Ja Solar Malaysia Sdn. Bhd. v Dynacraft Industries Sdn. Bhd. (PA-22NCvC-81-05/2024)

3 MLJ 78 at 101 - 102 warned against reliance on data on the internet from unverified sources.

We agree with learned counsel for the claimant that it is unsafe to rely on an unverified source of an alleged review by a blogger found at the website, www.powerof3consultants.com (see encl 5 RR2C at p 331). The website does not have any affiliation with any governmental body or department. The document or website page relied upon by the appellant company in COB 1 cannot be located in the website stated above (see Annexure ‘B’ encl 10 RR2H at p 1214 and encl 10 at p 1215). As such, little or no weight could be attached to this particular piece of documentary evidence. We agree with the claimant's learned counsel that the proper website to inquire whether a program or course is accredited in Malaysia or otherwise would be at the MQA website, www.mqga.gov.my.” 65. Not only did PW3 premised his report on unverified information, it transpired that there was actually insufficient supporting information for him to prepare an expert report. PW3 was aware of the insufficiency. He admitted that the missing information was material to his study, which he had requested from JA Solar, but it was not given to him. Without such information which PW3 said was relevant and specifically requested but was not given, his report is incomplete and unsafe to rely on. In summary, 33 PW3’s report was made in a vacuum and offers little probative value in assessing whether JA Solar has suffered from critical business or operational failure. Expert report not based on facts, but on unsupported assumptions, which are not applicable to JA Solar 66. PW3 failed to generate his report based on facts. Instead he relied on unsupported assumptions, which are eventually shown to be inapplicable to JA Solar. For instance, PW3 stated in the report that one of his terms of reference was to “examine the rationale of the directors in arriving at its decision to cease the Company’s business in 2022”. This is clearly a factual question. PW3 needed to find out what that rationale was. Surely, this should entail examining how and why the directors made the decision. 67. However, PW3 did not do that. Instead of finding out the actual rationale, what PW3 did was to “examine the rationale based on the documents available”. While the approach of checking the documents may not be wrong, it then transpired that PW3 actually did not have the necessary documents. While PW3 claimed he had “spoken to them’, no interview sheet with the directors was produced or referred to in the report. But yet, PW3 then proceeded to provide his opinion on the so - called rationale. What PW3 did was very much coming out with his own presumed rationale and trying to use that to back justify the decision that was made by the directors. 68. Another instance is in relation to PW3’s focus on the discontinuation of support from the holding company or the group. PW3 has at various 34 parts of his report heavily relied on this to justify his conclusion on critical business failure. But when asked, he was unable to provide any proof or documentary evidence showing that the holding company had decided to stop providing advances to JA Solar. Clearly, PW3 is building his theory not based on facts, but on assumptions. At the bare minimum, being an expert testifying in court, he ought to have investigated and satisfied himself as to these assumptions. Or at the very least, included a caveat: or a proviso in his conclusion. He did neither. 69. These are not isolated instances where PW3 was ignorant of facts but instead chose to rely on assumptions. The bulk of PW3’s report, which deals with his analysis on the effect of polysilicon prices, is largely based on pre - set assumptions. They were eventually shown to be inapplicable to JA Solar’s operations. 70. Firstly, PW3 relied heavily on the papers published by Bernreuter Research. Quite apart from the fact that he possesses no expertise on the subject matter and the data he relied on had not been verified, it is also clear that these research papers have no connection whatsoever with JA Solar’s operations. PW3 admitted that the papers published by Bernreuter Research are merely general statements without reference to JA Solar. He is aware that JA Solar did not rely on any of these papers in their decision - making process to cease business. He admitted that he did not know whether JA Solar’s market expectation was the same as those predicted by Bernreuter Research. Yet he was applying the prediction done by Bernreuter Research, as if that was exactly what happened to JA Solar. 35 71. Secondly, whether JA Solar was indeed badly affected by the polysilicon prices or in order to genuinely assess the impact that polysilicon prices had on its operations, surely one has to investigate JA Solar’s purchases of polysilicon and its sales of solar panels. But that was not done by PW3. PW3 admitted that he knew nothing about JA Solar’s purchases of polysilicon. Not the price, terms nor quantities. Despite not knowing the price at which JA Solar purchased polysilicon and other terms associated with the purchases, PW3 had the temerity to conclude that JA Solar was effectively killed by the “spike in polysilicon prices”. Such a conclusion is unsubstantiated. 72. This approach of disregarding the facts (i.e. what JA Solar was actually doing) and relying on something that is not applicable to JA Solar must be called into question, in light of the following three errors : (a) The first error is on disregarding facts. Actual raw materials purchase data and sales record of products were easily available, if PW3 had wanted it and JA Solar was willing to provide it. But none was produced or relied on; (b) The second error is on unsupported assumptions. PW3 assumed that JA Solar would operate in a certain manner but without any substantiation to justify such assumptions; and (c) The third error is inapplicability to JA Solar. Because of the structure of the group and the business model adopted, JA Solar does not trade. To wit, buy materials and sell products in the international open market and on arms - length basis. Hence all the data relied on by PW3 are irrelevant. 36 73. Thirdly, it would seem that this purported reason of spike in polysilicon prices (that is now being bandied around as the key factor causing critical failure of business or operations or being used as justification for the decision to shut) is an afterthought. This issue was not mentioned in any of JA Solar’s documents, other than the independent audit report of JA Solar Investment (Hong Kong) Ltd published much later. The issue of increased polysilicon prices was also not recorded in any of JA Solar’s reports or financial statements. 