Dato Teoh Chin Kee v Messrs S B Teh & Ho & Another (WA-24NCC-444-10/2017)

1.

TEOH CHIN KEE DIYANAH BINTI MOHAMAD ZAKI ....PLAINTIFFS

MESSRS SB TEH & HO (sued as firm)

HTJ DEVELOPMENT SDN BHD ....DEFENDANTS Page 2 of 29 DI HADAPAN YANG ARIF TUAN MOHD NAZLAN BIN MOHD GHAZALI HAKIM JUDGMENT Introduction [1] This is an application by way of an originating summons filed by the plaintiffs to seek the return of shares certificates from the second defendant, or that the certificates be declared null and void, following an alleged termination of a shares sale and purchase agreement. [2] After having heard the application, I refused the same and highlighted the key grounds for my decision. This judgment contains the full reasons for my decision. Key Background Facts [3] The plaintiffs are individuals who are the only two directors and shareholders of one TCK Capital Sdn Bhd (“TCK Capital”). The second defendant is a property development company. The first defendant is a law firm who acted on behalf of the second defendant in respect of the agreement which is the focus of the dispute between the parties herein. [4] This agreement is the Equity Investment Agreement dated 7 April 2015 executed by the plaintiffs as the vendors and the second defendant as the purchaser (“the EIA”), whereby, principally, the parties agreed to the sale of 90% of the entire share capital in TCK Capital by the plaintiffs to the second defendant (“the Said Shares”), at the total purchase consideration of RM334 million. [5] Given the contemplation of parties that TCK Capital would be the owner of a piece of land located in Kuala Lumpur (“the Said Land”) by purchasing the same from the Federal Lands Commissioner, the purchase consideration under the EIA substantially included the price of the Said Land. [6] However, when the EIA was entered into, the Federal Lands Commissioner was still the registered proprietor of the Said Land, whilst Page 3 of 29 TCK Capital itself had initiated a civil suit against amongst others, the Federal Lands Commissioner and the Government of Malaysia (“the Suit”), seeking to compel these parties to execute the result of an auction held by the Chief Secretary to the Malaysian Treasury (“KSU”) on 18 April 2011 where TCK Capital had emerged as the highest bidder of the Said Land. [7] In the instant originating summons, the plaintiffs applied primarily for the reliefs of first, that the certificates and transfer forms relating to the Said Shares in TCK Capital (“Share Transfer Documents”) be delivered to the plaintiffs or their solicitors, and secondly, in the event the certificates of the Said Shares are not so delivered, then the same to be deemed cancelled. [8] In order to provide a complete background to this application, a brief mention about the role of the first defendant law firm would be appropriate. The first defendant were the previous solicitors for the plaintiffs for the EIA but had in September 2017, and before the filing of the originating summons, discharged themselves from representing the second defendant itself as solicitors. [9] More relevantly, at the time of the institution of the originating summons, the Share Transfer Documents were held in the custody of the first defendant. Parties were however able to agree to the recording of a Consent Order dated 9 November 2017, in pursuance of which, the first defendant had delivered the Share Transfer Documents to the plaintiffs’ present solicitors to be held as stakeholders pending the disposal of this instant application. It was also, as a consequence, agreed that the first defendant should be struck off as a party to this originating summons. Accordingly, the first defendant is no longer a party to this originating summons. Essence of Contentions of Parties [10] The plaintiffs in the main are anchoring their application for the delivery of the share certificates for the Said Shares and the Share Transfer Documents on the overriding claim of a breach on the part of the second defendant for their failure to make payment of the balance purchase price under the EIA by 23 August 2017. Page 4 of 29 [11] The second defendant’s resistance to this originating summons is largely premised on the argument that its obligation to make the said payment under the EIA had yet to accrue. Evaluation & Findings by this Court Relevant Terms of the EIA [12] As the principal complaint against the second defendant that the plaintiffs argued would entitle the latter to the return of the Share Transfer Documents is its alleged failure to pay the balance purchase price, it is only natural that examination ought to be had to the applicable provisions as contained in the EIA. This would be especially pertinent since the second defendant’s key argument is that the EIA does not as yet impose on the second defendant the contractual obligation to make the payment of the balance purchase price of the Said Shares [13] In respect of the obligation to make payment of the purchase price of the Said Shares under the EIA, the relevant provisions are contained in Clause 3.2 which reads as follows:- “3.2 Payment Terms of the Purchase Consideration

Deposit. The Purchaser shall pay the deposit towards part payment of the Purchase Consideration (“Deposit”) in the following manner:-

Within ten (10) days upon execution of this Agreement, the sum of Ringgit Malaysia Seven Million Two Hundred Thousand (RM7,200,000.00) only (“Initial Refundable Commitment Deposit”) to be paid to the vendors Solicitors as stakeholders and to be retained in a month to month interest bearing fixed deposit. The initial Refundable Commitment Deposit shall be refunded to the Purchaser in the event the Initial Conditions Precedent (as defined hereunder) cannot be fulfilled on or before the Initial Cut-Off Date (as defined hereunder)

(ii) Within fourteen (14) Business Days upon the fulfilment of the Initial Conditions Precedent under Clause 4.1(I):- (aa) the further sum of Ringgit Malaysia Seven Million Two Hundred Thousand (RM7,200,000.00) only to be paid to the Vendor’s Solicitors as stakeholders and to be released to the Vendors Page 5 of 29 upon the fulfilment of the Subsequent Conditions. Precedent; and (bb) the sum of Ringgit Malaysia Nineteen Million (RM19,000,000.00) only being ten percent (10%) of the Land Price to be paid to the KSU or any governmental body as approved and directed by the Government in accordance with the provisions of the Land SPA or a sealed court order made in the Legal Suit (“Court Order”) (as defined hereunder).

