Felix Relocations (M) Sdn Bhd v Ivs Itechnics (M) Sdn Bhd (BA-22NCvC-159-04/2021)

FELIX RELOCATIONS (M) SDN. BHD.

CAROLINE TUNGGA ANAK NUING …PLAINTIFFS

IVS ITECHNICS (M) SDN BHD

DATIN GIRIJA A/P SUBRAMANIAM (NRIC NO.: 750311-05-5440) …DEFENDANTS 31/12/2025 14:27:48 BA-22NCvC-159-04/2021 Kand. 99

This is a civil action arising from a transaction between parties who were, at the material time, “friends” and business acquaintances. What began as a relationship of trust later turned sour, giving rise to this dispute.

The Plaintiff claims that a sum of RM2,000,000.00 was advanced to the Defendants as a friendly loan, whereas the Defendants contend that the same sum was intended as an investment. The disagreement over the true nature of this transaction ultimately led to the present action for breach of contract.

After hearing the parties and considering the evidence as a whole, I found, on the balance of probabilities, in favour of the Plaintiff. I was satisfied that the monies advanced were intended to be a loan, and not an investment, and that the Defendants had failed to establish otherwise. I also found that there was misrepresentation on the part of the Defendants, which justified the lifting of the corporate veil.

These are my full grounds of judgment on all issues raised by the parties.

The 1st Plaintiff, Felix Relocations (M) Sdn Bhd, is a company incorporated in Malaysia. It was not disputed that the 2nd Plaintiff acted on behalf of the 1st Plaintiff in the dealings with the Defendants.

The 2nd Plaintiff (hereinafter referred to as the Plaintiff) is the director and share holder of the 1st Plaintiff who, had a personal and business relationship with the Defendants.

The 3rd Plaintiff is the Plaintiff’s wife and was joined on the basis that she and the 2nd Plaintiff hold a joined bank account. No independent factual role was pursued in respect of her at trial, and the Defendants proceeded without objection on the basis that the issues for determination rested on the dealings between the Plaintiff and the Defendants.

The 1st Defendant (D1) is a company incorporated in Malaysia and, was involved in business activities that the 2nd Defendant claimed required funding.

The 2nd Defendant (D2) is an individual who is a director and the controlling mind of D1. D2 dealt directly with the Plaintiff in relation to the transaction that is the subject of this suit.

With regard to the 3rd Defendant, the Plaintiff discontinued his action against her on 18.1.2024.

Unless otherwise stated, references to “the Defendants” refer to both D1 and D2.

The Plaintiff’s case, as pleaded and advanced in evidence, is that he advanced a sum of RM2,000,000.00 to D1 at the request of D2 as a friendly loan, arising out of their personal relationship and mutual trust. According to the Plaintiff, he knew D2 through professional and social circles, including the Rotary Club, and that a relationship of trust existed between them.

According to the Plaintiff, D2 approached him on several occasions, requesting financial assistance in the form of a friendly loan. D2 represented that the monies were required for D1’s business expansion, specifically for the purchase of vessels through court auctions.

The Plaintiff testified that he was shown documents and correspondence relating to bidding processes, including letters to the Sheriff and Receiver of the Admiralty Court, and was informed that lawyers had been appointed for that purpose.

Relying on these representations and the relationship of trust, the Plaintiff advanced monies to the Defendants in several tranches. The transfers were made pursuant to written requests by the Defendants, which consistently used the word “loan” or “loan funds”. In total, RM2.95 million was advanced, of which RM2 million remains outstanding.

Plaintiff further states that there was never any discussion or agreement regarding profit-sharing, investment returns, or participation by the Plaintiff in any business venture. The Plaintiff did not receive any document evidencing an investment arrangement.

Subsequently, the Defendants made partial repayments. These repayments were not described as profits or returns on investment, and the Plaintiff treated them as partial repayment of the loan.

On the Defendants’ side, their witness, Mahendran A/L Chllmuthu, testified that he was involved in vessel bidding activities and claimed that inspections and bidding preparations were carried out. However, under cross-examination, he accepted that no vessel purchase was ultimately completed.

