Duta Nilai Holdings Sdn Bhd v Ismail Bin Othman (W-02(NCC)(W)-294-02/2023)

AL-AMIN STRATEGIC COMMODITY SDN BHD (Company No.:1109831-H)

MOHD NORNIZAN BIN RAMLAN @ JAMIL (NRIC NO:841127-01-6613)

MOHAMAD NASER BIN OSMAN (NRIC NO:560817-02-5233) ...RESPONDENTS (In the matter of High Court of Malaya at Kuala Lumpur (Commercial Division) Suit No.: WA-22NCC-244-06/2020 Between Duta Nilai Holdings Sdn Bhd (Company No.:184910-H ...Plaintiff

Ismail Bin Othman (NRIC No: 530610-10-6135)

Zainab Binti Mansor (NRIC No: 581206-01-5610)

Al-Amin Strategic Commodity Sdn Bhd (Company No.: 1109831-H)

Mohd Nornizan Bin Ramlan @ Jamil (NRIC No: 841127-01-6613)

Mohamad Naser Bin Osman (NRIC No: 560817-02-5233) ...Defendants) CORAM MOHD NAZLAN BIN MOHD GHAZALI, FCJ FAIZAH BINTI JAMALUDIN, JCA LIM HOCK LENG, JCA GROUNDS OF JUDGMENT Introduction [1] This is an appeal against the decision of the Kuala Lumpur High Court delivered on 14 February 2023 after a full trial. Duta Nilai Holdings Sdn Bhd ("the Appellant" or "DNH") had brought the legal action against its former directors and related parties (referred to collectively as "the Respondents"). The central issue in the action was whether 161,632,017 Redeemable Convertible Preference Shares ("RCPS") issued to the third Respondent ("Al-Amin") was valid. [2] The parties in the High Court action and this Appeal are: - the Appellant (DNH). The Appellant's immediate holding company is Seacera Properties Sdn Bhd ("SPSB"). SPSB is wholly owned by Seacera Group Bhd ("SGB"). The Appellant's wholly owned subsidiary is Duta Skyline Sdn Bhd ("DSSB"). - The first Respondent ("R1") and the second Respondent ("R2"), who were the former directors and shareholders of DNH. - The third Respondent (Al-Amin), the company to whom the RCPS were issued. - The fourth Respondent ("R4") who is the director and shareholder of Al-Amin. - The fifth Respondent ("R5") who was Al-Amin's director in 2016 and 2017. [3] DSSB is the registered owner of the land held under Grant No. 23940, Lot 613, Mukim Ulu Semenyih, Daerah Ulu Langat, Negeri Selangor ("Lot 613"). [4] By two sales and purchase agreements entered with DSSB in 2009 ("SPA1") and in 2012 ("SPA2"), SP acquired two quarters of Lot 613. By the "Acquisition Exercise" (defined below), SP acquired the other half of Lot 613 by buying the Appellant from its previous shareholders—R1 and R2, and settling the Appellant's and DSSB's Existing Liabilities. [5] The "Acquisition Exercise" refers to a large, structured transaction undertaken between 2015-2017 involving SGB, its subsidiary SP, the Appellant, its subsidiary DSSB, and the Respondents. The purpose of the Exercise was to enable SP, to acquire the remaining $ \frac{1}{2} $ share of Lot 613 valued at between RM320 million to RM350 million. [6] The Acquisition Exercise was split into two parts to achieve the agreed transaction value of RM320 million:

Cash/shares consideration: Cash and shares consideration of RM165.1 million paid to R1 and R2 for their shares in the Appellant; and

Settlement of Existing Liabilities: settling of the Existing Liabilities of the Appellant and DSSB. These liabilities were consolidated audited, reclassified and crystallised into the sum of RM161,574,236.24. In consideration of assuming these liabilities, Al-Amin received 161,632,017 RCPS. [7] The Acquisition Exercise was documented in the following documents:

Share Sale Agreement dated 16 November 2016 between SP (and SGB as guarantor), and R1 and R2 for 100% of the issued and fully paid-up share capital in the Appellant ("Share Sale Agreement");

Sale of Debt Agreements dated 24 June 2016 between Peninsular Recycler (M) Sdn Bhd ("PR"), the Appellant and Al-Amin, and PR, DSSB and Al-Amin ("Sale of Debt Agreements");

Assumption Agreement dated 07 December 2016 ("Assumption Agreement") between the Appellant, DSSB and Al-Amin, where it was agreed that the Appellant would assume DSSB's entire liability (RM124,312,815.20) to Al-Amin;

Debt Settlement Agreement dated 12 May 2017 between the Appellant and Al-Amin ("Debt Settlement Agreement");

Amended Memorandum and Articles of Association of the Appellant providing for the RCPS; and

SGB's shareholder approval circular, which was approved by SGB's shareholders at its Extraordinary General Meeting ("EGM") held on 17 August 2017. [8] The Sale of Debt Agreements, the Assumption Agreement and the Debt Settlement Agreement were agreements to address the Appellant and DSSB's (collectively the "DNH Group") "aggregate indebtedness" to its creditors. DNH Group's aggregate indebtedness as at the date of Share Sale Agreement was: (i) RM124,312,815.20 by DSSB to its creditors; and (ii) RM37,261,421.04 by the Appellant to its creditors. It was defined in the Share Sale Agreement as the "Existing Liabilities". Clause 1.1 of the Share Sale Agreement is reproduced below: "Existing means the aggregate of the following Indebtedness of Liabilities" the Group Companies as at the as at the dated of this Agreement:

RM37,261,421.04 owing by Duta Nilai to its creditors; and

(ii) RM124,312,815.20 owing by Duta Skyline to its creditors. [9] Under the Debt Settlement Agreement and the Assumption Agreement, the Appellant, DSSB and AI-Amin, agreed, inter alia, to the following:

AI-Amin agreed to and assumed the Existing Liabilities; and

the consideration Al-Amin will receive for assuming the Existing Liabilities was 161,632,017 RCPS. [10] SGB's financial adviser, Afrizan Tarmili Khairul Azhar ("AFTAAS"), and its legal adviser, Messrs Deol & Gill ("Deol & Gill"), conducted the financial and legal due diligence respectively for the Acquisition Exercise. SGB's shareholder approval for both the issuance of RCPS to Al-Amin and the Acquisition Exercise was granted at SGB's EGM on 17 August 2017. [11] The terms of the RCPS are, inter alia: (i) issue size: 161,632,017 RCPS; (ii) issue price: RM1.00 per RCPS; (iii) issue date: 12.12.2016; (iv) dividend rights: payable at a fixed cumulative dividend of 5% per annum on the issue price-fixed by the board of directors as deemed fit and expedient and subject to the availability of distributable profits; and (vi) conversion period: after the date of the fourth anniversary of the issue date. The RCPS was later registered at the Companies Commission of Malaysia [12] Al-Amin in a letter dated 11 February 2020, demanded from the Appellant payment of the dividend for the RCPS as of January 2020 amounting to RM9,428,534.32. [13] The Appellant did not pay the RCPS dividend to Al-Amin. [14] Instead, it filed the present action against the Respondents in June 2020 at the Kuala Lumpur High Court, challenging the legitimacy of the RCPS issuance to Al-Amin. The Appellant sought, inter alia, declarations for breach fiduciary duty, and the RCPS (and all rights arising thereunder) are null and void; recission of the RCPS as void for want of consideration; an account of profits by the Respondents; and equitable tracing remedies. The Respondents defended the claim and counterclaimed for abuse of process. [15] The High Court, in its judgment dated 14 February 2023, dismissed both the Appellant's claim and the Respondents' counterclaim, with costs of RM100,000.00 to be paid by the Appellant to the Respondents. The factual findings and the reasons for the dismissals are set out in the learned High Court's judge's Grounds of Judgment dated 06 September 2023. [16] The principal findings and reasoning of the High Court that are subject to this appeal, are:

Existence and treatment of indebtedness: The High Court accepted that the indebtedness of DNH and DSSB said to underlie the RCPS (the Existing Liabilities) had been reclassified to PR and that the sequence of events, the due diligence reports and PR's Year-End 2016 ("YE 2016") accounts supported the accounting entries and the existence of indebtedness as recorded.

Reliance on contemporaneous documents and due diligence: The High Court placed weight on contemporaneous documents, including the financial due diligence report by AFTAAS and legal due diligence report by Deol & Gill. The High Court found that the Acquisition Exercise was implemented in a transparent manner with professional advisers involved.

Accounting treatment of sale proceeds/deferred revenue: The High Court held that the accounting treatment which recorded certain sale proceeds as liabilities (deferred revenue) pending transfer of legal title and other conditions was consistent with applicable accounting standards and the due diligence findings.

Evaluation of expert evidence: The High Court gave limited weight to the Appellant's expert evidence (PW6 and the Expert Report) and accepted the Respondent's account and documentary evidence. The learned High Court judge considered aspects of the expert's scope, objectivity and concessions in assessing the weight to be accorded to the expert's evidence.

Credibility and sufficiency of proof: The Appellant's pleaded case was that the debts were "palsu dan/atau tidak wujud". The High Court found that the Appellant had not proved on the balance of probabilities that the indebtedness was fictitious or did not exist, or that the RCPS were issued without consideration. For those reasons, the High Court dismissed the Appellant's action and refused to grant the reliefs sought. The Appellant's Case [17] The Appellant contends that the High Court erred in law and fact by accepting the reclassification and related accounting entries as establishing the indebtedness that formed the consideration for the RCPS. The Appellant's case is that:

there was no RM161,574,236.24 pre-existing liability to be reclassified; that the DNH Group's books were overstated, and the reclassification was a self-serving internal declaration without legal effect;

PR could not validly "own" or sell debts that were originally owed to third-party creditors because there was no evidence of assignment, consent or payment to those creditors; the principle of nemo dat quod non habet applies;

the RCPS were issued without consideration and, alternatively, were issued at a discount in contravention of the Companies Act 1965; and

the High Court wrongly rejected the Appellant's sole expert (PW6) and substituted its own views on the accounting treatment of deferred revenue, including by relying on an open source definition (Investopedia), instead of accepting unopposed expert evidence. [18] In its written submissions in reply, the Appellant submits that the Respondents did not adduce any expert evidence to challenge or rebut expert testimony of PW6. It further contends that the High Court erred in placing reliance on contemporaneous documents and the reclassification without first determining the existence and validity of the underlying liabilities. The Appellant argues that the Respondents' reliance on the due diligence reports and the corporate exercise could not, in law, substitute for proof of a valid legal assignment or creditors consent. [19] On that basis, the Appellant seeks for this appeal to be allowed; that the High Court's Order dismissing its claim against the Respondents be set aside; that the RCPS be declared void ab initio for want of consideration; and that consequential reliefs be granted, including restitution or return of benefits; an account of profits, tracing remedies, and such further orders as this Court considers appropriate. The Respondent's Case [20] The Respondents submit that the High Court's findings are supported by contemporaneous documents, the due diligence exercises undertaken by the Appellant's own advisers, the sequence of Agreements, PR's YE 2016 accounts showing receivables consistent with the transaction, and the completion of the Acquisition Exercise, including SGB's shareholder approval. [21] The Respondents argue that the Appellant's appeal fails the "plainly wrong" test for appellate intervention after full trial. [22] The Respondents advance the following points in support of their position that the Appellant's appeal should be dismissed, and the High Court's decision affirmed:

Documentary and transactional matrix: there is voluminous, unrebutted documentary evidence prepared or approved by the Appellant and its advisers that records the liabilities, the reclassification, the sale of debt to Al-Amin and the debt settlement by issuance of the RCPS. The High Court properly relied on contemporaneous documents and the due diligence reports.

Accounting entries and PR's accounts: PR's YE 2016 accounts show other receivables consistent with the amounts involved; the High Court correctly interpreted the accounting treatment.

Appellate restraint: the Respondents invoke established appellate principles that this Court should not disturb a trial judge's findings of fact unless the findings were plainly wrong. Additionally, the learned High Court had audio-visual advantage and gave reasons for his conclusions.

Expert evidence and credibility: The learned trial judge was entitled to reject or limit the weight of PW6's evidence in light of the expert's concessions; the learned judge's assessment of credibility and weight is entitled to deference.

Unjust enrichment: the Respondents submit that if this Court allows the appeal, it will unjustly enrich the Appellant. This is because the Appellant's holding company SP, would have acquired the $ \frac{1}{2} $ share of Lot 613 valued for RM165.1 million only, which is vastly less than the value of the land, which was between RM320 million to RM350 million. It would result in a huge loss for R1 and R2 as they had given up their shares in the Appellant and DSSB, and interest in Lot 613 for a lot less than the purchase price that was agreed in the Acquisition Exercise.

Consequences and finality: a reversal of the High Court's decision by this Court would have extensive practical consequences, namely, the reversal of a completed acquisition, restitution and corporate and regulatory implications. The Respondents contend this supports caution and deference to the trial judge's findings. [23] In their submissions in reply, the Respondents emphasise that the Appellant's case was not pleaded with sufficient particularity in relation to the purportedly "fictitious and/or non-existent" debts; that the Appellant did not call, as witnesses, its professional advisers who prepared the due diligence reports; and that the Appellant's shifting case at trial undermined its claim. The Respondents maintain that the learned High Court judge gave due judicial appreciation to the evidence and did not err in law or in fact. Accordingly, they seek the dismissal of the appeal with costs and the affirmation of the High Court's order dismissing the Appellant's claim. Issues for Determination [24] The issues for determination in this appeal, as identified from the memorandum of appeal and the Appellant's written submissions, are:

Issue 1: Whether the High Court erred in placing weight on the "reclassification" of debts to PR and without first determining, as a threshold factual matter, whether a pre-existing indebtedness of RM161,574,236.24 existed.

Issue 2: Whether the High Court erred in treating the reclassification as amounting to an effective assignment/transfer of the original creditor's rights to PR in the absence of evidence of assignment, consent of original creditors, payment to original creditors or other formal steps required for legal transfer.

Issue 3: Whether the High Court erred in its assessment of the Appellant's expert evidence, including by rejecting the expert as not objective, and by substituting the judge's own views on accounting treatment of deferred revenue.