74. Premised on the above, | find that this point of “spike in polysilicon prices” brought up by PW3 is a red - herring. It is not a question of whether there was such “price hike” worldwide. The issue here is whether the “orice hike” had caused the purported critical failure in business or operations that resulted in the cessation of JA Solar’s business. That had not been established. 75. PW3’s evidence, at best, would only serve as a desktop study of what was happening in the world in general. But it does not show what happened to JA Solar. PW3’s evidence in this regard is theoretical. It does not answer any question about JA Solar and is unhelpful in addressing the issues in the present case. Wrong methodology 76. As alluded to earlier, there is no actual evidence that could show JA Solar’s financial status around mid - 2022. What PW3 did then was to pro - rate the full - year data of 2022 to try to show what JA Solar’s financial status was. However, it is inappropriate for the 2022 audited report to be . 37 Note : Serial number will be used to verify the originality of this-document via eFILING portal apportioned. 2022 was not a full operational year and substantial losses were incurred as a direct result of the decision and act of ceasing business. It was not a year where the events and activities remained consistent throughout the year. 77. What PW3 ought to have done, if he intended to ascertain whether JA Solar suffered from critical operations failure in mid - 2022 or its financial status at that time, was to get the actual data that could reflect factually what happened at that time. In this regard, it is in evidence that such financial reports were available to JA Solar, as confirmed by PW1 and PW5. Irrespective of whether PW3 was not given access to such reports or PW3 made the conscious decision of not referring to such reports, the fact remains that PW3’s current method is flawed. 78. As the methodology was wrong, the conclusion reached by PW3 is naturally wrong as well. Once this approach (i.e. through extrapolation) and the conclusion that it produced are discarded from PW3’s report, there is really nothing left in the report that could be used to support the position that there was critical failure in business or operations suffered by JA Solar. JA Solar has been a sustainable business 79. Although PW3’s conclusion in his report is that JA Solar has suffered critical failure in business or operations, a proper evaluation of the report reveals that not only did JA Solar not suffer critical business or operational failure, it was actually a business operation that is sustainable. For context, it should be highlighted that : 38 (a) there had been a business model that JA Solar operated under. As PW3 puts it, as a cost centre for the group; (b) as such, whether JA Solar suffered critical business or operational failure has to be considered in that context and taking into account historical facts on how it had been operating; and (c) that should be benchmarked against previous years since its establishment until 2021, during which there was no allegation that JA Solar suffered critical failure in business or operations. 80. PW3 stated that : (a) JA Solar’s business model has always been to support the operations of the larger group, and to form part of the supply chain for the group’s activities; (b) JA Solar has always been a ‘cost centre’, absorbing the expenses of the larger group and supporting its functions; and (c) the provision of advances by JA Solar’s holding company is not a new event, and has been the case since its inception. 81. PW3 agreed that JA Solar is a business that is self - sufficient within the group’s operations, based on its business model. In fact, JA Solar was profitable and able to reduce its reliance on the holding company despite it being a cost centre. PW3 accepted that there were substantial repayments to the related company in the past three years, there was no 39 increase of reliance on the holding company for the past three years and it has in fact stabilised and reduced. In other words, but for the decision to shut down made in 2022, JA Solar was doing well as a business. 82. The facts and accounts show that there was no requirement for additional support from the holding company. As a company, JA Solar was profitable. Even taking into account the loss incurred in 2021, cumulatively JA Solar made a profit of about RM 50 million in the past three years. PW3 confirmed that JA Solar was not in a critical state up to 2021. Therefore, in the way that JA Solar was operating, it was not suffering from critical failure in business or operations. 83. It is also PW3’s evidence, as confirmed by PW1, that JA Solar had no problem with its ability to pay its debts at the material time. As such, PW3’s evidence actually does not show any critical failure in business or operations. On the contrary, based on facts and figures, PW3 actually agreed that JA Solar was a solvent and profitable going concern that could sustain its operations. (vii) Dynacraft’s expert report 84. In contrast, Dynacraft’s expert (DW2) has taken a methodical approach in assessing whether there was critical failure in business or operations suffered by JA Solar. To wit : (a) Firstly, get the meaning of critical failure in business or operations right; 40 (b) Secondly, identify the necessary and relevant “indicators” from various different aspects of the business operations and financial reports that would provide an indication on whether critical failure in business or operations had occurred; (c) Thirdly, carry out a detailed study on each of those “indicators”; (d) Fourthly, carry out specific assessments on two key areas. Namely, going concern assessment and insolvency assessment; and (e) Finally, drawing a conclusion from the analyses. 85. | agree with Dynacraft that this represents a more methodical, objective and data - driven approach. There was no challenge by JA Solar at the trial regarding the correctness of such an approach and method during the cross - examination of DW2. No obvious or serious error in DW2’s expert report was identified. The following two salient points are highlighted. (a) First, on JA Solar’s going concern assessment, DW2 opined that the going concern assumption used in the preparation of the financial statements of JA Solar for the financial years 2018, 2019, 2020 and 2021 was appropriate. There was no material uncertainty affecting JA Solar’s ability to continue operations. For financial year 2022, while a going concern issue existed, this was not due to financial distress. But rather a management decision to cease manufacturing operations on 16.6.2022. 