Balance Purchase Consideration The purchaser shall pay the balance of the Purchase Consideration amounting to Ringgit Malaysia Three Hundred Million And Six Hundred Thousand (RM300,600,000.00). Only (“Balance Purchase Consideration”) within sixty (60) days from Unconditional Date as defined under Clause 4.3 hereunder or on the Completion Date, whichever is the later, in the following manner:

The sum of Ringgit Malaysia One Hundred and Seventy One Million (RM171,000.000.00) only equivalent to 90% of the Land Price directly to the KSU or any governmental body as approved and directed by the Government as stipulated in the Land SPA; and

(ii) The sum of Ringgit Malaysia One Hundred Twenty Nine Million (RM129,600,00.00) only to the Vendors Solicitors as stakeholders to be released to the Vendors as stipulated under 5.3(d) hereunder.” [14] It will be quite readily appreciated from a plain reading of the above stated Clause 3 that the second defendant is required under the EIA to make payment of deposit in three parts and the remainder bulk of the purchase consideration which is the balance purchase price in two parts. More crucially, all these payments are stated to be due, as only to be expected for sale transactions of this nature, on specific milestones for payments. [15] The triggering events giving rise to the obligation on the part of the second defendant for making the other payments of deposits are 14 days after the Initial and Subsequent Conditions Precedents, respectively; and for the balance purchase price, within 60 days from the Unconditional Date of the EIA or on the Completion Date, which is later. Page 6 of 29 [16] The defined terms, being the milestones for payments are further defined and described in other provisions of the EIA. As just stated, these pre-requisites for the payments be made by the second defendant are the Initial Conditions Precedent, the Subsequent Conditions Precedent, the Unconditional Date and the Completion Date. It is to be observed that these are not complex concepts. They typically appear as standard terms in sale and purchase transactions. The instant case is thus no exception at all. [17] The provisions in the EIA governing the payments of the deposits by the second defendant as set out above are directly tied to the fulfilment of the Initial Conditions Precedent and the Subsequent Conditions Precedent. The terms concerning the Initial Conditions Precedent and the Subsequent Conditions Precedent are found in Clause 4.1 of the EIA. [18] Relevant for present purposes, for the Initial Conditions Precedent, Clause 4.1(I)(a) states that the plaintiffs shall procure the signing of a sale and purchase agreement between TCK Capital and the Federal Land Commissioner and/or a sealed court order containing terms acceptable to the second defendant and/or second defendant’s receipt of a sealed consent judgment in respect of the Suit, together with a valid and registrable memorandum of the Said Land in favour of TCK Capital within 9 months from the date of the EIA (“Initial Cut-off Date”). [19] In relation to the Subsequent Conditions Precedent, it is stated that the plaintiffs shall, within 12 months from the date of the EIA (“Cut-off Date”), inter alia, caused to be obtained under Clause 4.1(II)(b), the requisite consent from the State Authority for the transfer of the Said Land to TCK Capital from the Federal Land Commissioner; procure under Clause 4.1(II)(c), an undertaking from the Federal Land Commissioner to deposit with the second defendant’s solicitors, the original issue document of title to the Said Land together with a valid and registrable memorandum of transfer duly executed by the Federal Land Commissioner in favour of TCK Capital in accordance with the sale and purchase agreement to be executed by TCK Capital and the Federal Land Commissioner, or a sealed court order; and caused to be obtained, under Clause 4.1(II)(h), approval for development to be undertaken on the Said Land with a plot ratio of 7:5 or higher. Page 7 of 29 [20] The case of the second defendant is that the payments of the other portions of the deposit has not become due because the Initial Conditions Precedent have not been fulfilled. Specifically this relates to the contractual requirement on the part of the plaintiffs, as mentioned above, to procure a valid and registrable memorandum of transfer of the Said Land in favour of TCK Capital within 9 months from the date of the EIA. Neither have the plaintiffs been able to procure, among others, the same memorandum of transfer within 12 months to ensure satisfaction of the Subsequent Conditions Precedent. [21] This fact is not in dispute. Until presently, the second defendant has yet to receive a valid and registrable memorandum of transfer of the Said Land in favour of TCK Capital. In fact, the sale and purchase agreement between TCK Capital and the Federal Land Commissioners itself was executed only on 26 April 2017 (“the Land Purchase Agreement”) well after a number of valid extensions of time of the Initial Cut-Off Date. [22] In other words, it is difficult for this Court not to find that the plaintiffs, on the express terms of the EIA, did not fulfil the Initial Conditions Precedent by the expiry of the Initial Cut-Off Date. No less importantly, it seems clear beyond peradventure that as the Initial Conditions Precedent were not met within the stipulated time period, and have not been fulfilled even at present, the second defendant cannot be said to be under any contractual obligation under the EIA to make the remainder of the deposit payments pursuant to Clause 3 of the EIA. And nor could the plaintiffs show that they had been able to comply with the requirements on the Subsequent Conditions Precedent. [23] In respect of the payment of the balance purchase price, and as noted earlier, the contractual constructs of Completion Date and Unconditional Date have been drafted into the EIA to provide the necessary triggering milestones. Specifically, to regulate the two tranches of the payments of RM171 million and RM129.6 million making up the balance purchase price, the payments must be made by the second defendant within sixty (60) days from Unconditional Date as defined under Clause 4.3 or on the Completion Date, whichever comes later. [24] Common sense and logic would next dictate that the meanings of Unconditional Date and the Completion Date should be ascertained. Clause 4.3 defines Unconditional Date as the date when all Page 8 of 29 the Conditions Precedent have been fulfilled, or otherwise waived by the second defendant. As has been determined earlier, the Conditions Precedents have not been fully satisfied within the stipulated time period. And it is not in dispute that there was no waiver granted by the second defendant. This must, inevitably mean that the Unconditional Date under the EIA never occurred. For this reason, the obligation of the second defendant to pay the balance purchase price could not have been triggered. [25] For completeness, regard ought also to be had to the definition of Completion Date, for, as stated earlier, the obligation to pay the balance purchase price under Clause 3.2(b) of the EIA could also be triggered by the occurrence of the Completion Date. In this regard, Clause 5.2 defines Completion Date as the date on which the title to the Said land is registered in the name of TCK Capital and vacant possession to the Said land delivered to it. There is again no argument by any of the parties that neither of these has happened. [26] As such, it is crystal clear from the express terms of the relevant provisions of the EIA that significantly, other than the first part of the payment of deposit, being the Initial Refundable Commitment Deposit of RM7.2 million which had been paid by the second defendant, the other payment obligations of the second defendant, be they the other two parts of the deposit or the entirety of the balance purchase price, never became due because the milestones for their payments had not been triggered. Was the Equity Investment Agreement varied by the Supplementary Agreements? [27] A key contention of the plaintiffs however is that the payment obligations of the second defendant under the EIA have been varied by one of the supplementary agreements entered into between the parties. Some mention of the supplementary agreements is thus apposite. [28] The parties to the EIA executed three supplementary agreements. The first is the Supplementary Agreement dated 10 April 2015 were parties agreed inter alia, principally in Clause 2.2 of the First Supplementary Agreement to adjust the purchase consideration to be at the rate of RM1,700.00 per square foot (“First Supplementary Agreement”). This was in anticipation of a possible reduction in the area of the Said Land as a result of the Civil Suit. Page 9 of 29 [29] The second Supplementary Agreement was dated 16 April 2015 where, primarily, the second defendant was given until 24 April 2015, instead of the original requirement of 17 April 2015 under the EIA, to make payment of the Initial Refundable Commitment Deposit (“Second Supplementary Agreement”). This, as stated earlier had been duly paid by the second defendant within the extended period. [30] Of particular relevance for present purposes however, is the third Supplementary Agreement entered into by the same parties dated 15 September 2015 (“Third Supplementary Agreement”), which was executed following the recording of the Consent Judgment on 4 September 2015 by parties to the Civil Suit. [31]

