LIM Ting Chai v Genneva Malaysia Sdn Bhd (WA-22NCC-141-04/2022)

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1 CIVIL SUIT NO.: WA-22NCC-141-04/2022 LIM TING CHAI

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Schedule Business under the Third Schedule of the BAFIA 1989” were misleading. While Genneva was indeed scheduled for leasing and factoring business under section 21(1) of BAFIA, this did not authorise it to conduct a deposit-taking business. The buy-back guarantee, which was central to the business model and was being practised despite public denials, required licensing under section 6(4) of BAFIA, which Genneva did not possess. The representation that the business was “Syariah compliant” was also false, as subsequently determined by the Syariah Advisory Council in June 2012. [109] Genneva was therefore not a legitimate, licensed gold trading business as represented. Instead, as the criminal court found, it was operating an illegal deposit-taking scheme under the guise of gold trading. The High Court in the criminal proceedings held that “the true nature of the gold transaction was indeed an illegal deposit-taking scheme” and that Genneva “was merely using gold as a medium to camouflage the deposit-taking scheme it perpetuated”. I therefore find that the first element of fraudulent misrepresentation, namely that false representations were made, is established. Element 2: Knowledge of Falsity [110] This is the most contentious element in the fraudulent misrepresentation claim. The Defendants maintain they acted in good faith, believing the business to be lawful at all material times. They emphasise the critical distinction between strict liability criminal offences under BAFIA and AMLA, which operate on an objective test, and civil fraud requiring proof of subjective dishonesty. They submit that “The Defendants had at all material times acted in good faith and themselves have no knowledge that the business of Genneva Malaysia Sdn Bhd required a licence under BAFIA. There was no subjective misrepresentation of any sort made by the Defendants.” [111] While I accept that this distinction exists in law, I find that the evidence in this case establishes that the Defendants knew, or at minimum were reckless as to whether, their representations were false. The test for fraudulent misrepresentation was authoritatively stated by the House of Lords in Derry v Peek, as applied by the Federal Court in Loi Hieng Chiong v Kon Tek Shin. As Lord Herschell held in Derry v Peek, “Fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth; or (3) recklessly, careless whether it be true or false”. I reach my conclusion based on multiple strands of evidence that, when considered cumulatively, are compelling. [112] First, the Defendants’ own conduct demonstrates knowledge that the buy-back guarantee was problematic under BAFIA. Following communications with BNM in February 2011, they participated in drafting and publishing public announcements disclaiming the buy-back guarantee. The evidence shows that BNM had sent draft wording to Genneva which stated that the company “is no longer offering a buy-back guarantee for its gold product, effective 13.6.2011”. This draft wording clearly indicated that BNM understood there had been a buy-back guarantee in operation prior to that date. [113] When examined about his understanding of this announcement, Philip testified under cross-examination about what he had been told at meetings with BNM. His testimony, recorded in the Notes of Proceedings dated 6.1.2025, was particularly revealing. When referred to Question 14 of his witness statement, where he stated “I attended several meetings with the officers of Bank Negara Malaysia and were told that no licence or approval from any authority is required. We were told that as long as the company does not give the customer a buy-back guarantee, it does not require any licence or approval from any authority,” the following exchange occurred: “DAS: ….So, you knew Dato’ Lim, you said you didn’t know but – PHIL: No, I said that we never gave a buy-back guarantee. DAS: No, what you said is that and I asked you, were you aware that giving a buy-back guarantee would offend the law and you said you didn’t know. And I said after your meetings with Bank Negara wasn’t it clear to you, you said no. This is your evidence. DAS: Do you want to correct that position now? What you said earlier was not true. You’ve sworn to this evidence. PHIL: (..00:45:24). DAS: Dato’ Lim, you did know. PHIL: That if we gave a buy-back guarantee it was an offence. Is that what you’re – DAS: Yes, it does not require any licence, yes. PHIL: So, if we – DAS: So, you knew that. No, this is your evidence. PHIL: No, sorry I’m just trying to – DAS: Yes. PHIL: Clarify with you what you’re saying is that if I gave back a buy-back guarantee, if I gave a buy-back guarantee I would need a licence. Is that what it says? So, if I don’t – DAS: Well, that’s the law – DAS: And that’s what you said. DAS: That’s what you said. PHIL: Yes, ok yes. DAS: Because it becomes a deposit taking enterprise. Doesn’t mean you can’t do it but you need a licence.” [114] This evidence establishes that Philip, who held the position of marketing director, knew that providing a buy-back guarantee would require licensing under BAFIA. Yet notwithstanding this knowledge, and notwithstanding the public disclaimers, Genneva continued to operate a buy-back guarantee in practice. As the High Court in the criminal proceedings found, “It was not the policy of Genneva Malaysia to offer any buyback guarantee for the gold it sold. However, Genneva admitted that, in practice, in the year 2011 and 2012, it has been buying back gold at the original price.” This gap between public representation and actual practice is not innocent mistake; it is deliberate concealment. [115] The involvement of Lim Kah Heng (DW5), Genneva’s General Manager in charge of the accounts department, in the correspondence with BNM further demonstrates management-level knowledge. The evidence shows that BNM was concerned about the public being misled about buy-back guarantees. When cross-examined, Lim Kah Heng confirmed that he was the one predominantly corresponding with BNM regarding the public announcement and that he had “quite a significant role, because this is a very important announcement”. The announcements were published in multiple languages in major newspapers following this correspondence. The notion that the directors of the company would not have known about these significant regulatory interactions and public announcements strains credulity. [116] Second, when the High Court in the criminal proceedings examined whether the individual Defendants fell within the statutory defence available under section 106(1) of BAFIA, it found they had failed to establish the defence. Section 106(1) creates a deeming provision making directors liable for offences committed by the company, but allows a statutory defence if the director can prove the offence was committed without his consent or connivance and that he exercised all due diligence to prevent the commission of the offence. The High Court’s findings were explicit. In relation to Khairuddin, the court held that “merely asserting that he had no role to play in the illicit scheme was not enough” and that there was “nothing to show that the sixth accused as a director had done anything to ensure that Genneva Malaysia did not embark on a venture that was against the law”. The court concluded that Khairuddin “had not successfully brought himself within the statutory defence provided for under BAFIA”. These findings were made after full examination of the evidence regarding his knowledge and role, and necessarily involved assessment of whether the Defendants had taken reasonable steps to prevent the unlawful activities. Similar findings were made regarding the other individual Defendants. [117] Third, I found the Defendants’ testimony in the present proceedings regarding their understanding of the business model to be profoundly lacking in credibility. The pattern of their evidence was consistent: each of the individual Defendants claimed not to understand fundamental aspects of their own business. They claimed not to know whether a buy-back guarantee would offend BAFIA. They claimed not to understand the legal implications of the public announcements they made. They claimed not to have authorised the promotional materials that were central to their marketing strategy. [118] Philip’s testimony exemplifies this pattern. As marketing director, he gave numerous talks promoting the business to the public. He attended meetings with BNM and was involved in the preparation of public announcements. Yet when examined about the announcement disclaiming buy-back guarantees, Philip claimed he did not see the final announcement dated 16.2.2012, stating “It’s definitely sent out without my knowledge as such”. When asked whether the announcement was sent out without his knowledge despite his attending meetings with BNM, he testified “I can’t remember”. This from a marketing director who, by his own admission in his witness statement, had attended meetings with BNM officers where the issue of buy-back guarantees was specifically discussed. [119] Similarly, when Philip was shown the promotional materials and the consultant’s guide setting out procedures for “Renew or Second Purchase”, he claimed unfamiliarity. When asked whether he was familiar with these documents as a consultant himself, he stated “As the details I’m not”. Yet the evidence established that Philip not only served as a director but also acted as a consultant bringing in business, and that these materials were fundamental to the business operations. [120] Tan’s testimony followed the same pattern. Despite being a director of the company throughout the relevant period, he disclaimed knowledge of the promotional materials and the business model. When examined about whether he knew that in practice almost all gold sold by Genneva was bought back, his evidence was evasive and unconvincing. When asked “You would have known, therefore, that in practice, almost all the gold that was sold by Genneva was in fact bought back by Genneva,” he responded “I disagree”. When reminded that he had testified to this effect in the criminal proceedings and asked if he remembered testifying “it was bought back at its original price,” he stated “I can’t remember unless you show me evidence to refresh my memory”. [121] Khairuddin’s evidence was equally problematic. When shown the promotional materials at page 281 