Issue 4: Whether the High Court failed to draw adverse inferences or otherwise properly consider the legal significance of the R1, R2, R4 and R5's decision not to give oral evidence, and whether that failure affected the assessment of the Appellant's burden of proof. Issue 1: Whether the High Court erred in placing weight on the "reclassification" of debts to PR and without first determining, as a threshold factual matter, whether a pre-existing indebtedness of RM161,574,236.24 existed. [25] The focus of the proceedings in the High Court was the existence of pre-existing indebtedness of the Appellant and DSSB (the DNH Group) that was reclassified as liabilities to PR and later sold by PR to Al-Amin. [26] The DNH Group's aggregate indebtedness of RM161,574,236.24 (the Appellant: RM37,261,421.04; DSSB: RM124,312,815.20) plus an advance of RM57,780.76 from Al-Amin to the Appellant formed the basis of the 161,632,017 RCPS by the Appellant to Al-Amin on 12 December 2016. The aggregate indebtedness was reclassified as debts due to PR. [27] The Appellant's case is that the indebtedness and the advance, are non-existent and/or fictitious. It contends that DNH Group's "reclassification" of its creditors as debts due to PR did not create a valid change of ownership; that the reclassification was a self-serving accounting entry lacking any evidence of assignment, creditor consent or payment, which therefore cannot support the RM161,574,236.24 indebtedness relied on to justify the RCPS. [28] The Appellant contends that the trial judge erred by considering the reclassification as definitive without first determining the existence or origin of the underlying liabilities. It argues that the learned judge ought to have required direct evidence of assignment or given weight to its expert's differing interpretation. [29] The Respondents submit that the learned trial judge was entitled to rely on the contemporaneous documentary record, including the due diligence reports prepared by SGB's advisers for the Acquisition Exercise, the Agreements, and PR's YE 2016 accounts. They contend that the reclassification of debts and the determination of the Existing Liabilities were audited, consolidated, and formally crystallised into the agreed figure in the Agreements, and that the learned trial judge appropriately evaluated the evidence. They assert that both the documentary matrix and PR's audited accounts substantiated the judge's conclusions. [30] The learned High Court judge recognised that the reclassification of the debts was a critical milestone. In paragraph 32 of his judgment, the learned judge said: "It must be stated at the onset that the reclassification of debts of the Plaintiff and DSSB is a critical milestone event". [31] His Lordship relied on contemporaneous documents and PR's 2016 audited accounts that post-dated the 2015 management accounts. He said in paragraph 48 of the judgment that the Appellant's and DSSB's 2015 management accounts and PR's accounts for YE 2014 and 2015 could not have reflected or provided for the reclassification of the debts by the Appellant and DSSB to PR since the reclassification of the debts only took place in 2016. [32] The learned judge noted that the financial due diligence report captured the reclassification of the debt. His Lordship went on to explain why the reclassification paragraph in the said financial due diligence report is critical evidence. Paragraphs 33 and34 of the judgment are produced below: [33] The Financial Due Diligence Report dated 25.10.2016 had captured the reclassification of the debt from the Plaintiff and DSSB to PR. An extract from the Financial Due Diligence by Aftaas dated 25.10.2016 is reproduced as follow: ... [34] To the mind of this Court the paragraph [paragraph 4.6 of the Aftaas Financial Due Diligence Report] that reads "As part of the condition precedent in the Sale and Purchase Agreement dated 27 April 2016 the DNH Group is to settle its creditors in respect of Existing Liabilities owing to the DNH Group. To fulfil this requirement the DNH Group has reclassified all of its creditors and borrowings due to Peninsular Recycler (M) Sdn Bhd (PRSB) is critical evidence that there was a conscious recognition of the reclassification of the Duta Nilai Holdings group that the indebtedness of the Plaintiff and DSSB would be carried out. [Emphasis added] [33] In considering the due diligence undertaken, the learned judge considered that AFTAAS in its financial due diligence report expressly recorded its inability to verify the reclassification of debts, owing to DNH's failure to provide a list of the outstanding creditors and the absence of evidence of assignment or consent from the original creditors in respect of the reclassification and subsequent acquisition of the debts by PR. This absence i.e. the lack of a creditors list and the absence of assignment or consent documents from the original creditors (referred in this judgement as the "verification gap") forms the basis of the Appellant's challenge to the substantive legal effect of the recorded reclassification. [34] The learned judge, upon weighing the verification gap against the broader matrix of documentary and accounting evidence, did not regard the absence of creditors list and separate assignment documents as determinative. His Lordship found that: (i) the financial due diligence report recorded a reclassification of DNH Group's borrowings to PR, along with balances as of 30 June 2016; (ii) PR's 2016 audited accounts reflected a significant receivable matching the amount in question; and (iii) the supporting documents and timeline aligned with the accounting entries and the corporate transaction that resulted in the RCPS being issued to Al-Amin. Consequently, the judge considered both the reclassification and the supporting documentary evidence as indicative of the underlying debt behind the RCPS, and dismissed the Appellant's dispute regarding the existence of this indebtedness. Analysis and Findings on Issue (1) [35] An appellate court will intervene with a trial judge's findings only where those findings are plainly wrong, incapable of reasonable explanation or justification, and not conclusions that any reasonable judge could have reached. A "plainly wrong" decision arises when the trial judge demonstrates either no, or insufficient, judicial appreciation of the evidence and/or commits a material error of law: Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1; [2004] 4 CLJ 309; [2004] 6 AMR 781, FC ("Gan Yook Chin"); Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67; [2020] 