Kenbee Sdn Bhd v Glory Drive Sdn Bhd (N-02(NCvC)(W)-1935-11/2024)

This is an appeal by Kenbee Sdn Bhd (“the Appellant)” against the whole of the decision of the High Court at Seremban delivered on 15.10.2024, which dismissed the Appellant’s claim against Glory Drive Sdn Bhd (“the Respondent”) for the payment of an adjustment sum of RM2,719,975.35 together with interest, being the balance of the purchase price for 51% of the issued and paid-up shares (“the Sale Shares”) in Pelita Diwangsa Sdn Bhd, an oil palm plantation company (“the Company”), with costs of RM50,000.00 awarded against the Appellant.

The Appellant was at all material times the legal and beneficial owner of 2,250,000 shares in the Company, representing 70% of its total issued and paid-up capital. Pelita Holdings Sdn Bhd owned the remaining 30%.

The Respondent purchased the Sale Shares from the Appellant pursuant to two agreements, namely, a principal agreement dated 7.10.2014 (“the Principal Agreement”), and a supplemental agreement dated 24.8.2015 (“the Supplemental Agreement”). We will refer to the parties by their designations in the High Court, namely the Appellant as the Plaintiff and the Respondent as the Defendant.

Having considered the submissions of both parties and the materials before us, we allowed the appeal for the reasons set out below.

Under Clause 5 of the Principal Agreement, the purchase consideration for the Sale Shares was RM118,000,000.00 to be satisfied as follows: a) Upon execution of the Principal Agreement, the Defendant will pay the deposit in the sum of RM118,000,000.00 to the Plaintiff’s Solicitor as stakeholder pending a due diligence audit of the Company by the Defendant; b) Subject to provision for extension, the Defendant will pay the balance sum of RM106,200,000.00 within four months from the date of the Principal Agreement.

Clause 1(d) of the Principal Agreement defined the "Balance of the Purchase Price" as that sum "subject to any adjustment to be made by virtue of any change more or less in respect of the liabilities of the company that differs from that stated under the Primary Accounts."

"Primary Accounts" was defined in Clause 1(m) of the Principal Agreement as the audited accounts of the Company for the financial year ended 31.12.2013 (“FYE 31.12.2013”), which were annexed as Schedule 2. The accounting date of 31.12.2013 was thus the undisputed baseline for the contractual price adjustment mechanism.

The rationale for this price adjustment mechanism was straightforward. The Plaintiff, as vendor and as the party in management control of the Company up to the point of completion and handover, was required under the Principal Agreement to conduct the Company’s affairs in the ordinary course of business. If the Company’s financial position improved during the Plaintiff’s stewardship (reflected by a net decrease in liabilities), the value of the Sale Shares would have increased, and the purchase price would be adjusted upwards in the Plaintiff’s favour. Conversely, if the financial position worsened (reflected by a net increase in liabilities), the purchase price would be adjusted downwards in the Defendant’s favour.

The Supplemental Agreement was entered into on 24.8.2015. Its occasion was not any concern about the liabilities mechanism in the Principal Agreement. Rather, its background was that an aerial drone survey of the plantation land had disclosed that the planted area within the Provisional Leases was smaller than previously understood, necessitating a downward reduction of the purchase price to reflect the reduced planted acreage. Accordingly, under Clause 2 of the Supplemental Agreement, the purchase price was reduced from RM118,000,000.00 to RM102,510,000.00 (and the Balance of the Purchase Price from RM106,200,000.00 to RM84,510,000.00). Clause 2 further provided: “Save and except for any further or additional price adjustment from any change in the liabilities of the company arising from its operation from the accounting date stated in Principal Agreement and the accounts annexed thereto, the parties hereby agree that the price for the sale of the shares shall be adjusted from RM118,000,000.00 to RM102,510,000.00.” [emphasis added]

Clause 4 of the Supplemental Agreement states that the date for payment of the Balance of the Purchase Price, which would now be RM84,510,000.00 because of the reduction of planted area, would be “in accordance with the Principal Agreement” but extended to a date expiring on or before 30.8.2015.

