Harvinder Singh A/L Santa Singh v 1. ) Pu Say Chiang (WA-22NCvC-466-07/2019)

PU SAY CHIANG (NRIC No: 690804-10-6267)

MOBILE FPX SDN. BHD. (CO No: 794790-M) ...DEFENDANTS GROUNDS OF JUDGMENT [After Full Trial] Introduction [1] This is the Plaintiff’s claim (‘this Case’) against D1, who is also known as William Pu, and D2, for the return of USD 1.5 million or its equivalent in Malaysian Ringgit, and general damages for fraud. [2] Notably, before the commencement of the trial, the Plaintiff had obtained a judgment-in-default of appearance on 2 October 2019 against D2 for a sum of RM6,203,250.00 with interest. No application has been filed by D2 to set aside the said judgment-in-default. [3] This is my judgment and my reasons in dismissing the Plaintiff’s claim against D1 after a full trial conducted. Background Facts [4] The Plaintiff is a businessman and investor with experience in managing and investing in businesses relating to networking technology. 16/02/2023 14:50:21 WA-22NCvC-466-07/2019 Kand. 135 S/N guoNfwIzp0J8XZqjMgbQ Meanwhile, D1 is a director of D2, a company limited by shares and incorporated pursuant to the Companies Act 1965. [5] On 23 September 2010, D2 entered into an agreement with Bank Islam Malaysia Berhad (“BIMB”) to supply a product known as Mobile Subscriber Identity Module (“MPODs”) and its related services. This arrangement was reduced to a written agreement on the said date (“the BIMB Contract”). [6] As part of D2’s obligations under the BIMB Contract, D2 was to source 150,000 units of the MPODs, which were valued at USD 1.5 million, from a Singaporean company called Watchdata Technologies Pte. Ltd. (“Watchdata”) and to deliver the same to BIMB. This order was placed by BIMB through a purchase order dated 11 October 2010. [7] The initial arrangement between D2 and BIMB was for D2 to procure and deliver the MPODs utilizing the letters of credit (“the LCs”) issued by BIMB. The MPODs would then be leased to BIMB for 36 months and BIMB would pay D2 monthly lease rental into a collection account. However, D2 later experienced financial difficulties to complete the order of 150,000 units of the MPODs. [8] The Plaintiff then came into the picture. The Plaintiff was introduced to D1. Upon perusing D2’s profile, the Plaintiff was not happy with the financial situation of D2 for him to invest in directly because it was encumbered by multiple trading debts. [9] The Plaintiff then proposed to acquire all of D2’s assets and liabilities, and intellectual property rights relating to its business including S/N guoNfwIzp0J8XZqjMgbQ the BIMB Contract for RM4 million. This was done through a shell company in Singapore known as Tootpay Pte. Ltd. where the Plaintiff held 30% of the shares together with an individual by the name of Balvinder Singh (DW3) who held the remaining 70% of the shares. Tootpay Pte. Ltd. then acquired 100% shares of a Malaysian company known as Langkah VIP Sdn. Bhd. (“Langkah VIP”) (later renamed to Tootpay Sdn. Bhd. (“Tootpay”)). [10] This arrangement was to insulate the Plaintiff from the historical financial liabilities of D2 and any probable future claims which would affect the profitability of the BIMB Contract. [11] This acquisition or purchase of D2’s assets and IP rights was then reduced into writing in the form of an asset purchase agreement dated 1 January 2011 between Langkah VIP Sdn. Bhd. and D2 (“the APA”). [12] The APA outlined several rights, duties, and liabilities but most importantly, the heart of this dispute: Clause 5A.01. Pursuant to Clause 5A.01, D2 was required to novate the BIMB Contract in favour of Tootpay. Clause 5A.01 says: “On or before the Completion Date, the Seller shall procure a novation of the following in favour of the Buyer or its nominees, such novation to be effective from the Completion Date: -