41 (b) In other words, as production had stopped and the decision to cease had already been made in June 2022, the 2022 audited report would obviously reflect a company that was no longer a going concern. This predicament was self - induced, caused by the decision to cease business. It was not an indication of failure, but a consequence of the decision to shut the business. (c) Second, on JA Solar’s insolvency assessment, DW2 opined that from 2018 to 2022, JA Solar consistently met its debt obligations. Including external borrowings such as revolving credit facility and onshore foreign currency loans, demonstrating its ability to service debts and maintain solvency throughout the period. 86. | accept these pointed findings by DW2. It evinces that JA Solar was solvent and operating as a going concern, until the decision to stop production was made. There was no critical business or operational failure. The shut down is not evidence of critical failure in business or operations. DW2 then arrived at the following conclusion : “The absence of distress indicators, structured asset disposals, and reliance on related - party transactions suggest a deliberate business wind - down. While JA Solar was solvent in prior years due to internal support, its 2022 exit was a strategic decision, not a result of market - driven insolvency.” 87. | accept this conclusion that was reached via a methodical analysis, supported by facts and data. It reflects what actually happened i.e. that there was no critical failure in business or operations suffered by JA Solar. But rather that JA Solar made a deliberate business decision to shut. When JA Solar decided to shut its business, cease production, stop 42 generating revenue and dispose off assets like a fire - sale, obviously the year - end account would show massive losses. 88. When the two expert reports are compared and based on the analyses above, | find that DW2’s expert report ought to be preferred. To sum up on this issue of critical failure in business or operations, the following points are reiterated. (a) On factual evidence, there was actually no relevant evidence produced by JA Solar to show critical failure in business or operations; (b) On expert evidence relied on by JA Solar, the expert report is flawed and unreliable; (c) As such, JA Solar failed to discharge its burden of proving that there was critical failure in business or operations suffered by it at the tenancy buildings, which could entitle it to invoke clause 16.2 of the tenancy agreements; (d) In any event, the evidence, including Dynacraft’s expert report, manifest that until the decision to cease business was made, JA Solar was a solvent and sustainable going concern; (e) The substantial losses recorded in the 2022 audited report were not the cause of critical business or operational failure. That was actually the consequence of the decision to cease business. It was the decision to stop production that resulted in the substantial losses; and 43 (f) There was no evidence that could show that the decision to shut down made in mid - 2022 was due to critical business or operational failure. There was no evidence that JA Solar was facing critical failure in business or operations at that time. The decision to shut down was a voluntary commercial decision. 89. It appears that the primary driver for the decision to stop production was probably the strategic business decision to relocate to Vietnam. While JA Solar may make more money by moving its manufacturing to Vietnam, that does not automatically mean that JA Solar’s operations in the tenancy buildings suffered from critical failure in business or operations. Just because another plant elsewhere makes more money does not make JA Solar’s plant in Malaysia unsustainable and having to shut down. In the circumstances, it is my finding that JA Solar has not suffered critical failure in business or operations when it issued the notice of termination dated 16.6.2022. Issue no. 2 - JA Solar wrongfully terminated the tenancy agreements and was in breach of the tenancy agreements 90. Since there was no critical failure in business or operations, it follows that JA Solar had no right to invoke clause 16.2 of the tenancy agreements and to issue the notice of termination. That being the case, the notice of termination was wrongfully issued and the termination attempted thereunder was invalid. By its wrongful issuance of the notice of termination and its refusal to continue with the tenancies beyond 15.3.2023, JA Solar has committed a repudiatory breach of the tenancy 44 agreements. JA Solar had no right to not continue with the tenancies and to do so was a breach of the tenancy agreements. 91. | conclude that the termination of the tenancy agreements by JA Solar was invalid. As a result of JA Solar’s repudiatory breach and failure to pay rental, Dynacraft then validly terminated the tenancy agreements. In connection with JA Solar’s wrongful termination of the tenancy agreements, it had also committed other breaches of the tenancy agreements that led to losses to Dynacraft, for which Dynacraft is entitled to compensation from JA Solar. These will be addressed next. Issue no. 3 - JA Solar’s liability and Dynacraft’s entitlements under the tenancy agreements (a) Unpaid rental by JA Solar 92. JA Solar is required to pay the monthly rentals, as specified in clauses 3.1 and 8.1 of the tenancy agreements. Under the latest renewal, the total monthly rental for the tenancy buildings was RM 814,107.10. The renewed term would expire on 22.3.2024. It is uncontroverted that JA Solar only paid rental up to 15.3.2023, being the date of handing over. As such, the remaining and unpaid rental by JA Solar to Dynacraft for the remaining duration of the tenancy agreements from 16.3.2023 to 22.3.2024 is RM 9,972,811.97, as computed below. Period Etch building Technoplex building 16.3.2023 to 22.3.2023 RM 130,195.52 RM 73,331.25 23.3.2023 to 22.4.2023 RM 520,782.10 RM 293,325.00 23.4.2023 to 22.5.2023 RM 520,782.10 RM 293,325.00 23.5.2023 to 22.6.2023 RM 520,782.10 RM 293,325.00 23.6.2023 to 22.7.2023 RM 520,782.10 RM 293,325.00 45 23.7.2023 to 22.8.2023 23.8.2023 to 22.9.2023 23.9.2023 to 22.10.2023 23.10.2023 to 22.11.2023 23.11.2023 to 22.12.2023 23.12.2023 to 22.1.2024 23.1.2024 to 22.2.2024 23.2.2024 to 22.3.2024 RM 520,782.10 . Total RM 6,379,580.72 RM 3,593,231 .25 93. As the tenancy agreements were wrongfully terminated by JA Solar, it is liable to pay the remainder rental for the unexpired term. The remaining rental represents losses that arose naturally as a consequence of the breach. But for the breach by JA Solar, Dynacraft would have received and been entitled to the remainder of the rental. Such loss falls within section 74 of the Contracts Act 1950, and the first limb of the Hadley v Baxendale rule. (See Hadley v Baxendale (1854) 9 Exch 341). 