Gan Kok Hwa v Loo Chooi Ting (WA-22NCC-159-04/2021)

In this action, the Plaintiff sought to recover from the Defendant a balance sum of RM1,700,000 in respect of shares sold to the Defendant in a company known as Builtamont Development Sdn Bhd (“the Company”).

The trial however only concerns the Defendant’s counterclaim for a sum of RM643,494.65 being allegedly the Plaintiff’s 25% share of debts/expenses of RM2,573,978.58 incurred by the Company for the years 2015 to 2020. According to the Defendant, there was an oral understanding between the parties that both were to bear the expenses of the Company during their tenure as shareholders.

The Plaintiff denied there was such an oral understanding and pleaded further that when the 25% block was sold to the Defendant, it was a term of sale that the Plaintiff shall cease to be responsible for all outstanding payments or debts of the Company. S/N 5T7OJtGsUkKnn0Cnfw5t0g **Note : Serial number will be used to verify the originality of this document via eFILING portal 2

During trial of the counterclaim, the Plaintiff testified in person whilst the Defendant called 2 witnesses to adduce evidence i.e. DW1 (Chan Moi Fong, instructed by Defendant to work on the Company’s accounts) and DW2 (Noraini binti Rashid) in support of the counterclaim.

I had on 14.8.2023 dismissed the Defendant’s counterclaim and given broad grounds as to why. This judgment contains the full reasons for my decision.

The Plaintiff and Pembinaan Makmur Teguh Sdn Bhd (“PMTSB”) together held 25% or 250,000 units of the ordinary shares in the Company whilst the other 75% was held by the Defendant.

On 25.8.2020, the Defendant wrote to the Plaintiff and PMTSB expressing her interest to purchase the 25% shares for a sum of RM2.2 million and proposed that upon receipt of duly executed blank and undated Transfer Forms for the shares and the Plaintiff’s resignation as a director of the Company, the Defendant shall deliver 2 postdated cheques as follows:

a cheque for the sum of RM500,000.00 dated 3 weeks after the date of receipt of the Transfer Forms and Resignation

(ii) a cheque for the balance sum of RM1,700,000.00 dated 6 months after the date of the first cheque. S/N 5T7OJtGsUkKnn0Cnfw5t0g [8] On 28.08.2020, Messrs. Tee, Ooi & Partners wrote to the Defendant:

confirming that they represent the Plaintiff and PMTSB;

that they were preparing the Transfer Forms and

counter proposed the following terms:

a simultaneous exchange of the blank and undated Transfer Forms and Resignation Letter and the post-dated cheques in favour of the Plaintiff only; and

(ii) that the Plaintiff shall cease to be responsible for all outstanding payments or debts of the Company (if any). [9] On 02.09.2020, Messrs. Y.C. Wong (“Messrs. YC Wong”) acting for the Defendant wrote, inter-alia, to expressly confirm the Defendant’s agreement to the terms including that the Plaintiff shall cease to be responsible for all outstanding payments or debts of the Company. [10]

Cheque No. 469176 dated 26.9.2020 for a sum of RM500,000; and

(ii) Cheque No. 469178 postdated to 27.3.2021 for a sum of RM1,700,000.00. [11] The 1st cheque was good for payment. [12] On 9.3.2021, about 2 weeks before the 2nd cheque was due for payment, the Defendant’s new solicitors, namely Messrs Amar Syiimir Izzat & Sham wrote to the Plaintiff as follows:

informed that an alleged recent audit on the accounts of the Company for the period of 2015 and 2020, reveal that there were various expenses incurred by the Company amounting to RM2,573,978.58;

the Plaintiff is to be responsible for 25% of the expenses incurred by the Company:

stating that the Defendant “has agreed to set off the amount of RM643,494.65” from the “amount of RM1,700,000.00 being the second tranche of the purchase price of the shares. As such the remaining amount to be paid by our client after the setting off is RM1,056,505.35”; and