the Bank Islam Agreements (as defined in Schedule 1 annexed hereto); and

the OEM Contract (as defined in Schedule 1 annexed hereto). collectively, the “Novated Agreements.” [13] The above were undisputed and forms part of the agreed facts of both parties. S/N guoNfwIzp0J8XZqjMgbQ The Dispute [14] The dispute arose when the novation arrangement for the BIMB contract with BIMB did not come into fruition quickly enough. The Plaintiff, in fear that the financial constraints that D2 was facing could jeopardise the BIMB Contract, agreed to advance the payments to Watchdata in return of (i) the LCs remain unutilised and returned, and (ii) a fresh LC issued by BIMB post-novation to Tootpay, with the understanding that the advances would be repaid by D2. [15] In total, the Plaintiff paid a sum of USD 1.5 million to Watchdata for the deliveries of the MPODs. It is undisputed that the Plaintiff had indeed made the payments. The dispute is regarding the role of the parties when the payments were made. Anyhow, the Plaintiff alleges that the Defendants are liable to reimburse the Plaintiff the USD 1.5 million advanced. D1 argues that BIMB had granted D2 financing facilities amounting RM 4.5 million (which is equivalent to USD 1.5 million at the time) to finance D2’s purchase of the 150,000 units of MPODs. This financing was tied to the BIMB Contract and had been released to D2. The LCs for the purchase and supply of the MPODs remained unutilised due to this arrangement between the Plaintiff and the Defendants. [16] It is undisputed that the BIMB Contract was perfected and 150,000 units of MPODs were successfully delivered by D2 (and later, Tootpay). One of the disputes is whether this change of vendors from D2 to Tootpay was a result of the novation under D2’s obligations under the APA or a different arrangement with BIMB as both parties came to the consensus that the novation had never gone through. S/N guoNfwIzp0J8XZqjMgbQ [17] The Plaintiff argued that D2’s duty to novate the agreement rested solely upon D1 on the basis that he was the sole director of D2 and involved in the operations of D2 after the APA was signed. [18] D1, however, argued that he had attempted to his best ability to complete the novation arrangement, but BIMB rejected the novation agreement and thus it ended up unsuccessful. Further, it was argued that the rejection triggered the financing repayment by D2. Hence, D2’s businesses could not be novated and has been closed down after the completion of the 36-month rental lease. [19] On the repayment of the USD 1.5 million advancement, the Plaintiff contended that D1 has admitted to the fact the payments to Watchdata by the Plaintiff were indeed advances. Thus, D1 must repay the Plaintiff. [20] D1 countered this with an argument that D2 had deposited into Tootpay’s account a sum of RM3.5 million which brings the balance to RM1 million. On the balance, D1 claimed that the Plaintiff had reneged in a separate agreement to transfer shares held by DW3 (who is holding the shares as proxy for D1) to D1. Therefore, D1 claimed that he stood to lose everything if he was not made a proper shareholder. The Trial [21] During the trial, the Plaintiff called two (2) witnesses while D1 called four (4) witnesses. The list of witnesses are as follows: PW1 Harcharan Singh A/L Ujagar Singh PW2 Harvinder Singh A/L Santa Singh DW1 Rufaizah Binti Hashim DW2 Mohd Faudzi Bin Din S/N guoNfwIzp0J8XZqjMgbQ DW3 Balvinder Singh A/L Santokh Singh DW4 Pu Say Chiang Submission by the Plaintiff [22] The crux of the Plaintiff’s submission is that D1 had induced the Plaintiff to make advancement of USD1.5 million to pay Watchdata and that D1 had given assurance and/or representation to repay such advancement made by the Plaintiff. [23] The Plaintiff submitted that D2 had to find a way to make payments for the MPODs to Watchdata without using the LC because it would affect the novation process. At a meeting held between the Plaintiff, D1, one Faudzi and one Balvinder, it was agreed that D2 would return the LCs back to BIMB so that there would be no obstructions to the novation of the BIMB Contract from D2 to Tootpay. [24] The Plaintiff also premised that it was also agreed in that meeting that the Plaintiff would make personal advances from his personal funds to Watchdata to meet the payments due until a fresh LC in favour of Tootpay was procured from BIMB after the novation of the BIMB Contract to Tootpay. [25] Although the reference for the remittance slips to Watchdata stated that the payment was made “on behalf of Langkah VIP Sdn Bhd” and later “on behalf of Tootpay Sdn Bhd”, the Plaintiff argued that the Plaintiff could not have paid the advances as "Harvinder Singh” because Watchdata would not have done the delivery because it could have led to security breaches. So, the Plaintiff could only represent Tootpay or D2 and in this Case, the Plaintiff had to represent Tootpay because the APA was going S/N guoNfwIzp0J8XZqjMgbQ to be signed and was in final negotiations. The Plaintiff alleged that the explanation above was never challenged by D1. [26] Therefore, the Plaintiff contended that the advances made by the Plaintiff were personal advances on the basis of a collateral arrangement between the parties to ensure there were no delays or issues caused to the novation. [27] The novation would have ensured that the new LC were issued in favour of Tootpay and pursuant to that, the Plaintiff’s advances would be repaid. Nevertheless, in breach of the APA, D1, in furtherance of his intention to defraud the Plaintiff stalled the novation through lack of sufficient initiative and continued to carry on the business and deal with BIMB through D2, despite having all the assets and intellectual rights transferred to Tootpay. [28] The Plaintiff further alleged that in view of the fact that BIMB Contract was not novated to Tootpay, D1 and D2 were legally obligated to repay the Plaintiff RM4.5 million. [29] Thus, the Plaintiff averred that D1 is liable to reimburse the Plaintiff the advancement made to Watchdata. 1st Defendant’s Submission [30] It is D1’s submission that there were 5 transactions made by the Plaintiff amounting to USD$1.5 million. These advances were not made in reliance of any alleged assurance or representation given by D1 because the advances were made on behalf of Langkah VIP and later Tootpay. This fact was admitted by the Plaintiff himself. S/N guoNfwIzp0J8XZqjMgbQ [31] D1 also contended that if the Plaintiff intended for the Defendants to be liable for the advances if BIMB refused to novate the BIMB Agreement, then the Plaintiff being a prudent businessman and prudent investor, having the benefit of legal counsel, ought to have made it clear in the APA. [32] The APA was signed after the Plaintiff made his first advance to Watchdata. As such, if the Plaintiff intended for the Defendants to be liable for his advances, this can easily be done by inserting a term in the APA. [33] D1 further premised that the Plaintiff had failed to prove that D1 had given any assurance or representation to repay the advances made by the Plaintiff. There was no evidence to show that D1 had personally, during the meetings between the parties, given any assurance or representation to reimburse the Plaintiff of the said advances. [34] Furthermore, it is D1’s case that just because D1 is a director of D2, D1 has no obligation to repay the advances made by the Plaintiff. The Plaintiff had failed to prove that there are special circumstances in this Case that would trigger this Court to lift the corporate veil. As such, the Plaintiff had failed to prove that D1 is liable to reimburse the advances made by the Plaintiff. Issues [35] Before the trial, the Parties had agreed on the following issues to be tried: - i) Whether D1 as Director of D2 had taken all reasonable steps to procure the consent of BIMB to novate the Bank Islam Contract to Tootpay in accordance with the APA. ii) Whether the advances made by the Plaintiff in the sum of US$1.5 million to Watchdata were made for and on behalf of S/N guoNfwIzp0J8XZqjMgbQ Tootpay in view of the pending novation of the Bank Islam Contract. iii) Whether, in view of the fact the Bank Islam Contract was not novated to Tootpay, D1 as director of D2 was obliged to repay the advances made by the Plaintiff in the sum of US$1.5 million, back to the Plaintiff in full. iv) Whether upon receipt of the RM4.5 million by D2 from BIMB, D1 was obliged to inform the Plaintiff of the same and ensure that the said monies were repaid to the Plaintiff as and when they were received. v) Whether D1 had diverted the monies received from BIMB for the Bank Islam Contract towards his personal and/or other use and/or to other third parties without the Plaintiff’s knowledge or consent and whether this amounted to fraud upon the Plaintiff as pleaded in the Statement of Claim. vi) Whether the Tax Invoice dated 19.11.2011 issued by Tootpay Sdn. Bhd. to D2 is a sham and/or fictitious document created for the purpose of facilitating the diversion of part of monies received from BIMB amounting to Tootpay. vii) Whether there was any arrangement that existed between the Plaintiff and D1 with regards to D1’s interest in Tootpay Pte Ltd. viii) Whether the Plaintiff is entitled to the reliefs prayed for in the Statement of Claim against D1. Findings and Decision of the Court [36] Before I continue further, it is to be noted that the burden of proof lies on the plaintiffs to prove the facts alleged and pleaded in the statement of claim by adducing evidence during trial. S/N guoNfwIzp0J8XZqjMgbQ [37] I refer to Section 101 and 102 of the Evidence Act 1950: Section 101 “… (1) 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.