of the Consent Judgment (“New Land Price”) [36] There is no doubt that the Land Price referred to in recital L in the EIA concerns the Said Land. It reads thus:- “The Company had, on 19 September 2014, commenced the Civil Action against the KSU, FLC, PTG and the Government (“Legal Suit”) claiming, inter alia, a declaration for a right to the transfer of the land with a portion to the Land to be surrendered for MRT Tunnel at a purchase consideration of Ringgit Malaysia One Hundred and Ninety Million (RM190,000,000.00) only (“Land Price”). [37] In my view, in the instant case, the plaintiffs’ contention that there was agreement to vary or modify the payment obligations and the timing of the payment obligations of the second defendant in reliance on Clause 2.2 of the Third Supplementary Agreement is entirely untenable. It is quite manifest from the language of Clause 2.2 as well as a number of recitals to the Third Supplementary Agreement that the predominant, if not the only one true objective focus of the execution of the Third Supplementary Agreement is to take cognisance and refer to the Consent Judgment and to address the reduction in area of the Said Land agreed to in the Consent Judgment and, as a result thereof, the new price for the Said Land. Page 11 of 29 [38] There is absolutely no mention in Clause 2.2 of the Third Supplementary Agreement of any variation to the manner and timing of the payments by the second defendant. In fact, there is nothing at all on the payment obligations of the second defendant under the EIA found in the Third Supplementary Agreement. [39] After all, the payment obligations of the second defendant under the EIA, as set out above, are contained in Clause 3.2 of the EIA. Yet, the Third Supplementary Agreement did not touch on Clause 3.2 at all. Principles of Interpretation [40] At this juncture, I think it would be remiss of me not to state the governing principles of interpretation of contracts and legal documents. First, and of paramount importance is that well-settled rule that the evidence given by witnesses on the interpretation of contracts such as the EIA, and of the Supplementary Agreements or the Land SPA and any other documents in the instant case is by and large irrelevant if not entirely inconsequential. It is for the Court to give the interpretation. [41] In Leong Ah Kew & Ors v Prisma Suria Sdn Bhd [2015] 8 CLJ 300, I had said thus:- “[8] Common law has established a number of important principles in the interpretation of contracts, one of which, especially relevant for present purposes is that the construction of contract is a question of law for determination by the court and not by witnesses through their evidence. In Bahamas International Trust Co Ltd v. Threadgold [1974] 1 WLR 1514, Lord Diplock stated the following: In a case which turns, as this one does, on the construction to be given to a written document, a court called on to construe the document in the absence of any claim to rectification, cannot be bound by any concession made by any of the parties as to what its language means. That is so even in the court before which the concession is made; a fortiori in the court to which an appeal from the judgment of the court is brought. The reason is that the construction of a written document is a question of law. It is for the judge to decide for himself what the law is, not to accept it from any or even all the parties to the suit; having so decided it is his duty to apply it to the facts of the case. He would be acting contrary to his judicial oath if he were to determine the case by applying what the Page 12 of 29 parties conceived to be the law, if in his own opinion it were erroneous. [9] This has since been emphatically followed in Malaysian cases, such as in the Court of Appeal decision in NVJ Menon v. The Great Eastern Life Assurance Company Ltd [2004] 3 CLJ 96; [2004] 3 MLJ 38”. [42] Secondly, the construction is to be based on the plain and ordinary meaning of the provisions of the contracts, having regard to the entirety of the contractual context, barring genuine ambiguities. In the Court of Appeal decision in Syarikat Binaan Utara Jaya (A Firm) v Koperasi Serbaguna Sungei Glugor Berhad [2009] 2 AMR 50, Abdul Malik Ishak, JCA stated the following key principles:- “[15] Of course, it is trite that when interpreting a contract the language of the contract must be taken into consideration. The intention of the parties is to be primarily gathered from the language employed in the contract itself. If, and only if the language is vague, the surrounding circumstances may be looked into in order to assist in interpreting the contract (Bipin Behari Deb v. Masrab Ali and Others [1961] AIR Vol. 48, 173 Assam). [16] I am fortunate that the contract here is in writing and so the parties are confined within the four corners of the document in which they have chosen to seal their agreement and neither of them can adduce evidence to say that his intention has been misstated or overlooked in the agreement or that some essential features of the contract has been omitted or ignored. To allow such evidence would involve the plain violation of s. 92 of the Evidence Act 1950 (Afshar M. M. Tacki v. Dharamsey Tricamdas [1947] AIR (34) 98 Bombay)”. [43] The need for judicial scrutiny be confined to the four corners of the contract when the terms are clear is further reaffirmed by Abdul Malik Ishak JCA in Syarikat Binaan Utara Jaya as follows:- “[17] From the available authorities, the following propositions may be advanced in construing a contract where the language employed is clear:

