Keller (M) Sdn Bhd v 1. Ong Leong Chiou; 2. PS Bina Sdn. Bhd. 3. Perfect Selection Sdn. Bhd. 4. Bina Puri Holdings Sdn Bhd (22C-28-07/2015)

ONG LEONG CHIOU

PS BINA SDN. BHD.

PERFECT SELECTION SDN. BHD.

BINA PURI HOLDINGS BERHAD (COMPANY NO. 207184-X) … DEFENDANTS THE JUDGMENT OF Y.A. LEE SWEE SENG [1] The main issue in this trial is whether the First, Second and Third Defendants (“D1, D2 and D3”) are liable jointly and severally to the Plaintiff for what the Plaintiff said is the amount due for work done with respect to the Empty Bore Works (“EBW”) as part of the contract 2 entered into with D2 when D2 and D3, under the control of D1, knew that they would not be paid for these Works by their respective principals. [2] This Court would have to unravel the relationship between the parties and the role played by D1 and another Defendant under its control i.e. D3 in what on the surface, based on the concept of separate legal entity, appears to be a case of merely a breach of the contract by D2. The stand of D1 and D3 is that any fall out should be confined to just D2 as the contracting party. [3] Like all allegations of fraud, both actual and equitable and even the use of devices and entities to evade one's contractual obligations, this Court would have to probe deeper beneath the surface. Is there something more sinister beneath the smooth veneer of separate legal entities and the privilege of arranging one's business and managing risk such that any financial exposure cannot be limited to the contracting entity but be extended to other related entities in the web of deceit dressed up to deflect any suspicion of something amiss? Parties [4] The Plaintiff is part of the Keller Group, an independent ground engineering specialist. They have a considerable presence in Malaysia, 3 having being involved in a few mega projects with respect to designing and delivering geotechnical solutions for projects carried out by the Government of Malaysia, namely, RAPID project, the SMART tunnel system, Ipoh Rawang Double Track Project, Pahang Selangor Raw Water Transfer Project, East Coast Expressway PH11, Penang Sewage Treatment Plant and Tun Razak Exchange Project. [5] D1 is Ong Leong Chiou, a businessman, also known as Tony Ong. He held himself out as having a close relationship with the controlling shareholders of Bina Puri Holdings Berhad, the 4th Defendant (D4). He is the Managing Director and the controlling shareholder of D3, Perfect Selection Sdn Bhd, holding 70% of its share. The other 30% of its shares is held by the other director Mr Liew Pok Boon. In its filing with Companies Commission of Malaysia, D3's nature of business is stated as “General Building Sub-Contractor”. [6] D2 is PS Bina Sdn Bhd. It was incorporated by D1 on 4.10.2013. D1 is the Managing Director and the largest shareholder in D2 and the other directors are Mr Chang Sin Fei and Mr Liew Pok Boon and their shareholdings are 40:30:30 respectively. D2 has the same registered address and company secretaries with D3. It did not have a business address. In its filing with Companies Commission of Malaysia, D2’s nature of business is stated as “Construction of Buildings”. 4 [7] D4 is a development and construction company listed in the Malaysian Stock Exchange. It is the main-contractor of a construction project known as the ‘Melawati Mall Project’. The Project [8] The Melawati Mall Project is a project to construct a 10 storey shopping mall and business complex in Pusat Bandar Melawati, Kuala Lumpur (“the Project”). The owner of the Melawati Mall Project is a joint venture between Capita Malls Asia and Sime Darby Property. [9] The Plaintiff's involvement with this Project is with respect to Contiguous Bore Pile ("CBP") Works, Foundation Bore Pile ("FBP") Works and Ground Anchors ("GA") Works (collectively called “the Works”). [10] Sometime around 13.9.2013, the Plaintiff received a facsimile from Mr Chang Sin Fei on behalf of CTF Build Sdn Bhd, enclosing an ‘Invitation to Quote’ inviting the Plaintiff to quote for the CBP Works and FBP Works also known as "Bored Cast In Situ Piling" Works for the Project. For this purpose the Plaintiff received 2 blank bills of quantities attached, i.e. Bill No. 2 for the CBP Works (“Blank Bill No. 2”) and Bill No. 4 for the FBP Works (“Blank Bill No. 4”). 5 [11] After meeting Mr. Chang Sin Fei at D3's office, sending and revising quotations with a company known as CTF Build Sdn Bhd, a Letter of Award was issued by D2 to the Plaintiff on 21.10.2013 for a provisional sum of RM17.6 million. [12] D2 had never before this been mentioned at any discussions or exchanges. The Plaintiff was rather puzzled and uncomfortable. They did a company search on D2 and noticed that D2 had just been incorporated on 4.10.2013. Clearly it was a company with no track record. [13] The Plaintiff was thus put on inquiry and they decided not to return the Letter of Award for CBP Works to D2 until after they had met the persons behind D2. As matters transpired, PW1 Ir Yee Yew Weng, the Plaintiff’s Managing Director, met D1 on 4.11.2013. According to the Plaintiff, D1 spoke words of reassurance and represented to them that he knew Tan Sri Tee (“TST”) very well, a major shareholder of D4. He had organised a lot of youth activities for the ‘Hokkien Association’ for TST. That was how he got the job for the Melawati Mall. D1 held out TST as having a vested interest in D2. D1 spoke of D2 as a company under his control and that there was no cause for worry. To further allay the Plaintiff's fears, he assured the Plaintiff that he could secure a guarantee from D4 to guarantee payment for the Works. 6 [14] Their fears were kept at bay with those representations and in particular, the assurance that D1 would secure a guarantee from D4. [15] After that meeting, the Plaintiff returned the signed Letter of Award for CBP Works to D2. The Plaintiff then proceeded on the same day to send its quotation ‘Commercial Proposal Nr 21.181.2418 dated 04 November 2013’ to D2 for the attention of D1, having known by then that D1 is the managing director of D2. [16] The quote was based on the information of the Works contained in Blank Bill No. 4 that the Plaintiff had previously received. The quotation for FBP Works was revised on 9.11.2013 from RM13,627,510.40 to RM13,125,000.00 via ‘Final Commercial Proposal Nr 21.181.2418 dated 09 November 2013’ (“the 9.11.2013 Proposal”). [17] D2 issued a Letter of Award on 12.11.2013 accepting the 9.11.2013 Proposal and appointing the Plaintiff to carry out the FBP Works for a provisional sum of RM13,125,000.00 (“the FBP Contract”). [18] The Plaintiff was careful to ensure that the representation of D1 on 4.11.2013 that D4 would provide the guarantee found its way into the FBP Contract in clause 23 as follows: “This Letter of Award pursuant to the terms and subject to the conditions set out in this Agreement, shall in all respects be 7 conditional upon the Main Contractor depositing with the Sub-Contractor a guarantee from Bina Puri Holdings Berhad to the satisfaction of Sub-Contractor (“the Conditional Precedent”) within 14 days from the date of this Letter of Award (“Cut Off Date”). In the event the Condition Precedent is not fulfilled or satisfied by the Cut-Off Date, Sub-Contractor shall be entitled to terminate this Letter of Award by giving notice in writing to Main-Contractor.” [19] After the FBP Contract, D2 issued a Letter of Award dated 7.2.2014 to the Plaintiff appointing them to carry out Ground Anchors works (“GA Works”) for a provisional sum of RM7,200,000.00 (“GA Contract”). Similarly, the GA Contract also provided for D4’s guarantee for the Plaintiff. Problem [20] There is a peculiar clause in the FBP Contract which later proved to be problematic and indeed the fodder that had fueled the present feud. In the 9.11.2013 Proposal, which was part of the FBP Contract, it was inter alia, provided that: “the empty bore quantity is not captured in the attached Bill of Quantities. However, our soil drilling length shall be measured from the toe of bored pile to top of Working Platform e.g. Existing 8 Ground Level (at point of boring) and payable at soil boring rate respectively”. (emphasis added) [21] These works are hereinafter known as “Empty Bore Works” (“EBW”). [22] The Plaintiff in their previous proposal Nr. 21.181.2400 dated 19.9.2013 had also made clear at paragraph 7 as follows: “…our basis of offer is as follows…Soil drilling will be measured from the toe of bored pile to top of working platform” (emphasis added) [23] The FBP Works proceeded rather expectedly with the Plaintiff being paid against D2's certification of the Works done submitted in the form of Interim Progress Claim ("IPC"). It was the calm before the storm that was brewing. [24] Problem began to precipitate with IPC No. 6 for period ending 25.6.2014, and the corresponding Certificate, which was supposed to be Certificate No. 8 but was late. The Certificate was contractually to be issued by D2 within 15 days after IPC. When it was received only on 5.9.2014 a whopping sum of RM4,520,824.21 for EBW had been reversed out! The FBP Works had already been completed by 22.7.2014. The Plaintiff submitted that it was not sheer coincidence that 9 the decertification continued until the whole of the EBW of RM7,462,720.19 were completely reversed out only after the completion of the FBP Works. It was so timed such that the EBW had to be completed first for otherwise it might be stalled or stopped and that would be of no benefit to D2 and D3. [25] Upon further inquiry it was discovered that in D4's contract with D3, it was stated that D3 would not be paid for the EBW. The effective part of their contract with the heading “Unconcreted (Empty) Bore” reads: “The unit rate of the pile shall be deemed to include whatever empty bore above the cut off level of the pile. No claim will be considered for any empty bore due to its sequence of construction” [26] The Plaintiff in putting the pieces together, could not escape the conclusion that fraud had been perpetrated by D1, D2 and D3 on them, in that whilst D3 was fully aware that the EBW would not be paid by D4 to D3, yet D3 under the control of D1 arranged for another of its newly incorporated company in D2 to enter into the FBP Contract wherein D2 had agreed to pay the Plaintiff some RM7 million plus of EBW under the FBP Contract. 10 [27] The Plaintiff's question is how is it that D2 could have so agreed to pay the Plaintiff when as it is, it has no other projects and further that under the control of D1, it was fully conscious that it would not be paid by D3, also under the control of D1? [28] Their fear of having been defrauded was further heightened when a search done on D2 soon after the completion of the FBP Works revealed that the shares of D1 and the other shareholders had been transferred to a Bangladeshi worker and another local Chinese, both of whom had disclosed only their workplace address in their filing with CCM. All the directors of D2 i.e. D1, Mr Chang Sin Fei and one Mr Liew Pok Boon had resigned as directors of D2. None of the new Directors of D2 came to Court to testify. [29] There were also other factors discussed below which caused the Plaintiff to pursue a claim for the losses suffered for not being paid for the EBW against D1, D2 and D3 jointly and severally in making out a claim for fraud, whether actual or equitable or that the said Defendants had conspired to unlawfully avoid and evade their contractual obligations and so justifying a lifting of the corporate veil where D1, D2 and D3 are concerned. 11 Prayers [30] Briefly the Plaintiff claimed against the Defendants as follows:

