Foo Yong v Sui Diong Hoe (WA-22NCC-141-04/2018)

This is an application by the Defendant to strike out the claim of the Plaintiff. I have dismissed the application. These are the full reasons for my decision.

At all material times between 2013 until 2015, the Plaintiff was the director and shareholder of Globetel Limited (“the Company”) and the Defendant was the executive director of the Company. 2

On various dates towards the end of 2013 and in February 2014, the Plaintiff had paid a total sum of SGD3,576,895.59 into the Defendant’s personal account in Singapore.

The Plaintiff has consistently maintained that he paid the said sums to the Defendant on the understanding and belief that the sums are for the benefit of the Company.

On the 1.4.2015, the Plaintiff signed a Share Sale Agreement with one Eric Yap and one Teh Kian Chye (“the Share Sale Agreement”) for the sale of the entire paid up shares in the Company for

Clause 4.2 of the Share Sale Agreement set out as follows: “The Vendor (Foo Yong) hereby agrees that notwithstanding the fact that the Vendor had, in the Vendor’s personal capacity (but not on behalf of the Company) previously waived the Vendor’s right to claim the sum of Ringgit Malaysia Seven Million (RM7,000,000.00) from David Sui in respect of the Company Fund, in the event that the Company shall decide to pursue any legal action against David Sui including legal action for the recovery of the Company Fund or any part thereof, the Vendor shall render all cooperation 3 and testify in court on behalf of the Company in respect of the amount paid by the Vendor to David Sui on the Company’s behalf.”

On 21.12.2015 the Company, represented by Messrs Tiong & Woon commenced an action against the Defendant for the recovery of the same sum advanced to the Defendant by the Plaintiff vide Kuala Lumpur High Court Suit No. 22 NCVC-693-12/2015 (“the said Suit”).

The Plaintiff herein affirmed an affidavit to support the application for summary judgment filed by the Company as plaintiff in the said Suit. The High Court struck out the said Suit but on appeal the decision of the High Court Judge was reversed.

The Defendant relies on limbs (a) (b) and/or (d) of Order 18 r 19. Thus the Defendant claims that the claim of the Plaintiff disclosed no reasonable cause of action, was frivolous, vexatious and otherwise tantamount to an abuse of the process of the Court.

The leading authority on Order 18 r 19(1) is the Supreme Court decision in Bandar Builder Sdn Bhd v United Malayan Banking 4 Corporation Bhd [1993] 3 MLJ 36, and in particular, the following part of the judgment of Mohamed Dzaidin SCJ (as he then was): “The principles upon which the Court acts in exercising its power under any of the four limbs of O. 18 r. 19(1) rules of the High Court are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule (per Lindley M.R. in Hubbuck v Wilkinson [1899] 1 QB 86, p. 91), and this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the fac of it “Obviously unsustainable” (Attorney General of Duchy of Lancaster v L. & N.W. Ry. Co. [1892] 3 Ch. 274, CA). It cannot be exercised by a minute examination of the documents and facts of the case, in order to see whether the party has a cause of action or a defence (Wenlock v Moloney [1965] 1 WLR 1238; [1965] 2 All ER 871, CA.). The authorities further show that if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O. 33 r. 3 (which is in pari material with our O. 33 r. 2 Rules of the High Court) (Hubbuck v Wilkinson) (supra). The Court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that the defences raised are not arguable”.

Reference is also made to the case of Meeriam Rosaline a/p Edward Paul v William Singam a/l Raja Singam [2010] 3 MLJ 541 where the Court of Appeal held that: 5 “That the mere fact that the pleading is weak and not likely to succeed at trial is no ground for the pleading to be struck out. Summary process is inappropriate where the facts and issues raised are in dispute and ought to be determined through cross examination of witnesses or where it requires serious arguments.”

The Defendant submits that the Plaintiff has no cause of action against him because there has been accord and satisfaction between the parties in this case.

