Feruni Ceramiche Sdn Bhd v See Boon Sham (JA-22NCvC-151-10/2021)

that the Defendant together with one Yang Jian (Jimmy) operated a business identified as Foshanshi Yi Fang Ceramics Co. Ltd (which translated as One Land Ceramics Technology Co. Ltd) in China wherein the Defendant has, among others, made secret profits at the expense of the Plaintiff; Defendant refused, failed and/or neglected to supervise and/or verify matters relating to the accounting practices in China therefore causing the Plaintiff to suffer loss and damage; and Defendant’s service is suspended until further notice. [8] Consequently, the Defendant was also issued a show cause letter for him to respond to that allegations levelled by the Plaintiff. [9] On 15.9.2017, the Defendant responded to the show cause letter and gave his defence in which he denied all the Plaintiff’s allegations. [10] Again, on 14.10.2017, the Plaintiff sent the Defendant another show cause letter (“2nd show cause letter”) wherein the allegations are almost similar as stated in the previous show cause letter. Subsequently, on 16.10.2017, the Defendant replied the 2nd show cause letter. Similarly, the Defendant denied all the allegations stated by the Plaintiff. [11] On 26.10.2017, the Plaintiff sent the Defendant a notice of inquiry on the involvement of the Defendant with Foshanshi Yi Fang Ceramics Co. Ltd and One Land Ceramics Technology Trading. [12] On 1.11.2017, the Defendant sent the Plaintiff a notice of termination stating his decision to resign from the Plaintiff company with immediate effect. [13] Since the Plaintiff was not satisfied with the response given by the Plaintiff, on 1.11.2017, a domestic inquiry which consisted of 3 members was held by the Plaintiff to try all the charges proffered against the Defendant. The Defendant attended the inquiry to defend himself. Later, the domestic inquiry panel found that the Defendant was guilty as per charges. [14] Upon the Defendant’s resignation and the decision of the domestic inquiry panel, the Plaintiff requested the Defendant to provide the original statements of account for the Bank Account for the period of 14.10.2015 to 20.9.2017 to the Plaintiff. The Defendant complied with the request and on 13.11.2017, the said statements of account were sent to the Plaintiff. [15] Upon receiving the statements of account, the Plaintiff conducted an investigation and discovered that the Defendant had failed to account for a sum amounting to RMB7,200,337.80 to the Plaintiff. As such, the Plaintiff requested the Defendant to pay or return RMB7,200,337.80 to the Plaintiff. However, the Defendant failed to pay the said sum which led the Plaintiff to file this Writ and Statement of Claim for the following reliefs, inter alia:

an order that the Defendant within 14 days is to pay to the Plaintiff the sum of RMB7,200,337.80 or a sum equivalent to the same in Malaysian Ringgit. [16] The Defendant in refuting the Plaintiff’s claim avers that –