of B1 which stated “100% buy back guarantee at purchase price”, he initially stated “As far as I’m concerned, there is no buy back guarantee”. When pressed to confirm that this was the representation made in the document, he stated “I’m not sure”. Only when directly confronted with the wording did he acknowledge “As per this document, yes”. Throughout his testimony, Khairuddin maintained he could not remember key matters despite being a member of the Syariah advisory committee and a director deeply involved in the company’s operations. [122] I find these claims of ignorance to be wholly incredible. These were not passive investors or nominal directors. The evidence establishes that all three individual Defendants were active operators of the business. Philip personally gave talks to promote the business and oversaw marketing activities. He was involved in crafting the public announcements and attended meetings with regulators. Khairuddin was involved in board meetings, served on the Syariah advisory committee, and was responsible for networking and liaising with authorities. Tan was involved in general administrative matters and also served as a consultant to the company. As the Plaintiffs’ counsel aptly put it in oral submissions, the Defendants “came to court and repeatedly said that they did not understand their own business model”. The notion that directors and officers so actively involved in the business did not understand the basic legal requirements for operating it defies belief. [123] The more plausible explanation is that the Defendants did understand their business model very well, knew it was legally problematic, and chose to proceed with it while creating layers of deniability through carefully worded disclaimers, public announcements, and documentation designed to provide them with plausible deniability if challenged. Their testimony in these proceedings represents a continuation of that strategy of denial. [124] Fourth, the sophistication of the scheme itself bespeaks knowledge and deliberate design. The criminal court made detailed findings about how Genneva’s documentation was carefully structured. The business model involved precisely calibrated features: the hibah system to provide returns to customers without calling them interest; the nominal ownership of gold to avoid the arrangement being characterised as a pure deposit; the public disclaimers of buy-back guarantees while practising them in reality; and the claims of regulatory approval through carefully worded and ambiguous references to AMLA reporting requirements. [125] The criminal court found that Genneva’s documentation was carefully crafted to “elude detection by the authorities”. This was not a case of businesspeople stumbling unknowingly into illegality through inadvertence or misunderstanding. Rather, the High Court found that Genneva “was merely using gold as a medium to camouflage the deposit-taking scheme it perpetuated” and that the scheme involved documentation that was “designed as an elaborate scheme of deposit taking” where “gold was used as an instrument to perpetuate that scheme”. The court further found that “The terms on hibah and the express terms of no buy-back guarantee were mere guises and camouflage in an attempt to conceal the real deal, namely, that Genneva Malaysia was involved in deposit taking without a valid licence. The business model adopted by Genneva Malaysia amounted to nothing more than a scheming gimmick to perpetuate its activities”. Such deliberate structuring to evade regulatory requirements required knowledge of what those requirements were and conscious decision-making to circumvent them. The Defendants were the architects and operators of this scheme. [126] Fifth, the Defendants’ own operational documents belie their claims of ignorance. The consultant’s guide, which was in evidence, set out detailed step-by-step procedures for the “Renew or Second Purchase” process. This guide showed that the buy-back mechanism was systematised and integrated into the business operations as a standard procedure. It was not something that happened by accident or without management knowledge and approval. The guide provided specific instructions to consultants on how to process customers returning gold for repurchase, demonstrating that this was a deliberate and organised aspect of the business model. [127] Sixth, there was evidence that even after the June 2012 Syariah committee decision questioning the business model, and after BNM’s public statements and meetings, Genneva continued to operate without informing existing customers of these significant developments. Lim Kah Heng testified under cross-examination that he was aware of the fatwa issued in June 2012 declaring the gold trading business carried out by Genneva to be not Syariah compliant. When asked whether he knew “that the State and Federal Fatwa Council had declared this business not syariah compliant but did you take any steps to change the business model to make sure it was compliant?”, he testified there were discussions with the Syariah Advisory Committee Board about how to correct it, and that “they are working on it” and “we come up with certain forms in order to comply”. However, when pressed on whether the model actually changed, the evidence showed it did not. This continuing operation in the face of clear warnings, without disclosure to existing or prospective customers, constitutes continuing concealment of material facts. [128] The Defendants argue that the criminal convictions do not establish civil fraud because criminal liability under BAFIA and AMLA is strict liability not requiring proof of fraudulent intent, whereas civil fraud requires proof of subjective knowledge or recklessness. While this distinction is correct as a matter of law, the argument misses the point in several critical respects. First, the criminal proceedings provided extensive evidence about the Defendants’ actual knowledge and conduct, which the High Court examined in detail before reaching its conclusions. The court’s findings about the deliberate concealment, the systematic nature of the scheme, the crafting of documents to elude detection, and the use of gold as camouflage for deposit-taking, all speak directly to the Defendants’ knowledge and fraudulent intent. These were findings of fact based on the evidence, not merely findings of strict liability. Second, and more fundamentally, the High Court in the criminal proceedings did make findings about the Defendants’ subjective state when considering the statutory defence under section 106(1) of BAFIA. This provision specifically required the court to assess whether the Defendants had exercised due diligence and whether the offences were committed without their consent or connivance. The court’s findings that the Defendants had failed to establish this defence, namely that a bare assertion of non-involvement was insufficient and that there was nothing to show they had taken any steps to prevent Genneva from embarking on unlawful activities, necessarily involved an assessment of their knowledge and whether they had taken reasonable steps to prevent the illegal business model. These findings are directly relevant to the issue of knowledge for civil fraud. [129] I am satisfied, on the balance of probabilities, that the Defendants knew their representations about Genneva being a licensed and legitimate business were false. At minimum, they were reckless, having shut their eyes to obvious illegality. The evidence demonstrates they attended meetings with BNM where they were told that offering a buy-back guarantee would require licensing. They participated in preparing public disclaimers while continuing the practice they publicly disclaimed. They operated a sophisticated scheme which the criminal court found was designed to elude detection through carefully crafted documentation and the use of gold as camouflage. They continued operations even after regulatory warnings and adverse Syariah rulings. Their testimony claiming ignorance of fundamental aspects of their own business is simply not credible given their active roles in the company’s operations and their dealings with regulators. Either state of mind, whether actual knowledge or recklessness, suffices to establish fraudulent misrepresentation. Element 3: Intention that Representations Be Acted Upon [130] The third element of fraudulent misrepresentation requires that the representations were intended to be acted upon by the Plaintiffs. The Plaintiffs submit that the entire purpose of Genneva’s promotional apparatus, including its materials, consultant network, and public talks, was to induce members of the public to invest in the scheme. The Defendants contend that they had no intention to deceive, asserting that they genuinely believed their business was lawful. However, this confuses the question of whether representations were intended to induce action (which they plainly were) with the separate question of whether the Defendants knew the representations were false (already addressed under the second element). [131] The evidence overwhelmingly establishes that the representations about legitimacy and licensing were intended to induce investment. First, there is the direct testimony of Kavita (PW1), Genneva’s senior consultant. She testified that promotional materials were “issued by the 1st Defendant and it was circulated to the 1st Defendant’s consultants, including myself, for the purpose of explaining the 1st Defendant’s business and gold products to new customers or members of the public who are interested in the 1st Defendant’s business.” The stated purpose was expressly to attract new customers. Second, Philip himself confirmed during cross-examination that he had delivered hundreds of talks to members of the public for the purpose of selling Genneva’s products. When asked directly whether he made representations when selling products, he answered: “Yes, but this is, like I said, a witness statement. He can say whatever he wants to say.” Third, even Tan, though initially resisting the characterisation, ultimately admitted during cross-examination that marketing activities “were intended to attract the public to buy gold from Genneva or sell gold to Genneva.” The promotional launch event, which featured prominent public figures and extensive media coverage, was similarly calculated to create and reinforce an appearance of legitimacy in order to attract customers. [132] The representations about legitimacy and licensing were not peripheral to Genneva’s marketing strategy; they were central to it. The