10 CLJ 1; [2020] 8 AMR 227, FC ("Ng Hoo Kui v Wendy Tan"). [36] The Appellant's complaint is essentially a challenge to the learned trial judge's evaluation of documentary evidence and inferences drawn from the transaction timeline. In this case, the trial judge expressly relied on contemporaneous documents—the due diligence reports, PR's 2016 audited accounts and the Agreements. He explained in his judgment why earlier 2015 management accounts were overtaken by events in 2016. [37] The Appellant in its submissions point to the verification gaps and argues that those gaps undermine the reclassification to DNH Group's indebtedness to PR. These points were raised at trial and were considered by the learned judge (see the judge's reliance in his judgment on paragraph 4.6 of the financial due diligence report and the PR accounts). [38] In this appeal, the Appellant requests that this Court reassess the same documentary evidence but reach different conclusions from that of the High Court. Reversal of findings of facts by a trial judge requires demonstration that the learned judge's conclusion is plainly wrong or unsupported by the evidence on record. [39] The Appellant has not identified a clear misapprehension of evidence or a legal misdirection in the High Court's approach to the reclassification of the debts to PR. Instead, the Appellant invites this Court to arrive at a different view from that of the High Court of the same evidence. The Federal Court in Ng Hoo Kui v Wendy Tan (supra) reiterated that the "plainly wrong" test was not intended to be used by an appellate court as a means to substitute its own decision for that of the trial court on the facts. As long as the trial court's conclusion can be supported on a rational basis in view of the material evidence, the fact that the appellate court felt like it might have decided differently was irrelevant. Conclusion on Issue (1) [40] For these reasons, we find that appellate intervention is not warranted on Issue (1). The High Court's factual assessment of the reclassification and its weight in the overall transactional matrix of the Acquisition Exercise was supported by contemporaneous documents and was explained by the trial judge in his judgment. The Appellant has not met the threshold for overturning the High Court's findings of fact that DNH Group's indebtedness existed prior to the reclassification of the debts to PR. Issue 2: Whether the High Court erred in treating the reclassification as amounting to an effective assignment/transfer of the original creditor's rights to PR in the absence of evidence of assignment, consent of original creditors, payment to original creditors or other formal steps required for legal transfer. [41] The High Court accepted the sequence of agreements—Sale of Debt Agreements, the Assumption Agreement, and the Debt Settlement Agreement; as well as the letters dated 28 April 2016 evidencing PR's position, and PR's YE 2016 accounts showing the receivables. The learned trial judge concluded that the accounting entries and the Acquisition Exercise were implemented, and that the indebtedness, as reclassified and dealt with in the transactional documents, form the basis of the RCPS. [42] The Appellant contends that there was no legal assignment of the debts from the original creditors to PR, so there was no pre-existing debt to reclassify. It argues that the maxim nemo dat quod non habet applies since PR cannot validly sell to Al-Amin what it did not own. [43] The Respondents assert that the learned judge had properly considered the Agreements, due diligence reports, and PR's accounts. They contend that the Acquisition Exercise was carried out with the involvement of professional advisers and received approval from SGB's shareholders. The Respondents maintain that the trial judge was entitled to accept the documentary evidence and witness testimonies as evidencing the steps undertaken. Analysis and Findings on Issue (2) [44] The Appellant's argument focuses on the legal sufficiency of the evidence for the assignment or transfer of the rights of DNH Group's creditors to the debt. [45] At the trial before the High Court, the Appellant had pointed out that there was no direct evidence of each original creditor's written assignment or consent, as indicated in AFTAAS' financial due diligence report. The learned judge did consider the lack of direct assignment or consent documents. Nevertheless, he found the contemporaneous documents, the accounts, and the overall series of events to be persuasive. The High Court's reasoning, as stated in the grounds of judgment, was documentary and inferential. [46] In this appeal, the Appellant argues the same point again, and asks this Court to substitute our own view on the legal effect of the lack of direct evidence of the creditors' assignments against the other documents adduced at the trial. To justify us substituting our own views with that of the learned trial judge, the Appellant must show that the trial judge misapplied the law or reached a conclusion with no evidential foundation. [47] The grounds of judgment show that the judge did not ignore the absence of the direct assignment documents; he weighed that absence against the other contemporaneous documents and explained his conclusion. The learned judge in his judgment addressed the Appellant's concerns about the absence of the assignment from the original creditors raised by AFTAAS in the financial due diligence report. Paragraphs 92 and 93 of the judgment are produced below: [92] The Plaintiff argued that the Due Diligence reports are to be read with caution as the advisors had qualified their report to say their view was based on what documents were provided to them. [93] There is nothing that can be read to the qualifications that were made in the Due Diligence Reports. It was after all accepted by SGB who commissioned the due diligence exercise. The result of the due diligence report was also put to the shareholders of SGB during the EGM held to endorse the said corporate exercise. As such, this Court rejects any suggestion that the Due Diligence Reports were questionable for lack of information or documentary support. [48] In this appeal, the Appellant re-argues the evidential insufficiency but does not demonstrate a legal misdirection by the trial judge or the absence of evidence to support his conclusion. We note that the question of whether the reclassification had full legal effect against third-party creditors is a question of fact and was addressed by the trial judge in his