94. Further, that would also be consistent with the principle that in the event of breach, the remedy of the non - defaulting party is to be put back into a position as if the breach had not occurred and that the contract had been performed. Had there been no breach and the tenancy agreements were duly performed by JA Solar, Dynacraft would have received and been entitled to the remainder of the rental. (See the Federal Court case of Akitek Tenggara Sdn Bhd v Mid Valley City Sdn Bhd [2007] 5 MLJ 697 at 728 - 730). 95. | conclude that there are unpaid rentals by JA Solar to Dynacraft, which is the remaining rental for the unexpired term of the tenancy agreements amounting to RM 9,972,811.97 (i.e. RM 6,379,580.72 for the Etch building and RM 3,593,231.25 for the Technoplex building). 46 (b) Restoration works 96. Under the terms of the tenancy agreements, JA Solar was contractually obligated to : (a) not make any structural alterations or undertake any future renovation works or remove any irremovable works and fittings from the tenancy buildings without the consent of Dynacraft; (b) keep the tenancy buildings in good and tenantable repair and condition, save for fair wear and tear; (c) replace, repair and keep in good tenantable repair and condition the main structure, roofs, walls, floor, joints, pipes, sewers, wires and cables serving the tenancy building; (d) upon determination of the term of the tenancies, yield up the tenancy buildings to Dynacraft in good and tenantable repair, fair wear and tear excepted; and (e) (i) restore the tenancy buildings to its original position at JA Solar’s own cost in accordance with the instructions of Dynacraft; (ii) not to remove any of the alterations or renovations made by JA Solar unless required to do so in writing by Dynacraft; and (iii) the cost and expense incurred by Dynacraft to ensure compliance by JA Solar with this covenant shall be a debt due by JA Solar to Dynacraft. 47 97. The question here is when JA Solar handed over the tenancy buildings back to Dynacraft on 15.3.2023, were the tenancy buildings in a condition that was in compliance with the tenancy agreements? From the contemporaneous correspondences, it is evident that JA Solar has failed to do so. The correspondences show that there was a list of action items to be rectified by JA Solar. Therefore, it has been established that JA Solar was in breach of those obligations under the tenancy agreements. 98. In fact, the existence of non - compliance and the need for restoration works are indisputable as JA Solar had provided a quotation by its own contractor for the restoration works in the sum of RM 238,700. Subsequently, JA Solar agreed to a deduction of RM 238,700 on account of the restoration works, although this was not accepted by Dynacraft on the basis that the amount ought to be higher. In a letter dated 19.5.2023 to Dynacraft, JA Solar wrote : “Delivery of vacant possession ... 3. Since we do not have access at all to the premises, it would be more practical for you to liase with the contractor for work arrangement according to the quotation. 4. If your company is agreeable to the quotation issued by Dragon Alliance Sdn Bhd, we agree for you to deduct RM 238,700.00 from RM 4,756,428.00 before returning us the total deposit.” 99. The evidence points to the fact that JA Solar has failed to keep the tenancy buildings in good and tenantable condition or to mend defects that occurred to the tenancy buildings. JA Solar has failed to complete the restoration works and properly handed over the tenancy buildings to Dynacraft. 48 (c) The deposits are to be forfeited in Dynacraft’s favour 100. Dynacraft’s right to forfeit the deposits in its favour is derived from the express terms of the tenancy agreements. The terms of the tenancy agreements are in pari materia. Under clause 18.4 (b) read together with clause 18.3 (a) of the tenancy agreement no. 1, in the event the tenancy agreements are terminated due to default by JA-Solar, all deposits paid by JA Solar shall be forfeited in favour of Dynacraft. Similar provision of same consequence is provided under clause 18.3 (a) for the tenancy agreement no. 2. 101. It is undisputed that JA Solar has stopped paying rent after 15.3.2023. That was a breach of clause 8.1 of the tenancy agreements and an express “Tenant Default Event” under clause 11.1 of the tenancy agreements. As such, clause 4.1 (b) of the tenancy agreements had been triggered. Further, as a result of JA Solar’s failure to pay rent beyond 15.3.2023 and its refusal to continue with the tenancies, Dynacraft had terminated the tenancy agreements by its notice dated 3.4.2023. As such, clause 18.4 (b) of the tenancy agreement no. 1 and clause 18.3 (a) of the tenancy agreement no. 2 had also been triggered. 102. The only question here is whether JA Solar had validly terminated the tenancy agreements by its notice of termination, and hence was relieved from its obligation to pay rental and continue with the tenancies. My answer to this question in the negative. As such, by operation of the terms of the tenancy agreements, Dynacraft is entitled to (i) forfeit the deposits; or (ii) deduct from the deposits, amount that is due from JA Solar to Dynacraft, which far exceeded the deposits. 49 103. In this regard, | consider that the deposits ought to be applied towards the unpaid rental. As held by the Federal court in Cubic Electronics Sdn Bhd (in liquidation) v Mars Telecommunications Sdn Bhd

2 CLJ 723 at 753, a deposit is subject to section 75 of the Contracts Act 1950. Pursuant thereto, Dynacraft is entitled to reasonable compensation. In this case, | consider it a reasonable compensation for Dynacraft to receive the unpaid rental, taking into account the deposits which are already in its hands. 104. This position is fortified by the provisions of the tenancy agreements. First, clause 4.1 (a) of the tenancy agreements provides that the deposits will act as “security deposits for the due observance and performance by the Tenant of the covenants, undertakings, obligations, stipulations and agreements on his part herein contained”. Second, clause 4.1 (b) of the tenancy agreements provides that the deposits shall be refunded to JA Solar “less whatever sum or sums of money which may then be found due to the Landlord as a result of any breach of the terms and stipulations herein contained”. 