When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. Section 102 …The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side…” [38] In the case before me, the Plaintiff’s pleaded case revolved around the allegation of fraud. The three key components of this Case are the BIMB Contract, the novation obligation and the advancement made by the Plaintiff for the MPODs. In essence, the Plaintiff’s claim in this Case is to be reimbursed for his advancement after completion of the BIMB Contract. He also alleged that D1 conspired to defraud him because the payment received from BIMB was concealed from his knowledge, or at the very least, failed to make payment for a debt that is due and payable. [39] The burden of proof and the standard of proof of fraud in civil cases were discussed thoroughly by Richard Malanjum CJSS in our Federal Court case of Sinnaiyah & Son Sdn. Bhd. v. Damai Setia Sdn. Bhd. [2015] 5 MLRA 191: “[52] We therefore reiterate that we agree and accept the rationale in In Re B (Children) (supra) that is, on the balance of probabilities, should apply. And perhaps it is not our place here to restate the general rule at common law that, “in the S/N guoNfwIzp0J8XZqjMgbQ absence of a statutory provision to the contrary, proof in civil proceedings of facts amounting to the commission of a crime need only be on a balance of probabilities.” (See Boonsoom Boonyanit v. Adorna Properties Sdn Bhd [1997] 1 MLRA 2019, at p 216). [Emphasis added] [40] When such an allegation of fraud arises, the court must be clear whether the fraud is a common law fraud or equitable fraud. The law made a clear distinction between common law fraud and equitable fraud. I shall elaborate more on this in the later part of the judgment. Suffice to say that unlike equitable fraud, common law fraud demands different proof or evidence. [41] Before I address the Parties’ submission on the issue of fraud, I would like to address a few more critical issues which will affect the foundation of the Plaintiff’s case. As mentioned earlier, before the trial, the parties agreed that there were eight (8) issues to be tried. Some of the issues are inter-related with each other. Therefore, I have consolidated those issues and would address them in 4 main issues: - i)

Whether the advances made by the Plaintiff in the sum of USD 5 million to Watchdata were made for and on behalf of Tootpay in view of the pending novation of the BIMB Contract; ii) Whether, in view of the fact that the BIMB Contract was not novated to Tootpay, D1 as director of D2 was obliged to repay the advances made by the Plaintiff in the sum of USD1.5 million, back to the Plaintiff in full; S/N guoNfwIzp0J8XZqjMgbQ iii) Whether there was any arrangement that existed between the Plaintiff and D1 with regards to D1’s interest in Tootpay Pte Ltd; and iv) Whether the Plaintiff is entitled to the reliefs prayed for in the Statement of Claim against D1. [42] In this Case, it is indisputable fact that there were 5 transactions made by the Plaintiff amounting to USD1.5 million: i)