Clause 6 of the Supplemental Agreement provided that the Supplemental Agreement was not to be construed as a new agreement and that all other terms and conditions of the Principal Agreement not affected by the Supplemental Agreement remained effective and binding.

In late August 2015 the Sale Shares were transferred to the Defendant. Seven directors nominated by the Defendant were appointed on 8.9.2015. The handover of management records and documentation from the Plaintiff to the Defendant commenced in early September 2015 and concluded on or about 30.9.2015, with full management control vesting in the Defendant from 1.10.2015.

At the trial below, even though parties disagree on the date for the payment of the Balance Purchase Price (which would be the completion and handover of the management by the Plaintiff to the Defendant), both parties’ experts and their respective computations of the Balance Purchase Price were premised on the financial position of the Company as at 31.8.2015. The aforesaid is notwithstanding that the handover of management records and documentation from the Plaintiff to the Defendant took place within a period of 1 month, beginning in early September 2015 and ending around 30.9.2015. Therefore, from 1.10.2015, it was beyond dispute that the Defendant, through its 51% shares as well as by virtue of having the majority of directors on the Board of Directors, had full management control of the Company.

The dispute between the parties concerns the meaning of Clause 2 of the Supplemental Agreement read with the Principal Agreement, and whether or not there should be an adjustment to the Balance of the Purchase Price to take into account change in the liabilities of the Company arising from its operation in the time between 31.12.2013 and a “completion accounts” date.

The Plaintiff’s position is that as at the “completion accounts” date prior to handover of management of the Company (that is, 31.8.2015), the overall financial position of the Company, which would be reflected in change in liabilities, had improved by RM5,333,285.00 as compared to the position on 31.12.2013 under the Primary Accounts. In other words, liabilities had decreased under the Plaintiff’s management of the Company and the value of shares of the Company had increased.

This figure of RM5,333,285.00 is arrived at by comparing the figures as at two dates as found in audited accounts: a) the figures at 31.12.2013 found in the Primary Accounts for FYE ended 31.12.2013 (which was attached to the

(ii) the figures as at 31.8.2015 found in audited accounts prepared for the period 1.1.2015 to 31.8.2015 by Messrs Adzli & Co. (who were the auditors of the Company from 2005 until 2015) (“31.8.2015 Audited Accounts”) for purposes of handover i.e. the “completion accounts”.

The expert opinion of PW4, an experienced accounting professional, considers the two sets of audited accounts figures and sets out the computation of change in liabilities as follows:

Taking into account such “change in liabilities” under Clause 2 of the Supplemental Agreement, the Purchase Price for the Sale Shares (which represents 51% of the issued and paid-up capital of the Company) should be adjusted upwards by 51% of the sum of RM5,333,285.00 – which equals the sum of RM2,719,975.35. The value of the Sale Shares had increased, corresponding to the decrease in the liabilities of the Company.

The Defendant however refused to make payment of the said sum of RM2,719,975.35 to the Plaintiff. This resulted in the High Court suit being filed.

Before the learned High Court Judge, the Defendant contended that Clause 2 of the Supplemental Agreement required that parties enter into a separate agreement to vary the Purchase Price of the Sale Shares. Clause 2 of the Supplemental Agreement also meant that the Purchase Price could only be adjusted downwards and not upwards because there was no mechanism to increase the price upwards. Further, Clause 2 of the Supplemental Agreement did not provide for any comparison date for purposes of adjusting the Purchase Price. There is only one date referred to which is 31.12.2013.

However, before this Court, the Defendant’s main contention is that the computation of liability should be limited to “liabilities of the company arising from its operation” as provided under Clause 2 and not on “overall financial position of the Company”. The Plaintiff did not particularise the alleged liabilities arising from its operation. The Defendant further contended that the Plaintiff had wrongly omitted certain accounting items from its Primary Accounts i.e. the accounts as at 31.12.2013, which were (a) deferred tax liability of RM3,795,762.00 and (b) amortization of RM3,152,298.00. These figures should be apportioned for the period up to 30.8.2015 or 31.8.2015 as follows: RM3,250,387.00 for deferred tax liability and RM1,801,313.05 as amortization. Taking this into account, there was no improvement in the financial position of the Company.

