believe you intend to say, if the statute is silent. Not the contract. Yes, if the statute is silent If the statute is silent Yes Yes … Go ahead Then the parties are free to contract as to what the terms are, but they really should, they should consult with the agency involved. As a matter of wisdom. As a matter of? Sorry, I didn’t get you As a matter of ensuring that everything gets through correctly. If I was representing my client, I would contact the agency and figure things out.” [Emphasis added]

The Learned Counsel for the Second Defendant’s argument that there is no need for the Second Defendant or APC Bank to notify the FIC because Section 1053 of the Financial Institution Act only requires the seller to notify the FIC if the transfer involves an interest of less than 20% does not hold water. S/N ikHhBwVFlkKYzfG43tlPug

According to PW1, there can be no transfer of the shares without the FIC’s approval regardless of whether it involves an interest less than or more than 20%.

Ultimately, the FIC requires that the licensed financier notify it and submit an application for approval, which APC Bank failed to do.

I reiterate that DW1’s opinion that it is sufficient for parties to agree on who to apply for the FIC approval is a mere theoretical opinion because FIC will only process an application submitted by the licensed financier. In this case, it would be APC Bank.

The Learned Counsel for the Second Defendant’s argument that the application for FIC approval must be made by a natural person as stated in the Fit and Proper Application form is also devoid of merit, as the licensed financier must make all applications.

According to PW1, the information must be furnished by the purchaser in accordance with Appendix A of the Fit and Proper Application. S/N ikHhBwVFlkKYzfG43tlPug

Ultimately the application for FIC approval must be made by the licensed financier. In this case, it should be APC Bank.

On the same issue, even though the Plaintiff made a representation that he is the owner of the Defendants’ shares due to the payment of USD3,500,000.00 to all the Defendants, that does not alter APC Bank’s obligation to apply for FIC approval.

It is imperative to note that:

Clause 3 of Part I: Preliminary of the Fit and Proper Requirements provides that the Fit and Proper Requirements are only applicable to all administrators of Palau Banks and the branches of foreign banks licensed by the FIC to carry out financial activities in the Republic of Palau; and

Clause 4 of Part I: Preliminary of the Fit and Proper Requirements provides that: S/N ikHhBwVFlkKYzfG43tlPug

for Palau Bank, the administrator can be either a member of the Board of Directors or a member of the Audit Committee; and

(ii) for foreign banks operating in the Republic of Palau, the administrator serves on the Audit Committee.

Based on the foregoing reasons, below are my findings regarding Issue No.1:

it is safer for me to rely on the evidence provided by PW1, which is supported by contemporaneous documents, Clauses 3 and 4 of Part 1 of the Fit and Proper Requirements and PW1’s nineteen years of experience at FIC, including his last position as the Executive Commissioner of FIC, rather than on DW1’s evidence, which is purely theoretical (Tindok Besar Estate Sdn Bhd v. Tinjar & Co [1979] 2 MLJ 229);

here, the completion of the SPA is contingent upon obtaining FIC’s approval to proceed with the acquisition of the Defendants’ shares in APC Bank by the Plaintiff;

the FIC’s approval application should be made by APC Bank in its capacity as the licensed financier; S/N ikHhBwVFlkKYzfG43tlPug

even in the event of an intended sale of shares, APC Bank is required to notify the FIC. In the instant case, the sale encompassed the sale of 100% of the shares in APC Bank to the Plaintiff. APC Bank’s obligation to notify the FIC remains unchanged. However, no evidence of such notification was adduced by the Second Defendant on behalf of APC Bank; and

in the instant case, APC Bank not only failed to notify the FIC of the SPA and the intended transfer of 100% of the Defendants' shares in APC Bank, but also failed to submit an application for FIC approval. ISSUE NO.2

The second issue to be resolved is whether the Second Defendant can forfeit the USD700,000.00.

The Learned Counsel for the Second Defendant contended that the forfeiture was justified because the SPA was executed and registered with the Supreme Court of Palau on 12 June 2017, and that the Plaintiff also failed to obtain FIC’s approval. S/N ikHhBwVFlkKYzfG43tlPug

I do not agree with the arguments of the Learned Counsel for the Second Defendant.

It is my finding that the Second Defendant cannot forfeit the sum of USD700,000.00 for the reasons set out below.

Although Clause 7 of the SPA provides that the transfer of ownership of the Defendants’ shares in APC Bank is complete upon registration of the SPA with the Supreme Court of Palau, no evidence has been adduced to prove that the SPA has been registered with the Supreme Court of Palau.

According to PW1 and DW1, there is no law or common practice in the Republic of Palau which requires the SPA to be registered with the Supreme Court of Palau.

Since the SPA was not registered with the Supreme Court of Palau, Clause 7 does not apply. This is confirmed by both PW1 and DW1. S/N ikHhBwVFlkKYzfG43tlPug

In light of the above, I find that the Second Defendant cannot invoke Clause 7 of the SPA to forfeit the USD700,000.00 sum.

The Learned Counsel for the Second Defendant contended that, under Clause 6.3 of the SPA, the Second Defendant can forfeit USD700,000.00 if the Plaintiff failed to obtain FIC’s approval.

The Second Defendant’s reliance on Clause 6.3 of the SPA is misconceived because it does not align with the Palauan law.

As alluded to earlier, it is the duty of the licensed financier, in this case, APC Bank, to make the application for FIC’s approval, not the Plaintiff or the Second Defendant.

Since Clause 6.3 of the SPA contravenes Palauan law, the Second Defendant cannot rely on it to forfeit the sum of

Therefore, it is my finding that withholding the sum of USD700,000.00 without any basis amounts to unjust enrichment on the part of the Second Defendant when: S/N ikHhBwVFlkKYzfG43tlPug

the Second Defendant was enriched by receiving and forfeiting USD700,000.00;

this enrichment came at the Plaintiff’s expense, as the Plaintiff paid USD700,000.00 to the Second Defendant. Under Palauan law, only APC Bank, being the licensed financier, is authorised to submit the application for FIC’s approval. APC Bank should have submitted this application but failed to do so. The transfer of the Second Defendant’s shares to the Plaintiff never materialised because FIC’s approval was not obtained;

the Second Defendant pleaded that his shares had been transferred to the Plaintiff. There is no evidence adduced by the Second Defendant to prove that the Second Defendant has transferred his shares to the Plaintiff. It is undisputed that there is no FIC’s approval. Since there is no FIC’s approval, the Second Defendant is still holding his shares in APC Bank. At the same time, the Second Defendant is retaining USD700,000.00, which was intended for the transfer of those shares. Since he continues to hold his shares, his retention of the sum of USD700,000.00 is unjust;

the process for obtaining FIC approval is straightforward, and APC Bank is responsible for submitting the application. Accordingly, the Second Defendant cannot S/N ikHhBwVFlkKYzfG43tlPug rely on Clauses 6.3 and 7 of the SPA to justify forfeiting the sum of USD700,000.00. The Second Defendant has no defence to extinguish his obligation to make restitution of the sum of USD700,000.00 to the Plaintiff. (See Dream Property Sdn Bhd v. Atlas Housing Sdn Bhd [2015] 2 MLJ 441; Tenaga Nasional Bhd v Ichi-Ban Plastic (M) Sdn Bhd and other appeals [2018] 3 MLJ 141)

The Second Defendant’s contention that the Plaintiff submitted an application for the FIC’s approval through Quantum Asset-Management Pte Ltd is also misconceived and devoid of merit because:

Quantum Asset-Management Pte Ltd is not a party to the SPA. According to PW1, being a third party to the SPA, Quantum Asset-Management Pte Ltd cannot make the application for FIC’s approval; S/N ikHhBwVFlkKYzfG43tlPug

in any event, Quantum Asset-Management Pte Ltd is not a licensed financier in the Republic of Palau; and

in the Republic of Palau, only the licensed financier, in this case APC Bank, can submit the application for FIC’s approval. G. CONCLUSION

For the foregoing reasons, I make the following Orders:

the Second Defendant is ordered to return the sum of USD700,000.00 to the Plaintiff within 30 days from today;

the Second Defendant is ordered to pay interest at the rate of 5% per annum on the Judgment sum of USD700,000.00 to be calculated from the date of this Judgment until full and final settlement of the Judgment sum; and S/N ikHhBwVFlkKYzfG43tlPug

the Second Defendant is ordered to pay the Plaintiff costs of RM80,000.00 subject to allocatur fee. Dated this 25 day of June 2026 SGD HELMI BIN HAMZAH JUDICIAL COMMISSIONER HIGH COURT IN MALAYA AT SHAH ALAM NEGERI SELANGOR Counsel for the Plaintiffs : Mr. Ravi Nekoo (Mr. N.Ravi Najan with him) (Messrs Ravi Rajan & Associates) Counsel for the Defendants : Mr. Mithran Poobalan (Mr. See Kwong Yan & Miss Doris Lee Pui See with him) (Messrs Dass, Jainab & Associates) S/N ikHhBwVFlkKYzfG43tlPug