03.12.2010 – USD 200,000.00; ii) 04-03-2011 – USD 300,000.00; iii) 06-05-2011 – USD 300,000.00; iv) 11-05-2011 – USD 200,000.00; v) 23-06-2011 – USD 500,000.00. [43] With regard to the advances (the 5 transactions mentioned above), D1 submitted that the advances was not made in reliance of any alleged assurance or representation given by D1 because if such advances were made in reliance of the alleged assurance, the Plaintiff being a prudent businessman and a prudent investor would have easily stated in the remittance advise the word “based on promise given by William” or at very least the word “on behalf of Mobile FPX Sdn Bhd”, but nevertheless, this was not the case. Instead, the Plaintiff had chosen to state the word “on behalf of Langkah VIP Sdn Bhd” in its first remittance advise and for the subsequent remittance advises, the Plaintiff had chosen to state the word “on behalf of Tootpay Sdn Bhd”. [44] Furthermore, D1 submitted that if the Plaintiff intended for the Defendants to be liable for the advances in the event BIMB refused to novate the said BIMB Contract, then the Plaintiff being a prudent S/N guoNfwIzp0J8XZqjMgbQ businessman and prudent investor, having the benefit of legal counsel, ought to have specified it clearly in the APA but this was never done by the Plaintiff. [45] The APA was signed after the Plaintiff made his first advance to Watchdata. As such, if the Plaintiff intended for D1 to be liable for his advances, this can easily be done by inserting a term in the APA prior to the execution of the same to reflect this arrangement. [46] However, the Plaintiff was unable to adduce any evidence that the APA had outlined or to adduce any corroborating evidence of such verbal agreement that D1 would be personally liability to repay the Plaintiff if there is any failure to complete the novation. [47] I find that that there is nothing in the APA to show any specific obligation of D1 to make payment to the Plaintiff for the failure to complete the novation. This can also be observed in the testimony of the Plaintiff himself (PW2) where the Plaintiff was unable to show that there was such clause in the APA. [Notes of Proceedings 14/06/2022, page 131] AO: Transferred by Mr. Harcharan. Now, do you agree that the Asset Purchase Agreement, do you agree that the Asset Purchase Agreement does not contain any provision to state that Mobile FPX how to make the payment for your advances in the event the said commercial agreement or LC was not novated. HVS: Yes. [48] Upon perusal of the APA, I find that the Defendant counsel’s observation is accurate in that there has never been such a clause. I am S/N guoNfwIzp0J8XZqjMgbQ guided by the case of SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464, where Zainun Ali FCJ in referring to Gopal Sri Ram FCJ in the leading case of Berjaya Times Square Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597 at paragraph 42 at pg. 620g, observed that: “[45] … Here it is important to bear in mind that a contract is to be interpreted in accordance with the following guidelines. 1st, a court interpreting a private contract is not confined to the four corners of the document. It is entitled to look at the factual matrix which forms the background of the transaction. Second, the factual matrix which forms the background to the transaction includes all material that was reasonably available to the parties. Third, the interpreting court must disregard any part of the background that is declaratory of subjective intent only. Lastly, the court should adopt an objective approach when interpreting a private contract.” [49] It is an indisputable fact that there was no formal oral and/or written agreement entered into by the parties with regard to the advances of USD$1.5 million paid by the Plaintiff to Watchdata. [50] On this point, the Plaintiff submitted that a verbal arrangement for the repayment had been agreed between the parties and thus it became binding on D1 personally to fulfil. This was only testified by the Plaintiff himself (PWS-2) in his witness statement at Question and Answer No. 19: “Q19: Do you have personal knowledge of the agreement reached between the parties mentioned in your Answers to Question 14 to 18 above? S/N guoNfwIzp0J8XZqjMgbQ A19: Yes, I do. As stated above, I was present at the meeting at Tootpay’s office in March 2011 attended by William Pu, Faudzi, Balvinder and Harvinder. During this meeting Harvinder brought up his worries that although he had been making payments to Watchdata, there was no progress on the novation of the Bank Islam Contract or the issuance of the fresh LC. And in the course of this meeting, Harvinder was repeatedly assured by William Pu that he would make sure that as previously agreed Harvinder would be reimbursed for whatever payment he had made or would make in the future for the MPODs as soon as monies were received from BIMB.” [51] As mentioned earlier, in refuting this, D1 contended that, if the Plaintiff intended for D1 to be liable for the repayment of his advances in the event that the novation failed to materialise, the Plaintiff having the benefit of legal counsel, ought to have made it clear in the APA that such liability fell upon the shoulders of D1. To this I agree. [52] The ultimate blow against the Plaintiff’s argument that the APA does not contain a default clause for such failure to novate was admitted by the draftsman himself. PW1 described in his mind that there was no need for such a clause and that he has never been instructed to put this in the APA. [Notes of Proceedings 1, page 47 (line 30) to page 48 (line 12)] Ok. Now do you agree there was no written agreement between D1 and Harvinder on your allegation that D1 has personally agreed to be liable for the RM4.5 million, agree? HCS I have no knowledge of that. There is no written agreement, or you do not know at all? HCS I do not know if there is a written agreement. S/N guoNfwIzp0J8XZqjMgbQ Now, do you agree as being a legal counsel for Tootpay, do you agree that if William Pu has agreed to be personally liable for Mr Harvinder Singh, you being there as a legal counsel, is it important, do you agree it's important that very thing to be put into a writing? Agree? HCS Yes, it is important. Yet I put it to you it was not put into writing, correct? HCS I was never instructed to put into writing. [53] It was further submitted by D1 that the APA was signed after the 1st advancement was made and not before. Therefore, for the Plaintiff, the gravity of the arrangement has already sunk in, and if the Plaintiff had intended for D1 to bear the liability of a failed novation, a simple termination clause would have been inserted into the APA reflecting the same. [54] I find this consonant and sound. Besides, the Plaintiff’s allegation that D1 agreed to repay or agreed to guarantee the repayment of the advances is not proven. According to the Plaintiff, D1 together with DWS- 2 and DWS-3 had given representation and/or assurance to the Plaintiff to reimburse him of the intended advances in a meeting held around late November or early December 2010 (“1st Meeting”). I refer to the PW-2 Witness Statement, Question and Answer No. 13: “Q13 : Without the LC, how was Mobile FPX to pay Watchdata for the MPODs? A13 : Mobile FPX had to find a way to make payments for the MPODs to Watchdata. Mobile FPX and William Pu claimed that they had no means to pay Watch data. At the same meeting mentioned in my answer to question 12 above, it was S/N guoNfwIzp0J8XZqjMgbQ agreed between all present that the only option was for me to make personal advances from my personal funds to Watchdata to meet the payments due until the fresh LC under Tootpay was procured from BIMB. … William Pu, Faudzi and Balvinder all agreed that I would be repaid the advances made as soon as the fresh LC became available or from any payment received from BIMB under the Bank Islam Contract. This arrangement was meant to be an interim arrangement as the fresh LC was expected to be in place soon after the Bank Islam Contract was novated to Tootpay. [55] Subsequently, when the Plaintiff became concerned about the novation, the Plaintiff alleged that on early March 2011 another meeting was called where the Plaintiff alleged that D1 had given representation or assurance to the Plaintiff to reimburse the Plaintiff of the advances made by the Plaintiff (“2nd Meeting”). [56] In rebutting the allegation by the Plaintiff, D1 submitted that there was no minute of either the 1st Meeting or the 2nd Meeting adduced by the Plaintiff to show the existence of an agreement or representation or assurance allegedly given by D1. This was confirmed by the Plaintiff himself during the cross-examination as follows: - [Notes of Proceeding 14/06/2022, page 58] “AO : Question and Answer No. 16 in the witness statement, 1-6. HCS : 1-6? S/N guoNfwIzp0J8XZqjMgbQ AO : Yes, 1-6. Reference was made in your answer ok, on the so-called first meeting ok. Now my question is this. Do you have any document to show that this meeting has in fact transpired? HSC : So you, talking about the first meeting or the second meeting? AO : First meeting. HCS : Do I have documents? AO : Yes. HCS : No, I don’t. AO : To show that this meeting in fact transpired. HCS : Not to my knowledge this one. AO : Therefore, I put it to you that you do not have any document to show whether such meeting in fact took place. Agree or disagree, I do not know? HCS : Yes, that’s what I said earlier. [57] Based on the evidence available before me, the 1st Meeting had in fact took place. DW-3, who was a subpoenaed witness (and later declared as hostile witness by the Defendant), has confirmed that he was present in the 1st Meeting but was not aware of any agreement or representation or assurance allegedly given by D1 in the 1st Meeting. The same, however, cannot be said about the 2nd meeting. DW-3 was not aware of the 2nd Meeting. Although DW-2 confirmed there were few meetings conducted, DW-2 could not confirm if one of the meetings was conducted in early March 2011 as alleged by the Plaintiff. [58] D1 further submitted that although the Plaintiff’s legal counsel i.e., PW-1 was present during the alleged 2nd Meeting, PW-1 had done nothing to put the alleged assurance into writing. The reason why such an alleged assurance was not put in writing was because there was no such S/N guoNfwIzp0J8XZqjMgbQ assurance given by D1 in the first place. As such, D1 submitted that the Plaintiff’s allegation was merely an afterthought to falsely strengthen the Plaintiff’s plea of fraudulent misrepresentation against D1. [59] I am in total agreement with D1 regarding this. As I have discussed earlier, there was no formal agreement executed by the Plaintiff and D1 to suggest that D1 is obligated to repay the advances made by the Plaintiff. Likewise, the APA executed between the parties does not have any provision to express this. The absence of such a crucial term in the APA could draw inference that no such term had ever been promised by the parties. Furthermore, there is no evidence, oral or documentary, to suggest that D1 has in fact given any assurance, guarantee or representation to the Plaintiff with regard to the repayment of the advances made by the Plaintiff. Although the Plaintiff had alleged that the 1st and the 2nd Meetings really took place, the Plaintiff had failed to prove that D1 had on those meetings given any assurance or representation alleged by the Plaintiff. [60] Without any contemporaneous documentary evidence to corroborate the Plaintiff’s oral testimony, the existence of such a crucial arrangement is dubious. It is against commercial sense nor common sense that such a requirement has not be documented anywhere if indeed the parties have agreed on this. Any prudent and seasoned businessmen like the Plaintiff here would have insisted for this to be written down and agreed