(ii) sought the Plaintiff’s return of the post-dated cheque of RM1,700,000 within seven (7) days. S/N 5T7OJtGsUkKnn0Cnfw5t0g [13] The Plaintiff’s solicitors responded to the said letter, reminding that the Defendant had agreed that the Plaintiff will not be liable for all outstanding payments or debts of the Company. [14] The 2nd cheque for RM1,700,000 when presented for payment was countermanded; hence this suit and the counterclaim. [15] On 15.9.2021, summary judgment was entered against the Defendant. The reasons for allowing the summary judgment application has been set out in my first grounds of judgment – see Gan Kok Hwa v Loo Chooi Ting [2021] MLJU 2336; [2021] 1 LNS 1922. The Defendant’s appeal to the Court of Appeal against the entry of summary judgment was not successful. Issues [16] The issues to be tried in my view boil down to 3 as follows:

16.1 Whether there is an oral understanding or agreement between the Plaintiff and the Defendant to jointly bear the expenses of the Company, Builtamont Development Sdn. Bhd. from 2015 to 2020?

16.2 Whether the Company, Builtamont Development Sdn. Bhd. incurred expenses of RM2,573,978.58 from 2015 to 2020?

16.3 If so, whether the Plaintiff owes the Defendant the sum of RM643,494.65 being his 25% share of the expenses? S/N 5T7OJtGsUkKnn0Cnfw5t0g Burden of proof [17] The Defendant in the counterclaim bears the legal and evidential burden to prove on a balance of probabilities of establishing a case against the Plaintiff throughout the trial. In the case of Dr Shanmuganathan v Periasamy s/o Sithambaram Pillai [1997] 3 MLJ 61, the Federal Court held: “Sections 101, 102, 103 and 106 of the Evidence Act 1950 deal with the burden of proof. Under s 101, it is provided that whoever desires any court to give judgment as to any legal right or liability, dependent on the existence of facts which he asserts, must prove that those facts exist. Under s 102 the burden of proof lies on that person who would fail if no evidence at all were given on either side. Under s 103, the burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person. Under s 106, when any fact is especially within the knowledge of any person the burden of proving that fact is upon him.” [18] In Letchumanan Chettiar Alagappan @ L Allagappan (as executor to SL Alameloo Achi alias Sona Lena Alamelo Acho, deceased) & Anor v Secure Plantation Sdn Bhd [2017] 4 MLJ 697, Jeffrey Tan FCJ elucidated as follows: “[56] Thus, a plaintiff has both the burden of proof as well as the initial onus of proof. In Britestone Pte Ltd v Smith & Associates Far East, Ltd [2007] 4 SLR 855, the Singapore Court of Appeal per VK Rajah JCA, delivering the judgment of the court, explained that at the start of the plaintiff’s case the burden of proof and the onus of proof coincide: … at the start of the plaintiff’s case, the legal burden of proving the existence of any relevant fact that the plaintiff must prove and the S/N 5T7OJtGsUkKnn0Cnfw5t0g evidential burden of some (not inherently incredible) evidence of the existence of such fact coincide. Upon adduction of that evidence, the evidential burden shifts to the defendant, as the case may be, to adduce some evidence in rebuttal. If no evidence in rebuttal is adduced, the court may conclude from the evidence of the defendant. If, on the other hand, evidence in rebuttal is adduced, the evidential burden shifts back to the plaintiff. If, ultimately, the evidential burden comes to rest on the defendant, the legal burden of proof of the relevant fact would have been discharged by the plaintiff. The legal burden of proof — a permanent and enduring burden — does not shift. A party who has the legal burden of proof on any issue must discharge it throughout. Sometimes, the legal burden is spoken of, inaccurately, as ‘shifting’; but what is truly meant is that another issue has been engaged, on which the opposite party hears the legal burden of proof. [57] The rule is that ‘the onus of proof of any particular fact lies on the party who alleges it, not on him who denies it; et incumbit probation qui decit, non qui negat, Actori incibit probation … The plaintiff is bound in the first instance, to show a prima facie case, and if he leaves it imperfect, the court will not assist him. Hence the maxim Potior