Huat Hing Rubberwood Sdn. Bhd. v Goodnite Sdn. Bhd. (WA-22NCC-293-07/2021)

This judgment concerns a claim arising from the murky waters where friendship meets commerce, and where the absence of proper documentation can transform what appears to be a straightforward business transaction into a labyrinth of competing narratives. The plaintiff company seeks to recover a substantial sum of money, claiming it was extended as a friendly loan to assist the defendant company during a period of financial distress. The defendant company denies any such loan arrangement, contending instead that the monies were advance payments made in connection with a proposed share purchase transaction between individuals, not companies.

At the heart of this dispute lies the fundamental question of who were the true contracting parties - were these corporate entities bound by a loan agreement, or were they merely conduits for a personal arrangement between two business acquaintances? The case is further complicated by the death of a key figure who allegedly orchestrated the entire arrangement, leaving behind a trail of conflicting evidence and incomplete documentation.

What emerges is a stark reminder that in commercial dealings, the law demands clarity and certainty, particularly where substantial sums are involved and where the financial stability of companies hangs in the balance. The plaintiff's case rests heavily on oral testimony and assertions of trust, while the defendant points to contemporaneous documents and accounting records that tell a markedly different story.

This court must therefore navigate through the competing versions of events to determine whether the evidence supports the existence of an enforceable loan agreement between the parties. The principles of contract law, the rules of evidence, and the standards of commercial conduct all converge in this matter to test whether good intentions and personal relationships can substitute for proper legal documentation. Ultimately, this case serves as a cautionary tale about the perils of informal arrangements in the unforgiving world of commercial litigation.

Huat Hing Rubberwood Sdn Bhd (the Plaintiff) is a company dealing with timber-based products and furniture. Goodnite Sdn Bhd (the Defendant) is involved in manufacturing mattresses and beddings.

The late Dato' Chew Kar Chong (“Dato' Chew”) was the founder, former director and majority shareholder of the Defendant company. Mr. Gan Boon Tian (“Mr. Gan”) is the founder, director and shareholder of the Plaintiff company. Both men were acquainted due to the overlapping nature of their businesses.

In or around June 2016, Dato' Chew approached Mr. Gan with a proposal for Mr. Gan to purchase 38% of Dato' Chew's shares in the Defendant company. Mr. Gan expressed interest in this proposal and appointed the law firm Messrs Rashid Tasin, K.L. Tan & Low to conduct due diligence on the Defendant company and prepare draft agreements relating to the proposed share purchase.

On 27.7.2016, Dato' Chew resigned as a director of the Defendant company.

Between October and November 2016, while negotiations for the share purchase were ongoing, a series of payments totalling RM1,768,845.30 were made to the Defendant company's accounts through the following transactions: 4 a)

19.10.2016: RM382,000.00 (bank transfer from Chin Thiam) b)

24.10.2016: RM452,180.60 (bank transfer) c)

24.10.2016: RM45,934.70 (bank transfer) d)

25.11.2016: RM300,000.00 (bank transfer) e)

28.11.2016: RM588,730.00 (bank transfer) [10] Between March and July 2017, a series of payments totalling RM990,981.00 were made from the Defendant company's accounts through the following transactions: a)

3.3.2017: RM181,666.00 b)

10.4.2017: RM80,000.00 c)

25.4.2017: RM50,000.00 d)

4.5.2017: RM53,466.00 e)

9.5.2017: RM181,666.00 f)

9.5.2017: RM74,640.00 g)

6.6.2017: RM185,266.00 h)