by the parties before any advances would be given. Bearing in mind the first of these advances were made almost the same period of time when the APA was executed by the parties, to the very least, the Plaintiff would have asked for this arrangement be inserted in the APA (or in a supplemental agreement). In the alternative, a simple letter or note S/N guoNfwIzp0J8XZqjMgbQ could be drafted and executed by the parties to indicate such arrangement and/ or guarantee. None of these have been done in this Case. It is illogical and non-commonsensible that such a crucial term is not documented anywhere if it was indeed agreed by the parties. Thus, there is nothing to even persuade this Court of the existence of such an arrangement. I find the following ratio of Arden LJ in English case of Re Mumtaz Properties Ltd, Re; Wetton (as liq of Mumtaz Properties Ltd) v Ahmed & others [2011] EWCA Civ 610, | [2012] 2 BCLC 109, [2011] NLJR 779, | [2011] All ER (D) 237 (May) extremely relevant: “[14] In my judgment, contemporaneous written documentation is of the very greatest importance in assessing credibility. Moreover, it can be significant not only where it is present and the oral evidence can then be checked against it. It can also be significant if written documentation is absent. For instance, if the judge is satisfied that certain contemporaneous documentation is likely to have existed were the oral evidence correct, and that the party adducing oral evidence is responsible for its non-production, then the documentation may be conspicuous by its absence and the judge may be able to draw inferences from its absence.” [Emphasis added] [61] In similar veins, it is my finding that the clause regarding the personal liability of D1 is so crucial that it should have been documented either in the APA or elsewhere if the oral evidence by the Plaintiff (PW2) is correct. However, no such contemporaneous written documentation has been tendered. I thus find the absence of such a document conspicuous and infer that such an arrangement (that D1 is to be personally liable) has never been agreed upon by the parties. S/N guoNfwIzp0J8XZqjMgbQ [62] Furthermore, merely because D1 is a director of D2, D1 has no obligation to repay the advances made by the Plaintiff. The law is trite that a company and its shareholders or directors are of separate legal entities. Although there are circumstances where the Court would lift the corporate veil between the company and the directors/ shareholders or order that the director(s) must be personally liable, that is not the case here. The Plaintiff had failed to prove that there are special circumstances in this Case that would justify the Court piercing the corporate veil. Neither is there any solid reason to make D1 personally liable. The only reason put forward by the Plaintiff was that D1 was the only director of D2 which is too far-fetched in the absence of any convincing evidence. [63] In Solid Investment Ltd v. Alcatel-Lucent (Malaysia) Sdn Bhd [2014] 1 MLRA 526, Hasan Lah FCJ observed that: “[46] …We also agree with the Court of Appeal that there must be evidence either of actual fraud or some conduct amounting to fraud in equity to justify the lifting of corporate veil. The position of the law on this subject had been clearly stated by Gopal Sri Ram JCA (as he then was) in Law Kam Loy & Anor v. Boltex Sdn Bhd & Ors [2005] 1 MLRA 521 at p 525 as follows: “In my judgment, in the light of the more recent authorities such as Adams v. Cape Industries Plc, it is not open to the courts to disregard the corporate veil purely on the ground that it is in the interest of justice to do so. It is also my respectful view that the special circumstances to which Lord Keith referred include cases where there is either actual fraud at common law or some S/N guoNfwIzp0J8XZqjMgbQ inequitable or unconscionable conduct amounting to fraud in equity…” [Emphasis added] [64] For the purpose of completeness, I shall discuss the issue of fraud. The law is trite. One of the special circumstances to make a director or shareholders personally liable is when there is either actual fraud at common law or some inequitable or unconscionable conduct amounting to fraud in equity. When an allegation of fraud arises, the courts must be clear whether the fraud is a common law fraud or equitable fraud. The term “common law fraud” is normally used to describe tort of deceit or making fraudulent misrepresentation. The element of intention is essential for common law fraud. I refer to KTL Sdn Bhd & Anor v. Leong Oow Lai [2014] MLRHU 1014 where Wong Kian Kheong JC (as he then was) decided as follows: “[92]…To summarise, a plea of fraud at common law will not succeed absent proof of an intention to deceive.” [65] In Double Acres Sdn Bhd v. Tiarasetia Sdn Bhd [2000] 3 MLRH 1, Abdul Malik Ishak J (as he then was) held (at p 26 – last para) that: “Whenever a person causes another to act on a false misrepresentation which the make himself does not believe to be true, the maker is said to have committed a fraud.” [66] For equitable fraud, the actual intention to deceive is not an element in proving equitable fraud. I refer to the Federal Court case of Takako Sakao v. Ng Pek Yuen & Anor [2009] 3 MLRA 74 where Gopal Sri Ram FCJ highlighted (at p 86 -1st para) that : S/N guoNfwIzp0J8XZqjMgbQ “… To summarise, a plea of fraud at common law will not succeed absent proof of an intention to deceive. Such an intention is not an ingredient of equitable fraud which is, essentially speaking, unconscionable conduct in circumstances where there exist or is implied or imposed a relationship of trust or confidence. [67] I further refer to KTL Sdn Bhd (supra) where Wong Kian Kheong JC (as he then was) held as follows: “[93] It is clear from Takako Sakao (No. 1), at p 411, that equitable fraud can be proven by the following without a need to prove intention to deceive (which is necessary to prove Common Law

