Cj Polymers Sdn Bhd v 1. ) Lok Pey Ling (BA-22NCvC-527-12/2023)

LOK PEY LING (No. K/P: 731129-01-5094)

KERK JIUN HONG (No. K/P: 001004-10-1795)

WAKIL DIRI KEPADA TEE YOK LAN @ TAY ENG LUN, SI MATI (No. K/P: 431024-01-5042) …DEFENDAN-DEFENDAN

The present suit was instituted by the Plaintiff company against three Defendants for the restitution and recovery of monies alleged to have been wrongfully received. 17/09/2025 13:28:01

These payments, made by the Plaintiff company, were authorised by its then director, Kerk Han Meng. What lends this case its distinctive complexion is that the First, Second, and Third Defendants are, respectively, Kerk’s wife, son, and mother-in-law. Of further significance is that the accounts and records of the Plaintiff company disclose a similar pattern of payments of salaries or allowances to another director’s family members, namely, his ex-wife, son, and mother. However, the Plaintiff company has not prosecuted a claim against the other director’s ex-wife, son and mother.

The Plaintiff contended that these payments were without legal basis and must be restored. The Defendants, however, stood firm in their defence, insisting that the sums were lawfully paid and lawfully received. In any event, it was also contended by the Defendants that the claims are time barred. At its core, the contest is whether these familial transactions were legitimate dealings, or whether they amount to an unjust depletion of the Plaintiff’s assets, leaving its claim, if proven, with compelling merit. The Questions Before this Court

This matter was filed as a Writ action, on 29 December, 2023. However, the parties reached an agreement that it be decided pursuant to Order 14A of the Rules of Court 2012 on the following Questions of Law:

Whether the Defendants are entitled to receive and/or retain the monies paid by the Plaintiff;

If the answer to question (a) above is negative, then whether the Plaintiff's claim is subject to a limitation period; and

If the answer to question (b) above is in the affirmative, when does the limitation period commence.

The Plaintiff company was incorporated in 2001. The persons behind its incorporation were Sim Chin Hu (“Sim”) and Kerk Han Meng (“Kerk”). However, the initial shareholders and directors were their respective wives, Ng Soo Han and Lok Pey Ling (the First Defendant). There was a reason for this arrangement. As explained in a related suit, Sim and Kerk had been employed since 1995 in a Malaysian-incorporated Taiwanese company, Hualon Corporation (M) Sdn Bhd, which was engaged in the manufacture of polyester resin and textile products. Around 2001, while still employed at Hualon, Sim and Kerk decided to establish their own trading company to import and export polymer and textile products. Having each gained over a decade of experience in the industry, they had acquired substantial knowledge and expertise, and had cultivated a network of suppliers, buyers, and agents.

Accordingly, CJ Polymer was incorporated with a paid-up capital of RM100,000.00, contributed equally by Sim and Kerk. Since both remained employed at Hualon, their wives were made the initial shareholders and directors, notwithstanding their lack of relevant industry experience. The de facto managers of the Plaintiff company were, in reality, Sim and Kerk.

Over time, various changes were made to the Plaintiff company.

In March 2014, Sim and Kerk were appointed directors of the Plaintiff company. On 30 June 2015, Ng Soo Han and the First Defendant ceased to be directors.

In November 2019, Lee Yu Meng was appointed as a director of the Plaintiff company.

On 5 May 2020, Sim was removed as a director of the Plaintiff company. Subsequently, on 29 August 2023, Kerk’s office as director was vacated, and on the same date, Wong Kok Kheong was appointed a director.

The departure of Sim and Kerk gave rise to a number of legal proceedings, including “Suit 138,” which the Defendants contended as having a bearing on the present suit, a contention refuted by the Plaintiff.

The sums that the Plaintiff seek to recover from the Defendants are as follow:

Against the First Defendant: RM4,330,820.00 from July 2015 to August 2023 (as pleaded in paragraph 23 of the

Against the Second Defendant: RM226,418.35 from July 2016 to December 2019 (as pleaded in paragraph 24 of the Plaintiff’s Statement of Claim); and

Against the Third Defendant: RM240,200.00 from May 2016 to December 2019 (as pleaded in paragraph 25 of the Plaintiff’s Statement of Claim).