After a full trial before the Learned Judicial Commissioner (the JC), the High Court dismissed the Plaintiff’s claim on three grounds: (i) that the Plaintiff’s pleaded formulation of "overall financial position improved" was inconsistent with the contractual wording of Clause 2 which was limited to "change in liabilities of the company arising from its operation"; (ii) that the date of 31.8.2015 used by the Plaintiff’s expert (PW4) was not the correct completion date; and (iii) that on the evidence, there had been no decrease in the liabilities of the Company arising from its operations, the JC accepting the Defendant’s position that the liabilities arising from operations had in fact increased, even excluding deferred tax liability.

In this appeal, the Appellant challenged all three findings. We shall deal with each in turn, beginning with what was in our view the most fundamental issue, namely the proper construction of Clause 2 of the Supplemental Agreement. Construction of Clause 2 of the Supplemental Agreement The governing principles

It is settled law in Malaysia that the construction of a contract is a question of law for the court, not for witnesses. The court is not bound by the testimony of witnesses or by the concessions of counsel as to what the language of the contractual document means: Dato’ Dr. Abd Wahab bin Abd Ghani v Mohd Rashid bin Mohd Noor & ors [2025] 7 CLJ 29 at [57], applying NVJ Menon v The Great Eastern Life Assurance Co Ltd and Silver Concept Sdn Bhd v Brisdale Rasa Development Sdn Bhd.

The leading authority on the construction of contracts in Malaysia is SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464 (SPM Membrane), in which the Federal Court accepted the principles stated by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896. The court must ascertain the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties at the time the contract was entered into. Where there is a choice between competing interpretations, the interpretation that makes better commercial sense should be preferred: SPM Membrane at [78]. No term is to be interpreted in isolation; the contract must be read as a whole. The meaning of "liabilities arising from its operation"

The central dispute turned upon the phrase in Clause 2 of the Supplemental Agreement: "any change in the liabilities of the company arising from its operation from the accounting date stated in Principal Agreement." The Defendant contended, and the JC accepted, that the phrase "arising from its operation" imported a technical accounting distinction drawn from cash flow statement analysis, so as to confine the relevant liabilities to those categorised as "operating liabilities" as opposed to "financing liabilities" such as bank loans. On this construction, the substantial reduction in bank loans (amounting to approximately RM6,247,700.00) achieved between 31.12.2013 and 31.8.2015 was excluded from the comparison.

We are unable to accept this construction. In our judgment, the phrase "arising from its operation" should not be interpreted as a technical accounting term of art referable to the classification of activities in a cash flow statement. We say this for the following reasons.

First, and most importantly, the context and occasion of Clause 2 must be borne in mind. The Supplemental Agreement was entered into solely because the drone survey had revealed that the planted area was smaller than previously thought, requiring a downward price adjustment. The parties were not motivated by any concern relating to the structure or categorisation of the Company’s liabilities. Both agreements were negotiated between businesspersons. There was no evidence that accountants were involved in the drafting of either document. In these circumstances, it is implausible that the phrase "arising from its operation" was deployed to introduce a refined technical accounting distinction of the kind ordinarily encountered only in the preparation of financial statements under accounting standards.

Second, the purpose of the price adjustment mechanism, read in its full contractual context, was to adjust the purchase price to reflect any net change in the value of the Sale Shares attributable to the manner in which the Company had been managed during the Plaintiff’s stewardship between the baseline date (31.12.2013) and the completion and handover date. The mechanism was designed to reward the Plaintiff if the Company’s overall financial position improved under its management, and to penalise the Plaintiff if the Company’s overall financial position deteriorated. In that context, the phrase "arising from its operation" serves a simple and sensible purpose: it distinguishes liabilities that arise in the normal and ordinary operation of the Company’s business (including by way of the repayment of bank loans from revenue generated by sales of fresh fruit bunches) from changes that might arise from wholly extraordinary events outside the scope of the Company’s ordinary business. It does not serve to exclude the single largest category of liabilities— bank term loans—merely because those liabilities are classified as "financing activities" in cash flow statements prepared pursuant to accounting standards.