the court must give effect to the plain meaning of the words, no matter how distasteful the result may be (The Central Bank of India Ltd. Amritsar v. The Hartford Fire Insurance Co. Ltd.[1965] AIR Vol. 52, 1288 SC);

where the language in the document is unambiguous and clear, the real nature of the document is to be determined solely by looking at its contents, uninfluenced by any intention of the parties ((Nawab Major Sir) Mohammad Akbar Khan v. Attar Singh and Others [1936] AIR Vol. 23, 171 PC);

when the minds of the parties are expressed in an unambiguous manner, the court cannot override the declared intention of the parties unequivocally expressed (K. Appukuttam Panicker and Another v. S.K.R.A.K.R. Athappa Chettiar and Others [1966] AIR Vol. 53, 303 Kerala); and

there is no scope, at all, for drawing upon hypothetical considerations or the supposed intention of the parties when the words contained in the contract are clear and unambiguous (The Union of India v. Kishorilal Gupta and Bros. [1959] AIR Vol. 46, 1362 SC). [18] I have said that the general rule is that extrinsic evidence will not be admitted to contradict or vary the clear terms of an agreement. Similarly, evidence of prior negotiations will not be accepted to explain the meaning of the ambiguous wording. It is not unusual in a case of disputed interpretation to find a party contending for his own interpretation the true construction of the words used or, in the alternative, the same party claiming rectification of the contract will insist that the court should examine closely the preceding negotiations in order to ascertain whether the agreement allows rectification. A classic example can be seen in the case of Prenn v. Simmonds [1971] 1 WLR