promotional materials prominently stated that Genneva had “Fulfilled all Bank Negara Malaysia’s requirements as a scheduled institution under BAFIA 1989, and classified under AMLA 2001 as a reporting institution.” During consultant briefings led by Philip, consultants were reminded that “customers would receive consistent savings and profit from the purchase of gold through issuance of hibah. These savings are guaranteed and legitimate as the 1st Defendant had fulfilled all BNM’s requirements and were classified under the Anti-Money Laundering and Anti-Terrorism Act 2001, and that the 1st Defendant is not, in any manner, a multi-level marketing or ponzi scheme.” These representations were plainly intended to reassure potential customers that the scheme was safe, regulated, and legitimate, in other words, to induce them to invest. No rational person would invest substantial sums in an unlicensed and illegal deposit-taking scheme. The Defendants must have known that representations of legitimacy were essential to attracting customers. I therefore find that the third element is established. Element 4: Reliance [133] The fourth element of fraudulent misrepresentation requires proof that the Plaintiffs relied on the representations in entering into transactions with Genneva. The evidence establishes that each Plaintiff did so rely, though the strength and directness of the evidence varies between the three Plaintiffs. Lim Ting Chai’s evidence shows direct reliance on representations made at a talk given personally by Philip. Sha Li Li’s evidence demonstrates reliance on representations made through Kavita, who was Genneva’s consultant trained and authorised by the Defendants. Mother Mangalam’s evidence, whilst less direct, establishes reliance on representations made through Genneva’s promotional materials and consultant network, particularly through Michael Joseph, who was described as Genneva’s senior consultant. [134] Lim Ting Chai testified that on or about 16.1.2012, he attended a talk presented by Philip concerning Genneva’s business. In his witness statement, Lim Ting Chai stated: “The 3rd Defendant had given details of the gold product and investment types offered by the 1st Defendant to a group of ordinary members of the public, including myself. He generally talked about how beneficial the scheme was to us investors. During the talk he used slides as part of the presentation. The contents of his slides were similar to the document at CBOD1, pages 273 to 294.” Philip does not deny giving talks to promote Genneva’s business, though he claims he cannot remember specific talks given 13 years ago. This establishes direct reliance by Lim Ting Chai on representations made personally by an individual Defendant. [135] Sha Li Li testified that she relied on representations made by Kavita. In her witness statement, Sha Li Li stated: “Prior to my purchase of gold with the 1st Defendant, details of the gold products and investment types offered by the Defendants were explained to me by my consultant using a presentation.” Kavita testified that she was a consultant of Genneva and that she dealt directly with Sha Li Li. Kavita confirmed delivering promotional materials and information to Sha Li Li. The evidence establishes that Sha Li Li relied on these representations in entering into her transaction with Genneva on 4.9.2012. [136] Mother Mangalam’s evidence of reliance comes through her administrator, Thanalakshmi. Thanalakshmi testified that Mother Mangalam dealt with Michael Joseph: “Joseph Michael, he was the one who attended to her throughout the whole procedure of getting everything done, all the papers for her, for the purchase of gold. From what I know, he was a senior consultant of Genneva Malaysia.” Thanalakshmi further testified that Mother Mangalam had in her possession promotional materials including newspaper clippings advertising Genneva’s business, and that Mother Mangalam attended or was aware of a launch event involving prominent figures. Thanalakshmi stated: “Before she purchased the gold, she was confident with this project because the dignitaries, the top dignitaries, and Tun Mahathir Mohamad, he launched the launching ceremony, where she came to know about it, and the few dignitaries, whom she knows, they were in this group. So, she was rather overconfident and said, I thought this will be a good investment for her future.” This evidence, whilst less direct than that of the other two Plaintiffs, nevertheless establishes that Mother Mangalam relied on representations about Genneva’s legitimacy made through promotional materials and the consultant network in entering into her transaction on 19.9.2012. [137] The Defendants argue that there was no direct communication between the individual Defendants and the Plaintiffs, and therefore no reliance is established. They submit that Khairuddin, Philip and Tan had no direct dealings with the Plaintiffs, and that any representations were made by consultants who lacked authority to bind the Defendants. They further argue that the consultants’ agreement shows consultants were not authorised to distribute promotional materials without written approval. This argument misunderstands both the facts and the law of agency and vicarious liability for representations. [138] As a matter of law, a principal is liable for fraudulent representations made by an agent acting within the scope of the agent’s authority. The House of Lords in Briess v Woolley [1954] 1 ALL ER 909 addressed this principle in the context of continuing representations. Lord Reid stated at page 922: “Rosher, when he became the agent of the respondents, was under the duty as between himself and the appellants to correct the false impression that his misrepresentations had made. He had become the agent of the respondents to complete the negotiations for the sale of their shares, as well as his own shares, to the appellants. His authority extended to giving the appellants information as to the business of the company. It cannot be denied that, if he had made a new fraudulent statement as to that business, the respondents would have been liable to the appellants in damages for that fraud. It seems to me necessarily to follow that they must be liable for his fraudulent failure to withdraw or modify the false statement he had already made.” [139] The shareholders in Briess v Woolley were held liable for their agent’s representations made in negotiations for the sale of company shares. Where an agent is appointed to conduct negotiations and makes representations within the scope of that authority, the principal is responsible for those representations. [140] The evidence establishes that Genneva’s consultants, including Kavita and Michael Joseph, were appointed by Genneva and authorised to deal with customers on Genneva’s behalf. The consultancy agreement in evidence at B2 pages 594-603 identifies the consultants as consultants to Genneva, not to customers. Clause 3.1 requires Genneva to support its consultants in promoting Genneva’s business. Clauses 2.1 and 4.3 define the consultants’ role as promoting Genneva’s business. Kavita testified that she was trained by the Defendants, including Philip, to promote Genneva’s business. She stated she received promotional materials from Genneva which she used in dealing with customers. The fact that representations were conveyed through intermediaries does not break the chain of causation. When Kavita represented Genneva’s business as legitimate to Sha Li Li, she was making Genneva’s representations, for which the Defendants who operated and controlled Genneva are responsible. [141] The promotional materials themselves emanated from Genneva and bore the company’s name and branding. These materials were distributed through Genneva’s consultant network and used at talks given by company directors. When customers, including the Plaintiffs, relied on these materials and the representations contained in them, they were relying on Genneva’s representations. All three Defendants who operated and controlled Genneva, as directors who promoted the business, gave talks, trained consultants, and oversaw operations, are responsible for these representations. The element of reliance is established for all three Plaintiffs. Element 5: Damage [142] The Plaintiffs submit that they each suffered loss and damage as a direct result of the Defendants’ fraudulent misrepresentations. The evidence establishes the specific losses sustained by each Plaintiff. Lim Ting Chai entered into a transaction on 30.8.2012 whereby he returned 4,500 grams of gold previously purchased from Genneva (valued at RM904,500.00) and paid RM188,570.00 in cash, for a total consideration of RM1,093,070.00. In return, he was to receive 5,230 grams of new gold at RM209 per gram. The transaction was documented through a CPO dated 30.8.2012 and a Sale and Purchase Agreement (“SPA”) dated 5.9.2012. However, Lim Ting Chai received neither the 5,230 grams of new gold, nor the return of his 4,500 grams of original gold, nor his cash payment of RM188,570.00. Sha Li Li paid RM136,760.00 in cash and delivered 3,970 grams of gold valued at RM801,940.00 (for a total of RM938,410.00) pursuant to her SPA dated 5.9.2012, entitling her to receive 4,490 grams of gold. She received neither the new gold nor the return of her payment and original gold. Mother Mangalam paid RM309,560.00 to Genneva on 30.8.2012 for the purchase of 1,420 grams of gold at RM218 per gram pursuant to her SPA dated 20.9.2012. She received no gold. The Plaintiffs contend that these losses flowed directly from their reliance on the fraudulent representations about Genneva being a licensed and legitimate business. [143] The Defendants submit that the Plaintiffs have not established the element of damage. They contend that any claim the Plaintiffs may have lies instead with the Public Prosecutor pursuant to section 61 of AMLA, given that Genneva’s assets have been subject to forfeiture proceedings. The Defendants argue that since Genneva was wound up on 11.4.2022 and its assets forfeited, the Plaintiffs’ remedy should be pursued through the forfeiture and asset recovery proceedings rather than through this civil action against the individual Defendants. In their Defences, the individual Defendants put the Plaintiffs to strict proof of their claims regarding loss and damage, whilst denying knowledge of the alleged losses. [144] I find that the element of damage is clearly established. The evidence demonstrates that each Plaintiff parted with valuable consideration in the form of money and/or gold on the faith