Third, the literal meaning of the words "liabilities of the company arising from its operation" does not naturally import the technical cash flow statement distinction between operating, investing and financing activities. A reasonable person reading those words against the background of this share sale transaction would understand them to refer to all liabilities that arise by virtue of the Company carrying on its business in the ordinary course, which plainly includes the progressive repayment of bank loans from sales revenue. PW4, the Plaintiff’s expert, gave cogent evidence in re-examination to this effect. The source of funds used to repay the term loans was the revenue from the Company’s operations—the sale of fresh fruit bunches. The repayment of debt from operating revenue is quintessentially an activity that "arises from operation." The Defendant did not lead any evidence to explain why, from a commercial or contractual standpoint, the reduction of bank debt financed from operating cashflow should be excluded from the price adjustment mechanism.

Fourth, the Defendant’s own expert (DW2) accepted that, but for the proposed distinction between operating and financing liabilities, and but for the introduction of amortisation and deferred tax liability, the overall change in liabilities would have been a net decrease in favour of the Plaintiff. The elaborate classification exercise undertaken by DW2 thus served principally to neutralise a result that the plain figures supported. In our view this strongly suggests that the distinction sought to be drawn has no genuine foundation in the contractual language.

Fifth, we note that Clause 1(d) of the Principal Agreement— which provides the commercial matrix for Clause 2 of the Supplemental Agreement and which survived the Supplemental Agreement unaltered by virtue of Clause 6 thereof—contains no such distinction. It refers simply to "any change more or less in respect of the liabilities of the company." The Supplemental Agreement introduced the phrase "arising from its operation" to reflect the ongoing nature of the Company’s business activities in the period between the two agreements, not to introduce an accounting classification that would effectively write out the most economically significant category of liabilities from the comparison.

Sixth, the Defendant’s construction fails the commercial sense test. If the Defendant’s interpretation were correct and the position were reversed—that is, if the Company’s overall liabilities had increased because of additional bank borrowings—the Defendant would undoubtedly have sought to characterise that increase as a "financing" liability and to rely on it to reduce the purchase price. The Defendant’s interpretation yields an asymmetric result that cannot have been intended by the parties: it confines the upward price adjustment available to the Plaintiff to a narrow and artificial category of liabilities, while leaving the downward adjustment mechanism intact. That is not a commercially sensible construction.

For all the foregoing reasons, we hold that the phrase "change in the liabilities of the company arising from its operation" in Clause 2 of the Supplemental Agreement means a change in the Company’s liabilities attributable to the ordinary business operations of the Company, inclusive of the repayment of bank loans from trading revenue, and does not import the technical accounting distinction between "operating" and "financing" activities as classified in a cash flow statement prepared under applicable accounting standards.

We turn to the second ground of dismissal. Both the Principal Agreement and the Supplemental Agreement are silent as to the specific date by reference to which the change in liabilities is to be computed for purposes of the price adjustment. Clause 2 of the Supplemental Agreement refers to "any change in the liabilities of the company arising from its operation from the accounting date stated in Principal Agreement", identifying only the starting date (31.12.2013) and not the endpoint. In the absence of a contractually specified endpoint, the parties necessarily contemplated that a reasonable date proximate to completion and handover would be used as the comparison date.

The Plaintiff used 31.8.2015 as the comparison date, relying on the audited accounts prepared for the period 1.1.2015 to 31.8.2015 by Messrs Adzli & Co., the Company’s auditors since 2005. The JC rejected this date on the ground that PW4, the Plaintiff’s expert, had accepted under cross-examination that 31.8.2015 was not the actual date of formal handover, and found that the appropriate comparison date was 30.9.2015.

We respectfully disagree with the JC’s rejection of 31.8.2015 as the comparison date, for the following reasons.