there is a relationship of trust or confidence between the parties. Such a relationship may be inferred from the circumstances of the case in question; and

there is unconscionable conduct by the defendant in question.” [Emphasis added] [68] In Takako Sakao (supra), Gopal Sri Ram FCJ explained the concept of equitable fraud as follows: “[24] The “fraud” of which Lord Halsbury spoke in Salomon v. A Salomon & Co includes equitable fraud. In the recent Australian case of The Bell Group Ltd (In liquidation) v. Westpac Banking Corporation (No 9) [2008] WASC 239; 70 ACSR 1, Owen J discussed the distinction between equitable fraud and fraud at common law. His Honour said: S/N guoNfwIzp0J8XZqjMgbQ

One of the leading Australian texts on equitable principles is R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (4th ed 2002). When I refer to this text from time to time in these reasons I will do so by the shortened phrase ‘Meagher, Gummow and Lehane’. At [12-050] the authors set out a non-exhaustive list of factual and legal situations that have traditionally been treated as species of equitable fraud. They include:

Misrepresentation by persons under an obligation to exercise skill and discharge reliance and trust (from example in fiduciary relationship), and inducements to contract or otherwise for the representee to act to his detriment in reliance on the representation;

The use of power to procure a bargain or gift, resulting in disadvantage to the other party;

Conflict of interest against a duty arising from a fiduciary relationship; and

Agreements which are bona fide between the parties but in fraud of third persons.