judgment based on the evidence before him. [49] We agree with the learned judge that the results of the due diligence reports were accepted by SGB who had commissioned the reports, and were put before SGB's shareholders for their approval. The completion of legal and financial due diligence by SP on the DNH Group and their respective assets, and the results of the due diligence "being satisfactory to the Purchaser [SP] in its sole and absolute discretion", is one of the conditions precedents to the Share Sale Agreement: see clause 2.1.1 of the Share Sale Agreement. If SP was dissatisfied with the results of the due diligence because it claims that DNH Group's indebtedness were "fictitious and/or non-existent", it should have terminated the Acquisition Exercise as provided in clause 2.2 of the Share Sale Agreement. It should not have proceeded with the acquisition of the R1 and R2's shares in the Appellant, and with that DSSB and the remaining 1/2 share in Lot 613, and SGB should not have put the acquisition to its shareholders for approval. Conclusion on Issue (2) [50] For the above reasons, we find that the Appellant has not shown that the High Court's conclusion on the transactional effect of the reclassification and the Agreements was plainly wrong. The learned judge was not wrong to rely on the contemporaneous documents and PR's YE 2016 accounts in arriving at his findings. Accordingly, appellate intervention is not justified on this issue. Issue 3: Whether the High Court erred in its assessment of the Appellant's expert evidence, including by rejecting the expert as not objective, and by substituting the judge's own views on accounting treatment of deferred revenue. [51] The Appellant's accounting evidence during the trial was adduced through its expert witness, Mr. Richard Tan Loke Yew ("PW6"). PW6, together with Mr. Chan Kuan Chee, had prepared a written expert's report dated 13 September 2021 ("Expert Report"). [52] PW6's opinion was confined to the scope of his engagement and was premised on the application of private-entity accounting standards (PERS/MPERS) to the Appellant's and its subsidiary's management and audited accounts. The thrust of his evidence was that the DNH Group's published and management accounts did not support the existence of indebtedness in the sum of RM161,574,236.24, and that the accounts were overstated or misstated. On his analysis, there was nothing capable of being reclassified to PR. [53] The Respondents did not adduce expert evidence to rebut PW6's testimony. PW6 was therefore the sole expert witness before the High Court. [54] The learned High Court judge considered the Expert Report and PW6's testimony but ultimately accorded it limited weight. His Lordship identified several material shortcomings in PW6's evidence, including limitations in scope, methodology, as well as concessions made during cross-examination. [55] The learned judge explained that PW6's analysis relied principally on earlier management and audited accounts which pre-dated the 2016 reclassification of the debts, and which were therefore overtaken by subsequent events. His Lordship noted that neither the Appellant's or PR's audited financial statements for the relevant periods has been restated or qualified, a factor which he considered significant in assessing the reliability of the accounting records. [56] In preferring the contemporaneous documentary evidence including the Sale of Debt Agreement, the Assumption Agreement, the Debt Settlement Agreement, and PR's audited accounts for YE 2016—the learned judge concluded that the accounting entries reflected genuine transactions and were consistent with the Acquisition Exercise as implemented. [57] The Appellant submits that the High Court erred in rejecting PW6's expert evidence, particularly as it was unopposed. It contends that, in doing so, the learned judge impermissibly substituted his own views on the accounting treatment of deferred revenue, including by reliance on an open-source definition obtained from Investopedia, rather than accepting the unchallenged Expert Report. [58] The Respondents maintain that the trial judge was entitled to evaluate the expert's objectivity, the scope of his testimony, and any concessions made. They contend that even an unopposed expert opinion may be disregarded if the judge finds the expert's opinion unreliable or inconsistent with the evidence presented. Moreover, the judge's assessment of the expert's opinion constitutes a matter of trial evaluation and should be afforded deference. Analysis and Findings on Issue (3) [59] The Appellant's case rests on the proposition that an unopposed expert's opinion must be accepted. With respect, that is not an absolute rule: a trial judge may reject or limit the weight of expert evidence if the expert's scope, methodology, assumptions or concessions undermine reliability. [60] It is well settled that expert evidence is advisory in nature and does not bind the Court. Section 45 of the Evidence Act 1950 permits expert opinion to assist the court in matters requiring specialised knowledge but the responsibility for assessing such evidence and arriving at findings of fact remains with the Court. The Court of Appeal in Kulasingam s/o Samuel v Rasamah d/o JV Tambipillai [1997] 1 MLJ 288; [1997] 1 CLJ 406; [1997] 1 AMR 797 observed that "expert witnesses only give opinion evidence but the court is free to draw its own conclusions". [61] Even where expert evidence is unopposed, a trial judge is not bound to accept it if there are cogent reasons for rejecting or limiting its weight. Although as a general rule, a judge should not reject the opinion outright without judiciously considering whether the opinion is obviously indefensible and unsupported by the basic facts of the case, it may do so where the expert's opinion is undermined by deficiencies in methodology, scope, assumptions, or objectivity, or where it is inconsistent with the facts of the case: see Majuikan Sdn Bhd v Barclays Bank Plc [2015] 1 MLJ 171; [2014] 9 CLJ 337; [2014] AMEJ 1338, CA. [62] The Federal Court in Dr Shanmuganathan v Periasamy s/o Sithambaram Pillai [1997] 3 MLJ 61; [1997] 2 CLJ 153; [1997] 3 AMR 3012 at pp. 85-89 (MLJ) confirm that "the court is the final arbiter, not the experts or witnesses". It held that the learned judge was entitled to reject the expert's evidence after considering the evidence. [63] In the present case, the learned High Court judge did not reject PW6's evidence arbitrarily. His Lordship provided clear and reasoned grounds for doing so, including that:

PW6's mandate was narrowly framed and aligned to supporting the Appellant's position;

his analysis was confined to documents selected and supplied by the Appellant, without independent verification;

he did not engage with the Appellant's professional advisers or statutory auditors, nor seek clarification from those involved in the due diligence and preparation of the audited financial statements; and

his understanding of the Appellant's pleaded case was incomplete. [64] The learned judge's reasons for rejecting PW6's evidence are set out at paragraph 71 of the judgment and are reproduced below: a) PW6 conceded that he was not aware of the Plaintiff's claims in its entirety. In fact, his understanding was that the Plaintiff is seeking to nullify the RCPS because of "accounting errors or ambiguity". This is not the Plaintiff's case. This leaves a question mark as to accuracy of his findings; b) his mandate was specific and was designed to support the Plaintiff's case. It was obvious to this Court that PW6 was out to support the position advance by the Plaintiff. An example can be seen when he gave evidence on the treatment of "deferred revenue". It is the view of this Court that such a position taken is contrary to basic accounting practice. The answer given in re-examination was designed to defend the position of the Plaintiff; c) his analysis was purely based on information supplied by the Plaintiff/PW4. It was admitted by PW6 that he was guided by the Plaintiff and its documents was provided by PW4. Even his interview was only conducted with PW4. No other staff of SGB was interviewed by him. He confirmed that he only looked at the 15 documents as listed in the last page of his Report and nothing else. PW6 also confirmed that he did not state in his Report which documents he wanted to see but were not available or had been destroyed. To achieve a comprehensive and conclusive report, it is imperative that his enquires must go beyond the documents supplied; and he failed to engage the professionals such as the independent advisors involved namely Legal and Financial due diligence advisors as well as the statutory Auditors of the Plaintiff and the related companies. To this Court, this is a fundamental shortcoming of PW6's evidence. He ought to have sought the views of the professionals who prepared the various reports as well as contracted the statutory auditors who prepared the Audited Financial Statements of the relevant companies. Instead, he failed to do so, leaving the impression that he was only guided by what was given to him when the scope of his assessment should have been wider. [Emphasis added] [65] These were legitimate considerations by the learned judge bearing on the weight to be accorded to the expert evidence. [66] As regards the learned judge's reference to Investopedia in explaining the accounting concept of deferred revenue, we do not accept that this amounted to an impermissible substitution of judicial opinion for expert evidence. The reference was plainly illustrative and formed no part of the evidential foundation for the judge's findings. Those findings rested on the Agreements, the audited accounts, and the contemporaneous documentary matrix adduced at trial. The accounting treatment of deferred revenue was consistent with the due diligence findings and the recorded transactions. Conclusion on Issue (3) [67] The Appellant's complaint on this issue invites this Court to re-weigh the expert evidence and to prefer PW6's opinion over the trial judge's assessment. That is not the function of an appellate court. [68] The learned High Court judge had exercised his evaluative discretion judiciously, gave reasons for the weight he attached to the expert evidence, and grounded his conclusions in contemporaneous documents and audited accounts. The Appellant failed to demonstrate any misdirection in law or misapprehension of material facts by the learned judge. [69] Accordingly, we find that appellate intervention is not warranted in respect of Issue (3). Issue 4: Whether the High Court failed to draw adverse inferences or otherwise properly consider the legal significance of the R1, R2, R4 and R5's decision not to give oral evidence, and whether that failure affected the assessment of the Appellant's burden of proof. [70] None of the individual Respondents (R1, R2, R4 and R5) gave evidence during the trial. The Appellant contends that the High Court failed to appreciate the legal implications of R1, R2, R4 and R5's declining to give evidence. It submits that as the Acquisition Exercise and the issuance of the RCPS were matters within the knowledge of R1 and R2, "their failure to go into the witness-box is a relevant factor for the court to consider in determining whether the Appellant has discharged its burden of proof as a plaintiff in the action". They cite Takako Sakao (F) v Ng Pek Yuen [2009] 6 MLJ 751; [2010] 1 CLJ 381; [2010] 2 AMR 609, where the Federal Court held where the first respondent who was fully conversant with the facts "studiously refrained" from giving evidence, the evidence given by the appellant ought to have been presumed to be true, and the court ought to have drawn adverse inference against the first respondent. [71] The Respondents submit that the fact that they did not give evidence does not in any way remove the burden on the Appellant to prove their pleaded case with oral and documentary evidence of their own. They maintain that the Appellant knew from the Respondents' List of Witnesses that they were calling only one witness to testify, and that it could have subpoenaed any other witnesses it wished and called the makers of the documents that it wished to examine, but did not. Analysis and Findings on Issue (4) [72] The Appellant asks this Court to treat the absence of oral evidence from R1, R2, R4 and R5 as a reason for the court to draw adverse inference against the Respondents and to presume the evidence that the Appellant gave was true. However, neither the materials in the appeal record nor the Appellant's submission identify with specificity the precise evidence that R1, R2, R4 and/or R5 would have given, or a discrete and material lacuna in the documentary record that only their testimony could fill. [73] An adverse inference would be appropriate only if the Appellant can show that (a) the absent testimony was peculiarly within the knowledge of the witness who did not testify, (b) the documentary record left a material gap that only the testimony of the witness could fill, and (c) the judge's failure to draw an adverse inference produced real prejudice to the Appellant's ability to discharge its burden. [74] In Takako Sakao (F) v Ng Pek Yuen (supra), the appellant and the first respondent were partners in a restaurant business and they were the only two persons who were privy to the terms of their mutual arrangement in relation the payments made and the purpose for which they were made in respect of the purchase of the building where the restaurant has its business. The appellant in that case gave oral evidence on the terms of the arrangement and about the sums of money she had provided and the purpose for which they were provided. Unlike in this present appeal, in Takako Sakao (F) v Ng Pek Yuen, there were no contemporaneous documents and audited accounts to evidence the terms of the mutual arrangement between the appellant and the first respondent and about the sums of money the appellant had provided and the purpose for which they were provided. The Federal Court