10.7.2017: RM184,277.00 [11] On 28.7.2017, Dato' Chew passed away. Following his death, the proposed share purchase could not proceed. [12] The Plaintiff company and Mr. Gan subsequently requested repayment of the sum of RM1,768,845.30 from the Defendant company. The Defendant denied any loan arrangement and refused to make the repayment. [13] On 2.7.2021, nearly four years after Dato' Chew's death, the Plaintiff filed this action against the Defendant seeking repayment of RM1,768,845.30 plus interest at 5% per annum from the date of filing until full settlement. [14] The Plaintiff maintains that the sum was a friendly loan made to help the Defendant company during financial difficulties, while the Defendant contends that the payments were advance payments related to the proposed share purchase between Mr. Gan and Dato' Chew personally. No written loan agreement or share purchase agreement was ever executed between the parties. THE PLAINTIFF’S PLEADED CASE [15] The Plaintiff pleads that in June 2016, Dato' Chew, who was then the founder and main person managing the Defendant company, informed Mr. Gan that the Defendant was in an extremely unstable financial position and facing severe financial difficulties. Due to this situation, Dato' Chew requested, on behalf of the Defendant, for a friendly loan from the Plaintiff to rescue and improve the Defendant's financial position. [16] The Plaintiff contends that based on mutual trust and with the intention of helping the Defendant, Mr. Gan agreed to this request. The Plaintiff then extended a friendly loan totalling RM1,768,845.30 through five separate payments made between October and November 2016. [17] According to the Plaintiff, it was agreed between Dato' Chew and Mr. Gan that this friendly loan was: a) Made on a friendly and goodwill basis b) Intended to rescue the Defendant financially c) Made for the purpose of maintaining and securing the integrity of the Defendant company as the subject matter of the proposed share purchase d) To be repaid on flexible terms to be agreed in future, as the immediate priority was the Defendant's financial health [18] The Plaintiff pleads that while the friendly loan and the proposed share purchase were running in parallel, they were separate arrangements that did not overlap with each other. [19] Following Dato' Chew's death on 28.7.2017, the proposed share purchase could not proceed. The Plaintiff then requested repayment of the friendly loan, but the Defendant refused and denied the existence of any loan arrangement. [20] The Plaintiff argues that the Defendant had clearly enjoyed the benefits of the friendly loan and that the Defendant's refusal to repay amounts to unjust enrichment. [21] The reliefs sought by the Plaintiff are: a) Return of the sum of RM1,768,845.30 by the Defendant b) Interest at the rate of 5% per annum on the judgment sum from the filing date until full settlement c) Costs of the action to be borne by the Defendant d) Such other orders, reliefs or directions as the court deems fit and proper THE DEFENDANT’S PLEADED CASE [22] The Defendant contends that the alleged loan was in fact part of a private arrangement between Mr. Gan and Dato' Chew personally regarding the proposed purchase of Dato' Chew's 38% shareholding in the Defendant company. The Defendant maintains that it was never party to any loan agreement with the Plaintiff. [23] The Defendant emphasises that Dato' Chew had resigned as director on 27.7.2016, and therefore had no authority to request any loan on behalf of the Defendant company after that date. The Defendant argues that while Dato' Chew may have directed certain payments to be made into the Defendant's account, this did not create any loan relationship between the Plaintiff and Defendant companies. [24] Regarding the sum of RM382,000 transferred by Chin Thiam, the Defendant points out that this payment was not made by the Plaintiff company but by a third party. The Defendant maintains that if any loan existed, it was a personal transaction between Mr. Gan and Dato' Chew. [25] The Defendant further pleads that between March and July 2017, Dato' Chew had already caused payments totalling RM990,981.00 to be made to the Plaintiff from the accounts of the Defendant and a related company, Goodnite Enterprise (M) Sdn Bhd. The Defendant argues that the Plaintiff's claim fails to account for these payments. [26] The Defendant contends that it is implausible for two registered companies to enter into a loan agreement for such a substantial sum (RM1,768,845.30) without any written agreement, board resolution, or repayment terms. The Defendant also points out that the Plaintiff never issued any letter of demand before commencing the action. [27] The Defendant argues that the Plaintiff and Mr. Gan are taking advantage of Dato' Chew's death to pursue this claim against the wrong party. The Defendant maintains that if there are any outstanding claims regarding these payments, they should be directed against Dato' Chew's estate rather than the Defendant company. [28] The Defendant seeks dismissal of the Plaintiff's claim with costs, on the grounds that: a) The Plaintiff has no contractual relationship with the Defendant b) The Plaintiff lacks locus standi to bring this claim c) The claim is frivolous, vexatious and discloses no reasonable cause of action d) The action constitutes an abuse of the court process WITNESSES [29] Three witnesses appeared for the Plaintiff as follows: a) PW1 is Gan Boon Tian (Mr. Gan), the founder, director, and shareholder of the Plaintiff. His evidence focused on establishing the existence of a friendly loan between the Plaintiff and the Defendant. He testified that at the request of Dato' Chew, he made five payments to the Defendant, totaling RM1,768,845.30, which constituted the friendly loan. He also spoke about the lack of formal documentation for this loan, attributing it to his trust in Dato' Chew and their shared understanding of the transaction. He emphasised that these payments were distinct from any investment proposal and that the Plaintiff is seeking repayment of the loan from the Defendant. b) PW2 is Chin Thiam, the sole proprietor of Gage Enterprise. His evidence centers around a payment of RM382,000.00 he made to the Defendant on 19.10.2016, at the request of Mr. Gan (PW1). He testified that he understood this payment to be part of a larger friendly loan from the Plaintiff to the Defendant. He explained that he was Mr. Gan’s brother-in-law, had no personal relationship with Dato' Chew, and held no position within the Plaintiff. c) PW3 is Chan Yen Hoong (Kathy), the Chief Administrative Officer of the Plaintiff. Her evidence primarily focused on clarifying the accounting practices of the Plaintiff and explaining the rationale behind the lack of formal documentation for the alleged friendly loan to the Defendant. She testified that while the Plaintiff did not issue a payment voucher for the transfers to the Defendant, the company did record these payments in its accounting system and noted them in the audit report under “other receivables.” She maintained that a bank-in slip was sufficient proof of payment and explained that this information was readily available for auditors upon request. [30] Seven witnesses appeared for the Plaintiff as follows: a) DW1 is Lee Siau Chian, the assistant manager at the Defendant at the time of the trial. Her evidence primarily focused on identifying payment vouchers and ledgers from the Defendant. During her testimony, she confirmed that she prepared the payment vouchers at the instruction of her superior, Khoo Chee Keong (DW7) (“Mr. Khoo”). She also acknowledged that these payment vouchers did not include any stamp, signature, or other evidence that the Plaintiff had been notified or had agreed to the payments. b) DW2 is Gui Sek Li, a senior accounts executive at the Defendant at the time of the trial. In 2016 and 2017, the period when the payments from the Plaintiff were made, she held the position of accounts assistant. Her evidence focused on identifying payment vouchers related to the alleged loan and confirming the signature of her superior, Mr. Khoo (DW7), on one of the payment vouchers. Similar to Lee Siau Chian's (DW1) testimony, DW2 stated that she prepared payment vouchers based on the instructions of her superiors and had no knowledge of the purpose or discussions surrounding the payments. She also confirmed that in 2016 and 2017, Dato' Chew was the boss of the Defendant. c) DW3 is Hamdan bin Yusop, a director of the Defendant from 15.2.2000, to 18.9.2019. However, he testified that he was only a nominal director, appointed at the request of Dato’ Chew, and had no knowledge of the company’s financial records or the alleged friendly loan from the Plaintiff. He claimed he had no experience or skills in managing the company’s daily operations or business affairs. During his testimony, DW3 confirmed that he never interfered in the company’s management and that Dato' Chew was the main decision-maker in the company. d) DW4 is Foo Mee Choo (Emily), the personal assistant to Dato’ Chew until his death and, at the time of the trial, the personal assistant to Mr. Teo Yek Ming (DW5), a managing director of the Defendant. Her evidence focused on the procedures she followed for authorising payments from the Defendant’s bank accounts, specifically relating to the cheques issued to the Plaintiff. She testified that she would verify any payment with Dato’ Chew before signing any cheques and would confirm his instruction to make the payment, the details of the receiving party, and the amount of the payment, but she would not inquire about the purpose of the payment as she considered that outside the scope of her duties. She stated that she had no knowledge of the purpose of the payments made to the Plaintiff and that Dato’ Chew never disclosed that purpose to her. e) DW5 is Teo Yek Ming, the Managing Director of the Defendant at the time of the trial, presented evidence aimed at refuting the Plaintiff’s claim of a friendly loan. He asserted that the lack of documentation, the source of some payments, and the timing relative to Dato' Chew's resignation indicated that the RM1,768,840.00 was not a company loan, but a personal arrangement between PW1 and Dato' Chew, possibly related to a proposed share sale. DW5 relied heavily on his interpretation of financial records and his understanding of the relationship between the individuals involved, but lacked direct knowledge of their agreements. f) DW6 is Datin Gong Yinmei, Dato’ Chew’s widow and a director of the Defendant from 23.3.2016 to 18.9.2019. However, she testified that she was only a nominal director and had no involvement in the daily operations or decision-making