that D1, D2 and D3 be, jointly and/or severally, liable for RM7,462,720.19 for the Empty Bore Works;

that D1, D2, D3 and D4, be jointly and/or severally, liable for RM1,913,080.25 for the retention sum under the 3 contracts, i.e. CBP Contract, FBP Contract and GA Contract;

that D4 be liable for RM717,721.96 being the remainder sum agreed under the undertaking of RM3.5 million. [31] D2 also have a Counterclaim against the Plaintiff for RM1,324,868.11 for defective works. Principles Whether D2 is liable to the Plaintiff for the Empty Bore Works [32] The Plaintiff’s contract with D1 is clear in that the EBW will be paid. This is clear from the Proposal given by the Plaintiff and finally incorporated in the Letter of Award from D2 to the Plaintiff. There is thus no room for D2 to say that since they were not paid by D3, then they need not pay the Plaintiff. This is not a “Pay When Paid Contract.” As it now transpires, D3 would in turn not be paid by D4 because the 12 contract between them is such that EBW would not be payable. At the end of the day D2, down the chain, is not going to get paid for the EBW. D2 cannot import into its contract with the Plaintiff the terms of its contract with D3 where the non-payment of the EBW is concerned and cannot contend that payment would only be for the FBP from the toe to the base and not to the ground level. [33] The fact that D2’s contract with D3 and correspondingly D3’s contract with D4 provides that EBW would not be paid has no bearing on the contract between the Plaintiff and D2 which provides for such payment. [34] The Plaintiff has proved on the balance of probabilities, based on the evidence adduced, the sum claimed of RM7,462,720.19 as the amount outstanding based on the various Interim Progress Claims and Certificates before the unilateral reversal out or decertification by D2. Whether D2 has proved its counterclaim against the Plaintiff [35] D2 has a counterclaim mainly for rectification works and on the whole D2 has proved this on the balance of probabilities. There was no dispute or objection raised by the Plaintiff on this sum claimed by D2 at the material time. On the other hand there are contemporaneous documents produced by D2 to substantiate their counterclaim. I would 13 hold that on the balance of probabilities D2 has proved the counterclaim of RM1,324,868.11 and I would allow this to be deducted from the Retention Sum of RM1,913,080.25 that should be released by D2 to the Plaintiff as all the CBP, FBP and GA Works have been completed. Pronouncement [36] The net result is that D2 is liable to pay the Plaintiff the sum of RM8,050,932.33 and so I had allowed judgment to be entered by the Plaintiff against D2 for the said sum. This shall carry interest of 5% per annum from date of writ to realization. [37] As both the Plaintiff and D2 are not appealing against this order made and judgment given, I would not labour further on the analysis of the evidence adduced by the Plaintiff and D2 with respect to the Plaintiff’s claim for the EBW and D2’s counterclaim for the rectification works done. [38] I shall now focus on whether D1 and D3 can be made jointly and severally liable with D2 for the amount that is owing by D2 to the Plaintiff. Whether D1 and D3 knew that D2 would not be paid by D3 and D3 would not be paid by D4 for the EBW 14 [39] What is of critical importance is for this Court to determine if D1 and with him, D2 and D3 knew as a matter of fact that in D3’s contract with D4, the EBW would not be paid. If it can be shown on the balance of probabilities that D1, D2 and D3 knew as a matter of fact that D3 would not be paid for the EBW and that is for a sum of over RM7 million, what did they do when they discovered this? Did they immediately alert and advise the Plaintiff about this? Or did they continue with the hope that it would be paid somehow and so the Plaintiff would be paid so that the EBW would be completed? [40] The Plaintiff’s proposal and contract with D2 is clear. In the Proposal of 9.11.2013 that forms part of the FBP Contract with the Plaintiff it is expressly stated as follows: “…the empty bore quantity is not captured in the attached Bill of Quantities. However, our soil drilling length shall be measured from the toe of bored pile to top of Working Platform e.g. Existing Ground Level (at point of boring) and payable at soil boring rate respectively.” (emphasis added) [41] It is telling that D2 had never objected, rebutted or disputed this term of the contract between them and the Plaintiff. Throughout the negotiations, D1 gave many assurances to the Plaintiff that there was 15 nothing to worry because of his close connection with D4 and its key shareholder TST. [42] What then is the term in the contract between D3 and D4 where the EBW is concerned? The effective part of their contract with the heading “Unconcreted (Empty) Bore” reads: “The unit rate of the pile shall be deemed to include whatever empty bore above the cut off level of the pile. No claim will be considered for any empty bore due to his sequence of construction” [43] As explained by the Plaintiff the FBP Works requires the Plaintiff to excavate bore holes from the Working Platform which is the platform that was given to the Plaintiff to work on, to a certain designated depth (“Pile Toe”). Concrete would then be poured into the bore holes up to a certain designated height as (“Cut-Off Level”) to form the bore piles as per the design given to the Plaintiff. The length of the bore hole from the Working Platform to the Cut-Off Level is known as empty bore in that it is not filled by concrete. [44] The Plaintiff managed to take a photograph of 3 pages of the contract between the using a mobile phone in October 2014 during a meeting with the Defendants over the non-payment of the EBW. 16 [45] The fact that this is true is not disputed by the Defendants. Learned counsel for D1 and D3 said that the contract between D3 and D4 was dated 9.12.2013 but that between D3 and D2 was dated 12.12.2013 whilst the FBP Contract between D2 and the Plaintiff was much earlier, being dated 12.11.2013. [46] In essence what D1 and D3 are attempting to give, by way of impression, is that they did not know at the time of entering into contract between the Plaintiff and D2 that D4 would not be paying D3 for the EBW under the FBP Contract. [47] It is of course only too true that no one enters into a sub-contract without knowing the terms, specifications and the Bill of Quantities under the main contract and more especially the price. Otherwise how would D2 in this case know how to price the contract that it would eventually enter into with the Plaintiff at the behest of D1 who had held himself out as having secured the contract with D4 because of his close relationship with D4 and persuading the Plaintiff to accept contracting with D2, another company set up by him and Mr Chang Sin Fei, to execute the sub-structural works of the Project? [48] Evidence was led that D2 had claimed against D3 on 30.10.2013 for the period ending 25.10.2012 for a substantial sum of 17 RM2,734,204.40 suggesting that the Plaintiff had commenced work for D2 end of September or early October 2013. [49] D3’s purported first certificate to D2 was dated 4.12.2013 for period ending 31.10.2013. This shows that the rates were known to D3 before 9.12.2013 because the valuation of the works were done on 4.12.2013. [50] D3’s first claim to D4 was dated 31.10.2013 for period ending 31.10.2013 amounting to RM2,738,417.40. Pages 1263-1280 D1/3 BOD3. It enclosed D2’s claim to D3 dated 30.10.2013 including Bill of Quantities at pages 1264-1280 D1/3 BOD3. The Bill of Quantities enclosed showed at page 1274 of the same Bundle that D2 and D3 knew as early as before 30.10.2013 that “bored length shall be measured from the cut off level to pile” i.e. EBWs would not be paid. D4’s first certificate to D3 was dated 30.11.2013 for period ending 31.10.2013. In fact DW1 who is D1 reluctantly admitted that he knew of the terms of the contract between D3 and D4 before the FBP Works were awarded to the Plaintiff on 12.11.2013. [51] It would be stretching to incredulity to suggest that for a RM88 million contract D3 did not know the rates and terms of the contract and yet D3 could enter into a contract with D2 and D2 could enter into a contract with the Plaintiff for the agreed rates and terms. If anything it 18 underscores the fact that D1 was more than confident that even though the contract between D3 and D4 had not been inked until 9.12.2013, D1 through the instrumentality of D2 had no problem entering into the FBP Contract with the Plaintiff which expressly stated that EBW would not be paid. [52] If indeed the terms between D3 and D4 was initially that D4 had agreed to pay D3 for the EBW, then surely D3 could have called TST as witness. The witness that came on behalf of D4, one Mr Png Choon Yam as DW 4. did not testify to this effect. [53] On the balance of probabilities I would say that D3 knew of the terms of the contract with D4 that the EBW would not be paid, even before the execution of the contract between the Plaintiff and D2 on 12.11.2013 and with that, D1 too, for it was D1 that leveraged his influence with TST to secure the contract between D3 and D4 and who persuaded the Plaintiff to accept D2 as the contracting party for the FBP Contract. [54] D1’s fingerprints and footprints are all over D2 and D3, being companies and vehicles controlled by him in the overall scheme of executing the works for this Project. D1 is effectively the Managing Director of both D2 and D3 and a substantial and major shareholder as well in both D2 and D3. In the business card given by D1 to PW1, D1 19 described himself as the Managing Director of D3. See page 30 PBOD