the Defendant has no knowledge towards the monies deposited by the Plaintiff into the Bank Account; and [17] The Defendant also files the counter claim against the Plaintiff for a sum of RM50,200.00 being the Defendant’s appointment fees as an independent contractor holding the post of R&D and Production Consultant. [18] A full trial for this suit was conducted where the Plaintiff called six witnesses while the Defendant appeared as the sole witness for himself. Whether the principle of constructive trust is irrelevant as it is not pleaded by the Plaintiff [19] The Defendant contends that the principle of constructive trust is irrelevant as it is not pleaded by the Plaintiff as its cause of action against the Defendant. [20] On this issue, I find the Plaintiff has in paragraphs 11 to 13 of its Statement of Claim stated that the company deposited the sum of RMB12,208,314.49 into the Bank Account for the purpose of the Plaintiff’s business and operations in China. It is further pleaded by the Plaintiff that the Defendant holds the monies deposited as a trustee in favour of the Plaintiff. Thus, the Defendant’s argument that the issue of constructive trust is not pleaded by the Plaintiff, is misconceived. Whether the Plaintiff failed to prove that the Defendant is a trustee to the monies deposited by the Plaintiff into the Bank Account [21] The Defendant argues that the Plaintiff failed to prove that the Defendant is a trustee to the monies deposited by the Plaintiff into the Bank Account. The Defendant further submits that the Plaintiff failed to prove that there are elements of certainty of intention, certainty of subject matter and certainty of subject as to create a trust as decided in Ho Min Hao & Anor v. Ho Yee Chin & Anor [2016] 4 CLJ 726; [2016] 10 MLJ 60; [2017] 4 MLRA 49; [2016] 2 AMR 455. [22] At this juncture, it is apt to note that in the House of Lords case of Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 it was held, amongst others, that if a transferor transfers an asset to the transferee for a specific purpose, that asset ought to be used only for that specific purpose. In the event that the specific purpose fails, a resulting trust will then arise in favour of the transferor for the transferred asset whereby the transferor may then take back the transferred asset from the transferee. This form of trust is known as a Quistclose Trust. [23] The principle of Quistclose Trust was approved and adopted by the Federal Court in PECD Bhd & Anor v. Am Trustee Bhd and other appeals [2013] 9 CLJ 841, where Richard Malanjum CJSS (as the Lordship then was) when delivering the apex court judgment said – [43] Hence, it would appear that based on what was said by Lord Millett the equitable principle that evolved would be that in a Quistclose trust the beneficial interest would remain with the lender or provider of the money. It is therefore the lender or provider of the money who has the right to enforce the trust in the event the exclusive purpose in the lending or giving of the money failed. [24] The question is whether the Plaintiff has established the Quistclose Trust in the present suit. [25] It is without doubt that the Plaintiff through its agents namely Deng Han (PW2), Deng Haiyuan (PW3) and Li Baojian (PW4) had deposited the sum of RMB12,208,314.49 into the Bank Account for the purposes of the Plaintiff’s business and operations in China. [26] PW2 in his witness statement stated that – Q3. Mr. Deng Han, what is your involvement in this suit? PW2: As one of the agents of the Plaintiff in China, the Plaintiff had deposited the sums to the Defendant’s Bank Account in China through my bank account in China. I was given the Defendant’s Bank of China account bearing Account Number: 708152602160 and over a period of time, that is between 03.11.2015 to 11.08.2017, I deposited a total sum of RMB672,962.35 into the Defendant’s Bank account. Mr. Deng Han, can you show the Court how and when the monies were deposited into the Defendant’s account? PW2: Certainly. The transactions that was made through my bank account from 3.11.2015 to 11.08.2017 are as follows: a) on 25.4.2016, I deposited a sum of RMB500,000.00 by cash over the counter; and b) on 21.9.2016, I deposited a sum of RMB172.962.35 by cash over the counter [27]

Court may presume existence of certain fact The court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct, and public and private business, in their relation to the facts of the particular case. ILLUSTRATIONS The court may presume —

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that evidence which could be and is not produced would if produced be unfavourable to the person who withholds it; [42] In Subry bin Hamid v. Husaini bin Tan Sri Ikhwan & Anor [2006] 4 CLJ 50; [2006] 6 MLJ 229 Gopal Sri Ram JCA (as the Lordship then was) held – [7] I am conscious that s. 114(g) of the Evidence Act 1950 confers a discretion on a trier of fact to draw such an inference. See Synn Lee & Co Ltd v. Bank of China [1962] CLJU 189; [1962] MLJ 395. But the discretion is one which is required to be exercised judicially. So, where a party to an action provides no reasons as to why material witnesses were not called to give evidence, the court will normally draw an adverse inference. See Guthrie Sdn Bhd v. Trans-Malaysian Leasing Corp Bhd [1991] 1 CLJ Rep 155; [1991] 1 MLJ 33. [8] In Wisniewski v. Central Manchester Health Authority [1998] P.I.Q.R. 324, Brooke LJ when delivering the judgment of the Court of Appeal quoted from a number of authorities including the following passage from the speech of Lord Diplock in Herrington v. British Railways Board [1972] AC 877: The appellants, who are a public corporation, elected to call no witnesses, thus depriving the court of any positive evidence as to whether the condition of the fence and the adjacent terrain had been noticed by any particular servant of theirs or as to what he or any other of their servants either thought or did about it. This is a legitimate tactical move under our adversarial system of litigation. But a defendant who adopts it cannot complain if the court draws from the facts which have been disclosed all reasonable inferences as to what are the facts which the defendant has chosen to withhold. [9] Brooke LJ then went on to say as follows: From this line of authority, I derive the following principles in the context of the present case:

In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.

If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.

There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.