105. Thus it is contractually envisaged that the deposits are meant to cover whatever is found due to the landlord (Dynacraft) as a result of the tenant's (JA Solar) non - performance of its obligations under the tenancy agreements. | therefore consider it appropriate that the deposits be set - off against the unpaid rental. (d) Dynacraft’s entitlements under the tenancy agreements 106. Dynacraft’s claims against JA Solar are for : 50 (i) unpaid rental from 16.3.2023 to 22.3.2024 in the sum of RM 9,972,811.97, or in the alternative RM 5,216,383.97 (if set - off by the deposits of RM 4,756,428) or part thereof; (ii) costs of the restoration works in the sum of RM 797,500, or at least RM 238,700 as admitted by JA Solar or part thereof; and (iii) reimbursement of the PDC consent fee in the sum of RM 249,320.33 or part thereof; all with interest at 10 % per annum. (i) Unpaid rental 107. Asdiscussed above, JA Solar is liable to pay Dynacraft the balance rental of RM 9,972,811.97 for the remaining unexpired term of the tenancy agreements. The deposits of RM 4,756,428 should be deducted from the unpaid rental, leaving a balance of RM 5,216,383.97 to be paid by JA Solar. (ii) Restoration works 108. As discussed above, JA Solar has not handed over the tenancy buildings in the manner and condition that they should be in under the terms of the tenancy agreements. Therefore restoration works were needed. JA Solar has admitted to a sum of RM 238,700 on account of the restoration works. Accordingly, | order JA Solar to pay the sum of RM 238,700 as the costs of the restoration works to Dynacraft. 51 109. | am not in favour of the sum of RM 797,500 claimed by Dynacraft in respect of the restorations works. (a) Firstly, this amount was not proven, It is derived from two quotations dated 16.6.2023 obtained by Dynacraft from a contractor. To wit, RM 438,000 in respect of the Etch building and RM 357,700 in respect of the Technoplex building. However, no evidence was adduced by Dynacraft as whether the restorations works had been performed and if so, what the actual cost is. In fact, during the cross - examination of DW1 (Dynacraft’s general manager), it transpired that Dynacraft had not incurred the said sum of RM 797,500. (b) Secondly, there is confusion regarding the amount. At paragraph 18.2 of the defence dated 13.3.2024, Dynacraft pleaded that “the estimated costs that the Defendant has to incur for the restoration works is RM 800,000.00”. Such averment was made notwithstanding that the aforesaid two quotations had already been obtained. (c) Moreover, the aggregate of the aforesaid two quotations is RM 795,700 (i.e. RM 438,000 for the Etch building plus RM 357,700 for the Technoplex building). Such figure is not consistent with the sum of RM 797,500 as claimed by Dynacraft. (iii) Reimbursement of the PDC consent fee 110. The basis upon which this claim was made by Dynacraft is as follows. The tenancies with JA Solar requires consent from the PDC, and 52 a consent fee had been paid by Dynacraft to the PDC. The agreement between the parties was that half of the PDC consent fee would be borne by JA Solar and apportioned over the duration of the tenancies. In line with that, half share of the PDC consent fee was being billed to JA Solar together with the monthly rental, which JA Solar has paid Dynacraft together with the payment for monthly rental. That reimbursement stopped from 15.3.2023, when JA Solar stopped paying the monthly rental. 111. According to Dynacraft, the remaining PDC consent fee to be reimbursed by JA Solar is RM 249,320.33 (being RM 159,489.49 for the Etch building and RM 89,830.84 for the Technoplex building). The breakdown and computation are as follows : Period Etch building Technoplex building 16.3.2023 to 22.3.2023 RM 3,254.89 RM 1,833.28 23.3.2023 to 22.4.2023 RM 13,019.55 RM 7,333.13 23.4.2023 to 22.5.2023 RM 13,019.55 RM 7,333.13 23.5.2023 to 22.6.2023 RM 13,019.55 RM 7,333.13 23.6.2023 to 22.7.2023 RM 13,019.55 RM 7,333.13 23.7.2023 to 22.8.2023 RM 13,019.55 RM 7,333.13 23.8.2023 to 22.9.2023 RM 13,019.55 RM 7,333.13 23.9.2023 to 22.10.2023 RM 13,019.55 RM 7,333.13 23.10.2023 to 22.11.2023 RM 13,019.55 RM 7,333.13 23.11.2023 to 22.12.2023 RM 13,019.55 RM 7,333.13 23.12.2023 to 22.1.2024 RM 13,019.55 RM 7,333.13 23.1.2024 to 22.2.2024 RM 13,019.55 RM 7,333.13 23.2.2024 to 22.3.2024 RM 13,019.55 RM 7,333.13 Total RM 159,489.49 RM 89,830.84 112. | reject this head of claim because it goes against the terms of the tenancy agrements. Under clause 9.2 of the tenancy agreements, the PDC consent fee is at the “sole cost and expense” of the landlord, Dynacraft. The said provision reads : 53 “9. Landlord’s covenants The Landlord [Dynacraft] hereby covenants and undertakes with the Tenant [Ja Solar] ... as follows :- 9.2 to apply for the consent to rent the demised premises to the Tenant from the State Authority as well as from the Penang Development Corporation ... at the Landlord’s sole cost and expense;” 113. It is JA Solar’s prerogative to contribute to the PDC consent fee during the subsistence of the tenancy agrements, if it so wished. Perhaps JA Solar (as the tenant) did so as a gesture of goodwill to maintain good relations with Dynacraft (as the landlord). But now that Dynacraft has terminated the tenancy agreements via a notice of termination dated 3.4.2023, it cannot force JA Solar to reimburse the PDC consent fee. There is no such contractual obligation imposed on JA Solar to do so pursuant to the tenancy agreements. On the contrary, it is clear from clause 9.2 of the tenancy agreements that the PDC consent fee is Dynacraft’s sole responsibility. 114. It has not been shown that there was any variation to clause 9.2 of the tenancy agreements. On this aspect, clause 26.1 of the tenancy agreements stipulates that “no variation hereof shall be effective unless made by the parties hereto in writing”. 115. Further, JA Solar’s course of conduct in contributing to the PDC consent fee during the subsistence of the tenancy agrements cannot be construed as a waiver of clause 9.2 of the tenancy agreements. It does not preclude JA Solar from now insisting that Dynacraft fully bears the PDC consent fee, as per clause 9.2 of the tenancy agreements. This 54 position is in line with clause 26.14 of the tenancy agreement no. 1 and clause 26.13 of the tenancy agreement no. 2, which reads : “The rights of each Party as set out in this Agreement shall not be capable of being waived or varied otherwise than by an express waiver or variation in writing; and in particular any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right; any defective or partial exercise of any of such rights shall not preclude any other or further exercise of that or any other such right; and no act.or course of conduct or negotiation on a Party’s part or on its behalf shall in any way preclude it from exercising any such right or constitute a suspension or any variation of any such right.” 116. Dynacraft complains that JA Solar did not plead the aforesaid clauses of the tenancy agreements as part of its defence. At the trial, no question with regard to these contractual clauses was put to Dynacraft’s witness. No evidence in that regard was included in any of JA Solar’s witness statements or evidence. 117. Be that as it may, the dispute herein revolves around the termination of the tenancy agreements. As such, | should be at liberty to look at the tenancy agreements in their entirety. Including clauses that were not relied upon by JA solar. This will enable me to properly construe the termination agreements. After all, the construction of the tenancy agreements is a question of law for me to decide. And not based on the ‘say - so’ of a witness. | am not bound by the testimony of witnesses or concessions made by counsel. | refer to the following authorities. 118. In NVJ Menon v The Great Eastern Life Assurance Company Ltd