of the company. She also stated that she had no knowledge of the alleged friendly loan of RM1,768,845.30 from the Plaintiff. Datin Gong claimed she was not involved in the business of the company and that Dato' Chew controlled the Defendant until his death. g) DW7 is Khoo Chee Keong (earlier defined as “Mr. Khoo”), the Finance Manager of the Defendant and reported directly to Dato' Chew Kar Chong during the period the alleged loan took place. His evidence centered on supporting the Defendant's claim that the RM1,768,845.30 was not a loan but was an advance payment for the purchase of shares from Dato' Chew by Mr. Gan (PW1). He also testified that all financial decisions at the Defendant were made by Dato’ Chew, who instructed him to record the money received from the Plaintiff as payments to Dato' Chew. Mr. Khoo further stated that he did not question the purpose of the payments as he trusted Dato' Chew and had a close relationship with him. ISSUES [31] From the facts of the case, defences relied on by the Defendant and the submissions of parties, the court frames the following main issues for deliberation which this court considers pivotal to the resolution of this case: a) Whether, in the absence of any business relationship between the Plaintiff and the Defendant, the sum of RM1,768,845.30 paid by the Plaintiff to the Defendant constitutes a legally enforceable friendly loan. b) Whether, in the absence of contemporaneous documentation, financial records, or corporate approvals, the sum of RM1,768,845.30 paid by the Plaintiff to the Defendant was made pursuant to an enforceable oral loan agreement. c) Whether the Plaintiff’s failure to issue any formal demand for repayment over a prolonged period undermines the existence of a binding loan agreement in respect of the RM1,768,845.30 allegedly advanced to the Defendant. d) Whether the payments totalling RM1,768,845.30 made by the Plaintiff were, in substance, loans extended to the Defendant, having regard to the Plaintiff’s assertions and the contemporaneous remittance forms and accounting records indicating a proposed share sale to Dato’ Chew. e) Whether the sum of RM1,768,845.30 paid into the Defendant’s account was a personal advance from Mr. Gan to Dato’ Chew for the purchase of shares, reflected in the Defendant’s accounting records under the “Contra-2 Account” as a shareholder-related item. f) Whether the oral testimony of Mr. Gan, asserting that the payments totalling RM1,768,845.30 were corporate loans extended by the Plaintiff to the Defendant, can override contemporaneous documentary evidence indicating that the payments were for a 38% share investment and recorded as personal advances from Dato’ Chew under the Defendant’s “Contra-2 Account”. g) Whether the payments totalling RM1,768,845.30 were part of a personal arrangement between Mr. Gan and Dato’ Chew. h) Whether an adverse inference should be drawn under Section 114(g) of the Evidence Act 1950 against the Plaintiff for failing to call solicitors from Messrs. Rashid Tasin, KL Tan & Low, whose evidence could have clarified the nature and purpose of the RM1,768,845.30 payment. ANALYSIS AND FINDINGS OF THE COURT No business relationship or dealings between the plaintiff and defendant [32] The Plaintiff contended that it had extended a sum of RM1,768,845.30 to the Defendant, pursuant to a legally enforceable friendly loan agreement. The Plaintiff argued that the loan was advanced at the request of the Defendant’s then-majority shareholder and founder, the late Dato’ Chew, to alleviate the Defendant’s severe financial difficulties. This financial distress was evident from the Defendant's own admission in its Defence that “Tujuan pinjaman diberikan ... untuk mengatasi masalah kewangan Defendan.” [33] The Plaintiff further asserted that the loan was extended on the basis of mutual trust and was intended to preserve the Defendant’s operational stability to facilitate a proposed share sale transaction between the Plaintiff and Dato’ Chew. PW1 testified that “So, Dato' Chew informed me that the status of the finance, the financial status of Goodnite, has got some problems, and very dangerous. So, he asked me to help him out, to loan the company this money.” [34] The Plaintiff submitted that this loan, characterised as interest-free and informal, was nonetheless enforceable and warranted restitution, particularly in light of the Defendant’s refusal to repay. [35] The Defendant’s position was that the financial assistance provided by the Plaintiff was not a loan in the legal or commercial sense but rather a personal transaction between Mr. Gan, the Plaintiff’s managing director, and Dato’ Chew. This was evidenced by Mr. Gan's own testimony that “the negotiation for the purchase of Goodnite shares were between you and Dato' Chew only” and that “the share sales was between you, personally Mr Gan and Dato' Chew personally.” [36] The Defendant asserted that there was no business relationship between the Plaintiff and the Defendant at the material time or at any point prior to or since the payments were made, a fact confirmed by PW1 in cross-examination: “AMOS: So, based on your answer, Goodnite is not a customer of Huat Hing, right? GBT: Correct. AMOS: Has never been, right? GBT: Never been.” [37] It argued that the alleged transaction was not commercially plausible and that the Plaintiff’s payments were instead part of a broader personal arrangement arising out of Mr. Gan’s long-standing friendship with Dato’ Chew. The Defendant further contended that these funds were advanced in connection with a proposed share sale agreement and were not intended as a loan recoverable from the Defendant. [38] Having considered the written submissions and evidence, this court is persuaded by the Defendant’s submissions. The Plaintiff’s characterisation of the transaction as a friendly loan enforceable against the Defendant is fundamentally inconsistent with the factual and evidentiary matrix. [39] The Plaintiff’s contention that the RM1,768,845.30 was remitted pursuant to a legally enforceable loan agreement between corporate entities is incompatible with the fact that there was absolutely no business relationship or dealings between the Plaintiff and Defendant prior to or since these payments. It defies commercial sense that the Plaintiff would altruistically advance such substantial sums to an unrelated party in financial distress without legally safeguarding its position. [40] The testimony provided by Mr. Gan, the managing director and majority shareholder of the Plaintiff representing the Plaintiff, underscores a scenario where an interest-free loan was allegedly extended to the Defendant during a period of financial distress. The notion that a commercial entity would, without any commercial incentive or existing business relationship, extend a substantial financial loan to another commercial entity in financial distress, is commercially implausible. This is particularly so when considering the inherent risk of non-repayment under such circumstances. [41] The evidence further indicates that the transaction in question was not a commercial loan, but rather a personal arrangement rooted in the longstanding friendship and mutual respect between Mr. Gan, the managing director and majority shareholder of the Plaintiff, and the late Dato’ Chew, who was the founder, former director, and majority shareholder of the Defendant. Multiple witnesses, including PW1 himself, testified to the close personal relationship between the two men. In cross-examination, PW1 readily acknowledged that he regarded Dato’ Chew as a close friend and a man of high standing within the timber and furniture industries. This sentiment was echoed by other witnesses, including DW4, who affirmed that Dato’ Chew was well respected within the industry and the associations he led. [42] The Plaintiff also relied on Dato’ Chew’s reputation as a respected leader and office bearer in various trade associations, including his appointments as President and Vice President of the Kuala Lumpur & Selangor Furniture Entrepreneur Association (KLSFEA) and the Kuala Lumpur Furniture Industry Association (KLSFIA). These roles positioned Dato’ Chew as a prominent and influential figure within the same industry circle as Mr. Gan. Their professional proximity, combined with personal rapport, appears to have laid the foundation for the Plaintiff’s decision to advance funds at Dato’ Chew’s request - not as a formalised commercial loan, but as a gesture of personal trust and goodwill between individuals who shared a bond beyond mere business interests. [43] Critically, there was no contemporaneous documentation evidencing any corporate loan agreement between the parties. Instead, the payment was made during an ongoing negotiation for Mr. Gan to acquire a 38% stake in the Defendant, a deal that ultimately fell through due to Dato’ Chew’s untimely passing. In this light, the nature of the transaction aligns more persuasively with a personal financial arrangement between friends, made in anticipation of a future business partnership, rather than a corporate debt enforceable against the Defendant. [44] The nature of this relationship is critical in understanding the motivations behind the transaction. The discussions and interactions between Mr. Gan and Dato' Chew, as detailed in the proceedings, reveal a relationship that transcends mere commercial interest, but is instead rooted in personal trust and respect. [45] Moreover, the argument put forward by the Plaintiff that the transaction was intended to keep the Defendant financially afloat does not convincingly detract from the essence of the Defendant's submission. The characterisation of the payment as part of a broader proposed share sale agreement between two friends further distances the transaction from a commercial loan and aligns it more closely with a personal financial arrangement between individuals. [46] The Plaintiff's submission attempts to reframe the transaction as a “Friendly Loan” arising out of the non-existent business relationship and the Defendant's unstable financial position. However, this court finds such a characterisation inconsistent with the evidence of the transaction's nature and purpose. The Defendant's contention that the financial support was an advance payment related to a proposed share sale, facilitated by personal trust and respect, is more compelling and substantiated by the testimonies and documents presented. No documentation records the alleged loan [47] The Plaintiff contended that it had extended the sum of RM1,768,845.30 to the Defendant pursuant to an oral loan agreement. The Plaintiff argued that this sum was advanced in five separate payments between October to November