The Plaintiff’s causes of action for monies had and received, knowing receipt and unjust enrichment are premised on, inter alia, the following:

Kerk, in breach of his fiduciary duties by acting not in the best interest of the Plaintiff, have caused the Plaintiff to pay monies and provide other benefits to the Defendants which were received by the Defendants without any considerations; and

The Defendants were neither employed by the Plaintiff nor had the Defendants provided any services to the Plaintiff at the relevant time when they received the money claimed hereof.

It was also alleged that the monies which were caused to be paid by Kerk was made in breach of Kerk’s fiduciary duties at the material times and thus cannot form a valid defence for the Defendants to receive or retain the monies at the Plaintiff’s expense.

In their defence, the Defendants collectively alleged that the Plaintiff’s action is time barred and/or caught by the doctrine of laches.

In relation to the First Defendant, it was argued that she is entitled to the monies in exchange for the services that she has rendered the Plaintiff company in her capacity as a Senior Finance Director.

As for the Second and Third Defendants, it was contended the monies they had received were paid pursuant to the understanding made between Sim and Kerk, that is, that they would receive such payments through their respective family members from the Plaintiff company pursuant to the quasi-partnership between Sim and Kerk in the Plaintiff, as decided by the High Court in Originating Summons: WA-24NCC-138- 03/2020 (“Suit 138”) and affirmed by the Court of Appeal (see CJ Polymers Sdn Bhd v Sim Chin Hu & Ors and other appeals [2025] AMEJ 1211; [2025] CLJU 1248; [2025] MLJU 1551; [2025] 5 MLRA 473).

The Defendants also maintained that it would be unjust for the Plaintiff to seek restitution as there has been a change in the Defendants’ positions.

In addition to the above defences, the Defendants also sought for general damages, exemplary damages and aggravated damages against the Plaintiff by way of a counterclaim. The Findings and Decision of this Court

This Court now turns to address each of the questions posed for determination. Question 1: Whether the Defendants are entitled to receive and/or retain the monies paid by the Plaintiff

It is not disputed that each of the Defendants did in fact receive monies from the Plaintiff.

The governing principles on monies had and received, and on unjust enrichment, are well settled. Authorities such as Seascope Sdn Bhd v Syed Izhar bin Syed Salleh [2005] 8 CLJ 624; [2006] 3 MLJ 756; [2006] 1 MLRH 32, LNE Network Systems (Asia) Sdn Bhd v Loi Chew Ping & Ors [2015] AMEJ 608; [2015] 3 CLJ 663; [2015] MLJU 1884; [2015] MLRHU 181, Ever-Yield Sdn Bhd v Yap Keat Choon and other appeals [2023] 1 CLJ 346; [2023] 2 MLJ 90; [2022] MLRAU 189 and Dream Property Bhd v Atlas Housing Sdn Bhd [2015] 2 AMR 601; [2015] 2 CLJ 453; [2015] 2 MLJ 441; [2015] 2 MLRA 247 are instructive.

The evidence establishes that the First Defendant had resigned as Finance Director of the Plaintiff with effect from 30 June 2015.

Accordingly, the monies which Kerk caused or procured to be paid to the First Defendant after her resignation, that is, from July 2015 to August 2023, were made in breach of Kerk’s fiduciary duties. These payments were unlawful, and the First Defendant was thereby unjustly enriched at the expense of the Plaintiff.

The Defendants have sought to rely on Suit 138, contending that they were entitled to receive and/or retain the monies based on an understanding allegedly reached between Sim and Kerk.

While this Court is bound by the Court of Appeal’s findings in Suit 138 concerning the existence of a quasi-partnership, such a finding does not derogate from the fiduciary obligations imposed on Kerk as a director of the Plaintiff. Under section 213(1) of the Companies Act 2016, a director must at all times exercise his powers in accordance with the Act, for a proper purpose, and in good faith in the best interest of the company. Duties and responsibilities of directors

(1) A director of a company shall at all times exercise his powers in accordance with this Act, for a proper purpose and in good faith in the best interest of the company.