est condition defendantis. A plaintiff cannot obviously advantage himself by the weakness of the defence. A plaintiff’s case must stand or fall upon the evidence adduced by him. When, however, the defendant, or either litigant party, instead of denying what is alleged against him, relies on some new matter which, if true, is an answer to it, the burden of proof changes sides; and he, in his turn, is bound to show a prima facie case at least and, if he leaves it imperfect, the court will not assist him. Reus excipendo fit actor’ (Woodroffe and Amir Ali, Vol 3 at pp 3190-3191). (Emphasis added) [19] I would thus remind myself that if the Defendant does not discharge her burden, the counterclaim would be dismissed notwithstanding whether the defence is or is not established. I now deal with the issues. S/N 5T7OJtGsUkKnn0Cnfw5t0g Evaluations and Findings Whether there is an oral understanding or agreement between the Plaintiff and the Defendant to jointly bear the expenses of the Company from 2015 to 2020? [20] Having heard the evidence of the 2 witnesses called for the Defendant and the Plaintiff who testified in person, examined and read the relevant documents and submission of the parties, I am of the respectful view that the Defendant has not proven her counterclaim on a balance of probability. [21] Firstly, there were no contemporaneous documents at all between Plaintiff and the Defendant from 2015 – 2020 to support the alleged understanding pertaining to the Plaintiff being responsible to pay 25% of the Company’s expenses. Both DW-1 and DW-2 have no personal knowledge of the relevant fact in dispute namely that of oral agreement/understanding. Their evidence is pure hearsay and is worthless as evidence and no court can be expected to pay the slightest attention to it. [22] The date of the oral understanding or agreement in the instant case is unknown. In Tan Poh Yee v Tan Boon Thien & Other Appeals [2017] 3 CLJ 569 at 571, the Court of Appeal held that where an oral agreement is pleaded, it is incumbent on the person asserting on the existence of said oral agreement to pleaded the precise date upon which the oral agreement was entered into: “It was the respondent’s obligation to ensure that all the material particulars and facts necessary to establish his case had been acquired before the filing of the claim. The respondent had failed to establish the existence of S/N 5T7OJtGsUkKnn0Cnfw5t0g such purported 2004 agreement when the respondent could not provide or specify the precise date upon which it was entered into. The date for the conclusion of a valid contract, especially an oral one in the instant appeal, was pertinent and must be specific to achieve certainty. A party intending to rely on the oral agreement could not make an assumption of any date and failure to provide the precise date necessarily meant that the plaintiff had failed to prove the existence of the same. The respondent therefore had failed to plead and provide the material particulars to the exact date of the purported 2004 agreement at this preliminary stage which was highly prejudicial to the appellants and fatal to the respondent’s case.” [23] Second, the evidence when properly analysed will lead to a finding that the fate of the counterclaim was sealed by the Defendant’s failure to testify. In the face of denial by the Plaintiff that the understanding was ever made, there is as such a controversy of fact pertaining to the truth of the allegation of fact of the alleged understanding and breach which can only be resolved by viva voce evidence. It would be critical to ascertain the true state of affairs by resort to cross-examination. The Defendant however undermined her position by not testifying. I can be forgiven for concluding that she was trying to avoid cross examination. Her not testifying is significant as here is a case where she alleged there was an oral agreement /understanding for the Plaintiff to bear 25% of the Company’s s expenses. It behoves her to give evidence to prove her case. [24] In Takako Sakao (f) v Ng Pek Yuen (f) Anor (2009) 6 MLJ 751, the Federal Court speaking through Gopal Sri Ram FCJ, provided a useful guide when there is no evidence put forth by a party in a civil case: “[4] In our judgment, two consequences inevitably