The Plaintiff maintained that the lack of formal documentation was attributable to the trust and goodwill between Mr. Gan, the Plaintiff's managing director, and Dato' Chew. As testified by PW1: “No resolution is because I trusted Dato' Chew very much. So, whenever he informed me on the timing for the money to be deposited into Goodnite, I just follow his instruction. Because he's such a reputable person in our industry, that's why I trusted him so much. So, I also considering the fact that if I ask him to prepare documents, he will feel ashamed, therefore I didn't ask him to do all that.” [48] The Plaintiff sought to rely on bank transfer slips as evidence of the transaction and urged the court to accept the informal nature of the agreement, given the mutual trust underpinning the relationship between Mr. Gan and Dato’ Chew. [49] The Defendant denied the existence of any enforceable loan agreement and argued that the absence of documentary evidence, including written records, accounting entries, or correspondence, rendered the Plaintiff’s claim untenable. The Defendant highlighted that despite having a proper functioning accounting department, the Plaintiff produced: a) No payment vouchers and receipts b) No letters or emails between Plaintiff and Defendant recording the purpose of remittance c) No minutes of meeting recording Dato' Chew's request d) No management account, statement of account or accounting books e) No record in the Plaintiff's financial statements from 2016 to 2020 f) No board resolutions [50] The Defendant asserted that no corporate loan of such magnitude would be undertaken without proper documentation, particularly given the financial distress of the Defendant at the material time, particularly given the Defendant's financial distress at the material time, which PW1 acknowledged in evidence: “AMOS: And in 2016, Goodnite Sdn Bhd was heavily indebted? GBT: Yes. AMOS: And Goodnite was almost unable to pay its debt? GBT: He had informed me that there were some financial problems, yes.” [51] The Defendant relied on the lack of evidence in the Plaintiff’s financial records, including its audited statements, to support its position that no loan transaction occurred. Instead, the Defendant characterised the transaction as a personal financial arrangement between Mr. Gan and Dato’ Chew, unconnected to the Defendant’s corporate obligations. [52] Having carefully reviewed the submissions and evidence before the court this court finds in favour of the Defendant. The Plaintiff’s claim suffers from a critical absence of the documentary evidence typically expected to substantiate a loan of this magnitude, particularly in a corporate context. This finding is supported by the observation in Alliance Bank Malaysia Bhd v Wan Shalihudin Wan Ibrahim & Another Case [2013] 4 CLJ 653 (HC) that “In this time and era any allegation of oral agreement that too by corporate personalities relating to corporate transaction, must be frowned by courts.” [53] The crux of the Defendant's argument rests on the absence of documentary evidence to substantiate the Plaintiff's claim of an oral loan agreement, juxtaposed with the statutory and practical expectations of commercial and financial dealings, especially those involving substantial sums of money. [54] The Defendant has effectively highlighted the implausibility of an oral loan agreement of such magnitude lacking any form of written documentation, be it text messages, emails, or formal records. This assertion is supported by the principles laid out in the case of P Thiagarajan Pavadai v Ganesan Thankaveloo [2020] 1 LNS 2084 (HC) where the absence of corroborative evidence significantly undermined the credibility of the claim. The Defendant's argument is further bolstered by referencing Kamdar Sdn Bhd v Bipinchandran Balvantrai & Ors. [2017] 1 CLJ 369 (CA), emphasising the importance of accounting records, such as payment vouchers, in substantiating financial transactions. The court stated: “In this context, it is relevant that there were no payment vouchers or any supporting documents available to support the debit entry in the general ledger. This runs awry of the normal accounting practice in the plaintiff which requires a payment voucher and other supporting documents such as an invoice stipulating the purpose of the payment.” [55] The stark absence of such documentation in this case casts a shadow over the Plaintiff’s narrative. [56] Moreover, the Defendant's submission meticulously outlines the discrepancies between the claim and the standard practices of maintaining and producing relevant accounting and financial records. The failure to present management accounts, statements of account, or accounting books to support the transaction in question raises considerable doubt about the existence of the purported loan. The Defendant rightly points out that the financial statements of the Plaintiff from 2016 to 2020 exhibit no record of any loan provided to the Defendant, which is a critical omission given the claimed magnitude of the transaction. [57] On the contrary, the Plaintiff's submissions attempt to counteract the absence of documentation by emphasising the trust between the parties involved and the presence of bank-in slips as proof of the transaction. However, this approach fails to adequately address the fundamental requirements of corporate governance and financial diligence, particularly in the context of substantial financial transactions. The reliance on oral assurances and informal proofs, such as bank-in slips, does not meet the evidential threshold required to substantiate claims of financial transactions in a corporate setting. [58] The court is mindful of the Plaintiff’s argument regarding the nature of the 'Friendly Loan' and the purported trust between the parties. However, the absence of formal documentation, internal records, or any form of acknowledgment in the Plaintiff's accounting records significantly undermines the credibility of such a claim. Significant financial transactions, especially those claimed in a legal dispute, require robust documentary evidence to be considered reliable and credible. [59] The argument that Mr. Gan transferred the sum of RM1,768,845.30 to the Defendant because of trust in Dato' Chew's integrity actually reinforces the Defendant's position that the contract for this payment was a private arrangement between Mr. Gan and Dato' Chew in their personal capacities. This premise is supported by Mr. Gan's conduct in relation to the transaction, which indicates a distinct separation of trust levels; his trust resided not with the Defendant as a corporate entity, but with Dato' Chew on a personal level. As revealed during cross-examination, Mr. Gan had engaged Messrs. Rashid Tasin, KL Tan & Low to conduct due diligence for the proposed share sale and was aware of the Defendant's very serious financial difficulties (“sangat teruk”) and unstable financial standing. Despite having knowledge of the Defendant's precarious financial position, Mr. Gan chose to proceed with the transfer without obtaining any formal documentation, collateral, or board approval. Significantly, Mr. Gan confirmed during cross-examination that throughout the negotiation process, he had never seen any financial due diligence report on the Defendant, and that he did not ascertain the Defendant's ability to repay the amount before making the transfer. He further admitted that he did not seek any guarantees or security for the sum transferred, explaining that he trusted Dato' Chew implicitly and did not wish to embarrass him by requesting formal safeguards. This is particularly evident in Mr. Gan's decision to proceed with the transfer despite being aware of the Defendant's financial difficulties and imminent risk of winding up, as explicitly acknowledged during the proceedings. [60] The reliance on personal trust rather than a formal contractual agreement between the companies further distances this transaction from being a corporate obligation. Mr. Gan's admissions that he did not ascertain the Defendant's ability to repay the amount before making the transfer, coupled with his explicit statement of trust in Dato' Chew's personal capacity to repay, underscore the personal nature of the transaction. In cross-examination, Mr. Gan confirmed that he did not request any financial documents from the Defendant, such as audited accounts, cash flow projections, or a business plan to assess the company's ability to repay the loan. He further admitted that he did not seek any guarantees or security for the sum transferred, nor did he conduct any independent verification of the Defendant's solvency beyond what Dato' Chew had told him. Significantly, Mr. Gan explicitly acknowledged that there was no board resolution for the RM1.7 million transfer, stating “I give the loan of RM1.7 million, there was no reso, no document whatsoever.” He justified this by explaining that “there's not necessary for me to go through the Board because I'm the major shareholder” and “I am the founder and the decision maker. I am the decision maker, whatever I say, it counts.” When asked why no written agreement was prepared, Mr. Gan explained that he trusted Dato' Chew deeply as “such a reputable person in our industry” and stated that “if I ask him to prepare documents, he will feel ashamed, therefore I didn't ask him to do all that.” The fact that Mr. Gan initiated the transfer without detailed knowledge of the Defendant's financial health, formal documentation, board consultation, or a clear expectation of repayment from the Defendant reinforces the notion that this was not a conventional loan transaction rooted in corporate assurances or formalities. [61] Moreover, the exchange between Mr. Gan and counsel during cross-examination and re-examination highlights a relationship predicated on personal trust and mutual respect, rather than on the formalities and protections typically associated with corporate transactions. When asked why no written agreement was drawn up, Mr. Gan explained that he trusted Dato' Chew deeply and did not wish to embarrass him by requesting documentation. He repeatedly described Dato' Chew as a “reputable person” in the industry and stated that he believed a formal agreement would have made Dato' Chew feel “ashamed.” Mr. Gan admitted that he relied entirely on Dato' Chew's assurances and did not think it was necessary to formalise the arrangement, even though it involved a large sum of money. Crucially, Mr. Gan confirmed during cross-examination that he had no contact with any other officer or director of the Defendant company. Specifically, regarding the other directors Gong Yin Mei and Hamdan Bin Yusop, Mr. Gan testified that he was “not close” with them, that “they have never contacted [him] personally before,” that he did not “know their personalities and characters,” and that he had “never had any dealings with them before.” He further confirmed that he had “never seen them before” and “never told them” about the RM1.7 million transfer or that it was allegedly a loan from the Plaintiff. Additionally, Mr. Gan admitted that he did not inform his own lawyers handling the due diligence about the money transfer, explaining that “the issue of lending money” and “the dealing that I'm having with Kelly Tee are two separate dealings.” Mr. Gan's approach to the transaction, conducted exclusively through personal trust in Dato' Chew without any corporate formalities, board consultation, or engagement with other company officers, aligns with a personal rather than corporate arrangement. The transaction's characterisation as a private agreement is further supported by the absence of any formal loan documentation, clear terms of repayment, or evidence of corporate-to-corporate engagement that would typically govern a corporate loan. [62] In light of the foregoing analysis, the court finds the Defendant's arguments to be more compelling and grounded in the legal and practical expectations of financial and commercial conduct. The absence of any concrete documentary evidence to support the existence of an oral loan agreement, coupled with the statutory requirements for maintaining and producing financial records, leads the court to conclude that the Plaintiff has failed to discharge the burden of proof on the balance of probabilities. No demand for repayment [63] The Plaintiff contends that the funds amounting to RM1,768,845.30 extended to the Defendant as a friendly loan pursuant to an oral agreement made with the late Dato’ Chew for the purpose of alleviating the Defendant’s financial distress. The Plaintiff further submits that the absence of a formal demand for repayment does not detract from the enforceability of the loan, as the transaction was based on trust and mutual understanding. The Plaintiff insists that the commencement of legal action, though delayed, serves as sufficient notice of the demand. [64] The Defendant challenges the existence of the alleged loan agreement, contending that the absence of a formal demand for repayment post the demise of Dato’ Chew critically undermines the Plaintiff’s claim. It emphasises that the Plaintiff’s inaction over nearly four years following the alleged loan transaction is inconsistent with the conduct expected of a diligent creditor, particularly in light of the substantial sum involved. The Defendant argues that issuing a demand is an important indicator of creditor intent, even where no statutory requirement for such a demand exists. The Defendant further submits that the lack of formal demand aligns with its position that the transaction was not a corporate loan but a personal arrangement between Mr. Gan and Dato’ Chew. [65] Upon careful consideration of the submissions and evidence, this court finds in favour of the Defendant. The absence of a formal demand for repayment is a significant factor that militates against the Plaintiff’s claim and undermines its assertion of the existence of a loan agreement binding the Defendant. [66] The Defendant's argument, is that the absence of formal demand for repayment draws attention to the implausibility of such a transaction