observed: [13] As partners the appellant and the first respondent owed each other a duty to act with utmost good faith towards each other. See, Blisset v. Daniel [1853] 68 ER 1022. The mutual understanding that both partners would purchase in their joint names, with financial contributions from each of them the building in which the business of their restaurant was being conducted and hold it in equal shares formed an integral part of the partnership... [75] The appellant in Takako Sakao (F) v Ng Pek Yuen could show that (a) the first respondent's absent testimony was peculiarly within her knowledge, (b) the lack documentary record of their mutual understanding, the sums of money paid by the appellant and the purpose for which the moneys were paid left a material gap that only the first respondent's oral testimony could fill, and (c) the judge's failure to draw an adverse inference against the first respondent produced real prejudice to the appellant's ability in that case to discharge her burden of proof. [76] Whereas in this present appeal, the Appellant's submissions do not establish any of these elements: they do not show that R1, R2, R4 and R5 alone possessed the missing facts in relation to the indebtedness. Also, the Appellant in its submissions did not point to a specific gap or lacuna in the contemporaneous documentary evidence that the judge ignored. [77] The learned judge in his judgment identified the deficiencies in the Appellant's pleadings. He highlighted that the Appellant did not particularise which of its and/or DSSB's debts, it alleges to be fictitious or who fabricated them. He said in paragraph 95 of the judgment: [95] The claim that the debt did not exist was only a one liner mentioned in paragraph 11 of the Statement of Claim which reads "Hutang yang di katakan tersebut adalah palsu dan/atau tidak pernah wujud". Nothing was pleaded and particularised as to how the said debts did not exist or was fictitious. [78] As the Appellant failed to particularise in its pleadings which debts are alleged to be fictitious or who fabricated them, in our view the absence of additional oral testimony from the Respondents is less likely to be decisive as the documentary record itself must bear the weight of proof. The Appellant did not show that the absent witnesses—R1, R2, R4 and R5—would have supplied the missing particulars. [79] The Appellant's case before this Court is silent about a) the absent testimonies that were peculiarly within the knowledge of R1, R2, R4 and/or R5, (b) the material gap in the documentary record that only the testimony of R1, R2, R4 and/or R5 could fill, and (c) the judge's failure to draw adverse inference produced real prejudice to the Appellant's ability to discharge its burden of proof that the debt was fictitious and/or nonexistent. The Appellant's silence is material: without particularising these elements, this Court cannot conclude that the learned High Court judge erred in declining to draw an adverse inference against the Respondents. Conclusion on Issue (4) [80] For the above reasons, we find that appellate intervention is not justified on Issue (4). The Appellant failed to prove based on the facts and circumstances of the case, the judge's action in not drawing adverse inference against the Respondents for not calling R1, R2, R4 and/or R5 as witnesses during the trial produced a plainly wrong outcome on the evidence adduced during the trial. Overall Conclusion [81] Having considered the record of appeal, the parties' submissions, and the reasons given by the learned High Court judge, we are not satisfied that any of the issues raised meet the threshold for appellate intervention. The High Court's findings were grounded on contemporaneous documentary evidence, audited financial statements, and the transactional matrix of the Acquisition Exercise. [82] The learned judge expressly relied on the audited financial statements for YE 2016, the Sale of Debt Agreement, the Assumption Agreement and the Debt Settlement Agreement, filings at the Companies Commission of Malaysia recording the allotment of the 161,632,017 RCPS to Al-Amin, and the due diligence reports. His Lordship evaluated the financial due diligence report, noted its limitations and the verification gap highlighted by AFTAAS, and weighed those matters in assessing the probative value of evidence. [83] Those contemporaneous materials formed the primary evidential foundation for the learned judge's conclusion about (i) the existence and quantum of DNH Group's indebtedness consolidated as "Existing Liabilities" in the Share Sale Agreement; (ii) the accounting entries and the RCPS allotment to Al-Amin as the mechanism for settlement of those Existing Liabilities, and (iii) the absence of proof of the Appellant's allegations of fabrication or fraud as regards the indebtedness. [84] The Appellant bore the legal burden to prove its pleaded allegations and of identifying the specific debts or accounting entries said to be fictitious. The High Court identified material deficiencies in the Appellant's case and found that it had failed to discharge its burden of proof that the indebtedness was fictitious and/or non-existent. The learned judge carefully examined the pleadings, the documentary record, and the oral evidence before concluding that Appellant had not proved its case. [85] In our view, this appeal does not demonstrate that the learned judge had misdirected himself on the applicable legal principles governing the burden of proof or failed to consider the relevant evidence. Rather, the Appellant's submissions amount to disagreements with the weight accorded by the learned judge to the evidence, rather than the identification of any legal error. The learned judge heard the evidence, observed the witnesses and had the advantage of assessing both their demeanour and the documentary evidence in its proper context. He had explained why he preferred the contemporaneous documents, and why he rejected aspects of the Appellant's expert evidence. These are classic matters of trial evaluation. An appellate court's role is not to re-weigh evidence merely because it might have reached a different conclusion: see Federal Court's reminder in Ng Hoo Kui v Wendy Tan (supra). Intervention is warranted only where the trial judge's findings are plainly wrong. [86] The Appellant's complaints, in substance, seek a re-evaluation of evidence and a substitution of this Court's view for that of the trial judge, which is impermissible absent a finding that the decision was plainly wrong. The Appellant has not demonstrated that the learned judge had misdirected himself in law, misapprehended the material facts, misapplied the standard of proof, or arrived at an irrational conclusion that no reasonable judge could have reached. [87] Accordingly, we find that the Appellant has not satisfied the criteria for appellate intervention and has not met the threshold for overturning the findings of the High Court.

[88] Therefore, we dismiss this appeal with costs. [89] The judgment of the High Court dated 14.02.2023 is affirmed. [90] Cost of RM50,000 to be paid by the Appellant to the Respondents, subject to allocatur. Dated: 30 January 2026 -Sgd- (FAIZAH BINTI JAMALUDIN) JUDGE COURT OF APPEAL MALAYSIA COUNSELS: For the Appellant: Steven Thiru Sia Siew Mun Alex Tan Chie Sian David Ng Yew Kiat Sew Chang Peng Jane Chan Siew Hing Hong Shen [Messrs Alex Tan Chie Sian] For the Respondents: Renu Zechariah Cheryl Kwan Manmohan Singh Kang [Messrs Rosley Zechariah]