[55] Even assuming for a moment that D3 was unaware of this before the execution of the contract with D4, D3 certainly knew about this that the EBW would not be paid by D4 when the contract was executed on 9.12.2013. As pointed out by learned counsel for Plaintiff that was the same date when the Plaintiff had started work on the EBW. See page 149 of PBOD1. On 30.12.2013 the Plaintiff had written to say that there would be around RM4.8 million worth of empty bore estimate and that EBW are payable (pages 566-68 PBOD3). There was surprising silence from D2 and by extension D1 and D3 as well; the kind of silence that speaks volume of D2’s culpable conduct, with full knowledge of D1 and D3. [56] The observation made by the Court of Appeal in David Wong Hon Leong v Noorazman bin Adnan [1995] 4 CLJ 155, CA at page 156 would resonate with the above matrix of facts: “There are cases – business and mercantile cases – in which the Courts have taken notice that, in ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who 20 receives that letter must answer it if he means to dispute the fact that he did so agree.” [57] It is not the version of D1 and D3 that they did not read the contract or that they were labouring under the impression that it would be paid nevertheless though contractually D4 is not obliged to pay D3 for the EBW. Whether D1, D2 and D3 having knowledge that EBW would not be paid by D4 to D3, are liable to the Plaintiff in the circumstances of the case where D2 is contractually obligated to pay the Plaintiff for EBW [58] The action and response of a genuine businessman would be to alert the Plaintiff about this and so sort out the problem of no payment for the EBW. At least 3 parties knew about this, D3 that signed the contract with D4, D1 who was instrumental in securing the contract for D3 from D4 and D2 that had entered into a total sub-contracting with D3 for a 2% commission fees to be paid by D2 to D3. D2’s knowledge is by virtue of D1 being the Director responsible for putting together D2 and D3 for the Project, being a common director and common controlling shareholder of D2 and D3. None of these 3 parties informed the Plaintiff of the predicament they were in i.e. How to pay the Plaintiff when they would not be paid by D4 for the EBW? 21 [59] That vital information was concealed from the Plaintiff by D1, D2 and D3 and for good reason. The Plaintiff might have cold feet proceeding for unless D2, a company incorporated just a month before the contract was entered into, had alternative sources of funds or are prepared to be out of pocket for RM7 million plus, the Plaintiff would not be paid or cannot reasonably be expected to be paid for the EBW. The Plaintiff would not want to proceed without ensuring that D4 would guarantee the total sum due under the whole contract between the Plaintiff and D2. [60] Already the Guarantee from D4 that D1 had represented that he would secure in favour of the Plaintiff for the whole of the contract sum in the FBP and the GA contracts was not forthcoming other than a limited Undertaking for the total sum of RM2 million. [61] Of course with both feet already placed and positioned at the site with the workers and machineries as well as the piles, it was too late to demobilize when the Guarantee from D4 that D1 had wanted to secure was not forthcoming other than for a total sum of RM2 million. [62] D1 is now trying to put the blame on the Plaintiff for not having stopped work when the Guarantee/Undertaking from D4 was not forthcoming. In other words D1 is in effect saying that it was a risk that the Plaintiff took and they only have themselves to blame. 22 [63] However the evidence led by the Plaintiff was that there was the plea and persuasion from D1 that the Plaintiff should not slow down or stop work altogether and that he would iron out whatever hiccups there might be for the late issuance of the Guarantee/Undertaking from D4. [64] The SMS between the Plaintiff’s Managing Director PW1 Mr Yee Yew Meng and D1 was clearly a representation from D1 reassuring the Plaintiff to carry on with the Works as payments would be forthcoming together with the Guarantee/Undertaking from D4. The relevant SMS are reproduced below and not disputed by D1: SMS dated 13.2.14 @ 9.01: “Gong Xi Fa Cai bro, need ur help. I heard Chang said your CFO is chasing the undertaking letter from BP and reluctant to mobile in new machine. The letter is just pending for Tan Sri Tee signature. I hope u can trust me and ask them to move forward” SMS dated 20.2.14 @ 5.55: “Bro, u back to KL? FYI I m very unhappy with ur man here as they bypass our company to deal with Bina Puri directly. Ur man not satisfy with the undertaking letter Bina Puri issued; if they not satisfy, come back to me instead of go directly to BP. Pls help ask ur man don’t do this la! Tqvm bro” SMS dated 25.2.14 @ 6.25: 23 “Dear Mr Yee, I understand that there is a problem at site; everyone is having a hard time waiting for ur bg36 to arrive. I was told that u make the decision not to deliver the bg36 until ur side get the undertaking letter from Bina Puri. FYI I was told we r working together to draft a new undertaking letter according to ur need. I deeply appreciate that u have constantly helping us, pls advise me while we r waiting for the letter, is there any other option so that the bg36 can be delivered? When u will be in KL bro? I can arrange a meeting with Tan Sri Tee if u think it is necessary. Tqvm” [65] D1 concealed from the Plaintiff that the guarantee that it wanted would not be given until the Plaintiff had incurred an amount owing of RM11 million in works. D1 peddled his influence and friendship with TST to lull and lure the Plaintiff into trusting him that all payments for the Works would be honoured. [66] It would have been different and the Plaintiff would only have themselves to blame if D1 had told the Plaintiff that the Undertaking from D4 is not forthcoming and that D4 is not paying D3 for the unconcreted bored piles or the EBW. D1 either on his own behalf or on behalf of D2 and D3 of which he is the Managing Director and controlling shareholder cannot in all honesty and fairness conceal this from the Plaintiff. To do so would be fraud on the Plaintiff! 24 [67] In fact the requirement of D2 having to procure a Guarantee for payment of the whole sum of the FBP Contract of over RM13 million was stated as a condition precedent such that if it was not procured then the Plaintiff may terminate the contract. The fact that such a Guarantee was not so procured is not so much a reflection that the Plaintiff had waived this requirement but more of the fact that D1 had breached his representation to the Plaintiff that he was in a position to procure the said Guarantee. [68] Finally instead of a Guarantee/Undertaking from D4 to pay the whole of the contract sum of the FBP Works and the GA Works of RM20.325 million there was an Undertaking to pay the Plaintiff limited to the sum of RM2 million by D4’s Letter of Undertaking dated 7.3.2014 to pay the Plaintiff direct up to a limit of RM2 million. [69] Very interestingly, DW4’s evidence on behalf of D4 was that D1 did not ask D4 to provide a direct undertaking or Guarantee to pay the Plaintiff for the whole sum of the FBP and GA Contracts. [70] I agree with the Plaintiff that strictly speaking there was no obligation for D4 to guarantee the Plaintiff any amount whatsoever because at the end of the day when the various contracts down the chain were signed, it transpired that D4 was contracting with D3 and D3 with D2 and then D2 with the Plaintiff. The Plaintiff was not even a sub- 25 contractor of D4 but instead a new company, had been interposed in between D3 and the Plaintiff i.e. D2 and that can only be at the behest of D1 who was negotiating with the Plaintiff on the one hand and D4 on the other. [71] There was no evidence of D2 and D3 writing to D4 for this Undertaking from D4 to pay direct to the Plaintiff for the whole of the FBP and GA Works. The representations made by D1 can thus be treated as being made on his own behalf to entice the Plaintiff into commencing the Works and continuing with it even when the Undertaking from D4 was not forthcoming until much later and even then for a limited sum or RM2 million. [72] Even if one were to believe that D3 through D1 was hopeful of persuading D4 to pay for the EBW of RM7 million plus and so saw no need to disclose this risk to the Plaintiff, one cannot run away from the fact that this was not a risk that the Plaintiff was aware of and which the Plaintiff had undertaken. [73] Starting from this knowledge of D1, D2 and D3 that D4 would not be paying for the EBW and that D1, D2 and D3 knew of the fact that contractually D2 had to pay the Plaintiff this shortfall of RM7 million plus for the EBW, are there other circumstances which when taken together with this knowledge would prove on the balance of probabilities the 26 intention of D1, D2 and D3 to defraud the Plaintiff or that of D2 to avoid its contractual obligation to the Plaintiff in that D2 was nothing but a mere fiction and facade where the EBW are concerned as from the very start of the Contract, there was no funds coming into D2 for payment to the Plaintiff for the EBW? This knowledge was possessed by D1 and the question is whether D1 had D2 interposed as another layer of company to shield D3 from the oncoming implosion in the making. The complete reversal of the payments due for the EBW only after its full completion. [74] As work progresses for the FBP, the Plaintiff would issue Interim Progress Claims (“IPC”) to D2 seeking payment from D2. D2 would then issue Certificates of Payment to certify the claims made in the IPCs. Learned counsel for the Plaintiff has summarized in their Main Submission the various IPCs from No. 1—17 for the period 27.1.2014 to 28.5.2015 and the corresponding Certificates issued by D2 for the relevant period and the relevant pages in Plaintiff’s Bundle of Documents 3 (“PBOD 3”). [75] As can be seen there was no problem with IPC No.1 for the period ending 25.1.2014 until IPC No. 5 for the period ending 26.5.2014. The corresponding certificates are Certificate No. 3 for 27 period ending 25.1.2014 to Certificate No.7 for period ending 25.5.2014. Throughout this period the EBW were paid. [76] Problem surfaced with IPC No. 6 for period ending 25.6.2014, the certificate, which was supposed to be Certificate No. 8 was late. Although the FBP Contract provided that certificates ought to be issued within 15 days after IPC, none was forthcoming. The Plaintiff issued reminder on 3.9.2014 to chase for it as the FBP Works were completed on 22.7.2014 but they did not receive the Certificate No. 8 until much later. [77] It hit the Plaintiff like a thunderbolt when Certificate No. 8 for IPC No. 6 for period ending 25.6.2014 was received on 5.9.2014. Lo and behold, a sum of RM4,520,824.21 for Empty Bore Works had been reversed out! In other words what had been previously certified and paid was now being ‘reversed’ or ‘decertified’. [78] This reversal continued in Certificate No. 9 for period ending 25.7.2014 received on 22.9.2014 when all the EBW previously certified and paid were completed reversed out. The amount of work done that had decreased in Certificate No. 9 together with the claim in IPC No. 7 that were not certified, amounted to RM7,448,384.68. [79] The amount of EBW in respect of the FBP Contract then outstanding was RM7,462,720.19 (“Unpaid EBW”) as shown by IPC No. 28 14 for period ending 25.2.2015 and Certificate No. 14 for the same period. [80] Very significantly this reversal only happened when the FBP Contract had been performed and completed on 22.7.2014. The Plaintiff submitted that this was planned with the sinister intention that when the Plaintiff discovered it, it was too late to stall or stop the EBW altogether for the simple reason that it had already been completed. [81] What is even more disturbing is that when there was a reversal out from the Certificates for the EBW in the Certificates between D4 and D3, these reversals were not correspondingly effected between D2 and the Plaintiff. [82] The reversal started around Certificate No. 5. Instead D2 actually certified for increase works being done with respect to the EBW and the reversal came suddenly with Certificate No. 8 onwards, by which time the FBP works had been completed. [83] Though there were variance even from Certificates No. 1-7 this was more in the nature of under-certification rather than decertification or reversal of prior certification. [84] D1 and D3 submitted that the Plaintiff actually knew about the reversal earlier but pleaded with D1 not to reverse out so drastically and 29 sharply until a solution could be found. I find that it is to no benefit to the Plaintiff to have suggested this as it would only postpone the problem of payment with no solution in sight. Moreover if the Plaintiff had known about the fact that they would not be paid for the EBW they would in all probability stop work unless there were convincing assurance given them that these EBW would be paid. On the balance of