The extent and content of such fiduciary duties are well-established, with guidance found in Charterbridge Corp Ltd v Lloyds Bank Ltd [1970] Ch 62 at p 74, Pioneer Haven Sdn Bhd v Ho Hup Construction Co Bhd & Anor and other appeals [2012] 3 AMR 297; [2012] 5 CLJ 169; [2012] 3 MLJ 616; [2012] 4 MLRA 210 and Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Bhd and another appeal [2018] 2 CLJ 641; [2018] 2 MLJ 177.

It is acknowledged that in a quasi-partnership, matters such as directors’ remuneration, the non-declaration of dividends, administrative expenses, repayment of debts, disposal of assets, and the raising of finance fall within the purview of the board of directors. In such circumstances, the courts ordinarily refrain from interfering with the internal management of the company, provided that the affairs are conducted in accordance with the law (see Re Kong Thai Sawmill (Miri) Sdn Bhd [1976] 2 MLJ 227; [1978] 1 MLRA 235, Lee Ah Kong @ Lee Muk Sang v Wings Logistic Sdn Bhd & Anor [2013] CLJU 1413; [2015] 7 MLJ 408; [2013] MLRHU 1354, and Low Tien Sang & Sons Holdings Sdn Bhd & Ors v How Kem Chin & Ors [1999] AMEJ 0238; [1999] CLJU 163; [2000] 2 MLJ 334; [1999] 5 MLRH 248). The present case, however, does not fall within this category of lawful internal management decisions.

This Court accepts the Plaintiff’s submission that payments made under the guise of quasi-partnership management cannot justify or validate transactions that are not in the company’s best interests. The prevalence of a quasi-partnership has no bearing or exculpatory effect on the Plaintiff’s present claim.

The Defendants have further invoked the indoor management rule. This reliance, however, is misconceived. It is also significant that Kerk himself has neither intervened in this suit nor filed any affidavit to assert that he had properly authorised the payment of salaries to the Defendants.

As for the Defendants’ contention that the Plaintiff’s claim is unsustainable on the ground that it would be inequitable, in all the circumstances, to require restitution by reason of a change of position, the short answer is that such a defence is available only where the recipient has acted in good faith.

In light of the foregoing, the first question is answered in the negative. Question 2: Whether the Plaintiff's claim is subject to a limitation period; and Question 3: If the answer to the above Question 2 is in the affirmative, when does the limitation period commence

The central issue, as correctly framed by the Defendants, concerns the applicability of the limitation period prescribed under section 6 of the Limitation Act 1953.

This Court was reminded of the Court of Appeal’s observations in Teow Tek Soon v Koay Chin Teong [2017] CLJU 1208; [2018] 3 MLJ 114; [2017] 6 MLRA 179, where it was emphasised that: The court should not countenance the laxity on the part of litigants in pursuing their claims. It is for this reason the doctrine of limitation exists.

The question that must now be addressed is whether the Plaintiff had, in fact, been lax in the pursuit of its claims

The Defendants argued in the affirmative, relying on sections 6(1)(a) and (d) and section 6(6) of the Limitation Act 1953, which read as follows: Limitation of actions of contract and tort and certain other actions

6.

Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say —

actions founded on a contract or on tort; …

actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or of a sum by way of penalty or forfeiture.

Subject to sections 22 and 32 of this Act the provisions of this section shall apply (if necessary by analogy) to all claims for specific performance of a contract or for an injunction or for other equitable relief whether the same be founded upon any contract or tort or upon any trust or other ground in equity.

The Plaintiff commenced the present suit in December 2023. The Defendants contended that this was filed more than six years after the alleged wrongful receipt of monies and/or unjust enrichment, and therefore beyond the statutory limitation period. They argued that the six-year limitation period has inexorably set in, with no scope for extension, as the statute provides none. Accordingly, the limitation is said to bar the main action.