[19] But, while in cases of doubt as to the meaning of an agreement, the rule has always been that prior negotiations cannot be looked at yet the general background and surrounding circumstances of the contract can and will be taken into consideration. Indeed this seems to be the approach of Lord Wilberforce in Prenn v. Simmonds (supra) at p. 1385, citing Cardozo J's seminal "genesis and aim of the transaction" in Utica City National Bank v. Gunn [1918] 118 NE 607, and this was what Lord Wilberforce said: In my opinion, then, evidence of negotiations, or of the parties' intentions,... ought not to be received, and evidence should be restricted to evidence of the factual background known to the parties at or before the date of the contract, including evidence of the 'genesis' and objectively the 'aim' of the transaction. [20] Again, Lord Wilberforce in Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen (Trading as H.E. Hansen-Tangen), Page 14 of 29 Yngvar Hansen-Tangen (Trading as H.E. Hansen-Tangen) v. Sanko Steamship Co. [1976] 1 WLR 989, 995, 996, aptly said: In a commercial contract it is certainly right that the Court should know the commercial purpose of the contract and this in turn pre-supposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating. [21] There is also a rule of evidence that should be mentioned here. It is this. That the whole of the contract should be examined before construing an individual part of it (per Lord Halsbury in Glynn and Others v. Margetson & Co. and Others [1893] AC 351, at p. 357)”. [44] I see no good reasons to depart from these principles in the present case before me. The terms on the payment obligations of the second defendant, as set out earlier, are clear and demonstrate no ambiguities that prevent their plain and ordinary meaning from reigning supreme. Not even when examined against the Third Supplementary Agreement. This is especially so when the other clauses of these agreements are also taken into account, as they should be. And I say this for several reasons. [45] In the first place, the EIA, in its Clause 10.12 clearly states that the EIA constitutes the entire undertaking between the parties and that a variation is only effective if it is made in writing and signed by all the parties to the EIA. Clause 10.12 provides thus:- “10.12 Whole Agreement This Agreement constitutes the entire undertaking between the Parties in respect of the subject matter hereof and supersedes all previous agreements and undertakings in respect of the subject matter hereof. No variations hereof shall be effective unless made in writing and signed by all the Parties hereto”. [46] Thus in the High Court decision in Macronet Sdn Bhd v RHB Bank Berhad [2002] 3 MLJ 118, Abdul Aziz Mohamad J later FCJ) in dealing with a similar clause held instructively:- “The effect of that clause is that the agreement, because it constituted the whole agreement, could not be varied for any reason or under any circumstances except by another agreement in writing.” Page 15 of 29 [47] This ruling in Macronet has also been applied in subsequent cases, including by the Court of Appeal in the case of Network Pet Products (M) Sdn Bhd v Royal Canin SAS & Anor [2015] 2 CLJ 530 where the argument by one of the parties to a distributorship contract alleging the existence of an oral partnership agreement was rejected by reason of the presence of an entire agreement clause in the distributorship contract. In addition, the Court of Appeal in Master Strike Sdn Bhd v Sterling Heights Sdn Bhd [2005] 3 MLJ 585 also ruled to similar effect. [48] Secondly, even though by its nature the Third Supplementary Agreement had the effect of varying the EIA, based on the terms of the former, the parties in having executed the Third Supplementary Agreement only sought to vary as stated above, the purchase consideration as a result of the reduced land area of the Said Land as recorded in the Consent Judgment. [49] As stated earlier, on its plain and ordinary meaning, Clause 2.2 of the Third Supplementary Agreement only concerned the variation by way of the reduction of the land price. Thus, the words of Clause 2.2 themselves plainly changed “Land Price” to “New Land Price”. [50] The Third Supplementary Agreement does not even mention Clause 3.2 of the EIA which contained the provisions on “Payment Terms of the Purchase Consideration”. Neither did any provision of the EIA, not even its Recital L state that the second defendant, as the purchaser of the Said Shares under the EIA was obligated to pay for the purchase price of the Land Price or the New Land Price. [51] Despite the non-delivery of the memorandum of transfer in respect of the Said Land as required by Clause 4.1(1) (a) of the EIA, the plaintiffs maintained that it was agreed that the second defendant ought to pay the Government the balance purchase price before the Government can execute the memorandum of transfer. But again the plaintiffs could not point to any credible basis for this assertion other than Clause 2.2 of the Third Supplementary Agreement which has been shown to be of no support to the construction proffered by the plaintiffs. Neither did the plaintiffs refer to any other clear evidence to support the existence of any agreement on the part of the second defendant to make payment prior to the execution and delivery of the memorandum of transfer. Page 16 of 29 [52] There is no evidence of any variation to the payment obligations of the second defendant under the EIA, let alone one that was expressly made by the written agreement of the parties. Furthermore, the other terms of the Third Supplementary Agreement make this conclusion even more inevitable. First, Recital 10 of the Third Supplementary Agreement states that “the Parties have agreed to vary the Principal Agreement [EIA] to the extent as hereinafter contained to implement the terms of the Consent Judgment”. Clearly, this must be taken to mean that the extent and effect of variation of the pertinent provision in the Third Supplementary Agreement. There is thus no room to read into the Third Supplementary Agreement changes which were not agreed upon. [53] Secondly, Clause 1.1 clearly states that “the Parties agree that this Supplemental Agreement is only for the purposes defined in this Agreement and shall not in any way be used treated or interpreted so as to vary add or amend the whole or any part of the Principal Agreement unless otherwise specifically stated herein”. This must surely be read as the parties taking pain to emphasise the point that on other variation was intended and none should be read into the variation. [54] As if all that were not enough, further reiteration of the same point was provided by Clause 3 of the Third Supplementary Agreement which reads „save and except for the amendments, modifications and amplifications effected hereby and any consequential amendments as may be necessary, all the terms and conditions of the Principal Agreement shall continue to be in full force and effect and the obligations and rights of the parties herein shall continue to bind the respective parties until full discharge thereof”. [55] The terms of the relevant agreements, when given their plain and ordinary meanings more than clearly support the case of the second defendant. Principles on Contractual Interpretation - The Objective Approach and Commercial Context [56] I have in the foregoing analysis undertaken an interpretive process based primarily on examining the relevant clauses which appeared in both the EIA and the Third Supplementary Agreement, with special focus on the ordinary and plain meaning of the language employed by both agreements, as well as on how certain provisions in Page 17 of 29 one document relate to other clauses in the other document, and tried to highlighted inconsistencies and conflicts which were none. Even on this premise, I have made the finding that on the true construction of the relevant agreements, the answer to the primary question as to whether the second defendant had not complied with the payment obligations of the second defendant under the EIA is one that is quite overwhelmingly more in accord with the version proffered by the second defendant. [57] In addition, the same outcome would similarly obtain when the other relevant principles of interpretation of contracts are applied. On this, I can do no better than make reference to a recent decision of the Federal Court in SPM Membrane Switch Sdn Bhd v. Kerajaan Negeri Selangor [2016] 1 MLJ 464 where Zainun Ali FCJ in delivering the judgment of the Federal Court, made this pertinent observation:- “[27] In recent times, the restatement of principles in the landmark case of Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896, 912-913 "(ICS)" provides a helpful starting point for the consideration of the relevant principles. The judgment of Lord Hoffmann is as reproduced below, where His Lordship stated that: ... I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 WLR 1381, 1384-1386 and Reardon Smith Line Ltd v. Yngvar Hansen-Tangen [1976] 1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of 'legal' interpretation has been discarded. The principles may be summarised as follows:

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. Page 18 of 29

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co Ltd v. Eagle Star Life Assurance Co Ltd [1995] 1 WLR 1 508.