The question of what constitutes a reasonable or appropriate date for the comparison is a question of fact. No contractual date was specified. The parties contemplated that a practical cut-off date would be selected. The Defendant’s own primary position throughout the proceedings had been that there was no comparison date under Clause 2 at all and that one must simply look at the accuracy of the Primary Accounts. The Defendant did not propose 30.9.2015 as an alternative date; neither did the Defendant adduce any evidence as to the financial position of the Company as at 30.9.2015. It would be wrong in principle to dismiss the Plaintiff’s claim entirely based on a date (30.9.2015) that (a) was neither party’s position, (b) does not appear in either contract, and (c) in respect of which no financial evidence was placed before the Court.

Onn the contrary, the Plaintiff adduced compelling evidence that 31.8.2015 was a logical and commercially sensible comparison date. The Defendant itself acknowledged in its own subsequently-prepared audited accounts for FYE

29.2.2016 that the Defendant had become a 51% shareholder on 28.8.2015. The directors of the Company resigned and were replaced by the Defendant’s nominees on 8.9.2015 and 31.8.2015 was an end-of-month date falling immediately before the period of transition commenced. On any reasonable view, 31.8.2015 represents the last month-end date at which the Company was entirely under the management control of the Plaintiff, and is thus eminently suitable as the comparison date for the “completion accounts”.

We also observe, as the Appellant did, that the JC’s own conduct was internally inconsistent on this point. Having held that the appropriate comparison date was 30.9.2015, the JC then proceeded to assess the change in liabilities by reference to the 31.8.2015 Audited Accounts, the very figures the JC had just declared to be irrelevant. This inconsistency serves to confirm that 31.8.2015 was, in practical terms, an appropriate and usable comparison date.

As to PW4’s cross-examination admissions, we note that PW4 candidly acknowledged the scope of his instructions (namely, to verify the change in liabilities as at 31.8.2015) and that a different date would require a different computation. These admissions go no further than confirming that his report was premised on one specific date. They do not establish that 31.8.2015 was an unreasonable or impermissible date. PW4’s substantive expert opinion on the change in liabilities as at 31.8.2015 remained intact and unchallenged on its merits.

We therefore hold that 31.8.2015 is the appropriate comparison date for the purpose of computing the price adjustment under Clause 2 of the Supplemental Agreement. The Defendant, having failed to propose any alternative date and having placed no financial evidence before the Court as at any other date, cannot rely on uncertainty as to the exact comparison date to defeat the Plaintiff’s claim. The burden lies on the party that asserts a different date to establish it: Section 103 of the Evidence Act 1950. The Defendant has not discharged that burden.

We turn to the third and final ground advanced by the Defendant. The Defendant contended, and the JC accepted, that the Plaintiff’s computation of the change in liabilities was flawed because it failed to account for amortisation of Planting Development Expenditure and the consequent Deferred Tax Liability. The Defendant argued that the Company’s previous accounting policy of adopting the Capital Maintenance Method (under which no amortisation charge was recognised) was wrong, and that under the correct policy (the Amortisation Method), additional non-current liabilities ought to have been recognised both as at 31.12.2013 and as at 31.8.2015.

We reject this contention for the following reasons.

The fundamental principle is this: the purpose of Clause 2 of the Supplemental Agreement, read together with Clause 1(d) of the Principal Agreement, was to compare the financial position of the Company as reflected in its accounts at two points in time, namely, the baseline date of 31.12.2013, and the comparison date immediately before completion. That comparison must be conducted on a consistent accounting basis. The accounts at both dates must be prepared in accordance with the same accounting policies. It would be wholly unprincipled to adjust the comparison by retroactively applying a different accounting policy to one or both sets of accounts after the parties have entered into their agreement.