followed when the first respondent who was fully conversant with the facts studiously refrained from S/N 5T7OJtGsUkKnn0Cnfw5t0g giving evidence. In the first place, the evidence given by the appellant ought to have been presumed to be true. As Elphinstone CJ said inWasakah Singh v Bachan Singh (1931) 1 MC 125 at p 128: If the party on whom the burden of proof lies gives or calls evidence which, if it is believed, is sufficient to prove his case, then the judge is bound to call upon the other party, and has no power to hold that the first party has failed to prove his case merely because the judge does not believe his evidence. At this stage, the truth or falsity of the evidence is immaterial. For the purpose of testing whether there is a case to answer, all the evidence given must be presumed to be true. Now, what the trial judge did in the present case is precisely what he ought not to have done. He expressed dissatisfaction with the appellant's evidence without asking himself that most vital question: does the first defendant/respondent have a case to answer? This failure on the part of the trial judge is a serious non-direction amounting to a misdirection which occasioned a miscarriage of justice. The trial judge was at that stage not concerned with his belief of the appellant's evidence. She had given her explanation as to the discrepancies in the figures. And her evidence does not appear to be either inherently incredible or inherently improbable. In these circumstances it was the duty of the judge to have accepted her evidence as true in the absence of any evidence from the first respondent going the other way. He however failed to direct himself in this fashion thereby occasioning a serious miscarriage of justice. [5] The second consequence is that the court ought to have drawn an adverse inference against the first respondent on the amount of the appellant's contribution to the purchase price as well as the existence and the terms of the mutual understanding or agreement that she had with the first respondent. Where, as here, the first respondent being a party to the action provides no reasons as to why she did not care to give evidence the court will normally draw an adverse inference. SeeGuthrie Sdn Bhd v Trans-Malaysian Leasing Corp Bhd [1991] 1 MLJ 33. See alsoJaafar S/N 5T7OJtGsUkKnn0Cnfw5t0g bin Shaari & Anor (suing as Administrators of the Estate of Shofiah bte Ahmad, deceased) v Tan Lip Eng & Anor [1997] 3 MLJ 693 where Peh Swee Chin FCJ said: 'The respondents had chosen to close the case at the end of the appellants' case. Although they were entitled to do so, they would be in peril of not having the evidence of their most important witness and of having an adverse inference drawn against them for failing to call such evidence should the circumstances demand it.' ….. The other case isCrawford v Financial Institutions Services Ltd (Jamaica) [2005] UKPC 40, where Lord Walker of Gestingthorpe when delivering the advice of the Privy Council said: 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. [5] Sarkar on Evidence (16th Ed) at p 1837 states: It is the bounden duty of a party personally knowing the whole circumstances to give evidence and to submit to cross-examination. Non-appearance as a witness would be the strongest possible circumstance to discredit the truth of his case Gurbakhsh v Gurdial AIR 1927 PC 230. [6] In the present instance, there is no doubt that the first respondent had intimate knowledge of the material facts relevant to the dispute and that she was privy to the several steps through which the transaction had proceeded. Based on the authorities already cited, it is patently clear that the trial judge in the present case ought to have held that the failure of the first respondent to give evidence apart from discrediting her case strengthened the appellant's case on those vital points that lay at the axis of the dispute between the parties. This, the trial judge clearly omitted to do. Instead, he treated the first respondent's failure to appear and give evidence as a matter of no apparent consequence. His non-direction upon such a crucial point as this certainly amounts to a misdirection which has occasioned a miscarriage of justice. To conclude the first issue, it is our S/N 