lacking the hallmarks of commercial and legal rigour. [67] The Defendant compellingly underscores the absence of proactive measures by the Plaintiff to recover the alleged loan post the demise of Dato' Chew, highlighting an incongruity with expected creditor conduct. Despite claiming that the sum of RM1,768,845.30 constituted a loan, the Plaintiff made no written demand, sent no reminders, and initiated no correspondence with the Defendant in the nearly four-year period following the transfer of funds. There were no letters of demand, follow-up phone calls, or legal notices issued, even though the Defendant remained a going concern and could be easily contacted. Mr. Gan admitted during cross-examination that no action was taken to pursue recovery after Dato’ Chew’s death, and there was no evidence of the Plaintiff engaging any legal or accounting professionals to assess the viability of recovery. This prolonged silence and inaction are inconsistent with how a reasonable and prudent creditor would behave when faced with a significant outstanding corporate debt, particularly one purportedly given in the absence of formal security. [68] This point is critically bolstered by referencing the legal precedent in Chen Heng Ping v Tan Teck Beng & Anor [2012] 1 LNS 1107, where the High Court observed: “PW1 admitted during cross-examination that he did not write any letter or made any written demand to the Defendants. In view of the amount involved is substantial as claimed by the Plaintiff, a letter of demand would be reasonable and appropriate in the circumstances.” [69] The judgment makes clear that the conduct of a party claiming to be a lender must be consistent with that role - that is, by actively taking steps to recover the alleged debt, particularly where substantial sums are concerned. The reasoning in Chen Heng Ping thus lends strong support to the Defendant’s position, reinforcing the principle that silence, inaction, and the absence of a demand may reasonably be construed as indications that no loan obligation was intended or understood to exist. The court finds this argument persuasive, emphasising that the lack of a demand for repayment in the face of a substantial alleged debt and operational viability of the Defendant significantly undermines the credibility of the loan's existence. [70] The Plaintiff's rebuttal, which seeks to downplay the necessity of a demand for repayment, fails to address the broader implications of such an omission within a commercial context. Legal action initiated nearly four years after the alleged transaction without preceding demands or attempts to secure repayment starkly deviates from the standard practices of diligent financial stewardship. This deviation is not justified by the mere absence of a statutory obligation to issue a demand before litigation, as the conduct of the Plaintiff post Dato’ Chew's passing does not align with the expected behaviour of a creditor engaged in a significant commercial transaction. [71] In aligning with the Defendant's stance, the court is guided by the principles laid out in the cited case law, which serves to underscore the expectation for formal documentation and active pursuit of repayment in substantial financial dealings. The silence and inaction of the Plaintiff, juxtaposed with the continued operation of the Defendant, present a scenario that is at odds with the norms of commercial conduct and creditor diligence. [72] Therefore, the court concludes that the Plaintiff has failed to satisfactorily demonstrate, on the balance of probabilities, the existence of a loan agreement mandating repayment by the Defendant. The absence of a formal demand for repayment, coupled with the complete lack of documentary evidence substantiating the alleged loan, critically undermines the claim. Payments represented advance proceeds to Dato' Chew from the sale of his shares [73] The Defendant submits that the payments were advance proceeds intended for the purchase of Dato’ Chew’s shares in the Defendant, as evidenced by contemporaneous documentary records, including a remittance form explicitly referencing “38% shares investment.” The Defendant contends that the Plaintiff’s narrative of a loan agreement is inconsistent with the evidence and contradicts the nature of the transactions as reflected in the documents. Relying on Section 94 of the Evidence Act 1950, the Defendant emphasises the primacy of clear and contemporaneous documentary evidence over retrospective claims. The Defendant further invokes the Federal Court decision in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229, which prioritises contemporaneous evidence in determining parties’ intentions, and submits that the Plaintiff’s claim is unsustainable in light of the objective evidence. [74] The Plaintiff submitted that the payments, despite being described as “38% shares investment” on the remittance form, were intended as a friendly loan extended to assist the Defendant during its financial distress, based on trust and goodwill between Mr. Gan and Dato’ Chew. It argued that the description on the remittance form was merely a convenient label and did not reflect the true purpose of the transaction. Invoking Section 95 of the Evidence Act 1950, the Plaintiff contended that the overall context and relationship between the parties demonstrated the existence of a binding oral loan agreement, notwithstanding the absence of formal documentation. The Plaintiff relied on bank transfer records as evidence of the payments and explained the delay in making a demand for repayment as consistent with the informal, trust-based nature of the arrangement. It further sought to challenge the Defendant’s evidence, arguing that the lack of a formal share sale agreement undermined the Defendant’s narrative of the payments being advance proceeds for a share purchase. [75] Upon careful consideration of the evidence, submissions, and applicable law, the court finds in favour of the Defendant. The Plaintiff’s assertion that the payments constituted loans to the Defendant is irreconcilable with the weight of the contemporaneous documentary evidence and the context in which the transactions occurred. [76] The Defendant's objective evidence show that the payments represented advance proceeds to Dato' Chew from the sale of his shares, as corroborated by the remittance form and contemporaneous accounting records. [77] The Defendant's submission is anchored in the assertion that the documentary evidence presented starkly contradicts the Plaintiff's narrative of an alleged loan. Notably, Chin Thiam's 19.10.2016 remittance form for a transfer of RM382,000.00, explicitly described as “38% shares investment,” aligns with the Defendant's contention that the payments were intended for the purchase of shares, not as a loan to the Defendant. This designation is critical, given the provisions of Section 94 of the Evidence Act 1950, which provides that: “When language used in a document is plain in itself and when it applies accurately to existing facts, evidence may not be given to show that it was not meant to apply to such facts.” This section stresses the primacy of documentary evidence when its language is clear and applies accurately to existing facts. [78] The court finds persuasive the Defendant's reliance on the principle that the intentions ascribed to these transactions by the parties at the time they were made should be considered paramount. The fact that Mr. Gan, representing the Plaintiff, had indicated a singular purpose for the series of payments totaling RM1,768,845.30 further undermines the Plaintiff's position that these were loans. This is evident from Mr. Gan’s testimony, where he repeatedly affirmed that the entire sum was transferred based on his trust in Dato’ Chew and was intended to assist the Defendant during a period of financial difficulty - not pursuant to any formally structured agreement with clear terms of repayment or security. Mr. Gan made no attempt to segregate the payments into distinct tranches with separate purposes or timelines, nor did he establish any repayment schedule or collateral, which would typically accompany a bona fide loan. The absence of any internal documentation within the Plaintiff’s corporate records also corroborates the inference that the payments were not treated as loans within the Plaintiff’s own governance framework. This view is substantiated by the consistency in the application of funds towards a shared investment venture, as evidenced by the testimony and the documentary trail, including the remittance form's explicit mention of share investment. [79] This view is substantiated by the consistency in the application of funds towards a shared investment venture, as evidenced by the testimony and the documentary trail, including the remittance form's explicit mention of “38% shares investment.” The remittance form dated 19.10.2016, submitted by Chin Thiam expressly records the purpose of the RM382,000.00 transfer as “38% share investment.” This contemporaneous documentary evidence aligns with the Defendant's account that the funds were intended as part of a private arrangement for the purchase of Dato' Chew's shares. Further, the Defendant's accounting records, produced contemporaneously, categorised the payments under the “Contra-2 Account,” indicating an internal classification as personal advances from Dato' Chew distinct from liabilities arising from commercial loans. In cross-examination, whilst Mr. Gan maintained his position that the transfer was for a loan, he could not deny that the remittance form stated “38% share investment” and not “loan,” and did not produce any contemporaneous communication or internal approval indicating that the purpose of the payments was a loan. This uniformity in the documentary evidence and absence of any contradictory contemporaneous record lends considerable weight to the Defendant's version of events. [80] Moreover, the method by which these transactions were conducted - through the transfer of funds not directly to Dato' Chew but rather into the Defendant's account - was elucidated by the arrangement to use the proceeds from the sale of Dato' Chew's shares for the Defendant's benefit. This method of payment was not disputed by the Plaintiff, and was in fact confirmed during Mr. Gan's testimony, where he acknowledged that none of the five payments totalling RM1,768,845.30 was made into Dato' Chew's personal account, but instead into the corporate account of the Defendant. The Plaintiff did not produce any evidence to show that these payments were made pursuant to a resolution or contractual obligation involving the Defendant as borrower. On the contrary, the Defendant's accounting treatment of these funds under the “Contra-2 Account” is consistent with Mr. Khoo's testimony that this account was set up to solely record Dato' Chew's personal transactions, where advances taken from the company would be debited and repayments to the company would be credited. The evidence further suggests that Dato' Chew, being both the founder and major shareholder of the Defendant, had agreed to this internal mechanism whereby he would advance funds to the company to discharge the Defendant's debts, with the understanding that when the share sale to Mr. Gan was finalised, the sale proceeds would be used to repay this advance - a strategy not uncommon in closely-held companies, especially where the founder's interests are closely tied to the survival of the corporate entity. This arrangement, peculiar yet not unfounded in private transactions, underscores a significant departure from the characteristics typically associated with corporate lending. [81] The Plaintiff's arguments, aiming to counter the documentary evidence and the Defendant's interpretation thereof, invoke Section 95 of the Evidence Act 1950, suggesting that the context and the entirety of evidence should guide the interpretation of the transactions' purpose. Section 95 provides that: “When language used in a document is plain in itself, but is unmeaning in reference to existing facts, evidence may be given to show that it was used in a peculiar sense.” [82] Relying on this provision, the Plaintiff submits that the label “38% shares investment” on the remittance form was not intended to denote a literal investment transaction, but rather functioned as a convenient shorthand or informal expression used within the unique context of Mr. Gan’s trusted relationship with the late Dato’ Chew. The Plaintiff contends that when viewed holistically - particularly in light of Mr. Gan’s oral testimony about the purpose and circumstances of the payments - the court should interpret the label in a non-literal manner. However, while the Plaintiff endeavours to paint the transactions as part of a “Friendly Loan,” the absence of conventional loan documentation, coupled with the explicit designation of the funds for share investment, considerably weakens this stance. In circumstances where the written description on a contemporaneous banking document is clear and correlates with the Defendant’s explanation, the Plaintiff’s reliance on Section 95 to impute an alternative meaning becomes strained and unconvincing. [83] In weighing the evidence, the court is guided by the doctrine that contemporaneous documentary evidence often provides the most reliable indication of the parties' intentions. The Defendant's submission that the payments were advances for a proposed share sale, rather than a loan, is supported by the preponderance of evidence, both documentary and testimonial. The principle cited from the Federal Court case of Tindok Besar Estate emphasises the court's reliance on contemporaneous evidence over retrospective oral testimonies, particularly when such testimonies conflict with the documentary record. [84] Accordingly, the court concludes that the Defendant's narrative - that the transactions in question were for the purpose of purchasing shares and not as loans from the Plaintiff to the Defendant - is more consistent with the evidence presented. The Plaintiff's failure to present a cogent, documentary-backed explanation