of the representations made by the Defendants about Genneva being a licensed and legitimate business. In exchange for this consideration, the Plaintiffs were entitled to receive specified quantities of gold. None of the Plaintiffs received the gold they were promised, nor did they receive the return of their money or original gold. The loss is both quantifiable and proven. The causal connection between the fraudulent representations and the damage is direct and unbroken. Had the Plaintiffs known the truth, namely that Genneva was operating an illegal deposit-taking scheme in contravention of BAFIA, that it was not licensed to conduct such business, and that the scheme would inevitably collapse, they would not have entered into these transactions. The Defendants’ argument that the Plaintiffs should instead pursue claims through forfeiture proceedings does not negate the fact that the Defendants’ fraudulent misrepresentations directly caused the Plaintiffs to sustain these losses. The Defendants, as the architects and operators of the fraudulent scheme, are liable for the losses that flowed from their misconduct. The element of damage is therefore satisfied. Conclusion on Fraudulent Misrepresentation [145] I find that all five elements of fraudulent misrepresentation are established. The Defendants made false representations about Genneva being a licensed and legitimate business. These representations were made knowing they were false, or with reckless disregard for their truth. The representations were intended to induce investment and did induce the Plaintiffs to invest. The Plaintiffs have suffered loss as a result. The claim in fraudulent misrepresentation succeeds. Constructive Trust [146] The Plaintiffs contend that a constructive trust arose when they paid money to Genneva and/or delivered gold to Genneva pursuant to the fraudulent misrepresentations. They submit that Genneva and its operators held the Plaintiffs’ property on trust and fraudulently breached that trust by failing to deliver the Purchased Gold or return the money paid. The Plaintiffs argue that this is a case founded on unconscionable conduct which attracts the intervention of equity to imply a constructive trust in a remedial sense, and that it is just and appropriate to impose such a trust given the Defendants’ unconscionable behaviour in depriving the Plaintiffs of their beneficial interests in the property. [147] The Defendants deny any trust relationship existed. They submit there was no institutional trust, and that any remedial constructive trust would only arise after judgment as a remedy imposed by the court. They contend that section 22(1) of the Limitation Act 1953 does not apply because there was no institutional trust from the outset. They further deny any fraudulent breach of trust, arguing that they acted in good faith at all times. [148] The law recognises both institutional and remedial constructive trusts. An institutional constructive trust arises by operation of law when certain circumstances exist, such as where there is a pre-existing fiduciary relationship and a breach of that relationship results in property being held on trust. A remedial constructive trust is imposed by the court as a remedy for wrongdoing, flowing from unconscionable conduct that attracts the intervention of equity. The Malaysian courts have recognised and applied both concepts. [149] In Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67, the Federal Court at paragraphs 111-112 considered the nature of constructive trusts arising from unconscionable conduct. The Federal Court held at paragraph 111: “It is trite law that the intention to create a trust is applicable in situation of express trusts and not in constructive trusts. A constructive trust are trusts that may be implied in the absence of any declaration/intention of a trust, where the trustee has induced another to act to their detriment they would acquire a beneficial interest in the land/property. A characteristic feature of this trust does not owe its existence to the parties’ intention, but by operation of law. In Takako Sakao (f) v Ng Pek Yuen (f) & Anor [2009] 6 MLJ 751, it was held that: A constructive trust is imposed by law irrespective of the intention of the parties. And it is imposed only in certain circumstances, eg where there is dishonest, unconscionable or fraudulent conduct in the acquisition of property. What equity does in those circumstances is to fasten upon the conscience of the holder of the property a trust in favour of another in respect of the whole or part thereof.” [150] The Federal Court continued at paragraph 112: “Constructive trust is viewed as a device under which equity will intervene so as to create a trust relationship between the parties in order to make a person accountable for the trust to prevent any unfairness or injustice. Equity will impose obligation on the defendant to hold the property for the benefit of another.” [151] Similarly, in KTPC Resort Development Bhd v Convobuilt Sdn Bhd & Another Appeal [2020] 4 MLJ 26 at paragraphs 35-37, the Court of Appeal affirmed that constructive trusts may be implied when unconscionable conduct is involved. The Court of Appeal in IB Capital Sdn Bhd v Ivory Indah Sdn Bhd & Anor [2021] 1 LNS 2348 at paragraph 349 further held that it is just and appropriate to impose a constructive trust in a remedial sense due to unconscionable behaviour. Most significantly, the Federal Court in RHB Bank Bhd v Travelsight (M) Sdn Bhd [2016] 1 MLJ 175 recognised the application of remedial constructive trusts in Malaysian law. [152] In cases involving fraud, Malaysian courts have consistently held that where a defendant obtains property through fraud, a constructive trust arises over that property. This reflects the principle that a person should not profit from their own fraud, and that property obtained by fraud should be held for the benefit of the true owner. The fraudulent acquisition of property gives rise to equitable obligations regardless of whether the relationship between the parties would otherwise create a trust. As the Federal Court observed in Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67 at paragraphs 111-112, constructive trusts may be imposed where a defendant’s conduct is unconscionable, particularly in cases involving fraud or misappropriation of property. [153] Section 22(1)(a) of the Limitation Act 1953 provides that no period of limitation applies to “an action by a beneficiary under a trust, being an action in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy”. The plain words of this provision make no distinction between different species of constructive trust. What matters is whether the action is one of fraud or fraudulent breach of trust. In Low Boon Eng & Ors v Teo Kiong Huat & Ors [supra], the Court of Appeal at paragraphs 27-31 discussed the distinction between institutional and remedial constructive trusts in the context of section 22(1)(b), which concerns recovery of trust property. However, that was not a fraud case. Similarly, Ng Poh Hong concerned the application of section 22(1) to a non-fraudulent trust claim. Neither case addresses whether section 22(1)(a) applies to claims expressly pleaded as fraudulent breach of constructive trust. Where, as here, the claim is one of fraud or fraudulent breach of trust to which the Defendants were party or privy, section 22(1)(a) applies by its express terms. [154] In the present case, I have found that the Defendants made fraudulent misrepresentations to the Plaintiffs regarding Genneva being a licensed and legitimate gold trading business. Relying on these representations, Lim Ting Chai paid RM1,093,070.00 on 30.8.2012, Mother Mangalam paid RM309,560.00 on 19.9.2012, and Sha Li Li paid RM938,410.00 on 5.9.2012 and also delivered gold previously purchased to Genneva. At the moment these transfers occurred, based on the fraud I have found, a constructive trust arose by operation of law. Upon receiving the Plaintiffs’ money and gold, Genneva and its operators became trustees holding the Plaintiffs’ property on constructive trust. The nature of this trust obligation was to perform the contracts as represented - that is, to deliver the Purchased Gold to the Plaintiffs or, if that could not be done, to return the money and gold received. This trust arose automatically from the fraudulent circumstances in which the property was obtained, irrespective of the parties’ intentions. [155] Instead of performing this trust obligation, the Defendants fraudulently retained the Plaintiffs’ property. The gold purchased was not delivered to any of the three Plaintiffs. The money paid was not returned to them. The gold delivered by Sha Li Li was not returned. The Defendants have maintained possession of this property knowing that it was obtained through fraudulent misrepresentations and that they had no legitimate right to retain it. This constitutes a fraudulent breach of the constructive trust to which the Defendants were party and privy. [156] The Defendants’ submission that there was no institutional trust but only a remedial trust is a distinction without a difference for purposes of section 22(1)(a). That provision applies to “any fraud or fraudulent breach of trust to which the trustee was a party or privy” without distinguishing between species or classifications of trust. The statutory language is clear: what matters is whether there was fraud or fraudulent breach of trust, not whether the trust is labelled institutional or remedial. Whether the constructive trust is characterised as institutional (arising by operation of law from the fraudulent circumstances) or remedial (imposed by the court to remedy unconscionable conduct), the claim remains one of fraudulent breach of trust. The Defendants held property that in equity belonged to the Plaintiffs, and they fraudulently failed to deal with it properly by refusing to deliver the gold or return the money and gold received. That fraudulent breach brings the claim within section 22(1)(a). [157] Section 22(1)(a) of the Limitation Act 1953 expressly provides that no period of limitation applies to “an action by a beneficiary under a trust, being an action... in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy.” This provision applies directly to the present claim. The Plaintiffs are beneficiaries under the constructive trust that arose when they transferred their property to Genneva. The Defendants were trustees of that property, and they fraudulently breached the trust by retaining the property rather than performing their obligations. Section 