5T7OJtGsUkKnn0Cnfw5t0g judgment that there was no judicial appreciation of the appellant's evidence. A reasonable tribunal correctly directing itself on the facts and the relevant law would have held that the appellant had indeed contributed RM194,610 towards the purchase price of the building; that there was a mutual understanding between the appellant and the first respondent that they shall be beneficial co owners of the property in question in equal shares; and that the first respondent had acted in breach of that understanding.” [25] As such, this court is entitled to draw an adverse inference against the Defendant where, as here, she provided no reasons as to why she did not care to give evidence. This court is entitled to have the best evidence before it, bearing in mind that the burden to prove the counterclaim rests, all along, with the Defendant. Her evidence is highly relevant and pivotal as her cause of action is based on her oral understanding with the Plaintiff. [26] Without proving the oral agreement or understanding, the counterclaim imploded and I need not go into other issues which I will for completeness' sake, address. Whether the company incurred expenses of RM2,573,978.58 from 2015 to 2020? [27] There are no supporting documents to prove the Company had incurred expenses of RM2,573,978.58 from 2015 to 2020 to show that the Defendant had made shareholder advances of like amount to the Company. The fact that the Defendant pleaded she funded the expenses for the Company does not equate that the sum of RM2,573,978.58 was expended or incurred. In this case, it was just writing down the figures or items which will simply not do. The breakdown of RM2,573,978.58 prepared by DW-1 is on 2 sheets of paper at pp. 22-23 of CBD-1. This in S/N 5T7OJtGsUkKnn0Cnfw5t0g my view has no probative value - it does not prove anything without supporting documents such as invoices, payment vouchers, receipts. As stated in the Court of Appeal case of Sampo Materials (M) Sdn Bhd v Tenaga Nasional Bhd [2016] 1 MLJ 375, the mere fact that the summary of the particulars were made could never be taken as proving that the contents were correct. [28] Another Court of Appeal case of Sony Electronics (M) SdnBhd v Direct Interest Sdn Bhd [2007] 2 MLJ 229 is instructive. The Defendant must produce all necessary supporting documents. In Sony’s case the plaintiff failed to produce the documents to support the audited statements of account. This proved to be fatal. Sony’s case also held that a summary of particulars or sheet of calculations or summary of accounts do not prove the contents. They are nothing more than conclusions. They must be proven by calling the maker to explain the facts and basis of calculation. In addition, the books to support the calculation must be in evidence. The failure of the respondent to produce or tender the account books or the necessary support documents upon which the audited statements of account were based was fatal to his claim for damages. Thus, the audited statements of account and the respondent's oral evidence in connection therewith were inadmissible (see para 55 of the judgment). [29] The Defendant’s counsel nevertheless submitted that each particular or item in the table of expenses was not challenged in detail by the Plaintiff’s counsel. He argued that none of the Defendant’s witnesses were referred to each of the particulars to the summary of the expenses incurred by the Defendant for the Company for the year 2015 - 2020 in detail during trial to scrutinize its content and validity. As the table of S/N 5T7OJtGsUkKnn0Cnfw5t0g summary remains unchallenged, it was submitted that the counterclaim of RM643,494.65 remains valid. [30] The Defendant’s counsel’s arguments with respect, are absolutely misconceived and wide off the mark. There is no duty to challenge the evidence when the evidence is inadmissible: see Sony supra: “[35] According to the appellant the respondent made much of the appellant's failure to object to the audited statements of account. [36] It is the appellant's case that the fact that the appellant's counsel did not object to the audited statements of account does not render the said document admissible or relevant per Edger Joseph Jr J in Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ

…. [66] Edger Joseph Jr J in Popular Industries Ltd v Eastern Garment Manufacturing [1989] 3 MLJ 360 cited Sarkar on Laws of Evidenceas follows: … An erroneous omission to object to evidence not admissible or relevant under the Act does not make it admissible. It is the duty of the court to exclude all irrelevant or inadmissible evidence even if no objection is taken to its admissibility by the parties …. [68] By the same token we find that the appellant was not obliged to cross-examine Ramlan on his oral evidence thereon, when it is clear that the said audited statements of account and oral evidence were irrelevant and insufficient to establish the respondent's claim to damages. [69] We might add that the mere fact that the audited statements were marked as exhibits in no way formalize their existence in the absence of S/N 5T7OJtGsUkKnn0Cnfw5t0g correct and proper tendering thereof. This is especially true when the respondent had failed to discharge their duty to properly tender or prove the said audited statements”. [31] Just as in this case, the fact that the Plaintiff’s counsel did not object to the 2 sheets of paper setting out the amounts incurred does not render the said document admissible or relevant per Edger Joseph Jr J in Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360. Paragraphs 68 and 69 of Sony’s case alluded in the preceding paragraph nail the point. [32] How the Court of Appeal in Sony’s case dealt with such evidence offers guidance here to me on the breakdown as contained in the 2 sheets of paper produced in this case: "[55] The respondent's failure to produce or tender the account books or the necessary support documents upon which the audited statements of account were based is fatal to his claim for damages. Thus, we find that the audited statements of account and Ramlan's oral evidence in connection therewith are inadmissible. [56] The case of Johnson v Kershaw 63 ER 1059 which was followed in Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360 illustrates the above position. The Vice-Chancellor in Johnson v Kershaw had observed: If the account books had been in evidence, the accountant's statement of the results of his examination of those books, as the evidence of a person of skill might be receivable; but, inasmuch as the books were not in evidence, I must decline to receive the deposition of Mr Seet as to their contents. ...... [59] Even if Ramlan had in fact been the maker of the audited statements of account, it is still incumbent upon him to produce the books of account upon S/N 5T7OJtGsUkKnn0Cnfw5t0g which the audited statements were based (see KPM Khidmat Sdn Bhd v Tey Kim Suie [1994] 2 MLJ 627 and Popular Industries Ltd v Eastern Garment [1989] 3 MLJ 360).” [33] The former Suprreme Court in KPM Khidmat Sdn Bhd v Tev Kim Suie [1994] 2 MLJ 627 observed thus (at p 631): … when documentary evidence is tendered, primary evidence of the said document must be adduced except in the cases under s 65 of the Evidence Act 1950. ' … The mere fact that the summary of the particulars were made could never be taken as proving that the contents were correct. It has to be proved by calling the maker to explain the facts and the basis of the calculation of the amount claimed. Moreover the record book upon which the maker based her summary must be in evidence… ' [34] The instant case is even weaker as audited statements were not even produced. The fact that the Defendant pleaded that she funded the expenses does not ipso facto dispense with proof by acceptable and precise evidence of the amounts expended. Although DW1 testified that because the Company was sold to a new purchaser, so she does not have the documents to show because all the documents had handed over to the new company is unacceptable as there is no effort shown to retrieve the documents; neither was a subpoena issued for such documents to be produced. Sans supporting documents, the Defendant has not proven quantum on a balance of probability. [35] In any case, I also find that it is a term of sale of shares by the Plaintiff to the Defendant that the Plaintiff shall cease to be responsible for all outstanding payments or debts of the Company. It had also crossed my mind when deciding this case that as the expenses were allegedly S/N 5T7OJtGsUkKnn0Cnfw5t0g incurred by the Company, it called into question whether the Defendant is the proper person to make such a claim and caught by the rule in Foss v Harbottle (1843) 67 ER 189 but this does not concern the court as it was not raised in the Plaintiff’s defence, and I shall say no more. [36] Both the 2nd and 3rd issues are answered in the negative. [37] On the facts and circumstances, the Defendant failed to satisfy the court on the fact of the oral understanding and the quantum of expenses. I find that the Defendant has not on a balance of probability proven her counterclaim. The counterclaim is thus dismissed with costs to the Plaintiff subject to allocator. Dated 2nd November 2023 - signed - ……………………….. Liza Chan Sow Keng Judge High Court of Malaya at Kuala Lumpur COUNSEL: For the Plaintiff : Nickson Yew Ka Hui Messrs Ewe Chong & Khoo For the Defendant : Ahmad Syiimir Suffian (together with Mohd Shahrysham and Muhammad Danish) Messrs Amar Syiimir Izzat & Sham CASES REFERRED: Tan Poh Yee v Tan Boon Thien & Other Appeals [2017] 3 CLJ 569 Takako Sakao (f) v Ng Pek Yuen (f) Anor (2009) 6 MLJ 751 S/N 5T7OJtGsUkKnn0Cnfw5t0g Sampo Materials (M) Sdn Bhd v Tenaga Nasional Bhd [2016] 1 MLJ 375 Sony Electronics (M) SdnBhd v Direct Interest Sdn Bhd [2007] 2 MLJ 229 KPM Khidmat Sdn Bhd v Tev Kim Suie [1994] 2 MLJ 627 Foss v Harbottle (1843) 67 ER 189