On accord and satisfaction, YA Justice Syed Helmi B Syed Ahmad (as he then was) in the case of Mislisha Binti Lagiman v Linguaphone Distributors Sdn Bhd [2003] 1 LNS 598 held as follows: “This defence is commonly known as ‘accord and satisfaction’ and moves on the pretext of simple contract law and Keith R Evans in his book, The Law of Defamation in Singapore and Malaysia, 2nd Edition (p 97) puts it thus; “That valuable consideration can take the form of promise to do certain things, in which case the acceptance of the promise will discharge the claim”. In Philips v Clagett [1843] 11 M&W 84, it was held that it is a complete defence to any action for the defendant to prove that he has obtained from the 6 plaintiff at any time prior to judgment a surrender of the cause of action given for valuable consideration. Since accord and satisfaction provides a complete defence to an action for defamation the determination of its meaning is necessitated. In British Russian Gazette Ltd v Associated Newspaper Ltd [1933] 2 K.B. at 643 Scrutton LJ stated:- “Accord and satisfaction” is the purchase of a release from an obligation whether arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative”. It is clear from this passage that the operation of “accord and satisfaction” is nothing more than the ordinary application of the law of contract, though the subject matter of the contract may well concern a tort. The approach a Court should take in determining whether there has been “accord and satisfaction”, both in law and fact, is well settled and the best exposition of it appears in Roskill J.’s judgment in Margaronis Navigation Agency Ltd v Henry W. Peabody & Co of London Ltd [1965] 1 Q.B. 300 at 319. 7 “Where the question arises whether a particular obligation has been performed, the first thing that has to be done is to ascertain the nature of the obligation. That depends upon the construction of the contract and the construction of the contract is, of course, a question of law. But that is only one part of the equation. Having ascertained what the obligation is, one then has to measure the performance, and see whether the performance fulfils the obligation. That again ultimately is either a question of law or a question of mixed facts and law; not perhaps in every case, but in a great many cases”. The importance of ascertaining the exact terms of the compromise or “obligation”, as Roskill J puts it, is that it determines the question of whether or not the plaintiff can rely on his original cause of action. If, for instance, the promised or actual forbearance to pursue the claim is construed as being in return for the promised performance of some act by the other, or whom I would call the offending party, the agreement will be regarded as one involving the immediate discharge of the claim. But if the promised or actual forbearance is construed as being in return for the actual performance of some act by the offending party, the claim forborne will not be discharged until such performance takes place (see, the British Russian Gazette’s case, supra), and if in this respect the offending party fails to perform the terms of the compromise, the other party has an option to either accept the offending party’s repudiation of the compromise and re-assert his original claim or affirm the compromise and sue upon it”. 8 On compromise, Chitty on Contracts – General Principles (27th Edition) states at para 22-012:- “In order to establish a valid compromise, it must be shown that there has been agreement (accord) which is complete and certain in its terms, and that consideration (satisfaction) has been given or promised in return for the promised or actual forbearance to pursue the claim”. And at para 22-019, on evidence of accord:- “The question whether there has been an accord and satisfaction is a question of fact. Thus, retention and use by a creditor of a cheque sent by a debtor in full and final satisfaction of a larger claim does not as a matter of law, constitute an accord and satisfaction. The intention of the creditor in cashing the cheque must be objectively ascertained. Cashing a cheque or retention of a cheque without rejection is strong evidence of assent by the creditor but it is not conclusive evidence so that a creditor who, at the moment of paying in the cheque, makes clear that he is not assenting to the conditions imposed by the debtor will not be held to have entered into an accord and satisfaction. The construction of any correspondence which, it is alleged, evidences the accord is, however, a question of law”. From the above, what comes across as clear is the following:- 9

The defence of “accord and satisfaction” may be held to extinguish a cause of action of a litigant;

It is for the defendant to prove that there is indeed ‘accord and satisfaction’;

The operation of ‘accord and satisfaction’ is nothing more than the ordinary application of the law of contract;

The accords is the agreement by which the obligation is discharged;

It must be shown that the agreement is complete and certain in its terms;

The question whether there has been an accord is a question of fact;

The question of construction of correspondence, which, it is alleged, evidences accord, is a question of law. .................Thus by the terms of the paragraph of the aforesaid letter the Plaintiff have specifically agreed to forego their rights of action if the defendant provides valuable consideration in the form of rectifying the situation by the issuance of a written notice which was accordingly complied with by the defendant in the terms of the letter of P3. It must be stressed that there has not been any reservation of rights by the Plaintiff in PW2 and hence 10 in the absence of such express reservation, accord and satisfaction arises – see Cutler & Anor v McPhail [1962] 2 Q.B. 292. The consequence of the Defendant’s compliance with PW2 through their response in PW3 is that the Plaintiff is estopped from proceeding further – Boustead Trading (1985) Sdn Bhd v Arab Malaysian Merchant Bank Bhd [1995] 4 CLJ 283; [1995] 3 MLJ 331. The wide scope and flexibility of the doctrine was eminently espoused at page 344 thereof as follows: “The time has come for this court to recognize that the doctrine of estoppels is a flexible principle by which justice is done according to the circumstances of the case. It is a doctrine of wide utility and has been resorted to in varying fact patterns to achieve justice. Indeed, the circumstances in which the doctrine may operate are endless”.

The Defendant submits that the Letter of Undertaking which is admittedly signed by the Plaintiff sets out the following: “I hereby undertake to discharge all liabilities owed by or claims I might have against you for the sum of approximately RM7,000,000.00 disbursed to you provided all share transfer documents for the shares owned by you whether directly or indirectly (through proxy/nominee) in the following companies for 11 the transfer of the same to Dato Seri Eric Yap…and/or nominees to be provided to me within three (3) months from the date hereof…” And on page 2… “In the event that the shares cannot be transferred for practical or commercial reasons, you will not be held responsible and deem to have complied with all the conditions.”