The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v. Salen Rederierna AB [1985] AC 191, 201: If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to conclusion that flouts business common sense, it must be made to yield to business common sense. [28] However, there are reservations to a wholesale adoption and approval of the ICS principles. The applicability of the ICS principle, specially vis-à-vis the question of rectification of contracts, is doubted. This has been alluded to in the recent judgment of this court in Menta Construction Sdn Bhd v. Lestari Puchong Sdn Bhd [2015] 8 CLJ 1117 for reasons that we will not repeat here. Save for this reservation, the remaining ICS principles, for avoidance of doubt, where it does not concern rectification - are good law”. [emphasis added] [58] Thus, the imperative of adhering to the objective approach by primarily ascertaining the meaning which the contract would convey to a reasonable person having all the background knowledge which Page 19 of 29 would reasonably have been available to the parties cannot be emphasized enough. In respect of the instant case however, the passage from the judgment of Lord Diplock in Antaios Compania Naviera SA v. Salen Rederierna AB referred to above is especially pertinent given that it concerns the construction of a commercial contract, which is the case presently before this Court. [59] It is thus in this context that reference should additionally be usefully made to the decision of the UK Supreme Court in Re Sigma Finance Corp [2010] 1 ALL ER 571 which was also cited in SPM Membrane Switch Sdn Bhd v. Kerajaan Negeri Selangor. [60] This case concerns the issue on the order of priority of the creditors of Sigma, an insolvent structured investment vehicle (“SIV”), which at the crux of the dispute essentially pertains a question of contractual interpretation. The final sentence of clause 7.6 of the deed governing the SIV provided: “During the Realisation Period the Security Trustee shall so far as possible discharge on the due dates therefore any Short Term Liabilities falling due for payment during such period, using cash or other realisable or maturing Assets of the Issuer.” [61] The heart of the dispute was whether this clause require Sigma’s receivers to allocate assets to its short term liabilities pari passu, or otherwise according to the dates upon which those liabilities fell due – a “pay as you go” approach. The Supreme Court, in a majority decision, reversed the majority decision of the Court of Appeal and favoured the former construction. It was considered that the Court of Appeal had given too much emphasis on the natural meaning of the words of the deed and too little weight to their overall context. [62] Lord Mance, delivering the leading judgment, stated that when considering the meaning of the deed to a reasonable person with the relevant background, the key factor was "an understanding of the instrument's overall scheme and a reading of its individual sentences and phrases which places them in the context of that overall scheme". He found that the relevant clauses of the deed were drafted on the assumption that Sigma had enough assets to cover its liabilities to secured creditors. Of much greater importance was an understanding of the overall scheme of the document and a reading of its individual Page 20 of 29 sentences and phrases which placed them in the context of that overall scheme. [63] The decisions in the High Court and the Court of Appeal had, as held by the Supreme Court, elevated the importance of a minor provision, which appeared to create effective priority for certain creditors, to a level which it was not designed to have. This resulted in a conflict with the basic scheme of the document, which made the assumption that all secured liabilities would be covered and no issue of priority could arise. The pay-as-you-go clause had been formulated in contemplation of a situation where no question of insolvency would arise. As such, the basic scheme of the document shows that the pay-as-you-go provision could not be applied in a literal way. [64] That decision in fact follows the approach of the House of Lords in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38 in giving preference to an interpretive process which defers to the wider commercial intentions of the parties rather than the semantics of the contractual wordings in issue. [65] Lord Mance had indeed cited the chain of House of Lords authorities starting with Charter Reinsurance Co. Ltd. v Fagan [1997] AC 313 and Mannai Investment Co. Ltd. v Eagle Star Life Assurance Co. Ltd. [1997] AC 749, through to Investors Compensation Scheme Ltd. v West Bromwich Building Society [1998] 1 WLR 896 and then the House of Lords judgment in Chartbrook Ltd. v Persimmon Homes Ltd. [2009] UKHL 38. His Lordship drew attention to the danger, highlighted by Lord Mustill in Charter Reinsurance, of focusing too narrowly on a critical phrase and specifically referred to Lord Hoffmann's oft-cited summary of the principles of interpretation of contracts in Investors Compensation Scheme, repeated as follows: "(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] AC 749). Page 21 of 29