D2 testified that the monies were intended as part of an investment arrangement involving the Plaintiff, himself and Mahendran. He claimed that he had also invested his own funds and that the funds were advanced for business expansion, including the purchase of vessels.

No written agreement, board resolution, or documentary evidence evidencing an investment structure, profit-sharing arrangement, or completed vessel purchase was produced by the Defendants. Agreed Issues to be Tried

The agreed issues for determination are:

Whether the sum of RM2,000,000.00 advanced by the Plaintiff was a loan or an investment.

Whether there was a valid and binding loan agreement between the Plaintiff and the Defendants or D2, notwithstanding the absence of a formal written agreement.

Whether D2 had misrepresented the purpose for which the monies were requested and utilised, in particular, whether the Plaintiff was induced to advance the monies on the basis that they were to be used for the purchase of vessels.

Whether the partial repayments made by the Defendants constituted an acknowledgement of indebtedness, consistent with a loan arrangement.

Whether the Plaintiff is entitled to the reliefs claimed, including repayment of the sum advanced, damages to be assessed, interest, costs, and the lifting of the corporate veil as against D2.

These issues form the core of the dispute between the parties and will be addressed in the analysis that follows.

The central issue is whether the monies advanced constituted a loan or an investment. In determining this issue, I will look at the substance of the transaction, the intention of the parties, and their conduct.

After due consideration of the narratives of fact advanced by both parties, and having evaluated the evidence as a whole, I am inclined to accept the Plaintiff’s case that the monies were not an investment but a loan.

I accept the Plaintiff’s evidence that there was no discussion, agreement, or documentation indicating any intention to enter into an investment or profit-sharing arrangement. The written requests made by the Defendants or D2 personally repeatedly referred to the monies as “loan” or “loan funds”.

Further, the nature of the relationship between the Plaintiff, D2, and Mahendran does not support the existence of any consensus ad idem to enter into an investment arrangement.

Guided by Tan Aik Teck v Tang Soon Chye (2007) 6 MLJ 441, I find that the absence of formal documentation does not convert a loan into an investment, and that the Court must look at the context, conduct, and intention of the parties. I agree with this approach and find it applicable to the present facts. The surrounding circumstances here point consistently towards a loan rather than an investment. Use of Monies, Effect of Partial Repayment and Acknowledgement of

The Defendants attempted to argue that the absence of repayment terms and the alleged hope of profit indicated an investment. However, no authority was cited by the Defendants to support the proposition that a lack of formal terms or documentation necessarily transforms a loan into an investment. I therefore find this argument unpersuasive.

The Defendants failed to produce satisfactory evidence to account for the use of the monies advanced. No documentary proof of completed vessel purchases or investment activity was tendered.

The partial repayments made by the Defendants or by D2 personally are inconsistent with an investment arrangement. In the absence of any explanation that such payments represented investment returns, I find that they constitute acknowledgements of indebtedness.

This approach is consistent with the principle in Tan Swee Hoe Co Ltd v Ali Hussain Bros [1980] 2 MLJ 16, where the court drew inferences of indebtedness from payment conduct.

The Plaintiff expressly challenged the credibility and reliability of D2 as a witness. In substance, the Plaintiff submitted that:

D2’s evidence was internally inconsistent, particularly on the alleged investment purpose and the supposed purchase of vessels.

The evidence shows that the Defendants failed to account properly for the use of the monies advanced. No documentary evidence was produced to show any completed vessel purchase or investment activity. D2’s explanation as to how the RM2 million was utilised was vague and unsupported, which undermined his credibility.

The Plaintiff emphasised that D2’s oral testimony was not corroborated by independent evidence, whereas the Plaintiff’s case was supported by documentary records (letters of request, bank transfers, and repayment records).

The partial repayments made by the Defendants are inconsistent with an investment arrangement and amount to an acknowledgement of indebtedness. This supports the Plaintiff’s case that the transaction was a loan.

The Plaintiff submitted that these credibility issues justified the Court preferring the Plaintiff’s version of events, which I agree.