22(1)(a) therefore exempts this claim from any limitation period and reinforces that no limitation defence is available to the Defendants. [158] For the reasons set out above, I find that the claim for fraudulent breach of constructive trust is made out. A constructive trust arose when the Plaintiffs paid money and delivered gold to Genneva pursuant to fraudulent misrepresentations. The Defendants, as trustees of that property, were obliged to deal with it properly by delivering the Purchased Gold or returning the money and gold received. Instead, they fraudulently retained the property. This constitutes a fraudulent breach of trust to which the Defendants were party and privy, for which they are liable to account to the Plaintiffs. Money Laundering [159] The Plaintiffs contend that the Defendants were engaged in money laundering activities under the guise of Genneva’s gold trading business. They submit that the High Court in the criminal proceedings convicted Genneva and the individual Defendants of offences under section 4(1) of AMLA for money laundering, and these convictions have been upheld by the Court of Appeal. The criminal findings establish that Genneva’s business was not merely unlicensed but criminal in nature, reinforcing the fraudulent character of the representations made to the Plaintiffs. The Plaintiffs rely on these convictions as relevant facts admissible in the present proceedings under Section 42 of the Evidence Act 1950. [160] The Defendants deny being involved in money laundering. They submit that the criminal convictions under AMLA and BAFIA involve strict liability offences which do not require proof of fraudulent intent. The Defendants contend that criminal liability does not establish the subjective element necessary for civil fraud, and that the convictions therefore do not prove the Defendants knowingly or recklessly made false representations to the Plaintiffs. They maintain that they acted in good faith and were unaware that Genneva’s business required a licence under BAFIA. [161] The High Court in the criminal proceedings convicted Genneva and the individual Defendants of offences under section 4(1) of AMLA for money laundering and section 25(1) of BAFIA for accepting deposits without a valid licence. In the criminal judgment in relation to the charges under section 4(1)(a) of AMLA, the High Court found that the prosecution had adduced sufficient evidence to establish the receipt of monies by each accused through multiple cash cheques originating from, and traceable to, the two impugned CIMB Islamic Bank Bhd accounts belonging to Genneva. The court further found that the prosecution had adduced sufficient evidence, by way of forensic accounting analysis conducted by PW89 and the tracing of the money trail, to show that the monies in those accounts constituted proceeds of unlawful activity, namely the offence under section 25(1) of the BAFIA of accepting deposits without a valid licence, which was categorised as a serious offence under AMLAFTA. [162] The High Court made extensive findings regarding Genneva’s business model. At paragraph [73], the court held: “When all the facts and circumstances are taken together, it became clear that Genneva Malaysia was merely using gold as a medium to camouflage the deposit-taking scheme it perpetuated. Since gold is a very attractive and valuable commodity, it lends a bit more credit to the unsuspecting public compared with any other scam of deposit-taking. But when the scheme is closely examined in detail, it clearly defied common sense and on the same breadth did not constitute a defence that is probable in the circumstances of the case.” These findings demonstrate that the funds flowing through Genneva’s business constituted proceeds of unlawful activity, and that the Defendants were processing these proceeds through the money laundering scheme. [163] The criminal convictions are now final. The Defendants were convicted by the High Court on 4.8.2020. They appealed to the Court of Appeal (Case No. W-09-169- 08/2020). On 29.10.2024, the Court of Appeal dismissed their appeals against conviction and upheld the findings of guilt. Whilst the Court of Appeal allowed their appeals against sentence to the extent of reducing the fines imposed, the convictions under both AMLA and BAFIA were affirmed. The Defendants have thus exhausted their appellate remedies and the convictions stand as final determinations. [164] Under Malaysian law, final criminal convictions are admissible in civil proceedings as relevant facts. Section 42 of the Evidence Act 1950 empowers this court to consider the criminal convictions of the Defendants as relevant facts in these proceedings. In Ramanathan A/L Chelliah v Penyunting The Malay Mail & Anor [1998] 2 CLJ 691, the High Court held at page 701: “…the conviction of the plaintiff for an offence under section 354 of the Penal Code at the Sessions Court at Kuala Lumpur is admissible evidence of the fact that the plaintiff had been found guilty of that offence. Needless to say, whether such evidence discharges the evidentiary burden of proof at any stage is for the trial Court to decide on the whole of the evidence tendered at that stage.” [165] Whilst criminal convictions do not constitute conclusive proof of all facts in issue in civil proceedings, they are nonetheless admissible as evidence that a finding of guilt was made in respect of the particular offences. The criminal court made detailed findings of fact based on extensive evidence, including forensic accounting analysis and money trail evidence. These findings are highly probative of the facts underlying the civil claim. The convictions establish, as a matter of record, that a court of competent jurisdiction has determined that Genneva and the individual Defendants engaged in money laundering activities involving proceeds from illegal deposit-taking. [166] The relevance of these findings to the present civil claim operates at two levels. First, they reinforce the fraudulent nature of the representations made to the Plaintiffs. The business was not merely unlicensed; it was criminal. Genneva’s operations amounted to processing proceeds of crime through a money laundering scheme disguised as gold trading. Second, the findings establish that the Defendants’ conduct went beyond mere breach of contract or innocent misrepresentation. They were parties to a criminal enterprise that systematically used gold trading as a facade to perpetuate illegal deposit-taking activities. The money laundering convictions demonstrate the deliberate and calculated nature of the scheme, which is directly relevant to the question of fraudulent intent in the civil proceedings. [167] Having considered the evidence and the submissions of all parties, I find that the Plaintiffs have established that the Defendants engaged in money laundering activities under the guise of gold trading, as alleged in the Statement of Claim. The final criminal convictions, which have been upheld on appeal, constitute powerful evidence of the fraudulent character of the entire enterprise. Delivery of Gold [168] A significant factual dispute concerns whether gold was delivered by certain Plaintiffs to Genneva as part of subsequent purchase transactions. This issue primarily affects Sha Li Li’s claim and to a lesser extent Lim Ting Chai’s claim. The resolution of this issue is critical to determining whether these Plaintiffs provided full consideration for their subsequent gold purchases. [169] Sha Li Li contends that on 5.9.2012, she delivered 3,970 grams of gold to Genneva’s office through Kavita, who was Genneva’s consultant. According to Sha Li Li’s evidence, she had originally purchased this gold in May 2012. For her subsequent purchase, she agreed to buy 4,490 grams of gold at RM209 per gram for a total of RM938,410.00. She provided consideration by returning the 3,970 grams of gold (which had been purchased at RM202 per gram) and paying an additional sum of RM136,760.00 in cash via bank transfer. As evidence of delivery, Sha Li Li produced CPO No. CP-0272091 dated 5.9.2012. Although Kavita initially testified that the signature appearing in the section headed “For Office Use Only” was that of BL Sim (PW6) and that it acknowledged receipt on behalf of the 1st Defendant, she subsequently corrected her testimony during the trial. Kavita admitted that she had been mistaken and that the signature did not belong to BL Sim. She apologised to the Court for the error after verifying the matter with BL Sim. [170] Additionally, Sha Li Li produces a SPA dated September 2012 which was generated by Genneva showing the purchase of 4,490 grams at RM209 per gram for RM938,410.00. Kavita explained the significance of the SPA: “This SPA is for a total amount of RM938,410 for 4490 grams which is the RM130,000 over banked in by Sha Li Li plus the value of the 3.3, almost 4 kg, of gold which was delivered to them. And the details as per the SPA, the SPA has the entire sale amount written in here, not just part but the physical gold that was delivered plus the cash added in.” The SPA contains specific details including Schedule 2 setting out the product particulars, the purchaser’s details, and a tracking code (MPGAA125109) which correlates with the CPO number CP-0272019. [171] The Defendants mount a multi-pronged challenge to this evidence. First, they point out that when BL Sim testified as PW6, she denied that the signature on the CPO was hers. BL Sim testified: “Kavita check with me regarding the signatures at the bottom that our office use only is mine. I confirmed that it’s not my signature.” When shown the signature, she stated: “I can’t recall, but, definitely, it’s not my signature.” Second, the Defendants note that in the CPO, the column marked “RTN(g)” (meaning returned gold) contains merely a dash “–” rather than the quantity “3,970” which should appear if gold had been returned. The Defendants contrast this with Lim Ting Chai’s CPO where the RTN(g) column clearly states “4,500” grams. During cross-examination, this discrepancy was put to Kavita, who acknowledged: “Yes, it should have been written there, but it wasn’t.” [172] Third, the Defendants submit that for a transaction involving the return of gold to Genneva, the proper documentation would be a Customer Sales Form rather than merely a signature on a CPO. They produce evidence that such Customer Sales Forms existed in Genneva’s system. AK (PW5), an officer from Bank Negara Malaysia, tendered a Customer Sales Form dated 8.8.2012 showing Sha Li Li’s return of 50 grams of gold to Genneva in respect of a