The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201: '...if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.'" [66] It is also clear from the judgment that where a lengthy and complex document which are often drafted in voluminous and complex context, the argument that the clear and natural meaning of the words should prevail because the document was prepared by specialist and skilled lawyers will not necessarily carry significant weight. [67] The following part of the dissenting judgment of Lord Neuberger MR (later, President of the Supreme Court) in the Court of Appeal, endorsed by the Supreme Court, is most instructive for interpretation of commercial contracts:- "Where the interpretation of a word or phrase is in dispute, the resolution of that dispute will normally involve something of an iterative process, namely checking each of the rival meanings against other provisions of the document and investigating its commercial consequences…….. What one has to do when assessing each rival interpretation, is to ask whether the words at issue are capable of having the meaning contented for, but even that question cannot be judged free of documentary and commercial context. The more a particular interpretation, which accords well with the words in question judged on their own, produces a commercially improbable result and is hard to reconcile with other provisions in the document, the more ready the court will be to give the words another, perhaps linguistically more strained, interpretation, if that other interpretation complies with the other provisions and commercial reality". Page 22 of 29 [68] Thus, in short, unless the clauses are plain and unambiguous, as Lord Collins said, quite straight to the point:- "Detailed semantic analysis must give way to business common sense." [69] As such, where the Court is persuaded that the language permits competing interpretations, a literal construction of the pertinent words alone will be insufficient. Instead parties must convince the Court that the other party’s interpretation results in a less than reasonable or rational commercial outcome whilst on the other hand, and in contradistinction, a commercially reasonable and logical business sense outcome is produced by the construction promoted by the other party. [70] But in respect of the case now before me, this iterative process of interpretation is not strictly necessary. For the terms of the agreements in question are clear. There are no real ambiguities. They are not complex or even lengthy. The words as they appear are simply incapable of a different or competing interpretation. [71] Nevertheless even if they were ambiguous (which they are not) to the extent that would justify the need for the iterative process (which it would not), and even if detailed semantics were to give way to business common sense, the conclusion would still be the same. The second defendant’s obligation to pay the balance of the purchase price had not arisen because the Conditions Precedent were not satisfied. [72] Accordingly, it can be validly stated that in the instant case, a “reasonable person” having all the background knowledge reasonably available, in particular the principal terms and conditions of the EIA and the three Supplementary Agreements, as well as the Land SPA would reasonably understand that the payment obligations of the second defendant remain as stated in Clause 3.2 of the EIA. There is no evidence or basis for variation in terms of the time for payment which has been so specifically drafted in that Clause 3.2. [73] It cannot be denied that the second defendant was proposing to acquire the Said Shares in TCK Capital. That was what the EIA was all about. And the true and ultimate reason for the same is a commercial one, and as intimated earlier from the recitals in the EIA was the contemplation of the parties that TCK Capital would become the Page 23 of 29 registered owner of the Said Land which at the time of the execution of the EIA was still subject to litigation. [74] Since the second defendant as the purchaser of the Said Shares was not a party to the Land SPA (or the Consent Judgment) which in any event was entered into almost three years after the execution of the EIA, it is certainly commercially to be expected for a party who was required to pay what originally was a huge sum of almost RM340 million to at least have the contractual protection that payment of the balance purchase price by the second defendant would only be required after the memorandum of transfer of the title of the said land be delivered to the second defendant. [75] That was exactly what the parties agreed to, as more than clearly set out in Clause 3.2 of the EIA where delivery of the same was a specific requirement of each of the Initial and Subsequent Conditions Precedent, as referred to above. As such, under Clause 4.1 (I) (a), the delivery of the memorandum of transfer must accompany the other documents and be procured at the same time before the Initial Condition Precedent is regarded as being fulfilled. And importantly, this protection cannot be relegated to being of lesser importance, let alone unnecessary, in view of the execution of the Land SPA for the assertion be made, as now advanced by the plaintiffs, that the parties somehow agreed that the second defendant must first pay the balance purchase price before delivery of the memorandum of transfer to the second defendant. [76] In other words, requiring payment be made before delivery of the transfer documents (never mind that the terms in the EIA saying otherwise and the Third Supplementary Agreement which does not change the timing of the payment obligations) would clearly and fundamentally change the risk considerations assumed by the second defendant in having executed the EIA. This scenario of the state of affairs is devoid of commercial and business logic. This does not promote the objective or purpose of the EIA [77] The sale of the Said Land to TCK either by way of an agreement or Court order or consent judgment is paramount. If that did not happen then the EIA would not see completion. The second defendant would not want to acquire the Said Shares if control of TCK Capital does not come with ownership by TCK Capital of the Said Land. That is the reason for the sale and transfer of the Said Land, and receipt Page 24 of 29 of a valid and registrable memorandum of transfer of the Said Land in favour of TCK Capital duly signed by the Federal Land Commissioner to have been made into a key Condition Precedent upon which, in turn Unconditional Date and Completion Date depended. Other Considerations [78] The action herein as filed by the plaintiffs, lest it be forgotten, is to seek the return of the Share Transfer Documents. The exact basis for this request is however not very definitively stated by the plaintiffs. But it was averred in paragraph 20 of the plaintiffs’ affidavit in support affirmed by the second plaintiff on 13 October 2017 as follows: “Termination The time for complying with the Federal Government’s extension offer lapsed and the Equity Investors did not make payment of the balance purchase price payable to the Federal Government nor the additional Deposit and advance penalty demanded for the extension of time. In the circumstances, our solicitors wrote for mally [sic] to record the termination of the EIA by their letter dated 26th September 2017...In this letter, we demanded the return of the Share Certificates, Share Transfers and all other documents delivered to the Equity Investors’ or their solicitors pursuant to the EIA.” [79] The plaintiffs through their solicitors issued a letter dated 26 September 2017 to the second defendant’s then solicitors wherein it was asserted that second defendant had “acted in breach of the Equity Investment Agreement and various Supplementary Agreements by failing to make payment of the sums payable under the Land Sale and Purchase Agreement within the time limited”. The plaintiffs also requested for the Share Transfer Documents, amongst other things, to be refunded to them. [80] The basis relied on by the plaintiffs is untenable. It has been shown quite abundantly definitive that the payment obligation has not occurred and did not occur within the stipulated timeline. Thus it follows the termination of the EIA by the plaintiffs on account of the purported reason of the earlier breach by the second defendant of its payment obligations cannot be sustained. The terms in the EIA and the Third Supplementary Agreement are clear on stating when the payment obligations became due. Equally clear are the terms of the Land SPA on Page 25 of 29 prescribing the payment obligations of the purchaser therein that is TCK Capital. [81] The EIA and the Land SPA are not inter-conditional. The second defendant, I reiterate is not a party to the latter. Its obligations are set out in the EIA, not the Land SPA. The second defendant had complied with all payment obligations under the EIA and no further payment was due or payable at the material time since the Initial Conditions Precedent had not been met on account mainly of the non-delivery of the memorandum of transfer to the second defendant, which by definition must mean the Unconditional Date and the Completion Date too could not occur. [82] Nor can the plaintiffs validly rely on Clause 8.5 of the EIA which provides for a mechanism on breach and termination. The clause states:- “In the event the Vendors are ready to proceed to Completion in accordance with Clause 5 and the Purchaser shall fail to complete this Agreement in accordance with its terms by paying the Purchase Consideration and stipulated under Clause 3 due to no blameworthy conduct on the part of the Vendors, the Vendors shall be entitled at it sole discretion terminate this Agreement by a notice in writing to the Purchaser..” [83] It is more than amply plain from the above that reliance on this clause by the plaintiffs to found basis for their present application is unsustainable. For the requirements are simply not satisfied to justify the invocation of this Clause 8.5. First, it cannot by any stretch of imagination be said that the plaintiffs as the vendors in the EIA to be “ready to proceed to Completion in accordance with Clause 5”. [84] At the risk of repetition, the Completion Date could not happen since the Initial Conditions Precedent were not met in the first place. And in any event, the is no Completion Date since the title to the Said Land has yet to be registered in favour TCK Capital and vacant possession of the same had not been delivered to TCK Capital. As such a termination premised by the plaintiffs on Clause 8.5 of the EIA is misconceived. It follows that their demand for the Share Transfer Documents is entirely devoid of merit. [85] Furthermore, neither could the plaintiffs rely on Clause 4.2 of the EIA to demand the return of the Share Transfer Documents, Page 26 of 29 including the share certificates. The provisions of the same make this position abundantly clear. It reads as follows:- “If the Conditions precedent have not been fulfilled for any reasons whatsoever by the Cut-off Date or waived by the Purchaser, this Agreement shall be deemed to be terminated and shall be null and void and of no further effect, provided that in such event:-