The Defendants, on the other hand, submitted that:

The Plaintiff was an experienced businessman and would not have advanced RM2 million without expecting some form of return.

The Plaintiff’s claim that the transaction was a “friendly loan” was said to be self-serving and not reflective of commercial reality.

The absence of a written loan agreement and fixed repayment terms was relied upon to suggest that the Plaintiff’s evidence should be treated with caution.

However, the Defendants did not point to any material inconsistencies in the Plaintiff’s testimony, nor did they adduce documentary evidence to directly contradict the Plaintiff’s version of events.

After considering both parties on the credibility of the witnesses, I prefer the Plaintiff’s evidence. The Plaintiff’s testimony was consistent with the contemporaneous documents and was supported by the surrounding circumstances, including the manner in which the monies were requested, transferred, and partially repaid.

In contrast, D2’s evidence on the alleged investment and intended purchase of vessels was not supported by any independent documentary evidence and was marked by material gaps. On a balance of probabilities, I find the Plaintiff’s version of events to be more credible and reliable.

The Defendants’ reliance on Lee Choon Lan v Alpine Green Sdn Bhd [2010] 7 MLJ 488 does not assist them. I find that this case is distinguishable on its facts. That case involved a different factual matrix, including corporate reimbursement and a clear justification for the transaction. In the present case, there was no evidence of any agreed investment structure or corporate justification for the transfers.

In addition, the Plaintiff testified that the monies disbursed were used by D2 for personal purposes, and not for any identifiable business or investment activity (reference was made to the banking statements of the Defendants). This allegation was not satisfactorily rebutted by the Defendants.

Despite asserting that the funds were meant for the purchase of vessels, the Defendants failed to adduce any documentary evidence of such purchases, inspections, deposits, or ownership. There were no invoices, contracts, or third-party confirmations produced. In my view, this absence of evidence seriously undermines the Defendants’ investment narrative.

It is not disputed that partial repayments were made by the Defendants to the Plaintiff. The Defendants contended that these repayments were refunds of investment capital and not repayments of a loan.

I reject this contention. The Plaintiff relied on Kris Heavy Engineering & Construction Sdn Bhd v Lewis & Co (Advocates & Solicitors) (2017) MLJU 906, where the High Court held that part-payments constitute an acknowledgement and admission of indebtedness. I accept and apply this principle.

The repayments were made without any explanation that they represented profit, dividends, or capital redemption. Further, the Defendants did not protest or assert at the material time that the transaction was not a loan. In my view, the partial repayments are wholly consistent with a debtor repaying a loan, and not with an investor exiting an investment.

Additionally, the Plaintiff relied on Sulaiman bin Ahmad & Ors v Jemain bin Mohamed & Ors (2020) 11 MLJ 616, where the Court held that admissions in pleadings constitute the highest form of admission. I note that the Defendants’ own pleadings and conduct acknowledge repayment, which further supports the Plaintiff’s case.

The Defendants cited no authority to support their position that repayment, without more, negates the existence of a loan. I therefore find that the partial repayments amount to an acknowledgement of debt.

The Defendants’ defence rests heavily on the assertion that the monies were advanced for the purpose of purchasing vessels. However, I find this defence to be untenable.

There is no evidence that any vessels were purchased, inspected, or even identified with certainty. There is also no evidence that any deposits were paid for such a purpose. In contrast, the Plaintiff’s evidence shows that representations were made that the monies would be used for this purpose, when in fact this did not materialise.

The evidence of Mahendran was, in my view, unsupported by any contemporaneous documentary material. When questioned on the alleged inspection of vessels, he was unable to give clear or confident answers as to how, when, or in what manner such inspection was carried out. His evidence on this aspect remained vague and uncorroborated. In the circumstances, I am unable to place weight on his testimony to support the Defendants’ assertion that the monies were utilised, or genuinely intended to be utilised, for the purchase of vessels.

I therefore find that D2 misrepresented the purpose of the funds to induce the Plaintiff to advance the monies. This finding is consistent with the reasoning in Tan Aik Teck where the Court recognised that abuse of trust and misleading representations may be inferred from conduct and surrounding circumstances.