for the transactions further diminishes the credibility of the loan claim. Thus, the court finds that the financial transactions were not loans but payments made within the context of a private share purchase agreement between Mr. Gan and Dato' Chew. Contra-2 Account [85] The Defendant asserts that the payments were personal advances to Dato’ Chew, intended to facilitate his negotiation of a share sale to Mr. Gan. It relies on contemporaneous documentary evidence, including its general ledgers, which recorded the payments under the “Contra-2 Account,” denoting personal transactions between Dato’ Chew and the Defendant. The Defendant’s case is anchored on the testimony of Mr. Khoo, who explained that the payments were recorded as advances made by Dato’ Chew for the Defendant’s use. The Defendant contends that the Plaintiff’s claim is unsupported by any formal documentation, relying instead on hearsay evidence regarding alleged oral agreements. The Defendant further argues that Mr. Khoo’s testimony is corroborated by contemporaneous records and satisfies the exceptions to the hearsay rule under Section 32(1)(b) of the Evidence Act 1950, as the transactions were conducted in the ordinary course of business and against Dato’ Chew’s pecuniary interest. [86] The Plaintiff argues that the classification under “Contra-2 Account” is self-serving and unreliable, as it lacks corroboration from independent evidence. The Plaintiff disputes the credibility of the Defendant’s general ledgers and Mr. Khoo’s testimony, asserting that the latter relies on hearsay and assumptions rather than direct knowledge. It contends that Mr. Khoo’s evidence does not meet the criteria for admissibility under Section 32(1)(b) of the Evidence Act 1950, as the alleged statements by Dato’ Chew were neither made in the ordinary course of business nor against his pecuniary interest. The Plaintiff further argues that the absence of a formal share purchase agreement or corroborative evidence undermines the Defendant’s narrative and highlights that the payments, as evidenced by bank transfers, are prima facie proof of loans extended to the Defendant. [87] Having carefully considered the submissions, evidence, and applicable law, the court finds in favour of the Defendant. The Plaintiff’s claim that the payments were loans to the Defendant is not substantiated by credible evidence and is contradicted by contemporaneous documentary records and the testimony of Mr. Khoo. [88] The Defendant has established through DW7, its finance manager, Mr. Khoo that the payments of RM1,768,845.30 were personal advances to Dato' Chew, which were classified under “Contra-2 Account” and that such Contra-2 Account codification meant monies owed by Dato' Chew personally to the Defendant. Specifically in his evidence, Mr. Khoo testified that: a) The total sum of RM1,768,840 deposited into the Defendant's bank account was recorded as a loan from Mr. Chew to the Defendant, to be used to discharge the Defendant's debts. b) He was informed by Dato' Chew that the RM1,768,840 was a personal loan obtained by Dato' Chew from Mr. Gan, as part of negotiations for Mr. Gan's proposed purchase of the Defendant's shares. c) The payment of RM1,768,840 was recorded and accounted for by the Defendant as “Contra II A/C”, being all monies advanced by Dato' Chew to the Defendant. d) The cheques totaling RM990,981 issued by the Defendant and related company Goodnite Enterprise (M) Sdn Bhd as partial repayments were also recorded under “Contra II A/C” in the companies' accounts as monies owed by Dato' Chew. [89] The Plaintiff's claim largely hinges upon hearsay evidence, specifically the allegations regarding what was purportedly said by Dato' Chew to Mr. Gan concerning the nature of the payments. This includes Mr. Gan’s assertion that Dato’ Chew had orally represented that the RM1,768,845.30 remitted into the Defendant’s account constituted a loan from the Plaintiff, despite the absence of any written agreement, resolution, receipt, or formal acknowledgment of debt. Mr. Gan further testified that he refrained from asking Dato’ Chew to document the transaction out of respect and trust, fearing that Dato’ Chew would be embarrassed if asked to sign a formal loan agreement. This explanation, however, remains uncorroborated and relies entirely on Mr. Gan's recollection of private conversations with Dato' Chew, who is now deceased and unable to confirm or deny the alleged representations. Such evidence, as presented, lacks the support of documentary evidence, rendering it less credible in the eyes of the law. In contrast, the Defendant's position is substantiated by contemporaneous documentary evidence, notably the General Ledgers. These ledgers, as elucidated by Mr. Khoo, clearly categorise the transactions under discussion as “Contra 2 Account”, indicating personal transactions between Dato' Chew and the Defendant. This classification is critical as it directly contradicts the Plaintiff's assertion that the transactions were loans from the Plaintiff to the Defendant. [90] Further to this, Mr. Khoo's testimony provides a coherent and plausible explanation for the nature of these transactions. His detailed account of the “Contra 2 Account” and its purpose in recording personal transactions initiated by Dato' Chew, either as advances to or from the Defendant, is compelling. This is especially so when considering the financial distress faced by the company, necessitating such personal advances by Dato' Chew. His explanation regarding the advance of RM1,768,845.30 as a part payment for share purchases further illustrates the personal, rather than corporate, nature of the transactions. [91] The court also takes into account the legal framework surrounding hearsay evidence, as articulated in the Evidence Act 1950. Under Section 60 of the Act, oral evidence must, as a general rule, be direct, and hearsay-defined as a statement not made in court but tendered to prove the truth of its contents-is inadmissible unless it falls within a statutory exception. One such exception is provided under Section 32(1), which allows for the admission of statements made by persons who are deceased, or who cannot be found, if made under specific circumstances. In particular, Section 32(1)(b) permits statements made by such persons in the ordinary course of business, while Section 32(1)(c) permits statements made against the pecuniary or proprietary interest of the maker. [92] In the present case, the Defendant relies on these exceptions to admit statements attributed to the late Dato’ Chew, relayed through the testimony of Mr. Khoo, the Defendant’s finance manager. The court finds that these statements-specifically concerning the classification of the RM1,768,845.30 payment as personal advances from Dato’ Chew to the Defendant-were recorded in the Defendant’s general ledgers as part of its routine accounting process and reflect a liability on the part of Dato’ Chew. These facts bring the statements within both Section 32(1)(b) and (c). The court is therefore satisfied that the conditions for admissibility under the Evidence Act 1950 are met and accepts the entries and accompanying testimony as falling within the statutory hearsay exceptions. This lends further weight to the Defendant’s account of the transactions. [93] The Plaintiff relies on the findings of the court in Suit 708 as reported in Wong Thian Choy v Goodnite Sdn Bhd [2019] 1 LNS 1391 (HC), and attempts to draw parallels between that case and the present matter to support its argument that, based on the adverse findings against the credibility of Mr. Khoo and similar documents he produced in the previous Suit 708 case, the court should take a consistent position to disregard Mr. Khoo and his documents again in the current case. In Suit 708, the court found that Mr. Khoo (who testified as SD2) was “not a witness of truth” and “less than honest,” primarily due to his reliance on and participation in the fabrication of dubious payment vouchers (“ID1” to “ID15”). These payment vouchers, which bore signatures deemed suspicious, were voluntarily withdrawn by the defendant's counsel during trial without being tendered as exhibits after the plaintiff's counsel highlighted their dubious nature. The court found that Mr. Khoo had willingly participated in a dishonest scheme and criticised his conduct in carrying out allegedly dubious instructions without questioning their propriety. However, this court is not bound by the decisions made in Suit 708. This is not only a matter of judicial independence but also of factual distinction between the two cases. The Defendant has cogently argued that the factual matrix and legal circumstances of the present case diverge significantly from those in Suit 708. In the earlier case, there were Deeds of Covenant that provided a documentary foundation for the Plaintiff's claims, whereas in the current matter, there is an absence of any such written agreements or documents to substantiate the Plaintiff's claims against the Defendant. [94] The court is persuaded by the Defendant's submission that the reliance on the previous decision is both misguided and prejudicial. It does not advance the Plaintiff's case but rather seeks to undermine the integrity of the Defendant's evidence without direct challenge or cross-examination at trial. The principles of natural justice and fair play dictate that if the Plaintiff wished to cast aspersions on the veracity of the Defendant's documents or witnesses, it should have done so through the established procedural avenue of cross-examination. This principle is underscored by the judgment of Lord Herschell LC in Browne v Dunn [1893] 6 R 67, as adopted by the Court of Appeal in Aik Ming (M) Sdn Bhd v Chang Ching Chuen & Ors & Another case [1995] 3 CLJ 639), which emphasises the necessity of giving witnesses the opportunity to address and explain any accusations or implications of dishonesty directly during their testimony. The failure to challenge the integrity of the Defendant's documents at trial precludes the Plaintiff from disputing them in submissions. [95] The court also notes the Defendant's concern regarding the treatment of the payment vouchers in Suit 708. The suggestion that there may have been insufficient examination of all possible explanations for the disputed records, including legitimate explanations for the use of digital signatures and accounting entries, warrants consideration. While the court in Suit 708 made findings regarding the credibility of certain documents and witnesses, this court recognises the importance of ensuring that all relevant evidence is thoroughly examined before drawing conclusions about the nature of accounting records or witness testimony. This approach is consistent with the judicial principle that courts should exercise appropriate caution before inferring impropriety, as observed in See Hua Realty Bhd v KTS News Sdn Bhd & Ors [2016] 1 MLJ 92 (CA). [96] Moreover, the court is mindful of the importance of not allowing past judgments to unduly prejudice or influence the outcome of current proceedings, especially when the factual contexts are distinct. Suit 708, while having some overlapping facts with the instant case, cannot be determinative of the present case. [97] On the Plaintiff's part, the submissions concerning the unreliability of the Defendant's documentary evidence are predicated on Section 34 of the Evidence Act 1950 and the assertion that these documents, without corroboration, cannot be deemed sufficient to establish liability. Section 34 provides that entries in books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire. However, such entries alone are not sufficient to charge any person with liability unless they are supported by independent or contemporaneous evidence. [98] The Plaintiff relies on this provision to argue that the Defendant’s internal documents - including remittance forms, payment vouchers, and accounting records - are inherently self-serving and incapable of proving the Defendant’s case unless corroborated. [99] While the court acknowledges the legal foundation of these arguments, it is also cognisant of the Defendant's successful rebuttal which underscores the lack of direct challenge to these documents' authenticity during the trial. The Plaintiff did not object to the admissibility of these documents at the point of tender, nor were the makers of these documents subjected to sustained or meaningful cross-examination to test their reliability or truthfulness. In some instances, the Plaintiff did not dispute the contents at all, choosing instead to advance legal submissions post-trial without having laid the necessary factual foundation through evidence. [100] The principle that entries in books of accounts, while relevant, require support from contemporaneous evidence is well-established. However, the Plaintiff’s failure to engage with this evidence critically at trial - whether by way of evidential rebuttal, expert analysis, or effective cross-examination - undermines the Plaintiff's current stance. [101] The Plaintiff also argues that Mr. Khoo’s evidence, being based on mere opinions and assumptions without any corroborative support, should be given no weight in the court's considerations. Mr. Khoo did not have first-hand knowledge of the events giving rise to the alleged Friendly Loan, and much of his testimony concerned speculative interpretations of documents and reconstructed narratives based on second-hand information. [102] The Plaintiff points out that Mr. Khoo was not involved in the material dealings between the Plaintiff and the Defendant and was not a party to the communications or negotiations allegedly conducted by the late Dato’ Chew. His statements during trial consisted largely of inferences and suppositions about the purpose of the payments and the intentions behind them, without any independent documentary evidence or personal participation to support those conclusions. [103] The Plaintiff relies on the legal principle that witnesses generally should not provide opinion evidence unless specifically qualified under Section 45 of the Evidence Act