If the Initial Conditions Precedent cannot be fulfilled within the Initial Cut-Off Date, the Vendors’ Solicitors shall, within fourteen (14) Business Days of such termination, refund the Initial Refundable Commitment Deposit to the Purchaser together with the Accrued Interest …..…… …………………………. Upon such repayment and refund of all the above said monies to the Purchaser the Vendors shall be at liberty to sell or otherwise deal with the Sale Shares in such a manner and to such persons as the Vendors shall deem fit.” [86] It is clear beyond doubt that given the non-fulfilment of the Initial Conditions Precedent, which is not in dispute as far as the EIA is concerned, and regardless of whose fault it was, the EIA is already deemed terminated and null and void. It was unnecessary for the plaintiffs to seek to terminate it. And the obvious point is of course this. Clause 4.2 (1) is manifest in stating that upon the termination thereof, the solicitors for the plaintiffs as the vendors must refund the deposit already paid by the second defendant, specifically the Initial Refundable Commitment Deposit and that it would only be after the return of the said deposit could the plaintiffs start dealing with the Said Shares including to sell the same. [87] It bears emphasis that as a matter of fact, the plaintiffs had neither ensured the refund of the Initial Refundable Commitment Deposit to the second defendant, nor as a result become entitled to deal with the Sale Shares. As such, Clause 4.2 too does not advance the case of the plaintiffs. On the contrary it further weakens it. Considerably. [88] There is one other argument advanced by the plaintiffs which at first blush appears to be of merit. This is the fact that after the payment of the Initial Refundable Commitment Deposit to the plaintiffs’ Page 27 of 29 solicitors, it is not denied that the second defendant subsequently made the following payments:

RM3.800 million to the plaintiffs’ solicitors on 23 September 2015 to be transmitted to the KSU: and

RM14, 517,720.00 to the defendant’s solicitors on 26 April 2017 to be transmitted to the KSU. [89] But the explanation given by the second defendant is not inherently incredible. The assertion is simply that such additional payments were made with the objective of preserving its rights under the EIA. It had no legal obligation to do so under the EIA. Moreover, even though Clause 3.2(b) (i) of the EIA refers to “the KSU or any governmental body as approved and directed by the Government as stipulated in the Land SPA”, the same Clause 3.2 says nothing about any purported change in the timing of the second defendant’s payment obligations under the EIA. [90] In other words, the amount of RM18, 317,720.00 paid was not due yet at the time it was paid as there was non-fulfilment of the Initial Conditions Precedent. These payments were not made under any contractual obligations. The plaintiffs had made the payments nonetheless to protect its interest under the EIA. [91] The second defendant’s payments to the KSU could additionally be legitimately stated to be under Clause 10.7 of the EIA which reads thus:- “no exercise or failure to exercise or delay in exercising any right, power or privilege vested in any party shall operate as a waiver thereof or of any other right, power or privilege, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Any waiver by a Party of a breach of any provision of this Agreement shall not be considered as a waiver of any subsequent breach of the same or any other provision hereof”. [92] Similarly, as for the RM7.2 million under Clause 3.2 (ii) (aa) of the EIA, the second defendant had always taken the position that it was not required to pay as there was non-fulfilment of the Initial Conditions Precedent. It is of importance that not only must the Courts give effect to the plain and ordinary meaning of a clause, but also that it is trite that the Courts should also not rewrite the terms of the contract Page 28 of 29 (see the Court of Appeal decision in Dato‟ Shazryl Eskay bin Abdullah v Merong Mahawangsa Sdn Bhd & Anor [2014] 3 MLJ 892 ). [93] The plaintiffs’ argument that the second defendant had no proprietary interest in the Said Shares because it had defaulted in paying the balance purchase price is therefore untenable. Nor does the argument that as the second defendant was not seeking specific performance, but damages for termination, it cannot seek to restrain dealings in the Said Shares for breach or wrongful termination, meritorious. The plaintiffs must first establish their case for the return of the Share Transfer Documents under the EIA. [94] The argument that certain communication post the Land SPA between the parties or their solicitors showed that the second defendant had agreed to make payment of the balance purchase price before receipt of the memorandum of transfer is in my assessment unsupported by evidence considering the clear terms of the relevant clauses in the EIA, the Third Supplementary Agreement and even the Land SPA. The parties had shown meticulous attention to details in their contractual arrangement, which is wholly expected and understandable, more so when, like here, a huge sum of money is involved. Even for a delay of one week granted to the second defendant to pay the Initial Refundable Commitment Deposit, a specific agreement had to be drawn up and executed. That was the Second Supplementary Agreement, as mentioned earlier. It is inconceivable that a fundamental, drastic and critical change in relation to the timing of the payment of the balance purchase price, not be subject to anything close to something similar. Conclusion [95] In view of the myriad of reasons as discussed in the foregoing, it is my judgment that the plaintiffs have not successfully established their case for the return of the Share Transfer Documents. As such, the plaintiffs’ application is therefore dismissed, with costs. Page 29 of 29 Dated: 13 February 2018 (MOHD NAZLAN BIN MOHD GHAZALI) Judge High Court NCC1 Kuala Lumpur Counsel: Counsel for Plaintiffs K.Shanmuga with P.Dinesh Kumar Tetuan Kanesalingam & Co Kuala Lumpur Counsel for the Second Defendant