In addition, the Defendants also averred that the Plaintiff’s claim for an unjust enrichment is a claim for an equitable relief within the meaning of section 6(6) of the Limitation Act 1953 and thus, by reason of that provision, the six-year limitation period in section 6(1) of the Limitation Act 1953 applies to a cause of action for unjust enrichment.

It was the Defendants’ submissions that the limitation period commenced at the earliest time when a Plaintiff can commence a suit. Accordingly, as far as the Defendants’ contentions were concerned, the limitation period of the Plaintiff’s cause of action for wrongfully receiving monies and/or unjust enrichment:

accrued on July 2015 and would be time barred after July 2021 for the First Defendant;

accrued on July 2016 and would be time barred after July 2022 for the Second Defendant; and

accrued on May 2015 and would be time barred after May 2022 for the Third Defendant.

As the present claims for wrongfully receiving monies and/or unjust enrichment were only filed on 29 December, 2023, it was argued that they are time barred under section 6(6) of the Limitation Act 1953.

Unsurprisingly, the Plaintiff took a different position.

On the Second and Third Questions, the Plaintiff submitted that its claims are not time-barred. It relied on section 29 of the Limitation Act 1953, contending that the limitation period only began to run upon its discovery of the fraudulent acts and/or mistaken payments concealed by Kerk, which only came to light during the proceedings in Suit 138. In the alternative, the Plaintiff argued that this is not a claim founded on contract or tort, but rather one for restitution of monies had and received, to which the Limitation Act 1953 does not apply.

The relevant section 29 of the Limitation Act 1953 provides as follows: Postponement of limitation period in case of fraud or mistake

(1) Where, in the case of any action for which a period of limitation is prescribed by this Act, either —

the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; or

the right of action is concealed by the fraud of any such person as aforesaid; or

the action is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it:

The two cases cited by the Plaintiff were Lim Yoke Kong v Sivaparan Sabapathy [1992] 1 AMR 269; [1992] 1 CLJ (Rep) 184; [1992] 2 MLJ 571; [1992] 1 MLRA 224 and I-EXPO Sdn Bhd v TNB Engineering Corporation Sdn Bhd [2013] MLRHU

250.

The Plaintiff further relied on this Court’s decision in Mulpha Ventures Sdn Bhd v Mula Holdings Sdn Bhd & Ors [2024] AMEJ 0105; [2024] CLJU 109; [2024] MLJU 144; [2024] MLRHU 102 (“Mulpha Ventures”), which itself drew upon the Federal Court’s decision in Khatijah Abdullah & Ors v Mohd Isa Biran [2017] 2 AMR 341; [2017] 7 CLJ 513; [2017] 2 MLJ 1, [2017] 2 MLRA 509 (“Khatijah Abdullah”). The Plaintiff contended, in essence, that: “The issue is whether, in a case where the contract between the Defendants and the Plaintiff is void ab initio for total failure of consideration, such a contract can give rise to any enforceable rights or obligations.”

This Court is of the view, however, that Mulpha Ventures and Khatijah Abdullah are distinguishable on their facts, and that the principles applied in those cases have no application to the present dispute.

Having carefully considered the Plaintiff’s pleaded case and the causes of action advanced, this Court is unable to accept the Plaintiff’s contention that section 29 of the Limitation Act 1953 applies so as to extend the limitation period.

Accordingly, this Court finds that the Plaintiff’s claims for monies had and received prior to December 2017 are statute-barred.

In the premises, the First Defendant is liable to the Plaintiff in the sum of RM3,323,200.00.

As against the Second Defendant, the Plaintiff is entitled to judgment in the sum of RM131,418.35.

The Plaintiff is further entitled to recover from the Third Defendant the sum of RM132,850.00.

The Defendants’ counterclaim is without merit and is hereby dismissed.

In consequence, the Defendants are ordered to pay the Plaintiff’s costs, which this Court fixes at RM20,000.00. Dated: 28 August, 2025 (CHOONG YEOW CHOY) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR Counsel: For the Plaintiff : Max Yong Bon Swee Sarah Low Wan Qi (Messrs Shui Tai) For the Defendants : Shamesh Jeevaretnam Henry Poh Jun Yang (Messrs Jeevapartnership)