different transaction. The Defendants emphasise that no such Customer Sales Form has been produced for the alleged return of 3,970 grams. Fourth, the Defendants submit that Kavita’s testimony is unreliable given the correction she was forced to make regarding the signature identification. Under cross-examination, Kavita acknowledged: “BL Sim’s signature, I stated that it was hers. It was my mistake. After clarification and contacting her, I realized that it wasn’t, and I’m here in Court to apologize and acknowledge that I made a mistake on it.” When pressed on to whom she delivered the gold, Kavita responded: “I can’t confirm exactly who the staff was … I just assumed it was BL Sim.” The Defendants characterise this as a fundamental gap in proof of delivery. [173] This is a dispute of fact which must be determined on the balance of probabilities, having regard to all the evidence before the court and applying proper principles of evidence assessment. [174] I note at the outset that the Defendants’ pleadings did not specifically plead or challenge the fact of delivery of gold. The matters now raised regarding Customer Sales Forms, RTNG column entries, and the absence of specific identification of the receiving staff member were raised for the first time during trial and developed in final submissions. These points were not put to Kavita during her initial testimony, necessitating her recall to address them. The rule in Browne v Dunn (1893) 6 R 67, House of Lords, is clear on this matter. As stated by Lord Herschell LC in that case at pages 76-77: “To my mind nothing would be more absolutely unjust than not to cross examine witnesses upon evidence which they have given, so as to give them notice, and to give them an opportunity of explanation, and an opportunity every often to defend their own character, and not having given them such an opportunity, to ask the jury afterwards to disbelieve what they have said, although not one question has been directed either to their credit or to the accuracy of the facts they have deposed to.” [175] The failure to properly plead and challenge these documentary matters at the appropriate time must be taken into account in weighing the Defendants’ objections. [176] That said, the court must still examine the evidence on its merits and determine what actually occurred. In doing so, I find that the most compelling evidence regarding delivery comes not from the disputed signature evidence on the CPO, nor from the presence or absence of particular documentary formalities, but from the fundamental process evidence regarding how Genneva’s own systems operated. [177] DW5, Lim Kah Heng, was Genneva’s General Manager who worked in the accounts department and had detailed knowledge of Genneva’s internal procedures. Under cross-examination by the Plaintiffs’ counsel, he gave crucial evidence about when SPAs would be generated. He confirmed that an SPA would only be generated and issued after Genneva’s system had verified that both payment had been cleared and, in the case of subsequent purchases, that gold had been received. The New Consultant Guide document also indicated that stamped SPAs would only be issued “as and when we accepted the Customer Purchase Order” and payment. This was not merely a matter of DW5’s personal practice, but reflected Genneva’s systematic procedures which were applied company-wide through their computerised documentation system managed by J Emerald. PW6, BL Sim, though denying the signature was hers, corroborated this process evidence when she testified: “Because full payment after, ok, we bank... the customer bank in every things, and we have to enter to the system. Upon HQ confirm the payments, then system only been approved, then we can start print out the documents.” This confirms that Genneva’s documentation system had internal controls and that documents like SPAs could only be generated after verification and approval. [178] The critical point is this. If DW5’s evidence about Genneva’s systematic process is correct, and I have no reason to doubt it since he was describing the company’s internal operational procedures of which he had direct knowledge, then the very existence of the SPA proves that the gold must have been delivered. The SPA would not have been generated by Genneva’s computerised system unless both the cash payment had been verified and the return of gold had been confirmed. This process evidence, emanating from the Defendants’ own witness describing the Defendants’ own procedures, is in my assessment more probative than the disputed signature evidence or documentary formalities. [179] The Defendants’ argument about the absence of a Customer Sales Form for the return of 3,970 grams is not persuasive. A Customer Sales Form was just one type of document in Genneva’s documentation ecosystem. The critical control point in Genneva’s system was the generation of the SPA, which could only occur after both payment and gold receipt had been verified at headquarters level. The absence of one particular type of form does not negate the affirmative evidence that the transaction proceeded through all necessary stages to the point of SPA generation. [180] Regarding the RTNG column containing a dash rather than “3,970”, this may reflect clerical inconsistency, different internal coding methods between branches, or the fact that the returned gold quantum was being tracked through other means. The CPO itself shows the “Last Cert of Ownership” number at the top, which Kavita explained links to Sha Li Li’s previous Certificate of Ownership for the 3,970 grams originally purchased in May 2012. This cross-referencing system allowed Genneva to track which specific gold was being returned. The existence of multiple tracking mechanisms within Genneva’s documentation system means that the absence of an entry in one particular column on one form does not necessarily indicate non-delivery when other system-generated documents confirm the transaction proceeded. These documentary variances do not overcome the fundamental process evidence that the transaction was accepted, processed through Genneva’s computerised system, and resulted in the generation of an SPA. [181] As for Kavita’s testimony and the challenged signature, several points must be considered. First, Kavita acknowledged her error regarding the signature identification with candour and corrected her testimony. The court must consider whether an error on one point necessarily taints the entirety of a witness’s evidence. Kavita’s mistake concerned the identification of a signature on a 12-year-old document, not the fundamental fact of whether gold was delivered. The evidence shows that she made genuine efforts to verify the signature, including attempting to contact BL Sim, and upon discovering her error, immediately corrected it before the court. This demonstrates honesty rather than unreliability. [182] Second, while Kavita could not specifically identify the receiving staff member after 12 years, she consistently maintained that the gold was delivered to Genneva’s Kuala Lumpur office at Kuchai Lama. Third, the signature, even if not BL Sim’s, appears in the official “For Office Use Only” section of Genneva’s own CPO form, which suggests it was made by someone within Genneva’s organisation who had authority to receive payments and gold. [183] Fourth, while BL Sim testified that the signature was not hers, she also acknowledged: “It might be the front desk staff because that normally they receive a case.” This suggests that staff other than BL Sim were authorised to receive such transactions. The passage of 12 years between the transaction in September 2012 and the trial in 2024 must also be factored into assessing both Kavita’s inability to recall the specific staff member and the challenges in identifying signatures. Courts must be realistic about the limits of human memory, particularly in relation to routine commercial transactions that occurred over a decade ago and which would have been one of many similar transactions processed by Genneva’s staff at that time. The fact that Kavita could not, after 12 years, recall precisely which staff member received the gold does not mean the gold was not delivered; it means only that the specific identity of the receiving officer cannot now be established with certainty. [184] Weighing all of this evidence, I find on the balance of probabilities that Sha Li Li did deliver the 3,970 grams of gold to Genneva as she claims. This finding rests primarily on: a) the process evidence from DW5 that the SPA would not have been issued unless delivery had occurred; b) the existence of the SPA showing the full transaction value including both the cash payment and the gold return; c) Kavita’s testimony, supported by Sha Li Li’s own evidence, about the delivery to Genneva’s office; and d) the signature on the CPO in Genneva’s official section, even if the specific signatory cannot now be identified. [185] While there are documentary inconsistencies, these do not outweigh the fundamental evidence that Genneva’s own computerised system generated an SPA, which according to Genneva’s own witness’s evidence about systematic procedures, could only occur if both payment and gold had been received and verified. [186] For Lim Ting Chai’s subsequent purchase transaction, similar process evidence applies. He produces a CPO dated 30.8.2012 showing his purchase of 5,230 grams at RM209 per gram for RM1,093,070.00. His CPO shows in the RTN(g) column “4,500” grams returned. He paid an additional RM188,570.00 via Hong Leong Bank cheque no. 216157 dated 30.8.2012 into Genneva’s Trust Account [(Genneva Malaysia Sdn Bhd – Trust Account (CIMB Islamic A/C: 14560000662104)]. Genneva subsequently issued him an SPA dated 5.9.2012 and a coupon (no. 4027) dated 6.9.2012 for collection of the purchased gold. The generation of these documents by Genneva’s system evidences that the transaction proceeded through all stages including the receipt of the returned gold. The same process evidence and reasoning applies: the SPA would not have been generated unless Genneva had verified receipt of both the cash payment and the returned gold. [187] For Mother Mangalam’s case, this issue does not arise as hers was a first purchase transaction where she paid cash of RM309,560.00 on 19.9.2012 but never received the gold she had purchased. Piercing the Corporate Veil [188] The Plaintiffs claim against both the company (Genneva) and the individual directors, namely Khairuddin, Philip and Tan personally. They submit that the corporate veil should be pierced to hold the