probabilities I would find the Plaintiff’s version more believable as it is consistent with the timing of the reversal of the payment for the EBW such that it was only put into motion after the completion of the FBP Works. [85] Even if I were wrong there, it does not change a jot that reversal of the EBW payments were made with objections by the Plaintiff and if at all the Plaintiff continued to complete the EBW even with knowledge that D3 had reversed out payment made to D2 because D4 had reversed payments to D3, it is that they had wanted to honor their FBP Contract with D2 which is to complete the FBP Works and with that the EBW for the agreed sum. The Plaintiff would then have to seek legal advice as to what are the options available to them now that D2 cannot pay as it was not paid by D3. It must not be forgotten that Plaintiff did not know that the contract between D3 and D4 expressly provided that EBW would not be paid until much later in the October 2014 meeting 30 with the parties to sort out the problem of payments; way after the EBW had already been completed. [86] I find on the balance of probabilities that there was a concerted effort to clandestinely conceal and delay the reversal of the certification for the EBW so as not to arouse suspicion on the part of the Plaintiff until the EBW were completed such that the Plaintiff could no longer stall or stop the said EBW for the simple reason that it had already been completed. [87] D1, D2 and D3 were trying to paint a picture of matters beyond their control in that the employer Sime Darby Property had reversed out the payment, presumably on discovering that contractually EBW would not be paid under the Contract and that they were labouring under the misconception that they would be paid, which was why they did nothing to alert the Plaintiff until the physical reversal took place and when it did, it had to cascade down to the Plaintiff that ultimately did the EBW. [88] D1 and D3’s explanation is that they were hopeful that in spite of this provision in D3’s contract with D4 that the EBW would not be paid, D4 will somehow pay D3 the sum of RM7 million over for the EBW. This must be something so presumptuous as to be unbelievable. D4 being a public listed company and also the Employer, being part of a public listed company in the Sime Group would be acting in breach of basic 31 corporate governance principle and even fraud if such payment can be done when contractually they are not obliged to make such a payment. [89] DW4 for D4 said that as soon as they realized the overpayment, they immediately reversed the payments out. [90] However D1, D2 and D3 in this context, cannot suffer the FBP works not being completed, and so all acted in concert to conceal this from the Plaintiff until the works were completed. [91] Even if they were hoping against hope that somehow they would be paid for the EBW, this is not a matter that they should conceal from the Plaintiff. [92] Without doubt, that was a very convenient way to explain and excuse a very inconvenient truth which is that, D1, D2 and D3 knew for a fact that D4 was not contractually obliged to pay D3 for the EBW when D2 at the behest of D1 agreed to pay over RM7 million for the EBW in their contract with the Plaintiff. Whether page C/4/1 that states that “Bored length shall be measured from the cut-off level to pile toe” was not faxed over to the Plaintiff . [93] After the complete reversal of the payment for the EBW, the Plaintiff realized that the Blank Bill No. 4 that was sent to Plaintiff for the Plaintiff’s quote for bore pilling works for the FBP Contract in September 32 2013 has a particular page missing, i.e. page C/4/1. Page C/4/1 states “Bored length shall be measured from the cut off level to pile toe”. When read with the clause under “Unconcreted (Empty) Bore” it would mean that Empty Bore Works would not be paid for! The Plaintiff stated in its Statement of Claim that this page was not given to the Plaintiff. [94] The defence of D1 and D3 at paragraph 50 of their Amended Defence was that it was a clerical error. That being the case it was not open to D1 and D3 to then assert at trial that it had actually been faxed over. It was not for Chang Sin Fei as DW3 to testify that the whole of Bill No.4 had been faxed over to the Plaintiff, contrary to what had been pleaded. All that D1-D3 needed to do was to produce the fax transmission report. [95] It was of course difficult for the Plaintiff to prove a negative but the Plaintiff’s conduct is consistent with not having received that page. Had the Plaintiff received page C/4/1 the Plaintiff would not have in the 9.11.2013 Proposal said as follows: “The empty bore quantity is not captured in the attached Bill of Quantities. However, our soil drilling length shall be measured from the toe of bored pile to top of Working Platform e.g. Existing Ground Level (at point of boring) and payable at soil boring rate respectively”. (emphasis added) 33 [96] D2 had never pointed out or rebutted that this was not the case. Despite the Plaintiff’s reminder that the EBW would run into millions on 30.12.2013, D1-D3 chose to remain silent and to conceal from the Plaintiff that in the contract dated 9.12.2013 between D3 and D4, it was stated that D3 would not be paid for the EBW. [97] I can accept that Submission of the Plaintiff that had the Plaintiff knew that they would not be paid for the EBW then their pricing for the soil boring rates would be different as they would then have to price differently for the length of the pile not from the existing ground level but from the excavated ground level or Cut-Off Level to the toe pile. [98] Neither can the D1-D3 say that there was no benefit to them to have to pay for the boring of the piles through the Existing Ground Level (“EGL”) or Working Platform to the excavated ground level corresponding to the Cut-Off Level of the piles as ultimately the whole of the bored length which is the Unconcreted Empty Bore had to be excavated for the underground 3-storey car park which car park and Melawati Mall structure of 13-storey would sit on the Foundation Bored Piles. [99] The CBP Works commenced on 13.11.2013 and the FBP Works commenced on 9.12.2013. As explained by PW1, the FBP Works also involve boring through a layer of soil measuring more than 50 feet to 34 reach Cut-Off Level i.e. the top of the piles and the boring then continue further to reach where the pile is to end or toe level of the piles or the bottom of the piles (“Pile Toe”). Reinforced steel and concrete will fill up the bored holes from the Pile Toe to the Cut-Off Level to create a concrete pile. In short the boring will exceed 50 feet in depth. [100] The boring through the 50 feet of soil is the EBW. They are known as empty bore because the holes created will not be filled up with reinforced steel and concrete to make a pile. Once the piles were constructed, the earth above the Cut-off Level would be excavated, together with the empty bored holes. [101] Excavation would be layer by layer. Simultaneously with each layer taken away, ground anchors were installed. Ground anchors are a steel strand that holds the contiguous bored pile wall together. It is to prevent the wall from collapsing. [102] The GA Works are to construct these ground anchors. I agree with the Plaintiff that this is the sequence of work provided to the Plaintiff by D2 and that the Plaintiff was contractually obliged to follow this work sequence. [103] It cannot be gainsaid that the sequence of work as the Plaintiff had been instructed was that the FBP Works had to be done by boring 35 through from the existing ground level to the toe pile to save time and complete the Works within time for otherwise no piling works can be done until the ground has been excavated to the requisite depth and the CBP and GA Works done to prevent the excavated portion from collapsing before the FBP Works can begin, this time from the excavated ground level or Cut-Off Level. The semblance created of a genuine sub-contracting between D3 and D2 when both companies were in fact operating as a single economic entity under the directions of D1. [104] From the evidence adduced by the Plaintiff, it was clear that D1 was the alter ego of both D2 and D3. Many a time when payments were delayed, the Plaintiff through its Managing Director PW1 would text D1 and D1 would arrange for payments direct from D3 to the Plaintiff. [105] The incontrovertible evidence adduced by the Plaintiff and which was not disputed by D1 and D3 was that D2 and D3 shared the same office and staff, company secretary and having common directors and shareholders in D1 and one Mr Liew Pok Boon. The same accounting staff was in charged of the accounts of D2 and D3 and even D1’s wife Miss Angie as DW2 also admitted under cross-examination that though she was later made a Director of D3 on 8.10.2015, yet she was also on the payroll of D2, being overall in charged of D2’s accounts as well. 36 [106] To create a semblance of genuine sub-contracting there were exhibited Interim Claims submitted by D2 to D3. However the signatures on D2’s claim to D3 purportedly signed by a Mr Chua Hock Seng, were entirely different from the same Mr Chua Hock Seng’s signatures on undisputed documents like the Minutes of Meeting prepared by D4. [107] These mysterious differences do not just end with one set of signatures. It continues with that purportedly of one Mohd Hanif on D2’s claim to D3 which were entirely different from the same Mohd Hanif’s signature on undisputed documents in the certificates issued by D2 to the Plaintiff or on debit notes, invoices or even on dump truck records. [108] Indeed there seems to be a pattern here as there was another set of signatures on D2’s claim to D3, purportedly signed by one Wan Azila, which had was entirely different from the same Wan Azila’s signatures on undisputed documents in the Minutes of coordination meetings or invoices or certificates from D2 to the Plaintiff. [109] These staff was not called as witnesses to explain how their signatures could be different for different sets of Interim Claim from D2 to D3 purportedly checked and verified by the same persons. [110] The only reasonable conclusion is that one set of documents, that of D2 claiming against D3, was created after the event to give a semblance of an arms-length genuine subcontracting relationship 37 where as D1 testified, D3 did a total sub-contracting of the entire Works to D2 for a 2% commission on the contract sum. [111] Even the Certificates of Payment from D3 to D2 appear fake and D1 himself admitted not signing these Certificates. It was likely to be a reproduction of a computer ‘cut and paste’ job with the tracks not properly covered as they refer to another project as follows: “…balance of building and external works for the proposed service apartments and retail space at Newgate Avenue…” [112] That has nothing to do with the Melawati Mall Project. [113] That is another convenient way of explaining away documents created after the event to give a semblance of a genuine sub-contracting when in reality it was D1’s strategy to immunize D3 from claims from the Plaintiff for the Unpaid EBW. The fact that the contract of the Plaintiff was with D2 and not D3 would mean that contractually the Plaintiff could not sue D3. It was all right to D1 and D3 that D2 should be allowed to go down under should the Plaintiff sue. [114] The Plaintiff has introduced more than sufficient evidence by way of SMS messages between PW1 and D1 that showed that D1 has virtually treated D2 and D3 as interchangeable and as companies under his stable to do his urgent bidding when necessitated by the exigencies of the moment where payments for the work done and expediting the Work is concerned. 38 [115] D1, DW3 Chang Sin Fei and Liew Pok Boon were Directors of D2 at the material time before all of them resigned en-block. Their shareholdings are in the proportion of 40:30:30 respectively. As for D3, D1 and Liew Pok Boon are the 2 Directors before D1’s wife DW2 became a Director on 8.10.2015. The shareholders of D3 are D1 and Liew Pok Boon in the proportion of 70:30 giving D1 effective control of D3. At any rate D1 has held himself out as the Managing Director of both D2 and D3. Mr Chang Sin Fei on the other hand, though a Director of D2, would hold himself out in his business card as a Project Director of D2. For the record the Plaintiff is not suing Chang Sin Fei or Liew Pok Boon. It is for the Plaintiff to decide who to make personally liable in terms of degree of culpability. [116] D3 had paid the Plaintiff direct the following sums for work done as follows, namely, RM456,690.49, RM6,125,292.87 and RM1,000,000.00. Strangely it was D3 and not D2 that issued Debit Notes to the Plaintiff despite alleging there was no privity of contract. In the heat of the moment and the hustle and bustle of hurrying up the work and getting business done D1 gave the Freudian slip as to the legal personalities of D2 and D3 being literally subsumed into his personality. Learned counsel for the Plaintiff catalogued conversations by SMS as follows:

In response to the Plaintiff’s request for payment from D2, D1 said on 27.5.2014 @ 3.55pm that “Ready for collection 39 at my office 6.1m. Tq”. This RM6.1million cheque was issued by D3;

In response to the Plaintiff’s request for payment, D1 said on 9.9.2014 @ 9.08am that “Sorry for late reply. I just received a new payment from Bina Puri, the latest by next week I can settle the 1m payment. I did ask my account to keep ur account informed about this. Tqvm”. This RM1 million cheque was issued by D3;

In response to the Plaintiff’s request for payment, D1 said on 4.2.2014 @ 4.05pm that “I just bank in Bina Puri payment to me, ur side can collect chq on Friday and bank in. Tqvm”. This RM2.8 million cheque was issued by D2; 4 In response to the Plaintiff’s request for payment, D1 said on 24.7.2014 @ 1.22pm that “Boss, payment only can come in first week of August…My side really cant at this moment…”. This RM1 million cheque dated 8.8.14 was issued by D2.

In seeking the Plaintiff to speed up work despite non-payment, D1 said on 7.5.2014 @ 8:30pm that “Tq. I understand this delay on steel bar this time, I apologize for 40 this. However more effort need to be put in in order to catch up the delay. My contract to u is only 30mil, but BP to me is 90mil, different LAD incurred…” (emphasis added) [117] The Court of Appeal case of Epic Quest Sdn Bhd v Sheila Eleanor De Costa [2011] 8 CLJ 518 comes to mind. The facts are quite similar to the present case and the dicta of the Court of Appeal there is summarized below in the case of Mayland Development Sdn Bhd & Anor v Tanjung Teras Sdn Bhd [2016] MLJU 901 as follows: “[80] Learned counsel for the Plaintiff further referred to the case of Epic Quest Sdn Bhd v Sheila Eleanor De Costa [2011] 8 CLJ 518 (COA). In that case, Shiela, a lawyer exercised a lien over documents that belonged to her clients, Epic Quest. Epic Quest was part of the Titijaya Group of companies and Shiela had rendered services to the group in particular Titijaya (M) Sdn Bhd, Prestine Valley Sdn Bhd and Titijaya Hotel Sdn Bhd. There were unpaid bills in respect of the 3 companies and Shiela proceeded to obtain judgment against the 3 companies. She then exercised her lien over the documents of Epic Quest on which she did not have a judgment. The Court held that it is not open to the Courts to disregard the corporate veil purely on the ground that it is in the interest of justice to do so. Something more 41 must be shown such as special circumstances which would include cases where there is either actual fraud at common law or some inequitable or unconscionable conduct amounting to fraud in equity. [81] Based on the evidence, the court held that the plaintiff had laid sufficient evidential foundation to support the contention that special circumstances had existed for lifting the corporate veil of the Appellant and the 3 companies at the Titijaya Group of companies. Having themselves ignored the fact that they operated as one group enterprise when dealing with the Respondent, the Appellant could not be allowed to insist on their separate corporate personality to defeat the Respondent’s general lien whereby it would be inequitable or unconscionable to do so. The corporate veil could not be used as an instrument to evade a contractual obligation. Unconscionable or inequitable conduct amounts to fraud in equity. [82] In that case, the evidential trail revealed that the deponents of all affidavits were filed by one Bay Nut Soo - “Setiausaha Syarikat Titijaya Group of companies. It also revealed that SP Lim was a director of almost every one of them or through companies controlled by him or by close family of business associate. 42 Further, instructions from one company came from another. There was use of letterheads by Titijaya in respect of bills issued to Epic Quest. Existence of a letter from Titijaya (M) Sdn Bhd stating that Titijaya had made payment for bills issued to Logic Marine. The payment of legal charges for Sheila being paid by the group companies. It was in that context that the Court of Appeal held that: “[9] From what is set out above it was evident to us that when dealing with the respondent, the Titijaya Group of Companies including the appellants and SP Lim had deliberately ignored the separate corporate personalities of the companies, and operated as one group enterprise. The payment of the respondent’s legal charges also reflected this where it can be seen that when the respondent rendered her charges to a company within the group, the respondent’s charges would be paid by any one of the Titijaya Group of Companies even though the paying company did not directly receive the respondent’s services. Having themselves ignored it when dealing with her, the appellants cannot now be allowed to insist on their separate corporate personality to defeat the respondent’s general lien. In Sunrise Sdn Bhd v First Profile (M) Sdn Bhd & Anor 43 [1997] 1 CLJ 529 Chong Siew Fai (CJ Sabah & Sarawak) said that the corporate veil cannot be used as an instrument to evade a contractual obligation.” (emphasis added) [118] This brings me to the next series of strange events that happened in quick succession. The resignation of D1 and the other directors from the board of D2 and the transfer of the shares to third parties soon after the completion of the EBW. [119] No sooner had the EBW Works been completed by the Plaintiff in July 2014 and hardly 3 weeks after the complete reversal of RM7,448,384.68 on 22.9.2014 there was the sudden resignation on 17.10.2014 of both D1 and Chang Sin Fei and one Mr Liew Pok Boon who were the Directors of D2 when D2 was incorporated in Oct 2013 for the purpose of executing contracts secured by D3 for the Project. [120] D1’s explanation is too far-fetched to be true and more consigned to the realm of fables and fiction. It was said that the purchasers had a change of mind after this suit was filed by the Plaintiff. In other words the transfer of the shares was aborted. If that be so then why was D1 so keen to vacate his directorship even before the purchase price was made and why aren't the directors reinstated after the transaction proved abortive? 44 [121] Indeed if the shareholders had been transparent about the disposal of their shares, they should have disclosed to the prospective purchasers that there is a current liability of over RM7 million due to the Plaintiff for some construction work done for the EBW. Was this a case where D1 was trying to conceal the liability and exposure of D2 until a suit was filed or more a case where D1 were trying to get his nominees to be the front for him as Directors? [122] Who are the supposed new Directors and shareholders? One is a Mr Manik Maria who D1 admitted is a Bangladeshi national who entered Malaysia with a construction worker visa. He is also a labourer listed in the minutes of meetings for the Project under CTF Build Sdn Bhd. Mr Chang Sin Fei confirmed in his evidence under cross-examination that Mr Manik is a labourer. He has an address at Lot 153 Kampung Datuk Harun, 48200 Serendah which is similar to Liew Pok Boon’s address. The Plaintiff checked and this address is not a residential address. [123] The other Director is Mr Lee Fook Choy who is a local. He has at address at No. 73 & 74 Jalan Besar, 48200 Serendah. The Plaintiff checked and this address is not a residential address. He is also a director of another company where D1 and Liew Pok Boon are shareholders. [124] The 2 new directors and shareholders were not called to testify and corroborate D1’s explanation. This is a proper case for the application of the principle encapsulated in section 114(g) Evidence Act 1950 of adverse inference that the Court would draw. As was held by 45 the Court of Appeal in Wong Kar Juat & Anor v S7 Auto Parts (M) Sdn Bhd [2015] 9 CLJ 590, at page 607, para 43: “[43] Needless to say, our careful analysis of the evidence had exposed the trail of failures by the respondent to call these material witnesses and such manifest failure in our view would attract the presumption of adverse inference under s. illustration (g) of the Evidence Act 1950 against it. It is trite law and, indeed, a fundamental tenet of the rule of law that whoever alleges facts must produce the necessary evidence in proof of such facts” [125] The same applies to the D1, D2 and D3 in not calling Mr Liew Pok Boon, another Director and shareholder of D2 to testify. [126] D1’s story is more consistent with that of the directors fleeing from a sinking ship and leaving the shell of a company in the hands of directors who know neither head nor tail as to what is happening. This is another attempt by D1 to distance and dissociate himself from D2. In the event that D2 is wound up he would not be around to submit the Statement of Affairs of the company