This provision limits admissible opinion evidence to that given by persons who possess “special skill” or expertise in a particular field, such as handwriting, foreign law, science, or art, and whose testimony is intended to assist the court in reaching conclusions on matters requiring specialised knowledge. [104] In contrast, opinions expressed by lay witnesses on matters that are within the court's capacity to evaluate - such as interpreting transaction documents or assessing the parties' intentions - are inadmissible and carry no probative weight. It is asserted that the opinions of non-expert witnesses are irrelevant and can lead to erroneous conclusions, as the court and jury are capable of drawing their own conclusions from the narrated facts. [105] In support, the Plaintiff relies on the case of Wong Kim Wah v The Government Of The State Of Pahang & Anor [2011] 8 MLJ 856, where the High Court found a witness's testimony unreliable and inadmissible due to its opinion-based nature. [106] I disagree with the Plaintiff's arguments as Mr. Khoo’s testimonies are not merely unsupported opinions. Rather, they are corroborated by contemporaneous accounting records and documents produced by the Defendant, notably the general ledgers classifying the RM1,768,845.30 payment as an advance from Dato' Chew personally. [107] These records were maintained in the ordinary course of the Defendant’s business and reflect detailed journal entries that consistently describe the payments as shareholder-related transactions rather than corporate borrowings. Specifically, the entries record the RM1.7 million as advances receivable from Dato’ Chew under accounts designated for director-related transactions, and not as liabilities payable to the Plaintiff. [108] Furthermore, the remittance forms signed by PW2 included references to “38% Share Investment,” reinforcing the Defendant’s narrative that the funds were tied to the proposed share acquisition, and not a corporate loan. [109] This documentary evidence was produced at trial without objection, and the Plaintiff did not adduce any evidence to show that the ledgers were falsified or improperly maintained. As such, these records lend credibility to Mr. Khoo’s account and provide an objective basis supporting his version of events. [110] Contrary to the Plaintiff's submission, Section 45 of the Evidence Act 1950 does not preclude Mr. Khoo from testifying to factual matters within his personal knowledge as the Defendant's finance manager. His evidence is not being tendered as expert opinion evidence. There is no legal basis to exclude his factual testimony. [111] The case of Wong Kim Wah is clearly distinguishable and does not support the proposition that all opinion evidence is inadmissible and carries no weight. That case involved a “witness of convenience” who had no personal knowledge of the contract performance, only became involved in the case 12-15 years after the events in question, and whose supporting documentary evidence was either lost or misplaced. The court specifically found that DW2's evidence was “but a bare opinion formed admittedly on an incomplete document” and that he “could not answer some of the questions” due to missing records. In stark contrast, Mr. Khoo testifies from his direct, contemporaneous knowledge as the Defendant's finance manager regarding the company's accounts and transactions, supported by complete and properly maintained business records that were produced at trial without objection. [112] Mr. Khoo's evidence is not merely opinion but is supported by contemporaneous accounting records reflecting Dato' Chew's instructions on the treatment of the RM1,768,845.30 payment. As explained above, his evidence is within the hearsay exception under Section 32(1)(b) of the Evidence Act 1950. [113] More importantly, the Plaintiff failed to challenge the integrity of the accounting records or Mr. Khoo's credibility under cross examination. It cannot raise such allegations for the first time in submissions. The court accepts Mr. Khoo's coherent and consistent account regarding the nature of payment. [114] It is then submitted by the Plaintiff that Mr. Khoo’s evidence, marred by material inconsistencies and a lack of honesty, should not be given any weight in the court's considerations. [115] The Plaintiff contends that Mr. Khoo's demeanour during the trial suggests that his testimony may not be credible, highlighting his evasive manner when confronted with key documents, his tendency to avoid direct answers under cross-examination, and visible discomfort when asked about the classification of the RM1.7 million in the Defendant’s accounts. [116] The Plaintiff also draws attention to specific inconsistencies in Mr. Khoo's statements, such as his conflicting accounts of how the alleged payment was utilised - alternating between references to it being used for operational expenses and, at other times, for Dato’ Chew’s personal obligations - as well as his contradictory explanations regarding the extent of the Defendant’s financial distress during the relevant period. [117] I respectfully disagree with the Plaintiff's arguments against Mr. Khoo's credibility. The Plaintiff's attempt to cast doubt on Mr. Khoo's credibility is based on an unduly narrow focus on demeanour and alleged contradictions, lacking in the necessary legal and evidentiary foundation. [118] The critiques leveled against Mr. Khoo's credibility, focusing on his demeanour and supposed inconsistencies, requires a comprehensive response that addresses both the substance of his testimony and the context within which his statements were made. The Plaintiff's reliance on vague references to demeanour, without specifying how it impacts Mr. Khoo's credibility, falls short of the judicial scrutiny required for discrediting a witness. The so-called contradictions identified by the Plaintiff are misinterpretations taken out of context, failing to recognise the consistency in Mr. Khoo's testimony regarding the nature of the RM1,768,845.30 transaction. [119] Mr. Khoo's consistent stance that the sum in question was an advance payment from Mr. Gan for Dato' Chew's proposed share sale, not a loan from the Plaintiff to the Defendant, is a crucial distinction that the Plaintiff overlooks. [120] This is further clarified when Mr. Khoo, faced with a question underpinned by the incorrect assumption that the funds were a loan, rightly refuted this characterisation. During cross-examination, when asked whether the RM1,768,845.30 should be treated as a debt owed by the Defendant, Mr. Khoo unequivocally denied that any such loan existed. [121] He explained that the funds were remitted by Mr. Gan in anticipation of acquiring a 38% equity stake in the Defendant, and that the payments were internally recorded as advances from Dato’ Chew rather than from the Plaintiff company. Mr. Khoo maintained this position despite repeated attempts to frame the transaction as a corporate borrowing, demonstrating a coherent and reasoned understanding of the transaction's nature. [122] His explanation that Dato’ Chew directed the advance to be used by the Defendant underscores the legal and factual nuances of the case, negating any alleged contradiction. [123] This narrative is solidified by corroborative documentary evidence, such as general ledgers and payment vouchers, which, as per Tindok Besar, hold more weight than mere testimony. [124] The question posed to Mr. Khoo in cross-examination, which presupposed the advance as a loan, failed to acknowledge these intricacies, thereby challenging the fairness of its premise as per Section 143(b) of the Evidence Act 1950. His subsequent clarifications align with his initial testimony, providing a coherent account of the funds' flow and purpose, which diverges significantly from a straightforward loan. This delineation not only negates the supposed contradictions but reinforces the Defendant's assertion regarding the transaction's nature. [125] Concerning the assessment of Mr. Khoo's credibility, the court recognises the significance of witness demeanour as elucidated in Sarkar’s Law of Evidence. However, determining credibility must involve a balanced consideration of both the demeanour and the substantive content of testimony. The Plaintiff's assertions regarding Mr. Khoo's inconsistencies, notably around the advance payment's use and the financial predicament necessitating share sale, do not substantiate a material contradiction that could undermine his credibility. Instead, Mr. Khoo's testimony presents a nuanced understanding of the financial arrangements at issue, demonstrating consistency when viewed in its entirety rather than evidencing deceit or inconsistency. Mr. Gan’s oral testimony [126] The Plaintiff's evidence through Mr. Gan was that in 2016, Dato' Chew had requested for a friendly loan of RM1,768,845.30 from him to rescue the Defendant from financial ruin. Trusting Dato' Chew and intending to prevent the Defendant's winding up, Mr. Gan agreed to this interest-free rescue loan. The payments were directly made to the Defendant's bank account. He emphasises that Dato' Chew had requested for the loan on behalf of the Defendant company to rescue its financial situation, not for Dato' Chew's personal use. While Mr. Gan agreed to provide the loan owing to his friendship with Dato' Chew, he maintains that the capacity in which the loan was extended and received was between the Plaintiff company and the Defendant company. Mr. Gan denies that the loan amount came from his personal monies, asserting that it was the Plaintiff's monies that were lent to and received by the Defendant pursuant to Dato' Chew's loan request made on behalf of the Defendant. [127] However, I find that Mr. Gan’s bold yet unsubstantiated assertions that payments represented a corporate loan cannot supersede the steadfast objective evidence laid before this court. For contemporaneous documents contradicting his after-the-fact account carry inherently greater probative weight and reliability compared to subsequent oral testimony by nature malleable. [128] Specifically, Mr. Gan’s claim that the RM1,768,845.30 were remitted pursuant to Dato’ Chew’s alleged request for urgent rescue financing from the Plaintiff is severely undermined by Chin Thiam’s 19.10.2016 remittance form. This impartial contemporaneous record definitively evidenced payment purpose as “38% Share Investment” tied to Dato’ Chew’s potential divestment. Such documentary proof sounding squarely when events unfolded surely furnishes more reliable guidance on the genuine factual matrix compared to Mr. Gan’s retrospective verbal portrayal of a corporate loan. [129] Likewise, the Defendant’s ledgers objectively classified receipt under the exclusive “Contra-2 Account” for Dato’ Chew’s personal advances, corroborated by unchallenged testimony. These routine accounting entries made amidst fast-unfolding events surely constitute reliable guides too over Mr. Gan’s subsequent testimony shaped by emerging litigation incentives. [130] Indeed, whilst the Plaintiff protests inadequate accounting records on its part, this cannot invert its legal burden nor entitle this court to conveniently accept Mr. Gan’s conflicting account in lieu, otherwise unsubstantiated. For the law protects persons who formally document key transactions contemporaneously against counterparties who do not but later claim otherwise via oral testimony alone. [131] The court also finds that Mr. Gan's testimony is inconsistent and unreliable due to his emotional outbursts and argumentative responses during cross-examination, which betray a reluctance to confront uncomfortable facts and indicate a lack of candour, undermining his credibility as a witness. His reaction is consistent with witnesses who fear confronting the true facts. [132] For instance, when questioned about the Defendant's financial instability and winding up threat, Mr. Gan oscillated between denying knowledge despite his own contrary written evidence and inconsistently admitting then denying that Dato' Chew informed him the Defendant would be wound up without funds injection. [133] At one point, Mr. Gan affirmed that Dato' Chew had approached him urgently in 2016 seeking financial assistance to avert the Defendant’s insolvency. Yet, moments later, when pressed further, he retracted that acknowledgment and claimed he was unaware that the Defendant was facing imminent winding up. [134] This vacillation occurred despite his own witness statement and oral evidence affirming the existence of such a request by Dato’ Chew. The Plaintiff’s case itself is premised on the narrative that the funds were advanced to rescue the Defendant from collapse. [135] Nevertheless, Mr. Gan attempted to downplay this context under cross-examination, apparently to distance himself from any suggestion that the transaction was informal or undocumented. [136] Such contradictions within short intervals regarding a crucial matter exhibit a witness altering positions merely to suit himself, thereby diminishing reliability. [137] Additionally, Mr. Gan frequently responded with lengthy arguments and speeches instead of directly answering questions posed during cross-examination. Rather than providing concise answers, he often launched into detailed justifications of his position, digressed into unrelated background matters, and repeated earlier assertions already on record. For example, when asked a simple yes-or-no question about whether he had any documentary proof that the payments were loans, Mr. Gan responded with an extended explanation about his long-standing friendship with Dato’ Chew, his motivations, and the Defendant’s alleged misconduct, none of which addressed the question directly. This pattern of discursiveness was consistent throughout his testimony and required repeated interventions from counsel and the court to steer him back to the point. Despite warnings, he persisted in attempting to evade examination on uncomfortable facts. This defiance indicates a contrived effort to avoid truths adverse to his own narrative. [138] Overall, Mr. Gan's testimony is severely afflicted by material inconsistencies and visible evasiveness demonstrating both a lack of straightforwardness and reluctance to address the hard truths of this case. Combined with his combative behaviour, Mr. Gan has conducted himself as an unimpressive witness whose evidence is dubiously shaped to further his own cause, therefore warranting caution in the acceptance of his account by this court. [139] Hence on the indefeasible evidence laid, I am compelled to reject Mr. Gan’s belated testimony purporting ‘loans’ as plainly contradicted by more reliable contemporaneous documents. The Plaintiff thus fails to discharge its legal burden overall. To find otherwise risks severely eroding legal safeguards against claims sans documentation. Mr. Gan and Dato’ Chew were the contracting parties [140] The Plaintiff argued that the alleged loan agreement was a contractual relationship between the Plaintiff and the Defendant, emphasising that the funds, totalling RM1,768,845.30, were requested by Dato’ Chew on behalf of the Defendant to rescue it from financial distress and were paid directly into the Defendant’s bank account from the Plaintiff’s corporate funds. It asserted that the arrangement was corporate in nature, intended to stabilise the Defendant’s operations and prevent its winding up, and that repayment was the Defendant’s responsibility. The Plaintiff challenged the Defendant’s classification of the payments under the “Contra-2 Account” as self-serving and maintained that this did not override the substantive evidence of the payments. Relying on Mr. Gan’s testimony, the Plaintiff contended that the absence of formal documentation did not negate the enforceability of the oral loan agreement, as the circumstances and direct financial benefit to the Defendant implied a binding corporate loan arrangement. [141] The Defendant argued that the alleged loan agreement was a private arrangement between