The agreed contractual baseline is the Primary Accounts—the audited accounts for FYE 31.12.2013. Those accounts were prepared on the basis of the Capital Maintenance Method, which did not recognise amortisation of Planting Development Expenditure and accordingly gave rise to no Deferred Tax Liability in respect of such expenditure. That accounting policy had been consistently applied by the Company since its inception, and had been audited and approved by Messrs Adzli & Co. as the Company’s auditors from 2005. The same policy was applied in the preparation of the 31.8.2015 Audited Accounts. There is no suggestion that PW4’s computation was conducted on a different accounting basis from the Primary Accounts.

The change in accounting policy that now lies at the heart of the Defendant’s case did not take place until after the Defendant took control of the Company. The audited accounts for FYE 29.2.2016—the first financial year under the Defendant’s management—expressly disclosed that "during the period, the Company changed its accounting policy with respect of the treatment of amortization of plantation development expenditure to conform with that of the holding and ultimate holding Company," and that "this change in accounting policy has been accounted for prospectively as disclosed." The significance of this disclosure cannot be overstated. The change was (a) made by the Defendant’s own nominees who controlled the Board; (b) adopted to conform to the Defendant’s corporate group policy; and (c) expressly accounted for prospectively, meaning it did not apply to prior years and was not a correction of a prior error.

Three further points reinforce this conclusion. First, the Defendant itself—through the Board it controlled—signed off on the FYE 29.2.2016 accounts, which used FYE 28.2.2015 comparative figures that also did not include amortisation or Deferred Tax Liability. In doing so, the Defendant accepted, on oath, that the previous accounting policy was correct or at minimum that it had no objection to it. If the previous policy had been wrong, the directors were duty-bound to restate the comparative figures for prior years. They did not do so. The Defendant cannot now resile from that position in order to defeat the Plaintiff’s claim.

Second, the audited accounts at 31.12.2013 (the Primary Accounts) expressly stated that the Capital Maintenance Method was being used. This fact was known to the Defendant at the time of the Principal Agreement because the Primary Accounts were annexed as Schedule 2. When the Defendant instructed Crowe Horwarth to conduct a financial due diligence on the Company in late 2014 and 2015, Crowe Horwarth raised no concern about the Company’s use of the Capital Maintenance Method. The Defendant accepted the Primary Accounts without qualification and without requiring any amendment. A party to a commercial contract of this nature who accepts a counterparty’s audited accounts at face value as part of the contractual price-setting mechanism cannot, years later, seek to impugn the accounting treatment in those accounts to defeat a claim that arises under that contract.

Third, Malaysian Accounting Standard 8 (MAS 8)—which governs the treatment of Planting Development Expenditure— is a guideline and not a legally binding standard. MAS 8 explicitly provided two permitted methods of accounting for Planting Development Expenditure: the Amortisation Method and the Capital Maintenance Method. The Capital Maintenance Method is permissible under MAS 8, subject to the satisfaction of certain conditions—including the existence of a planned replanting programme. The evidence established that the Company’s oil palm trees, planted around 2006, were only approximately nine years old as at 2015 and had an economic life of 25 to 30 years. In those circumstances, replanting was not anticipated for another 15 to 20 years, and the absence of a formal replanting programme at the time of the Primary Accounts was entirely consistent with the Company’s actual position. The Company’s auditors at all material times accepted that the Capital Maintenance Method was appropriate. The Inland Revenue Board, during field audits of the Company for Years of Assessment 2010, 2011 and 2012, raised no issue with the treatment. This is a powerful indication that the accounting policy was not wrong.

We are in full agreement with the observation of PW4, the Plaintiff’s expert, who stated in evidence: "This change in accounting policy is not required by law. It’s just to conform with the purchaser’s holding company and should not be used to affect the purchase consideration in the sales and purchase agreement between the buyer and the seller… Adzli’s audited accounts are correct because it has been consistently applied from day 1 until the cut-off date."

In our judgment, the Defendant, having taken control of the Company and thereafter changed its accounting policy at the board level to align with the Defendant’s group policy, cannot be permitted to deploy that self-imposed policy change retrospectively as a device to alter the contractual price adjustment mechanism. To allow this would be to permit the Defendant effectively to rewrite the commercial bargain struck between the parties. It would confer on the Defendant—as the controlling shareholder—the power to alter the purchase price by the unilateral exercise of its management authority after the transaction had completed. That result was plainly never intended by the parties and is inconsistent with the commercial purpose of Clause 2.