If the reason for the witness's absence or silence satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified. [10] More recently, in Crawford v. Financial Institutions Services Ltd (Jamaica) [2005] UKPC 40, Lord Walker of Gestingthorpe when delivering the Advice of the Privy Council said this: It is well settled that in civil proceedings the court may draw adverse inferences from a defendant's decision not to give or call evidence as to matters within the knowledge of himself or his employees. [11] Based on the authorities cited, I am of the respectful view that the failure of the learned judicial commissioner to draw an adverse inference against the defendants is a serious misdirection which has occasioned a miscarriage of justice. In my judgment, the plaintiff was entitled to a finding from the High Court that he had established a prima facie case that he had been induced to plead guilty to the charge. That prima facie case which must be presumed to be true in the absence of any explanation from the defendants was strengthened and became-to borrow the words of Lord Lowry in R. v. IRC ex parte; TC Coombs & Co [1991] 2 A.C. 283- 'a strong or even an overwhelming case' as a result of the defendants' silence." [43] In the circumstances, it is my considered view that the Defendant has failed to discharge his burden pursuant to s. 103 of the EA and this Court is entitled to invoke an adverse inference pursuant to s. 114(g) of the EA against the Defendant for failing to call Yang Jian as a witness. The failure of the Defendant to call Yang Jian and/or Gidget Lim has weakened his case. As such, the Defendant has failed to establish that the Bank Account is controlled by Yang Jian and/or Gidget Lim. The Defendant’s counterclaim [44] The crux of the Defendant’s counterclaim against the Plaintiff is that the Plaintiff has allegedly failed to pay the Defendant’s appointment fee in the form of wages. [45] On this issue, it is an undisputed fact that the Plaintiff appointed the Defendant as the R&D and Production Consultant. Nevertheless, I find there is no evidence before this Court to support the Defendant’s assertion that there are any wages due and owing to the Defendant by the Plaintiff. [46] In fact, the Defendant himself has admitted during the cross examination that there is no evidence in respect of the outstanding wages. The Defendant said – Peguam Plaintif: So before the court today, alright, there is no evidence of any outstanding wages to you? Yes agree [47] I also find that the Defendant did not raise the issue of outstanding wages in his resignation letter dated 1.11.2017. It was only raised after the filing of this suit by the Plaintiff. This is confirmed by the Defendant when asked by the Plaintiff’s solicitor – Peguam Plantif: Okay, and going back to your resignation letter. Okay you resign on 1.11.2017. Okay, let me just read this very quickly to you. I’m writing to inform you my decision to resign form Feruni Ceramiche effective 01.11.2017. I have greatly enjoyed working for you for the past 10 years. I feel that I have learned a lot and grown professionally during my time in your employ. I appreciate opportunity to have worked with such a great group of people. Please feel free to contact me with any questions about the project I have been working on. In the coming weeks before March 1, I am happy to help in any way with the transition process. Thank you for your understanding of my decision to leave the company, and all your support over the years. I wish you all the best for your continue success. Thank you, your faithfully, name, signed. Alright. This is your last resignation letter. Correct? Yeah. Correct. Peguam Plantif: Do you agree with me that you have not even said that you owe me money? In this letter, do you agree with me that there is no mention of outstanding wages? Yes [48] Further, the Defendant also has not specified in detail on what month that his fee was not paid. In his testimony, the Defendant said – Peguam Plaintif: I’ll share screen yeah, okay. This is your counter claim, alright. You said 4 months for RM15 thousand, okay. And that’s about it. Do you agree with me, that you have not particularize the month that you were not paid? You didn’t said what month, what month you were not paid? Yes, I agree [49] As such, I find that the Defendant failed to substantiate his counterclaim and not only that, he himself was unable to specify his claim. Thus, I agree with the Plaintiff that the Defendant’s counterclaim is nothing more than an afterthought. Conclusion [51] Based on all the reasons explained, I allow the Plaintiff’s claim and dismiss the Defendant’s counterclaim with costs. Dated: 5.4.2025 -SIGNED- (SHAMSULBAHRI BIN HAJI IBRAHIM) Judge, Johor Bahru High Court Counsels: For the Plaintiff - Goh Keng Tat (Elfeez Thariq with him); Messrs. Goh Keng Tat & Co. For the Defendant - CK Yap; Messrs. CK Yap & Partners