The Defendants argued that the absence of formal repayment terms negates the existence of a loan. I do not agree.

The absence of formal repayment terms does not, in law, negate the existence of a loan, where there is clear evidence that monies were disbursed and received with an obligation to repay. The evidence here shows that the monies were requested, transferred, received, and partially repaid. This is sufficient to establish a loan on a balance of probabilities.

The Plaintiff further seeks to hold D2 personally liable and to lift the corporate veil of D1.

The applicable legal principles are well settled. In Solid Investments Ltd v Alcatel-Lucent (Malaysia) Sdn Bhd

1 MLRA 526, the Federal Court held that the corporate veil may only be lifted where there is evidence of actual fraud or conduct amounting to fraud in equity. This principle was reaffirmed in Gurbachan Singh Bagawan Singh & Ors v Vellasamy Pennusamy & Ors (2015) 1 MLRA 107 (Federal Court). I quote for reference: “...it is now a settled law in Malaysia that the court would lift the corporate veil of a corporation if such corporation was set up for fraudulent purposes, or where it was established to avoid an existing obligation or even to prevent the abuse of a corporate legal personality ... As to what constitutes fraudulent purposes it has been described as to include actual fraud or fraud in equity (see Law Kam Loy &Anor v. Boltex Sdn Bhd and others). And fraud in equity occurred in ‘... cases where there are signs of separate personalities of companies being used to enable persons to evade their contractual obligations or duties, the court would disregard the notional separateness of the companies...”.

I am satisfied, on the evidence before me, that this is an appropriate case to lift the corporate veil. The evidence shows that D2 treated D1 as his personal extension, received and utilised the Plaintiff’s funds, and misrepresented the purpose for which the monies were advanced. The company structure was used to facilitate and conceal the true nature of the transaction.

I also take guidance from Syarikat Faiza Sdn Bhd & Anor v Faiz Rice Sdn Bhd & Anor (2017) MLRHU 1156, which recognises that where an individual is the directing mind and alter ego of a company, personal liability may arise where there is abuse of the corporate structure.

The Defendants’ argument that there was no fraud and that refunds demonstrate good faith is unsupported by authority and contradicted by the evidence. I therefore reject this submission.

Guided by the authorities cited and having considered the totality of the evidence, I find that the Plaintiff has successfully proven that: - The sum of RM2,000,000.00 was a friendly loan; - The Defendants failed to repay the outstanding amount; - D2 misrepresented the purpose of the loan; and - The circumstances warrant the lifting of the corporate veil.

For the reasons set out above, I reiterate and find that the Plaintiff has proven, on a balance of probabilities, that the sum of RM2,000,000.00 advanced to the Defendants was a friendly loan and not an investment.

Accordingly, the Plaintiff’s claim is allowed. Judgment is entered in favour of the Plaintiff against the Defendants, jointly and severally, in terms of prayers (a), (b), (c), (d) and (e) as set out in paragraph 20 of the Amended Statement of Claim, with damages to be assessed.

I hereby order as follows:

The sum of RM2,000,000.00 shall be paid by D1 and D2 to the First Plaintiff.

A declaration is granted that the corporate veil of D1 is lifted, and this action may be brought personally against D2.

General damages for fraudulent misrepresentation against D1 and D2, to be assessed by this Court.

Interest at the rate of 5% per annum on the judgment sum, to be calculated from the date of judgment until full payment.

Interest at the rate of 5% per annum on the general damages, to be calculated from the date of judgment until full settlement.

The Plaintiff is awarded costs of RM50,000.00, subject to allocator.

The Plaintiff is directed to file a Notice of Assessment within 30 days from the date of this judgment, failing which the Plaintiff shall be deemed to have abandoned the assessment. Dated this: 29th December 2025 ~signed~ (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR For the Plaintiff : Dato’ Jasbeer Singh Kaura together With Jeyshini Naidu a/p G. Kali Das Messrs Jasbeer, Nur & Lee For the Defendants : Aravind Raj a/l T Paramasivam together with Atifah Muhammad