nor be required to answer questions or attend meetings summoned by the Liquidator. It was clearly an attempt to wash his hands clean of any possible liability that might attach to him in spite of incorporation of D2 as a separate legal entity and using it to be a shield to immunize D3 against any fall out. 46 [127] If the share transaction was genuine, surely there must be draft sale and purchase of shares agreement prepared and the final version executed by the parties. The fact that these were not produced is not so much a concern to preserve confidentiality of the purchasers but that it would be embarrassingly obvious that the so-called transaction was a sham. To call them would be disastrous as they would be perplexed and puzzled by what D1 had bequeathed to them as directors and shareholders of a company laden with liabilities. [128] There is every reason to believe that D2 was created to interpose the link with D3, that has substantial assets and funding as well as track-record, and the Plaintiff so that contractually the Plaintiff could not touch D3. D1, D2 and D3 tried to explain away the uncomfortable truth of D2 having no track record and other projects but was created as a buffer to absorb losses that was anticipated from the inability to pay for the EBW. D2 said it has a contract from D3 for works from GA Land (See pages 2317-2319 D1/3 PBOD4). However in that letter of 4.10.2013, D3 wrote “…with reference to your tender”. That would mean that the tender must have been submitted before 4.10.2013 but that was the date D2 was incorporated! See pages 603-614 PBOD 5. It must be a case of the tender having been submitted even before D2 had come into being! [129] Another give away can be gathered from the reference no: PSSB/CTFBSB/2014 and the reference to a letter of instruction to commence dated 18.12.2014. This must have been manufactured in 47 2014 and bears no signature. It must have been created recently to camouflage the truth. It proceeded from a guilty mind for there was no need to justify one’s existence by creating documents! [130] Looking back then in retrospect, the actions of D1, D2 and D3 taken together as a whole, is such that they were acting in concert to try to avoid and evade their legal obligation to pay for the EBW. In doing so they acted fraudulently. The veil of incorporation of D2 must be lifted and when so lifted, it exposed D1 as the master of the various moves to structure a deal where D2 would be allowed to fall but that the Works are completed nevertheless and D3 would be distanced from the fall out as it is not a contracting party with the Plaintiff. By that time the remaining Works had not been completed yet and CPC had not been issued. [131] Learned counsel for D1 and D3 had also advanced the proposition that if they had wanted to deceive the Plaintiff they would not have made any payments at all and that D2 would have defaulted from the first Interim Certificate. That I must say is not how an elaborate fraud is committed. Surely if even the first Certificate is not honoured then the Plaintiff would have stopped work altogether and D2 and D3 would not have the benefit of the completed Works done for which they could get payment from D4. In other words they would not have pulled through the fraud. [132] Fraud in reality would have to involve the element of enticing the Plaintiff to accept the Contract on terms that D2 has to pay for the EBW 48 but would not be able to honour this payment. In this case it is the payment for the EBW, as D3 was not contractually required to pay D2 and that stems from the fact that D4 was not contractually required to pay D3 for the same. The one person that knows this is D1, the Managing Director of both D2 and D3. [133] Indeed the payments, until Certificate No. 8, were made, though with some delay, so that the Plaintiff is lulled into a sense of complacency before the full reversal out of the EBW payments by Certificate No. 9 by which time it is too late to protest as the EBW would have already been completed. [134] Learned counsel for D1 and D3 also said that the conduct of D1 and D3 to try to arrange for meetings with D4 and also the employer Sime Darby Property is indicative of their bona fide intention to resolve the problem that had arisen. I must say these are post-event conduct borne more out of guilt rather than sympathy. There was no detriment but every advantage to be derived in looking cooperative and concerned that the anticipated and even intended implosion had erupted. [135] Likewise no credit can be given for what learned counsel for D1 and D3 said is the loss that D3 and D2 suffer because of this Project because whatever sums that D2 and D3 had received from D4, they had paid out to other contractors including the Plaintiff and so they are honest and above board in their conduct save for their inability to pay the Plaintiff for the EBW which they now blame D4 and Sime Darby 49 Property for not paying. If D1-D3 had caused their costs to overrun, that is not the fault of the Plaintiff. [136] That is to gloss over the issue as in the first place D4 was not contractually required to pay D3 for the EBW and that is because Sime Darby Property was not contractually required to pay the same. One can be quite sure if Sime Darby Property had been required to pay for the EBW from the very commencement of this Project, the Defendants would have called Sime Darby Property to explain their fault in not paying. [137] Authorities are clear in that a director cannot hide under the shell of incorporation to escape liability when fraud has been perpetrated and neither can a director use a company under his control and command to shield another company controlled by him from liability for a fraud engineered by him. When this happens the veil of incorporation would be lifted to expose the action of the mastermind and to find him and the vehicle used by him fully liable for the loss suffered by the victim. [138] I need not go further than to cite the Federal Court case of Gurbachan Singh s/o Bagawan Singh & Ors v Vellasamy s/o Pennusamy & Ors [2015] 1 MLJ 773 where the Federal Court expounded on the law as follows: “[96] But in the event that we should, we are of the view that it is now a settled law in Malaysia that the court would lift the corporate veil of a corporation if such corporation was set up for 50 fraudulent purposes, or where it was established to avoid an existing obligation or even to prevent the abuse of a corporate legal personality (see; Prest v Petrodel Resources Limited and others [2013] UKSC 34). [97] As to what constitutes fraudulent purposes it has been described as to include actual fraud or fraud in equity (see Law Kam Loy & Anor v Boltex Sdn Bhd and others). And fraud in equity occurred in '... cases where there are signs of separate personalities of companies being used to enable persons to evade their contractual obligations or duties, the court would disregard the notional separateness of the companies...' (see Sunrise Sdn Bhd v First Profile (M) Sdn Bhd & Anor [1996] 3 MLJ 533 per Chong Siew Fai FCJ (as he then was). [98] Quite recently this court also discussed on the issue of lifting a corporate veil. It said this: … As for principle, the starting point is no doubt the doctrine of corporate personality. The general rule is that a company has an existence that is separate and distinct from its shareholders. It finds expression in the seminal case on the subject, Salomon v A Salomon & Co Ltd [1897] AC 22. Lord Halsbury LC there stated the rule thus: 51 ... once the company is legally incorporated it must be treated like any other independent person with its rights and liabilities appropriate to itself, and that the motives of those who took part in the promotion of the company are absolutely irrelevant in discussing what those rights and liabilities are. The Lord Chancellor however provided for cases in which the veil of incorporation may be lifted. He said: If there was no fraud and no agency, and if the company was a real one and not a fiction or a myth, every one of the grounds upon which it is sought to support the judgment is disposed of. The proposition when inverted states that if there is fraud or an agency relationship or if the company is a myth or fiction, the doctrine of corporate personality does not insulate the shareholders or directors from being assailed directly. [22] A more recent statement of the doctrine of corporate personality is to be found in the case of Woolfson v Strathclyde Regional Council 1978 SLT 159 which is authority for the proposition that a litigant 52 who seeks the court's intervention to pierce the corporate veil must establish special circumstances showing that the company in question is a mere facade concealing the true facts (see Takako Sakao