Mr. Gan and Dato’ Chew, not a contractual relationship between the Plaintiff and the Defendant, by highlighting the absence of corporate formalities such as board resolutions or agreements to evidence a corporate loan. It relied on contemporaneous evidence, including a remittance form describing the payment as “38% Share Investment” and general ledgers classifying the transactions under the “Contra-2 Account,” which denoted personal transactions involving Dato’ Chew. The Defendant emphasised that the funds were tied to share sale negotiations between Mr. Gan and Dato’ Chew and were advanced as part of a personal arrangement. It argued that Mr. Gan failed to prove he was acting on behalf of the Plaintiff and pointed to inconsistencies in his testimony as further evidence that the transactions were private dealings. By applying legal principles requiring certainty of contracting parties, the Defendant maintained that no enforceable corporate loan agreement existed. [142] Upon careful consideration of the submissions, evidence, and relevant legal principles, the court finds in favour of the Defendant. The Plaintiff has failed to establish, on the balance of probabilities, that the transactions constituted a legally enforceable corporate loan agreement between the Plaintiff and the Defendant. Instead, the evidence supports the conclusion that the transactions were personal dealings between Mr. Gan and Dato’ Chew. [143] The court finds that the alleged loan agreement was essentially a private arrangement between individuals, specifically Mr. Gan and Dato’ Chew, rather than a contractual relationship between the Plaintiff and the Defendant, as the transfers of funds were orchestrated and managed by Mr. Gan for personal objectives, not evidencing a formal contract between the companies. This conclusion is reinforced by the legal principles and jurisprudence outlined in Hombourg Houtimport BV & Others v Agrosin Private Ltd and another [2004] 1 AC 715 (HL), Bitutech Sdn Bhd v Mohd Ishkandar Mohamed Yunus & Anor [2019] 1 LNS 1528 (HC), and Estor Ltd v Multifit (UK) Ltd [2009] EWHC 2565 (English HC), which underscore the fundamental requirement of certainty of parties for the formation of a binding and enforceable contract. [144] In Hombourg, the House of Lords emphasised that: “The identity of the parties to a contract is fundamental. It is not simply a term or condition of the contract. It goes to the very existence of the contract itself. If it is uncertain, there is no contract. Like the nature and amount of the consideration and the intention to create legal relations it is a question of fact and may be established by evidence.” [145] This principle aptly applies to the case at hand, where ambiguity over whether Mr. Gan was acting on behalf of the Plaintiff or in a personal capacity undermines the Plaintiff’s case. [146] Similarly, in Bitutech, the court reaffirmed that: “For a contract to exist, there must be a consensus ad idem between the contracting parties as to the essential terms of the agreement. The identity of the contracting parties must be clear and definite”. [147] In Estor Ltd, the court clearly articulated the applicable objective standard when determining contracting parties, holding that: “The court needs to adopt an objective approach and to consider the facts known to both parties and what was said orally or in writing between the relevant individuals. The fact that one individual went to or left a meeting, believing privately that the contract was to be with a particular party, would be of little or no weight or assistance in determining who the contract was with, unless there was reliable evidence that that belief was expressed to others at the meeting.” [148] This reinforces the necessity of examining the evidence of communications and conduct from an external standpoint, rather than relying on Mr. Gan’s uncommunicated internal beliefs. The Plaintiff has failed to show that at the material time, it was clearly communicated and understood that the Plaintiff company, and not Mr. Gan personally, was the contracting party. [149] In light of the principles laid down in Hamid v Francis Bradshaw Partnership [2013] EWCA Civ 470 (English CA) and Lumley v Foster & Co Group Ltd & Ors. [2022] EWHC 54 (TCC) (English HC), the court applies an objective test to the facts at hand, finding that subsequent actions and the manner in which transactions were conducted post-negotiation have limited relevance in determining the identities of the contracting parties at the time the agreement was purportedly made. [150] In Lumley, a dispute arose over a construction contract between Diane Lumley (the claimant) and several defendants associated with a company called Foster & Co Group. In June 2016, Mr. Nicholas Foster of the Foster & Co Group met with Ms. Lumley and agreed to carry out construction works on her home for £100,000. However, there was a dispute over which entity exactly Ms. Lumley contracted with - Mr. Foster personally, or one of his companies such as Foster & Co Construction Ltd (“FCCL”). The construction works were carried out in Ms. Lumley's home in 2016 but were allegedly substandard. Ms. Lumley claims the property was left scarcely habitable with substantial remedial works required. She is seeking damages for breach of contract. The main preliminary issue for the court was determining which Defendant(s) were party to the construction contract with Ms. Lumley. After analysing the objective evidence regarding the June 2016 meeting where the contract was formed, the judge concluded the contract was between Ms. Lumley and Mr. Foster personally, not with FCCL or any other company. This was because Mr. Foster had not made it clear he was acting as agent for a company, and his representations would lead a reasonable person to believe he was contracting personally. In determining contracting parties for the defective building work, Deputy Judge Coppel QC (as he then was) held: “At that point in time, I find that the objective evidence does not support the proposition that Mr Foster held himself out as contracting on behalf of a company...I reach that conclusion without applying any presumption that the contract was with Mr Foster personally but I note that...the onus was on Mr Foster to make clear that he was not contracting in a personal capacity. In my judgement, he plainly did not do so in the course of the meeting on 21 June 2016.” [151] In Hamid, the Court of Appeal considered whether a contract for professional services had been entered into personally by Mr. Hamid or by his associated company. Although Mr. Hamid argued the contract was made with him in his personal capacity, the engineering firm contended it was with the company. The court held that the test was not what Mr. Hamid or the firm privately believed, but what a reasonable person would have understood from their dealings at the time. The absence of clear indication that Mr. Hamid was acting as agent for his company led the court to conclude he had contracted personally. The court reiterated that: “In determining the identity of the contracting party, the court’s approach is objective, not subjective. The question is what a reasonable person, furnished with the relevant information, would conclude. The private thoughts of the protagonists concerning who was contracting with whom are irrelevant and inadmissible.” [152] This further supports the conclusion that the court must disregard Mr. Gan’s uncommunicated personal beliefs or intentions, and focus solely on the outward conduct and objective evidence at the time of the alleged agreement. Where, as in this case, there is no clear communication that the Plaintiff company was the contracting party, and the evidence shows direct dealings between Mr. Gan and Dato’ Chew personally, the law cannot impose a corporate obligation based on retrospective narratives or undocumented assertions. [153] The evidence presented, including the manner of fund transfers and the personal arrangement for the proposed share sale between Mr. Gan and Dato' Chew, clearly indicates that the transactions were conducted in their personal capacities rather than on behalf of the Plaintiff and Defendant companies. [154] Furthermore, the onus of proof was on Mr. Gan to demonstrate that he was acting on behalf of a company and not in a personal capacity when arranging for the payment of RM1,768,845.30. Given the absence of clear evidence to establish this, combined with the fact that negotiations and arrangements for the share sale and subsequent financial transactions were evidently handled between Mr. Gan and Dato’ Chew personally, the court concludes that the contractual relationship, if any, was between the individuals themselves and not their respective companies. [155] Therefore, the Plaintiff's claim, predicated on the assertion of a contractual debt owed by the Defendant company, cannot stand. The transactions in question, including the payment of RM1,768,845.30, are instead attributable to a private dealing between Mr. Gan and Dato’ Chew, without involving the legal entities they represent. Consequently, the court finds no enforceable contract between the Plaintiff and Defendant companies regarding the alleged loan agreement. [156] In the circumstances, I find that the Plaintiff has failed to establish the existence of a legally enforceable oral loan facility between corporate parties herein. Adverse inference for not calling due diligence solicitors [157] The Defendant has urged that an adverse inference be drawn against the Plaintiff for not calling the solicitor from Messrs. Rashid Tasin, KL Tan & Low, who was involved in the due diligence and drafting of the agreement for the proposed share sale between Mr. Gan and Dato’ Chew. The Defendant argues that the solicitor’s testimony could have corroborated the Plaintiff’s claim that the sum of RM1,768,845.30 was a loan rather than a payment made pursuant to the proposed share sale. The Defendant posits that the solicitor's absence is a deliberate choice to avoid unfavorable evidence, invoking Section 114(g) of the Evidence Act 1950, which allows for the presumption that evidence not produced would be unfavorable to the party withholding it. [158] The Plaintiff counters by suggesting that the non-attendance of the solicitors from Messrs. Rashid Tasin, KL Tan & Low does not significantly impact the case, arguing that the law on adverse inference has been misapplied by the Defendant. The Plaintiff asserts that its case does not hinge on the testimony of these solicitors, as it is supported by contemporaneous documents and the testimony of other witnesses. Moreover, the Plaintiff highlights that the burden of proof lies with it, and the decision on whom to call as a witness rests within its discretion. The Plaintiff relies on various authorities to argue that an adverse inference should not be drawn merely because a potential witness was not called, particularly when the evidence could have been equally obtained by the Defendant. [159] Upon careful consideration of the submissions and the legal principles governing the drawing of adverse inferences, the court finds the Defendant's argument on this point to be more persuasive. [160] The engagement of Messrs. Rashid Tasin, KL Tan & Low by Mr. Gan for the due diligence process in the negotiation for the share sale is a material fact, particularly given that the law firm was handling the transaction that is central to this dispute. It is undisputed that the firm was engaged to assist in the drafting and review of the necessary legal documentation for the proposed acquisition of 38% of shares in the Defendant company by Mr. Gan. This includes the very payment of RM1,768,845.30 that lies at the heart of the current litigation. [161] The solicitor in charge, Ms. Kelly Tee, would therefore have had direct knowledge of the instructions received, the legal characterisation of the payment at the time, and the context in which the transaction was structured. Her testimony could have provided crucial insights into the nature of the transaction and the intentions of the parties involved, especially concerning the purpose of the payment of RM1,768,845.30 - whether it was intended as a share investment advance or a loan from the Plaintiff. [162] Given the absence of any formal documentation evidencing a loan and the significance of the legal advice surrounding the share acquisition, the solicitor’s perspective would have served as a contemporaneous, independent account of the transaction's legal framework. [163] The Plaintiff’s rationale for not calling Ms. Kelly Tee or any representative from Messrs. Rashid Tasin, KL Tan & Low does not sufficiently mitigate the need for their testimony, given the significance of the transaction in question. [164] The absence of their evidence leaves a gap in the narrative presented to the court, which could have clarified whether the payment was indeed a loan or related to the share sale. This is especially so because the payment of RM1,768,845.30 is claimed by the Plaintiff to be a corporate loan extended by the Plaintiff to the Defendant, while the Defendant maintains that it was an advance from Mr. Gan personally in anticipation of acquiring shares from Dato’ Chew. [165] As the firm responsible for conducting due diligence and preparing the draft share sale agreement, Messrs. Rashid Tasin, KL Tan & Low would have had access to the parties’ instructions and underlying documents, and would have been in a position to confirm whether the payment was ever characterised or documented as a loan. [166] The absence of testimony from such a key third party, particularly one with direct legal involvement in structuring the transaction, deprives the court of potentially clarifying evidence that could have resolved the factual divergence between the parties. [167] Therefore, while recognising the discretion of the Plaintiff in deciding which witnesses to call, the court finds that the Plaintiff’s failure to call the solicitor from Messrs. Rashid Tasin, KL Tan & Low, who was intimately involved in the negotiations and drafting of the agreement for the proposed share sale, warrants the drawing of an adverse inference under Section 114(g) of the Evidence Act 1950. This inference supports the Defendant's position that the sum of RM1,768,845.30 was an advance payment made pursuant to the proposed share sale and not a loan between the Plaintiff and the Defendant. CONCLUSION [168] Having carefully considered all the evidence adduced, the submissions of counsel, and the applicable law, this court finds that the Plaintiff has failed to discharge its burden of proof on the balance of probabilities. The weight of contemporaneous documentary evidence, when measured against the oral testimony presented, tilts decisively in favour of the Defendant's version of events. The absence of any formal documentation recording a loan agreement, coupled with the complete lack of demand for repayment over nearly four years, speaks volumes about the true nature of the transaction. [169] The court is satisfied that the payments in question were not loans extended by the Plaintiff to the Defendant, but rather represented advance payments made in connection with a personal arrangement between individuals for the proposed purchase of shares. The contemporaneous accounting records, the remittance forms describing the payments as share investments, and the credible testimony regarding the “Contra-2 Account” classification all point to this conclusion. Where corporate entities are alleged to have entered into substantial financial arrangements, the law rightly demands more than mere assertions based on trust and friendship. [170] In the circumstances, the Plaintiff's claim is hereby dismissed with costs of RM50,000.00. 9 June 2025 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Wilson Lim Mao Shen with Chong Man Yee (Messrs Wilson Lim) For the Defendant: Amos Ho Chern Wey with Ivy Poo Long Yii and Gavrie Ang Qai Zen (PIC) (Messrs Amos Ho, Sew & Kiew)