3 CLJ 96 at 103; [2004] 4 AMR 164; [2004] 3 MLJ 38, the Court of Appeal said : 55 “Thus when read together, the Agency Agreement, the Supplementary Agreement and the circulars sufficiently create an entitlement in the plaintiff's favour of an overriding commission in respect of Group Scheme policies of insurance. It would be noticed that we have in arriving at our aforesaid conclusion made no reference to the oral evidence led at the trial as to the meaning and interpretation of the contract between the parties. This is because the construction of a contract is a question of law for determination by the court and not by witnesses through their oral evidence.” 419. In Silver Concept Sdn Bhd v Brisdale Rasa Development Sdn Bhd

3 CLJ 259 at 273; [2005] 5 AMR 24; [2005] 4 MLJ 101, the Court of Appeal held : “The construction of a contract is a question of law to be determined by this court. This court is not bound by the admission of witnesses or the concession made by counsel in the court below.” (iv) JA Solar’s obligation to indemnify Dynacraft 120. Dynacraft’s position on its claim for compensation from JA Solar is fortified by clause 8.22 of the tenancy agreement no. 1 and clause 8.21 of the tenancy agreement no. 2. Whereby JA Solar is required to indemnify Dynacraft against damages, losses, costs and expenses suffered or incurred by Dynacraft due to any breach by JA Solar of the tenancy agreements. 121. As the unpaid rental and the costs of the restoration works are losses and costs suffered or incurred by Dynacraft due to breach by JA Solar of the tenancy agreements, JA Solar is contractually obligated to indemnify Dynacraft. The law on this is rooted in section 77 of the Contracts Act 1950, which reads : 56 “A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".” 122. The indemnity provisions in clause 8.22 of the tenancy agreement no. 1 and clause 8.21 of the tenancy agreement no. 2 are contracts of indemnity within the meaning of section 77 of the Contracts Act 1950. There is no defence raised by JA Solar on its enforceability. Hence the indemnity is only conditional upon two things:- (i) the occurrence of breach by JA Solar (which has been established); and (ii) the occurrence of loss suffered by Dynacraft (which has also been established). As such, in addition to seeking compensation against JA Solar under section 74 of the Contracts Act 1950, Dynacraft is also entitled to invoke the indemnity provisions in the tenancy agreements against JA Solar. Accordingly, JA Solar is liable to indemnify Dynacraft in respect of the unpaid rental and the costs of the restoration works. (v) Dynacraft’s entitlement to interest 123. Under clause 11.5 (b) of the tenancy agreements, Dynacraft is entitled to “charge interest at the rate of ten per cent (10 %) per annum or upon late payment of any sum(s) due from the Tenant to the Landlord, which interest shall be calculated on a day to day basis from its due date until the date of full and final settlement;”. Payment of the rentals shall be made on the 7'" day of each and every succeeding calendar month, as per clause 3.1 of the tenancy agreements. 124. Thus, Dynacraft is entitled to interest on the outstanding rental, after deduction of the deposits. Dynacraft provided the computation below, whereas JA Solar did not do so although requested. 57 Etch building Unpaid rental | Due date Decision | Number | Interest Amount (RM) date of days | rate (%) (RM) 0.00 8.4.2023 | 30.7.2025 844 10 0.00 0.00 8.5.2023 | 30.7.2025 814 10 0.00 0.00 8.6.2023 | 30.7.2025 783 10 0.00 0.00 8.7.2023 | 30.7.2025 753 10 0.00 0.00 8.8.2023 | 30.7.2025 722 10 0.00 0.00 8.9.2023 | 30.7.2025 691 10 0.00 38,416.37 8.10.2023 | 30.7.2025 661 10 6,957.05 520,782.10 | 8.11.2023 | 30.7.2025 630 10 89,888.42 520,782.10 | 8.12.2023 | 30.7.2025 600 10 85,608.02 520,782.10 8.1.2024 | 30.7.2025 569 10 81,184.94 520,782.10 8.2.2024 | 30.7.2025 538 10 76,761.85 520,782.10 8.3.2024 | 30.7.2025 509 10 72,624.13 520,782.10 8.4.2024 | 30.7.2025 478 10 68,201.05 Total 481,225.46 Technoplex building Unpaid rental | Due date Decision | Number | Interest Amount (RM) date of days | rate (%) (RM) 0.00 8.4.2023 | 30.7.2025 844 10 0.00 0.00 8.5.2023 | 30.7.2025 814 10 0.00 0.00 8.6.2023 | 30.7.2025 783 10 0.00 0.00 8.7.2023 | 30.7.2025 753 10 0.00 0.00 8.8.2023 | 30.7.2025 722 10 0.00 0.00 8.9.2023 | 30.7.2025 691 10 0.00 293,325.00 | 8.10.2023 | 30.7.2025 661 10 53,119.95 293,325.00 | 8.11.2023 | 30.7.2025 630 10 50,628.70 293,325.00 | 8.12.2023 | 30.7.2025 600 10 48,217.81 293,325.00 8.1.2024 | 30.7.2025 569 10 45,726.55 293,325.00 8.2.2024 | 30.7.2025 538 10 43,235.30 293,325.00 8.3.2024 | 30.7.2025 509 10 40,904.77 293,325.00 8.4.2024 | 30.7.2025 478 10 38,413.52 Total 320,246.61 125. Therefore, as at 30.7.2025 (the date of this judgment), the accrued interest which JA Solar is liable to pay Dynacraft is RM 801,472.07 (i.e. RM 481,225.46 + RM 320,246.61). 58 126. Dynacraft also claims interest on the costs of the restorations works. | decline to allow this head of claim because Dynacraft has failed in its claim for the higher sum of RM 797,500. And JA Solar had conceded to the lower sum of RM 238,700, which | now award. Also because the restorations works have not been performed. Hence, such costs have not been incurred. 