We therefore hold that amortisation of Planting Development Expenditure and the consequent Deferred Tax Liability should not be taken into account in computing the change in liabilities for the purposes of the price adjustment under Clause 2 of the Supplemental Agreement. The computation of the change in liabilities must be conducted using the accounting policies consistently adopted in the Primary Accounts and in the 31.8.2015 Audited Accounts.

Having resolved the three substantive issues in favour of the Appellant, we turn to quantum. On the basis of the Primary Accounts (reflecting total liabilities of RM44,797,579.00 as at 31.12.2013) and the 31.8.2015 Audited Accounts (reflecting total liabilities of RM37,924,712.00), the gross change in liabilities is a net decrease of RM6,872,867.00.

PW4’s expert report applied a further adjustment to exclude liabilities attributable to the reduction of current assets (RM774,746.00 and RM2,314,328.00 respectively in the two sets of accounts, representing a net adjustment of RM1,539,582.00), yielding a net reduction in liabilities arising from operations from 1.1.2014 to 31.8.2015 of RM5,333,285.00. The Plaintiff’s claim is for 51% of RM5,333,285.00, which equals RM2,719,975.35.

The Defendant did not effectively challenge the base figures in the 31.8.2015 Audited Accounts, save for the introduction of Amortisation and Deferred Tax Liability (which we have rejected) and the operating/financing distinction (which we have also rejected). DW2’s own expert report, if read without the operating/financing distinction and without the imposition of amortisation and deferred tax, would not yield a materially different result from PW4’s computation on the underlying balance sheet figures. We accept PW4’s computation of a net reduction in liabilities of RM5,333,285.00, of which the Plaintiff’s 51% share is RM2,719,975.35.

We note, in passing, the JC’s inherent inconsistency in finding that the appropriate comparison date was 30.9.2015 but then proceeding to analyse the change in liabilities by reference to the 31.8.2015 Audited Accounts. Even on the JC’s own terms, the 31.8.2015 figures were treated as the relevant evidential basis. The Defendant placed no financial evidence before the Court as at 30.9.2015 and advanced no computation as at that date. In those circumstances, the JC ought not to have dismissed the claim for want of evidence at the 30.9. 2015 date which the Court itself had selected, when cogent audited accounts as at 31.8.2015 were before the Court and were in fact used by the JC.

We are mindful of the well-established principle that an appellate court should be slow to disturb the findings of a trial court. However, as the Federal Court stated in Letchumanan Chettiar Alagappan @ L Allagappan v Secure Plantation Sdn Bhd [2017] 4 MLJ 697 at [95], an appellate court should not hesitate to disturb the findings of a trial court where there has been a failure to appreciate the issues or evidence, to properly evaluate the evidence, to make proper findings and inferences, or to apply the correct law to the facts. We are satisfied that those conditions are met in the present case.

For all the foregoing reasons, we allow this appeal. The judgment of the High Court dismissing the Plaintiff’s claim is set aside. In its place, judgment is entered in favour of the Plaintiff against the Defendant for the following:

The sum of RM2,719,975.35 being the Balance Purchase Price payable pursuant to the price adjustment mechanism under Clause 2 of the Supplemental Agreement read with Clause 1(d) of the Principal

(ii) Interest thereon at the rate of 5% per annum from the date of the Writ of Summons until the date of full payment; and

(iii) Costs of RM 100,000.00 subject to allocator. Dated this 19th day of June 2026 -sgd-ONG CHEE KWAN JUDGE COURT OF APPEAL For the Appellant :

Ms. Shamala Devi Balasundaram

Ms. Soo Siew Mei; and

Ms. Siow Poh Ching (Messrs. Chongsoo Partnership) For the Respondent :

Mr. Alex Chang Huey Wah

Mr. Chang Jun Chen Sean; and

Ms. Lim Wen Mi (Messrs. Alex Chang & Co.)