The Letter of Undertaking relied on by the Defendant is dated 6.4.2015 and the Plaintiff’s signature was witnessed by one Alex Goon Hoong Chow. However, the Plaintiff asserts that the similar letter of undertaking that he signed was not dated and he has no knowledge of who Alex Goon is and did not sign the Letter of Undertaking before the said Alex Goon. However, the Plaintiff admitted signing a similar Letter of Undertaking so the date and witness is not really material. This is the accord, the Defendant submits.

To ascertain whether there has been satisfaction to the accord, the Defendant relies on a letter dated 6.4.2015 whereby the Defendant purports to forward to the Plaintiff letters of resignation as director and share transfer forms duly executed by him and various other persons in respect of the companies referred to in the Letter of Undertaking. At the 12 bottom of page 2, the Plaintiff purportedly signed an acknowledgement acknowledging receipt of the above stated documents and further undertook to discharge all liabilities or claims by him in relation to all the above stated companies.

The Plaintiff denies signing the Letter or any knowledge of this letter and he has lodged a police report on this.

In his submission, the Defendant asserted that by way of this letter, the Plaintiff confirmed that he acknowledged receipt of the transfer documents and “the said shares” to him. It is significant to note that the Defendant has not mentioned in the Letter that he is forwarding any share certificates in respect of any of the companies to the Plaintiff so it is not correct to say that the Plaintiff has acknowledged receipt of the said shares in the letter.

The Plaintiff asserts that he was informed by the company secretary of the Company that all the documents in relation to the resignation as director of the Defendant, Yeap Lye Hoe, the Plaintiff and Low Pak Tong and the share transfer forms in respect of the Company and Champ Zone Corporation Limited were only forwarded to the solicitors for the Plaintiff by way of email dated 12.8.2015. The Plaintiff 13 submits that the Defendant has failed to provide all the documents needed for the transfer of shares in Evo Telecom Limited, Champ Zone Corporation Limited, Rising Star Vision Sdn Bhd and Rising Star Synergies Sdn Bhd as well as the Company to the Plaintiff and that some of the shares belonging to the Defendant are still not transferred to Dato Seri Eric Yap.

The Defendant submitted that the Plaintiff had in fact eventually acted on the transfer of shares in the Company on 19.9.2015 notwithstanding his allegation that it was not done within the 3 months period stipulated in the Letter of Undertaking. But that only relates to the shares in the Company, at most. There is no evidence, apart from the Letter which the Plaintiff denies signing or having any knowledge of, that the other shares in the other companies referred to in the Letter of Undertaking have been duly transferred to Dato Seri Eric Yap by the Defendant.

Accordingly, the Defendant has not conclusively proved that there has been satisfaction to the accord between the parties. 14

The Defendant has also alleged that the fact that the Plaintiff had affirmed an affidavit in the said Suit supporting the Company’s claim for the same monies effectively means that he had no similar claim or right to claim in respect of that subject matter in this Court for if it were otherwise, it would also mean that the Plaintiff had committed perjury in the said Suit or is blatantly abusing the court process in the present suit. In the said Suit, the Plaintiff is saying what he is saying in this suit, namely, that he had advanced the monies to the Defendant upon the representation or belief that the monies would be directed into the Company. It is the Defendant who is saying that the advance was a private transaction between him and the Plaintiff not involving the Company and that there has been accord and satisfaction. I do not find the Plaintiff to be inconsistent in asking for the repayment of the advances in the event the monies did not go into the Company.

The Plaintiff has also raised the issue that it was upon the representation and belief that the funds will be directed into the Company that he made the advances to the Defendant. Since there is a misrepresentation and he has made the advances under a mistake of fact, the Letter of Undertaking is invalid. That is another reason why this is not a plain and obvious case wherein the Plaintiff’s claim ought to be 15 struck out. Accordingly, I dismiss the Defendant’s application with costs of RM5,000.00 subject to allocator. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Dated: 23rd July, 2018 16 Solicitors For The Plaintiff Bruce Toh Messrs Joseph Ting & Co Advocates & Solicitors Suites 7-14, 6th Floor, IOI Business Park No. 1, Persiaran Puchong Jaya Selatan Bandar Puchong Jaya 47170 Puchong Selangor Darul Ehsan Tel: 03-8070 8090 Fax: 03-8070 8039 Solicitors For the Defendant Terence Chan Kah Meng Messrs Lim Kian Leong & Co Advocates & Solicitors Suite 10-8, 10th Floor Wisma UOA II, No. 21, Jalan Pinang 50450 Kuala Lumpur