127. In summary, my findings are : (a) itis undisputed that JA Solar has failed to pay the balance rental from 16.3.2023 onwards until the expiry of the tenancies on 22.3.2024. The computation thereof is only an arithmetic exercise, arriving at the amount of RM 9,972,811.97; (b) it is admitted that there were restoration works which needed to be done. The only dispute is on the quantum. JA Solar has conceded to a sum of RM 238,700. Dynacraft has failed to prove its claim for the sum RM 797,500; (c) the PDC consent fee is to be borne fully by Dynacraft. JA Solar is not obligated to reimburse a half share of the same to Dynacraft; and (d) Dynacraft is entitled to 10 % interest on the unpaid rental amounting to RM 801,472.07. Dynacraft’s counterclaim against the 2™ to 8" Defendants in the counterclaim 59 128. Dynacraft’s cause of action against D2 to D8 is premised upon section 540 (1) of CA 2016, which reads : “Section 540 Responsibility for fraudulent trading (1) If in the course of the winding up of a company or in any proceedings against a company it appears that any business of the company has been carried on with intent to defraud the creditors of the company or creditors of any other person or for any fraudulent purpose, the Court on the application of the liquidator or any creditor or contributory of the company, may, if the Court thinks proper so to do, declare that any person who was knowingly a party to the carrying on of the business in that manner shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court directs.” 129. The application of section 540 (1) of CA 2016 can be seen from the Federal Court decision in Lai Fee & Anor v Wong Yu Vee & Ors [2023] 3 MLJ 503. The Federal Court set out a synopsis of the principles which govern the application of section 540 (1) of CA 2016 (at page 518 - 521):

The application of the statutory exception to the corporate personality principle has been also described as the lifting of the corporate veil - the effect of which is to render the members or officers of the company personally liable for the debts and liabilities of the company under certain circumstances. Under s 304 of the former Companies Act 1965, responsibility and liability will attached to any person if it can be established that that person(s) has conducted a company’s business with intent to defraud creditors. Section 540 of the current CA 2016 which is in pari materia with s 304 of the Companies Act 1965 reads as follows :

That responsibility for fraudulent trading under s 540 of the CA 2016 is the statutory exception to the corporate personality doctrine has been the subject of extensive discussion in a line of cases. Accordingly, it might be useful and desirable to set out a synopsis of the well - established principles which govern the application of this statutory exception which are : (i) | the words ‘with intent to defraud creditors ... or for any fraudulent purpose’ in s 304 of the Companies Act 1965 should be read disjunctively even though on the facts of the case both limbs are relevant and applicable ... ; 60 (ii) in the context of carrying on business, the phrase ‘with intent to defraud creditors’ it is in general a proper inference that the company is carrying on business with intent to defraud the creditors of the company if the company continues to carry on business to incur debts at a time when there is to the knowledge of the directors no reasonable prospect of the creditors ever receiving payment of those debts ... It has also been interpreted to include an intent to deprive creditors, of an economic advantage or inflict upon them some economic loss ... The word ‘intent’ is being used in the sense that a man must be taken to intend the natural or foreseen consequences of his act ... ; (iii) the word ‘fraud’ is also defined under s 17 of the Contracts Act 1950. According to Sinnadurai, Law of Contract (4 Ed, 2011) at para [5.07], fraud is defined ‘to include certain acts which are committed with intent to induce another party to enter into a contract’. Section 17 sets out five types of different acts which constitute fraud. These include ‘a promise made without any intention of performing it’ and ‘any other act fitted to deceive’: s 17(c) and (d), Contracts Act 1950; (iv) the words ‘f ... it appears’ in s 304 of the Companies Act 1966 is indicative of a lower threshold in order to trigger the operation of s 304. It does not matter whether s 304 contains in it both civil and a criminal provision - the civil provision in sub - s (1) and the criminal sanction in sub - s (5) are properly carved out and they do not interfere in each other’s operation ... ; (v) the burden of proof is on the plaintiffs to establish fraudulent trading within the meaning of s 304 of the Companies Act 1965. The standard of proof in civil cases involving proof of fraud or fraudulent conduct is on the balance of probabilities ... ; (vi) the existence of fraud is a question of fact. It is dependent on the circumstances of each particular case. Fraud must mean actual fraud, ie, dishonesty of some sort ... ; (vii) in order to establish dishonesty under s 304 of the Companies Act 1965, it must be shown that firstly, what was done was dishonest according to the ordinary standard of reasonable and honest people, and secondly that the actor himself must have realised that the act was by those standards dishonest ... ; (viii) it is fraud if it is proved that there was the taking of a risk which there was no right to take which would cause detriment or prejudice to another. It need not be proved that the defendant knew at the time when debts were incurred that there was no reasonable prospect of creditors ever receiving payment of their 61 debts. It was enough if the defendant realised at the time when the debts were incurred that there was no reason for thinking that funds would be available to pay the debt when it would become due or shortly thereafter. These words import a criterion that is partly subjective and partly objective ... ; (ix) whether there was any intention on the part of the defendants to defraud or to carry on any fraudulent purpose is a question of fact to be inferred from the surrounding circumstances and the subsequent conduct of the defendants, especially the concealment of material facts ... ; (x) actual knowledge was required before a person could be said to be knowingly a party to the fraudulent transaction carried out by a company within the meaning of s 304 of the Companies Act 1965 - it must be shown that the person has participated, concurred or taken some positive steps in the carrying on of the company’s business in a fraudulent manner - however, it is not necessary to show proof of his having assumed a controlling or managerial role over the company’s business before he could be said to be a party to the carrying on of it... ; and (xi) itis not necessary to establish a scheme to defraud to trigger the invocation of s 304 of the Companies Act 1965. The wordings of s 304 do not lend itself to be read in such a manner - a single act of doing business to defraud a creditor would be sufficient to trigger an action for compensation against the errant person in his personal capacity. A business may be found to have been carried out with intent to defraud creditors notwithstanding that only one creditor is shown to have been defrauded, and by a single transaction ...” 