individual Defendants liable because they used the corporate structure to perpetrate fraud. The Plaintiffs on the fraudulent purpose principle, arguing that the individual Defendants knew that Genneva was going to be used for a purpose that was not legitimate and yet they represented it as legitimate. The Plaintiffs submit that the circumstances warrant piercing the corporate veil on three grounds: first, that the company was set up for fraudulent purposes; second, concealment (continuing the business after the June 2012 fatwa without informing customers); and third, evasion (misrepresenting the business to BNM and diverting customer monies to other companies). [189] The Defendants submit that the corporate veil should not be pierced absent evidence that the company was formed from inception with criminal or fraudulent intent. They argue that BNM never said the business was fraudulent from the beginning, and that the Defendants’ lack of understanding does not equate to criminal intent. The Defendants contend that in order to pierce the corporate veil, the court must look at the mental state of the directors at the time of formation and find that the sole purpose of creating Genneva was to defraud the public. They submit that the individual Defendants believed what they were doing was legal, even though this belief was ultimately proven wrong by the criminal courts. The Defendants argue that proof of eventual illegality is not sufficient, and that there must be clear evidence that they formed the company with the intention to defraud from the outset. They further contend through counsel that the individual Defendants are “not that creative to say one thing or do another thing” and that they still do not understand what is meant by buy-back guarantee and taking deposits, emphasising their claimed confusion rather than criminal intent. [190] The principle that a company is a separate legal entity distinct from its shareholders and directors is fundamental to company law. However, the corporate veil may be pierced in exceptional circumstances, particularly where the corporate form has been used as a device or facade to perpetrate fraud. [191] The principles for piercing the corporate veil were established by the Federal Court in Gurbachan Singh Bagawan Singh & Ors v Vellasamy Pennusamy & Other Appeals [2015] 1 CLJ 719, which affirmed that the court will lift the corporate veil if a company was set up for fraudulent purposes. The Federal Court in Ong Leong Chiou & Anor v Keller (M) Sdn Bhd [2021] 3 MLJ 622 further held that the High Court was entitled to disregard corporate personalities and lift the corporate veil by reason of fraud alone. Additionally, two principles may be applied in deciding whether the corporate veil should be pierced: (a) the concealment principle; and (b) the evasion principle, as articulated in the UK Supreme Court case of Prest v Petrodel Resources Limited & Ors [2013] UKSC 34 and endorsed by the Federal Court in Ong Leong Chiou. These principles recognise that corporate structures may be misused in different ways to facilitate fraud or avoid legal obligations. [192] In the present case, multiple factors support piercing the corporate veil. First, the criminal court found that Genneva’s business was not a genuine gold trading operation but rather an illegal deposit-taking scheme disguised as gold trading. The High Court in the criminal proceedings held that “Genneva Malaysia was merely using gold as a medium to camouflage the deposit-taking scheme it perpetuated” and that the scheme involved documentation that was “designed as an elaborate scheme of deposit taking” where “gold was used as an instrument to perpetuate that scheme”. The criminal court found that “when the scheme is closely examined in detail, it clearly defied common sense”. The business model adopted by Genneva amounted to nothing more than a “scheming gimmick to perpetuate its activities of accepting illegal deposits”. The corporate structure was the vehicle for this fraud. [193] Second, the individual Defendants were not passive shareholders but active operators of the scheme who controlled Genneva and made key decisions about its business model. Khairuddin was a director of Genneva, involved in board meetings, marketing activities, and responsible for networking and liaising with authorities for the business. Philip was a director of Genneva, heavily involved in promotional activities and also served as a consultant. Tan was a director of Genneva, involved in general administrative matters and also served as a consultant. They authorised the promotional materials, gave talks to customers, and dealt with regulators including BNM. The company was their instrument. Tan admitted in his evidence at trial that he and the other directors personally benefitted from the business of Genneva. When asked directly whether he and the other directors personally financially benefited from the business operations of Genneva, Tan stated: “Definitely, we do business, we benefit from the business.” [194] Third, the fraud I have found was perpetrated through the company in the name of the company. The misrepresentations were made on behalf of Genneva but with the knowledge and participation of the individual Defendants. The criminal court found that all three of the individual Defendants had knowledge that Genneva was not licensed to accept deposits and that it had practised buy-back of gold from its purchasers at their original prices. The High Court in the criminal proceedings specifically found that “merely asserting that he had no role to play in the illicit scheme was not enough” and that there was “nothing to show that the sixth accused as a director had done anything to ensure that Genneva Malaysia did not embark on a venture that was against the law”. To allow the individual Defendants to shelter behind the corporate form would enable them to profit from their own fraud. [195] Fourth, the systematic nature of the fraud, which the criminal court found involved carefully crafted documentation to elude detection, shows that the corporate structure was deliberately used as part of the fraudulent scheme. The scheme required knowledge and deliberate design. The Defendants were the architects and operators of this scheme. The consultant’s guide, which set out step-by-step procedures for the “Renew or Second Purchase” process, shows that the buy-back mechanism was systemised and integrated into the business operations. This was not something that happened by accident or without management knowledge. [196] Fifth, there is evidence that this was not the first time such a business model had been operated by persons associated with the individual Defendants. A previous company called Genneva Sdn Bhd (as distinct from Genneva Malaysia Sdn Bhd, the 1st Defendant) had been convicted of illegal deposit-taking. The person involved in that company was Ng Poh Weng, who also attended meetings with representatives of Genneva and was involved with Genneva. As Philip testified in re-examination, the owners of Genneva, namely Marcus Yee, Ng Poh Weng and Chin Wai Leong, were the previous directors of Genneva Sdn Bhd. When Genneva Sdn Bhd was raided, “they started a new business and wanted, they could not become directors of the new business” so they approached Philip and Tan to become directors. This pattern of conduct, namely operating an illegal deposit-taking scheme through one company and, when that company was prosecuted, setting up a new company with a similar name and a similar business model, is highly probative of fraudulent intent and the conscious misuse of the corporate form. [197] Sixth, the concealment principle is demonstrated by the evidence that even after the June 2012 fatwa declaring that Genneva’s business was not Syariah-compliant, the individual Defendants continued their business in the same model without informing customers of this material development. Khairuddin, when asked whether he would have taken steps to change the business model if he had known that the fatwa council had declared the business not compliant, initially claimed he could not remember the fatwa but then confirmed that as a director he should have taken steps to change the model. The evidence showed that the Plaintiffs made their purchases in August and September 2012, after the June 2012 fatwa. By continuing to operate and accept customer money after receiving the fatwa without disclosing this to customers, the individual Defendants consciously used the corporate structure to conceal material information and facilitate fraud. [198] Seventh, the evasion principle is demonstrated by the evidence that the individual Defendants misrepresented the nature of Genneva’s business to BNM. Encik Mohd Idham Mohd Kenali from BNM testified in the criminal proceedings that he was not given the full story by Genneva’s representatives. He confirmed that Genneva told BNM that its business was factoring and leasing, when in fact Genneva was not carrying on factoring and leasing business. An email from BNM dated 20.2.2012 to Tan stated: “Publication of an Announcement by Genneva Malaysia Sdn. Bhd. Our meeting in Bank Negara Malaysia on 13 February 2012 on the above matter refers. 