All of these categories can be seen, to varying degrees, in the claims brought by the plaintiffs in the equitable fraud causes of action. The last category is of particular interest because it encompasses the imposition and deceit species referred to as the Earl of Chesterfield fourth limb. I will come to that doctrine shortly…” [69] D1 argued that the Plaintiff did not specifically plead equitable fraud and such plead is important for D1 to know at the outset the type of fraud relied on by the Plaintiff for D1’s preparation of its defence. In that event, S/N guoNfwIzp0J8XZqjMgbQ D1 submitted that if the Plaintiff intended to rely on equitable fraud, the Plaintiff ought to have pleaded it clearly in the Statement of Claim from the beginning and the failure to do so gives a picture that the Plaintiff’s pleaded case is only confined to the common law fraud. [70] D1 further premised that the Plaintiff had not particularized the alleged unconscionable acts which formed one of the essential elements of equitable fraud. The Plaintiff also had failed to identify the circumstances of special or trust relationship allegedly exist between the Plaintiff and D1 to give rise to an equitable fraud. [71] D1 stressed that the Plaintiff is bound by its pleading and in view of the shortcoming in the pleading, the Plaintiff ought not to be allowed to raise any plead of equitable fraud. D1 referred to the Federal Court decision in Zung Zang Wood Products Sdn Bhd & Ors v. Kwan Chee Hang Sdn Bhd [2014] 5 MLRA 85 where Jeffrey Tan FCJ explained (at p 117) that: “… Question 6 – [Where] a plaintiff relies on the type of fraud called equitable or constructive fraud, whether it is incumbent on him to plead the particulars of this class of fraud as would be incumbent on him if he were to plead fraudulent misrepresentation or common law fraud? Answer – when a plaintiff relies on the type of fraud called equitable or constructive fraud, it is incumbent on him to plead facts to support the class of fraud. We must add that “The most important issue concerning the sufficiency of pleadings remains whether the defendant is informed of the case to be met and is not unfairly taken by surprise” (Oliver v. Decorby, 2005 SKQB 289, (2005), 267 Sask R 147 (QB) per S/N guoNfwIzp0J8XZqjMgbQ Ball J), and “The general rule that fraud must be specifically pleaded would not … apply when the party aggrieved raised no objections and fights out the case as though the pleadings were in proper form (Beni Madho v. Basanto Kunbi 35 IC 252 All)” (Mogha’s Law of Pleadings in India 16th end at p 66).” [Emphasis added] [72] Based on the above, according to D1, since the Plaintiff had not provided any particularization of the alleged unconscionable acts which form one of the pertinent elements for equitable fraud, this Court should not accept any submission on equitable fraud. In the alternative, should this Court find that the particulars of the unconscionable act had been pleaded by the Plaintiff, D1 litigated that, the Plaintiff also had the burden to prove that the alleged conduct or concealment is unconscionable. [73] In view that the Plaintiff has not pleaded any particulars in the statement of claims to suggest that his claim is under equitable fraud, any attempt to say that the fraud alleged in this Case is under equitable fraud at post-trial stage is fruitless and futile effort. It could be greatly unfair and prejudicial to D1 if the claim under equitable fraud is allowed. Also, I agree with the counsel for D1 that the Plaintiff has failed to establish any unconscionable act. Thus, the fraud alleged by the Plaintiff is confined to common law fraud. As mentioned earlier, under common law fraud, establishment of intention is a must. I see no evidence adduced by the Plaintiff in this case to establish such intention. Hence, the Plaintiff’s claim under common law fraud has also failed. S/N guoNfwIzp0J8XZqjMgbQ [74] To complete his refutation of the Plaintiff’s claim against him, D1 also argued that the burden is on the Plaintiff to prove that the circumstance of this case shows a clear inference of fraud, be it common law fraud or equitable fraud based on its pleaded sets of facts. This the Plaintiff has not done. Therefore, I find that the Plaintiff’s claim fails on all counts. [75] Moreover, to further weaken the Plaintiff’s case, and just to add on to my earlier findings, it is my finding that the Plaintiff’s claim against D1 here is defective due to the issue of privity. This, to my mind, has caused the Plaintiff’s failure in establishing his case. To begin with, the evidence presented before me clearly shows that those advances were made on behalf of Langkah VIP and/or Tootpay. It was not personally from the Plaintiff. [76] I refer to the Notes of Proceeding 14/06/2022 at page 127 where PWS-2 confirmed the fact that: “AO : Ok. Now do you agree that these advances payment transfer slip at pages 4, 20, 21, 22, 23, 24 had been written down that the word, had been written down the word, “On behalf of Langkah VIP Sdn Bhd and on behalf of Tootpay Sdn Bhd”, that both had been written down there. Correct? Don’t worry, I’m not asking whether you made or not, I know. HVS : No, is it agree or – : I know, I mean the word it there, isn’t it? In that particular document? HVS : Yes, of course. S/N guoNfwIzp0J8XZqjMgbQ [77] All the remittance slips could also confirm this where remarks that it was made “on behalf of Langkah VIP Sdn Bhd” or “on behalf of Toothpay Sdn Bhd” were stated. Now, remarks that the advances were made by the Plaintiff on behalf of Langkah VIP and/or Tootpay have given rise to a very important question in determining this Case before me i.e., whether the Plaintiff has a locus standi and/or cause of action against the Defendants. [78] To succeed in his claim, the Plaintiff must at least prove that D1 has a liability to reimburse the Plaintiff all the advances made to Watchdata should the novation of the BIMB Agreement fail. However, as mentioned earlier, there is no evidence, oral or documentary, to suggest that D1 has such liability against the Plaintiff. In that event, D1 had no obligation whatsoever to repay the advances to the Plaintiff. Even if there exists such obligation to reimburse the advances of USD$1.5 million paid to Watchdata, the most appropriate party to initiate any action to recover such sum would be Langkah VIP or Tootpay. This is because, the advances, although made by the Plaintiff, were made on behalf of Langkah VIP and/or Tootpay. None of it was done in the personal capacity of the Plaintiff. The Plaintiff thus does not have any legal right to initiate this Case and/ or to recover the sum. Conclusion [79] The Plaintiff has not adduced any evidence to show that the Plaintiff had intended for D1 to be personally liable from the beginning. The chronology of the events, from discussion to verbal agreement, then to formal written agreement suggests that there are no external factors or agreements to be considered to determine the liabilities or obligations of the parties outside the four corners of the APA. The APA has no provision to commit D1’s obligation to repay the advances. If at all, it is D2’s S/N guoNfwIzp0J8XZqjMgbQ obligation to repay the same. The Plaintiff, however, has failed in establishing his claim against D1 on the balance of probabilities. [80] Besides, the Plaintiff has failed to show any extraordinary circumstance that would also justify the Court lifting the corporate veil or ordering D1 to be personally liable. Therefore, D1 is again not personally liable to repay the Plaintiff any of the advances. [81] As an add on, the Plaintiff also does not possess the necessary locus to bring this action. The privity of contract is between D2 and Tootpay, not the Plaintiff. The transaction documents, the APA, the accounts, and subsequent partial payment from D2 show that the transacting parties were all along, D2 and Tootpay only (or previously Langkah VIP) and not the Plaintiff. Hence, the Plaintiff has no locus to bring this action. If at all, it should be for Toothpay Sdn. Bhd. to initiate this Case for the recovery of the advances. In the absence of any evidence to prove otherwise, the correct parties of this Case are clearly Toothpay as the claimant and D2 as the defendant and not any other parties. [82] All things considered; I dismiss this Case with costs. Dated: 1st December, 2022 Dr. John Lee Kien How @ Mohd Johan Lee Judicial Commissioner High Court of Malaya Kuala Lumpur S/N guoNfwIzp0J8XZqjMgbQ Table of Authorities Cases Berjaya Times Square Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597 Double Acres Sdn Bhd v. Tiarasetia Sdn Bhd [2000] 3 MLRH 1 KTL Sdn Bhd & Anor v. Leong Oow Lai [2014] MLRHU 1014 Re Mumtaz Properties Ltd, Re; Wetton (as liq of Mumtaz Properties Ltd) v Ahmed & others [2011] EWCA Civ 610, | [2012] 2 BCLC 109, [2011] NLJR 779, | [2011] All ER (D) 237 (May) Sinnaiyah & Son Sdn. Bhd v. Damai Setia Sdn. Bhd [2015] 5 MLRA 191 Solid Investment Ltd v. Alcatel-Lucent (Malaysia) Sdn Bhd [2014] 1 MLRA 526 SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464 Takako Sakao v. Ng Pek Yuen & Anor [2009] 3 MLRA 74 Zung Zang Wood Products Sdn Bhd & Ors v. Kwan Chee Hang Sdn Bhd [2014] 5 MLRA 85 Statutes Section 101, Evidence Act 1950 Section 102, Evidence Act 1950 S/N guoNfwIzp0J8XZqjMgbQ