130. At paragraph 44 of the counterclaim, the four pleaded acts of fraudulent trading are : (i) JA Solar had decided to cease its business activities and operations some time in 2022 despite its business being at least sustainable at the material time, thereby depriving Dynacraft the ability to generate income and revenue; (ii) The assets of JA Solar were dissipated and disposed off in a severely under - valued manner; 62 (iii) JA Solar was being stripped off its assets that would otherwise be made available to pay debts that are due or becoming due to its creditors, including Dynacraft; and (iv) JA Solar had used the excuse of critical failure in its business or operations, which did not happen at the material time, to wrongfully disclaim and escape from its liability under the tenancy agreements. 131. At paragraph 45 of the counterclaim, it was further pleaded that these acts of fraudulent trading were designed to : (a) disable JA Solar to pay its debts and meet its liabilities towards its creditors, including Dynacraft; (b) benefit the party to which such assets or proceeds from the dissipation of assets were eventually accrued to, to the detriment of JA Solar’s creditors, including Dynacraft; (c) siphon and dissipate JA Solar’s assets which would otherwise have been available to the creditors and keep them out of reach of the creditors or liquidator (if and when JA Solar is liquidated); (d) deprive the creditors of the right to be paid or to seek recourse against JA Solar to satisfy debts owed by it to its creditors, including Dynacraft; and (e) leave JA Solar in a state where it is left with no or insufficient assets, insolvent and is unable to pay its debts. 63 132. | do not consider such pleaded acts to tantamount to fraudulent trading (dealing with each in turn). (i) As conceded by Dynacraft, the decision to shut down is entirely JA Solar’s right and prerogative. JA Solar is at liberty to do so even if the business remains profitable. That it could affect JA Solar’s ability to generate income (which then impaired its ability to meet its debt obligation, including the obligation to pay rental to Dynacraft) cannot constitute fraud or an intent to defraud creditors. (ii) First, it has not been proven that JA Solar’s assets were dissipated at a significant under - value. According to JA Solar, the asset disposal was done through a tender exercise. Second, it is to be expected that a disposal of asset in the context of a cessation of business (a fire sale, if you like) is unlikely to fetch fair market value. Flowing from this, Dynacraft’s complain that there was no valuation of the assets performed by JA Solar is irrelevant. (iii) JA Solar’s disposal of its assets is a natural consequence of a closure of its business. It is not a nefarious act of stripping of assets that could otherwise be used to pay debt. For the record, no winding - up has been filed against JA Solar as at the date of the filing of this suit. (iv) Although | disagreed with JA Solar’s stance that it suffered a critical failure in business or operations, | am not prepared to say 64 that it was abused as a means to evade liability under the tenancy agreements. JA Solar is entitled to take it up as a defence, notwithstanding that it ultimately failed in these proceedings. 133. Dynacraft complains that D2 to D8 made the conscious decision of not making provisions on the claims made by Dynacraft against JA Solar, thereby not reserving funds or assets to meet such obligation. In the 2022 audited report, the directors formed an opinion that it was not probable for Dynacraft to succeed in this claim. In this regard, JA Solar stated that it sought legal advice on the matter. | think it is quite reasonable for the directors to rely on legal advice, even if such advice turns out to be inaccurate. The directors judgment on this aspect, although found to be incorrect, is not fraudulent. 134. In summary, Dynacraft contends that the act of ceasing business, wrongly invoking early termination, disposing assets at under - value and not making provision for JA Solar’s liability towards Dynacraft, taken together, are acts which were intended to produce the outcome that Dynacraft would not be paid the amount due to it and it would not be able to recover the debt from JA Solar’s assets. On the facts however, | do not see fraud or dishonesty on the part of D2 to D8. 135. The burden of proof is on Dynacraft to establish fraudulent trading within the meaning of section 540 (1) of CA 1965 on the balance of probabilities. Dynacraft has not succeeded in doing so. | am not satisfied that D2 to D8 should be made “personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of JA Solar. 65 Conclusion 136. For the reasons above, |:- (i) dismiss JA Solar’s claim; (ii) partially allow Dynacraft’s counterclaim against JA Solar; and (iii) dismiss Dynacraft’s counterclaim against D2 to D8. In respect of Dynacraft’s counterclaim against JA Solar, | order JA Solar to pay the sum of RM 6,256,556.04 to Dynacraft. This judgment sum is the aggregate of:- (i) the RM 9,972,811.97 unpaid rental less the RM 4,756,428 deposits; (ii) the RM 238,700 restoration works; and (iii) the RM 801,472.07 interest on the outstanding rental. | award interest on the said judgment sum at the rate of 5 % per annum from the date of judgment to the date of payment. 137. In respect of JA Solar’s unsuccessful claim against Dynacraft and Dynacrafts’ successful counterclaim in part against JA Solar, | order JA Solar to pay total costs of RM 65,000 to Dynacraft. With respect to Dynacraft’s unsuccessful counterclaim against D2 to D8, | order Dynacraft to pay costs of RM 15,000 to each of the 27, 3 and 8" Defendants to the counterclaim (who testified at the trial) and RM 5,000 to each of the 4", 5th 6 and 7 Defendants to the counterclaim. 138. The security for costs in the sum of RM 25,000 that was deposited by JA Solar with the court shall be released to D2 to D8 through their counsel. This security sum shall be applied towards the total costs of RM 65,000 payable by Dynacraft to them. Dated 30 July 2025 a Quay Chew Soon, Judge 66 High Court of Malaya, Penang Civil Division NCvC 1 Counsels Emily Chong Pei Yen, Quiin Hng Huey Koon and Kartini Devi a/p Manimoly (Messrs Hng & Partners) for the Plaintiff in the original action and the Defendants in the counterclaim Choon Hon Leng, Himin Ng and Catherine Alicia Nathan (Messrs Sanjay Mohan) for the Defendant in the original action and the Plaintiff in the counterclaim 67