v Ng Pek Yuan (f) & Anor). [99] The phrase 'a mere façade concealing the true facts' was recently elaborated by the Supreme Court of the United Kingdom in the case of Prest v Petrodel Resources Limited and others [2013] UKSC 34. The leading judgment of the court said this: The concealment principle is legally banal and does not involve piercing the corporate veil at all. It is the imposition of a company or perhaps several companies so as to conceal the amount identity of the real actors will not deter the courts from identifying them, assuming that their identity is legally relevant. In these cases the court is not disregarding the 'façade' but only looking behind it to discover the facts which the corporate structure is concealing. The evasion principle is different. It is that the court may disregard the corporate veil if there is a legal right against the person in control of it which exists independently of the company's involvement, and a company is 53 interposed so that the separate legal personality of the company will defeat the right or frustrate its enforcement. Many cases will fall into both categories, but in some circumstances the difference between them may be critical. This may be illustrated by reference to those cases in which the court has been thought, rightly or wrongly, to have pierced the corporate veil” (emphasis added) [139] Reference must also be made to the Court of Appeal judgment in Tenaga Nasional Bhd v Irham Niaga Sdn Bhd & Anor [W]- 02(NCC)(W)-2339-10/2012. The Court of Appeal, after examining the authorities, held that:

the corporate veil could be lifted in exceptional circumstances; and 2. those exceptional circumstances must involve:

actual or equitable fraud and

the use of the company whose corporate veil was to be lifted as the means to conceal the true facts behind the facade of the company. [140] Time and again the Courts have displayed their willingness to debunk the notional separateness of companies when these have been woven into an interlocking web of deceit where the mastermind would 54 taunt the unsuspected with the teaser of “catch me if you can” because one cannot generally go behind the face of incorporation. Facade and fiction whether it be by way of shielding behind the shell of incorporation or the use of one or several layers of companies to shield the schemers would have to be exposed with the perpetrator being ferreted out from their furrows of refuge. The Courts would not allow the valid separate legal entity of a company to hide the culprit or to be hijacked to evade one’s contractual obligations. [141] Again in Prest v Prest and others [2013] 4 All ER 673 the Supreme Court presided over by Lord Neuberger held: “Where a person was under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evaded or whose enforcement he deliberately frustrated by interposing a company under his control, the court could pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company's separate legal personality. If it was not necessary to pierce the corporate veil, it was not appropriate to do so, because on that footing there was no public policy imperative which justified that course. However, the recognition of a small 55 residual category of cases where the abuse of the corporate veil to evade or frustrate the law could be addressed only by disregarding the legal personality of the company was consistent with authority and long-standing principles of legal policy...” (emphasis added) [142] Learned counsel for the Plaintiff also referred to the case of Hotel Jaya Puri Bhd v National Union Of Hotel, Bar & Restaurant Workers & Anor [1980] 1 MLJ 109 where it was observed as follows: “It is clear therefore that the approach taken by the President of Industrial Court is not without any legal support when he placed an emphasis on the essential unity of group enterprise which in this case consists of the Hotel and the Restaurant, especially when Datuk N.A. Kularajah who is the Managing Director of the Hotel was also the Managing Director and later a Director of the Restaurant and had the ultimate authority over the employees. Thus, the practice of treating the employees of the Restaurant as being separate from the employees of the Hotel such as the Union having been told that they were so, their salaries, their E.P.F. and SOCSO contributions being paid by the Restaurant, does not detract from the fact that the employees in question were in fact working in one group enterprise. In my judgment, by giving 56 recognition to this fact, the President did not cause any violence to the sanctity of the principle of separate entity established in Salomon v Salomon & Co [1897] AC 22 but rather gave effect to the reality of the Hotel and the Restaurant as being in one enterprise. I find nothing unreasonable in the finding of the President by by-passing this principle. He did no more than to comply with the wishes of the Legislature that in the making of an award substantial merits of the case, the public interest and any matters which are necessary or expedient for the purpose of settling the dispute are among the factors which should be taken into consideration by the court. In my view, the finding by the President is in no way against the principle of separate entity and I am therefore not prepared to interfere with the award on this account.” [143] Human nature is the same everywhere and many cases have come before our Courts challenging the limits of liability of incorporation and inviting our Courts to lift the veil of incorporation lest it becomes the veil of invidious intrigues for that would be inimical to ethical business. Learned counsel for the Plaintiff has assembled an array of cases in assisting the Court to unravel the facade of incorporation in D2 and D3 with D1 being the face in the forefront of this legal fiction, as follows: 57 Law Kam Loy & Anor. v Boltex Sdn Bhd & Ors [2005] 3 CLJ 355, Sunrise Sdn Bhd v First Profile (M) Sdn Bhd & Anor [1997] 1 CLJ 529, Takako Sakao v Ng Pek Yuen & Anor [2009] 6 MLJ 751, Epic Quest Sdn Bhd v Sheila Elenor De Costa [2011] 8 CLJ 518, CIMB Bank Bhd v Maybank Trustees Bhd and other appeals [2014] 3 MLJ 169, DHN Food Distributors Ltd and others v London Borough of Tower Hamlets [1976] 3 All ER 462 and Lim Kar Bee v Duofortis Properties (M) Sdn Bhd [1992] 2 MLJ 281. [144] Whilst incorporation has the effect of containing risk which all businessmen have to take, that is poles apart from one where there is active concealment of the fact of non-payment for the EBW to the tune of more than RM7 million and yet enticing the Plaintiff to execute the EBW knowing that the Plaintiff would not be paid and thus evading the responsibility to pay. Pronouncement [145] For all the reasons given above I had allowed judgment to be entered for the above sum that D2 has to pay the Plaintiff, against D1 and D3 in that all of them i.e. D1, D2 and D3 shall jointly and severally be liable to the Plaintiff for the sum of RM8,050,932.33 together with interest at 5% per annum from date of writ to realization. 58 Whether D4 is liable to the Plaintiff for the balance sum under the increased Undertaking to Pay of RM3.5 million and for the release of the retention sum [146] Next I deal with the claim of the Plaintiff against D4 under the Undertaking given by D4 to the Plaintiff where the Guarantee limit of RM2 million direct payment to the Plaintiff, had been increased to RM3.5 million after the series of meetings with all the parties to resolve the problem of reversal of payment for the EBW. [147] The context of this increase cannot be ignored. It was when a meeting was held after the completion of the FBP works and after this problem of the Plaintiff not going to be paid at all by D2 had arisen with the reversal of certified amounts for the EBW. It was at the meeting to try to solve this problem on 16.10.2013 where the PW 1 told TST of D4 that the Plaintiff would not have taken in the jobs if not for the promise of D4’s Guarantee by D1. I can believe PW 1 who strikes me as being a candid witness and conscientious director discharging his duties when he testified that TST broke the silence by offering to make payment up to RM3.5 million to convince the Plaintiff not to suspend the GA Works but to complete it. [148] In fact it was after several rounds of meetings with all the Defendants on 12.9.2014, 25.9.2014 and 1.10.2014 and 16.10.2014, 59 that the RM2 million limit was increased to RM3.5 million as the Plaintiff was being owed more than RM14 million then. [149] Therefore when D4 agreed to the increase, it must be understood that D2 can no longer use the ground of the payment must be one not disputed by D2, before direct payment can be made by D4 to the Plaintiff. At any rate I had held that contractually D2 cannot dispute with the Plaintiff on the agreed rates and contract sum for the FBP Works which included the EBW of over RM7 million. [150] It was clear that any dispute involving the payment for the EBW is not a reasonable ground for D4 not to pay the Plaintiff in as much as D2 cannot validly contend that such a payment is not due to the Plaintiff. Correspondingly D3 also cannot take the same position that the payment from them to D2 or ultimately to the Plaintiff is being disputed. [151] The documents paving the way for such a direct payment from D4 to the Plaintiff are set out below. By a letter dated 7.3.2014 from D4 to the Plaintiff, D4 agreed to make direct payments to the Plaintiff provided that:

there is an amount that is certified as being due and payable by D4 to D3; and 2. the limit of the direct payment shall be in the sum of RM2,000,000.00. 60 As stated this limit of RM2,000,000.00 was subsequently increased to RM3,500,000.00. [152] This direct payment arrangement by D4 to the Plaintiff was authorised by D2 and D3 in their respective letters dated 6.04.2014. [153] In the letter dated 6.04.2014 from D2 to D3 it is stated that D2 has consented and authorised D3 to issue direct payments to the Plaintiff; and such direct payments are to be taken as partial payments of amounts that are due to D2 by D3. [154] Similarly in a letter dated 6.4.2014 from D3 to D4, it is stated that the D3 has consented and authorised direct payments to be made by D4 to the Plaintiff and that D4 “may not make any payment to Keller (M) Sdn Bhd if there is no amount due and certified to be owing” by D4 to D3. It was further provided that such direct payments to the Plaintiff shall be deemed as payments made to D3. [155] D4 submitted that there is no payment due from D4 to D3 and so there is no payment to be made other than what had already been made below. D4 had, in compliance with this Undertaking, paid the sum of RM2,782,278.04 for the following certified amounts:

RM2,145,360.35 pursuant to Certificate No. 10; and 2. RM636,917.69 pursuant to Certificate No. 11. 61 [156] Learned counsel for D4 submitted that since there are no amounts that are due and payable by D4 to D3 as D4 had paid to D3 in excess of the amount certified. See Progress Payment Certificate No.25 dated 20.1.2016 at page 1226 of D1&D3s’ BOD Volume 3. [157] Surely D4 cannot make payment in excess of what is due and now say that there is no amount to be paid to D3 and hence no amount to be paid direct to the Plaintiff under the Undertaking as all parties already knew by then that the Plaintiff had not been paid for the EBW. [158] Be that as it may, there is still the sum of RM1.9 million being the retention sum retained by D4 to be released to D3 which monies had been carved out by work done by D3 for D4 and so is due and payable from D4 to D3. This sum is found in the email of the Plaintiff to D4 dated 12.9.2014 and 26.9.2014. In the High Court’s Decision in Lee Kam Chun v Syarikat Kukuh Maju Sdn Bhd (Syarikat Perumahan Pegawai Kerajaan Sdn Bhd, Garnishee) [1988] 1 MLJ 444 at page 448 it was observed as follows: “In my judgment, the retention sum in this case is an existing debt and in fact an existing indebted sum that involves the payment, notionally and irresistibly pursuant to an interim certificate issued by the architect, by the garnishee to the judgment-debtor and the 62 latter's payment in turn back to the garnishee for retention for purposes already stated, with the garnishee holding the money as trustee for the judgment debtor. A debt in respect of such money began to exist in the circumstances and still does exist, and to contend otherwise would be to defy common sense and logic.” [159] The above principle propounded by the High Court was followed in the Court of Appeal case of Qimonda Malaysia Sdn Bhd (in liquidation) v Sediabena Sdn Bhd & Anor [2012] 3 MLJ 422. [160] The Plaintiff is claiming against D4 the remaining sum of RM717,721.96 under the Undertaking by D4 to pay the Plaintiff directly. Pronouncement [161] Therefore D4 shall pay this sum of RM717,721.96 to the Plaintiff together with interest at 5% per annum from date of writ to realization. As D4 shall pay this sum over to the Plaintiff, in the circumstances of the case, this Court would order D3 to pay over this sum with interest to D4 and so a judgment for this sum is entered by D4 against D3. [162] As this Court has held that D2 and D3 are operating as a single unit, there is no necessity for any order for Judgment for this sum to be entered by D3 against D2. 63 [163] In any event from the facts adduced both D2 and D3 are capable of sorting out their accounts as the position taken by D3 is that it has totally sub-contracted the Works to D2 for 2% commission. [164] As for the retention sum there is no evidence that the term of early release direct from D4 to the Plaintiff has been agreed upon i.e. the requirement that a bond be secured from Plaintiff to D4 in lieu of the early release. [165] Therefore there has been no concluded contract on this between the Plaintiff and D4 for the Court to enforce. The Plaintiff is not appealing against this part of the Court’s order and so there is no need for me to say further. [166] I had after hearing the parties on costs made the orders for costs below. [167] As between the Plaintiff and D1 I ordered costs of RM30,000.00 to be paid by D1 to the Plaintiff. [168] As between the Plaintiff and D2, I ordered costs of RM20,000.00 to be paid by D2 to the Plaintiff. As for Plaintiff and D3. I also ordered costs of the amount of RM30,000.00 to be paid by D3 to the Plaintiff. 64 [169] As for Plaintiff and D4, I exercised my discretion and ordered that each party shall bear their own costs. Dated: 25 August 2017. - signed - LEE SWEE SENG Judge Construction Court Kuala Lumpur For the Plaintiff : Richard Kok and Winnou Chung (Messrs Rhiza & Richard) For the 1st Defendant : Ben Lee together with Shafiehani and 3rd Defendant (Messrs Gan & Zul) For the 2nd Defendant : Jaqdip Singh and Karamjit Kaur (Messrs Karamjit & Jaq) For the 4th Defendant : J L Foo and Caryn Lye (Messrs Gan Partnership) Date of Decision: 26 January 2017.