2. As agreed in the above meeting, we attached the ‘Announcement’ to be published by Genneva Malaysia Sdn Bhd (GMSB) in major newspapers, including Sabah and Sarawak. The publication is to be made within 7 days from the date of this email.” [199] The announcement was to clarify that Genneva was only an approved Schedule Business under the Third Schedule of BAFIA 1989 relating to leasing and factoring business, that it had not been granted any licensed to collect deposit, and that it was no longer offering a buy-back guarantee effective 13.6.2011. This shows that by early 2012, the individual Defendants knew that representations about the legitimacy and licensing of the business were false, yet they used the corporate structure to evade their obligations to customers. [200] Eighth, the evasion principle is further demonstrated by evidence that monies paid by customers into Genneva’s accounts were subsequently diverted into the accounts of other companies owned and controlled by the individual Defendants. Evidence at trial showed that Philip and his wife were directors of Success Altitude Sdn Bhd, and funds from Genneva were transferred to Success Altitude. Khairuddin received his consultant commission from LK Agency. Tan received his consultant commission from Good Decade. When Philip was asked in the criminal proceedings: “Why did the payment made through Good Decade instead of Genneva Malaysia Sdn Bhd pay it directly to you?”, his answer was “I don’t know”. When asked “So whatever you just received whatever money was transferred to you?”, he answered “As commission, yes.” Success Altitude Sdn Bhd, Ng Advantage Sdn Bhd, and other companies were convicted together with the individual Defendants for the offence of money laundering. The systematic diversion of customer funds through multiple corporate entities demonstrates the deliberate use of corporate structures to evade tracing of funds and avoid accountability. [201] The Defendants’ argument that there must be proof of fraudulent intent from the moment of incorporation is too narrow. The evasion principle established in Prest v Petrodel Resources Limited and endorsed by the Federal Court in Ong Leong Chiou recognises that the corporate veil may be pierced where a company’s separate legal personality is being used to evade legal obligations, regardless of whether this was the original purpose at incorporation. The evasion principle applies where existing corporate structures are misused to perpetrate fraud or avoid liabilities. While formation of a company specifically to commit fraud from inception is one ground for piercing the veil under the “fraudulent purpose” principle in Gurbachan Singh Bagawan Singh, it is not the only ground. The subsequent use of an existing company to perpetrate fraud is equally sufficient to justify piercing the corporate veil. The Federal Court in Ong Leong Chiou held that the court was entitled to disregard corporate personalities and lift the corporate veil by reason of fraud alone, without requiring proof that the company was formed for fraudulent purposes from inception. The evidence shows that by 2011 at the latest, when the individual Defendants were required by BNM to publish disclaimers about the buy-back guarantee (effective 13.6.2011) while continuing to operate it in practice, they were consciously using the corporate structure to facilitate fraud. Whether this was their intent from day one of incorporation is beside the point. [202] I find that this is an appropriate case for piercing the corporate veil. The individual Defendants controlled Genneva, operated its fraudulent scheme, made misrepresentations through it, concealed material information from customers, evaded regulatory requirements, and diverted customer funds through other corporate entities under their control. The multiple grounds established by the evidence, including the fraudulent nature of the scheme, the active participation of the individual Defendants, the concealment of material facts, the evasion of legal obligations through misrepresentations to regulators and the diversion of funds, and the pattern of conduct involving a previous similar company, amply justify disregarding the corporate personality of Genneva. The individual Defendants are personally liable for the fraudulent misrepresentations and breaches of trust committed through Genneva. Breach of Contract [203] The Plaintiffs plead breach of contract as an alternative cause of action. They submit that binding agreements were entered into with Genneva for the purchase of gold, pursuant to which Genneva was obliged to deliver the Purchased Gold to the Plaintiffs. Genneva breached these agreements by failing and refusing to deliver the gold notwithstanding the Plaintiffs’ requests. Lim Ting Chai pleads that on 22.5.2012 and 30.8.2012, he entered into agreements with Genneva to purchase a total of 5,230 grams of gold for RM1,093,070.00, which gold was never delivered. Sha Li Li pleads that on 5.9.2012, she entered into an agreement with Genneva to purchase 4,490 grams of gold for RM938,410.00, which gold was never delivered. Mother Mangalam pleads that on 19.9.2012, she entered into an agreement with Genneva to purchase 1,420 grams of gold for RM309,560.00, which gold was never delivered. [204] The Plaintiffs submit that whilst the Plaintiffs’ claims are not premised primarily on breach of contract, binding contracts were nevertheless formed through Genneva’s standard transactional process. Customers would submit CPOs containing the particulars of their intended purchases, including the description of the gold product, the amount of gold, the hibah rate, the unit price fixed by Genneva, and the amount to be paid. Upon payment being made and the CPO being submitted to Genneva’s office, Genneva’s staff would fill up the bottom portion of the CPO under the heading “For Office Use Only” to confirm the purchase. Genneva would then issue SPAs setting out the name and particulars of the purchaser, the description and amount of gold purchased, the unit price, and the amount paid. The Plaintiffs emphasise that SPAs were generated only upon confirmation by Genneva that payment had been received, as recorded in Genneva’s internal system which was exclusively controlled and managed by Genneva. The Plaintiffs rely upon the evidence of PW6, Ms Sim Boon Lian, a former Genneva employee, who testified: “If I’m not wrong, because that is quite some time, upon the payments cleared and HQ will approve from the system, then the branches only can print out the S&P.” In some cases, Letters of Hibah were also issued by Genneva, evidencing the contractual arrangement. [205] The Defendants submit that there were no binding contracts between the Plaintiffs and Genneva. The CPOs contained an express disclaimer stating: “I/we hereby declare that I/we am/are aware that this order does not bind Genneva until it is accepted in writing by Genneva.” When this was put to PW1, Kavita, in cross-examination, she agreed: “I will have to agree because of what’s written there on this CPO.” The Defendants argue that the Plaintiffs have produced no document in writing showing that Genneva accepted the offers contained in the CPOs. The SPAs produced by the Plaintiffs were not signed by Genneva or by any of its authorised signatories. When this was put to DW5, Mr Lim Kah Heng, he observed: “I didn’t see that, you know, all this S&P, there is acceptance by the company.” The Defendants contend that although SPAs may have been prepared, they were not binding on Genneva as neither Genneva nor the Plaintiffs had signed them. The Defendants further submit that the Plaintiffs’ claims should properly lie against the Public Prosecutor under section 61 of AMLA or against the liquidator of Genneva, given that all assets of Genneva including the gold had been seized by BNM. [206] Given my findings on fraudulent misrepresentation and constructive trust, it is not strictly necessary to determine the breach of contract claim. The Plaintiffs have established their primary causes of action and are entitled to relief on those grounds. However, for completeness, I shall address the alternative claim in contract. This is appropriate as the Plaintiffs have pleaded it and the parties have made submissions on it, and it provides an independent basis for recovery should any aspect of the primary claims be found deficient on appeal. [207] I turn first to whether binding contracts were formed. A contract requires offer, acceptance, consideration, and intention to create legal relations. The CPOs constituted offers by the Plaintiffs to purchase gold from Genneva. The CPOs specified with precision the gold to be purchased, the quantity, the price, and the payment arrangements. Although the CPOs contained a disclaimer that offers were not binding on Genneva until accepted in writing, this merely reflected the common law position that an offer does not bind the offeree and may be withdrawn before acceptance. The disclaimer did not prevent a binding contract from arising upon acceptance. [208] The question is whether Genneva accepted the offers. I find that acceptance occurred through Genneva’s issuance of the SPAs and, in some cases, Letters of Hibah. The evidence demonstrates that these documents were generated by Genneva’s internal system only after payment had been confirmed and processed. DW5 testified that Genneva’s process required that “once the CPO has been approved, then the S&P will be able to generate out” and that “once the account department have already checked the payments has been made, ok, and they already acceptance the offers to purchase, then the, they will start to give an instructions to the gold departments for preparation of gold.” This evidence shows that the generation and issuance of an SPA constituted Genneva’s acceptance of the customer’s offer. The SPA was not merely a pro forma document or an acknowledgment of receipt; it was a systematic confirmation that Genneva had accepted the transaction and would proceed to fulfil its obligations. Although the SPAs were unsigned, the absence of signatures does not negate the formation of contracts. Contracts may be formed by conduct, and Genneva’s deliberate act of generating and issuing SPAs through its controlled system after receiving payment constituted acceptance by conduct. The fact that Genneva intended the SPAs to be contractual documents is evident from their content, which sets out all the essential terms of sale and purchase agreements. Furthermore, in some cases Genneva issued Letters of Hibah, which explicitly referenced the “agreement” and confirmed Genneva’s contractual obligations to provide hibah payments. [209] The terms of these contracts obliged Genneva to deliver the Purchased Gold to the Plaintiffs. Genneva breached these contracts by failing and refusing to deliver the gold despite the Plaintiffs’ demands. The Defendants do not contend that gold was delivered to any of the three Plaintiffs for the transactions in question. In his letter of demand dated 7.1.2013 to Genneva, Lim Ting Chai stated: “2……But you have not delivered the gold product of 5.230kg to me, contrary to your undertaking and obligation by the agreement. 3. Under the agreement I am also entitled to receive from you hibah amount of roughly RM32,000 at the rate of 3% for six months starting from 6th September. I have not received any hibah payments from you to date.” [210] This breach is admitted in substance by the Defendants, whose defence rests not on contending that delivery occurred, but on asserting that no binding contracts existed in the first place. [211] As to the liability of the individual Defendants, I have already found at paragraphs 188 to 202 above that the corporate veil should be pierced and that Khairuddin, Philip and Tan are personally liable for the fraudulent misrepresentations and breaches of trust committed through Genneva. The same reasoning applies to the breaches of contract. The individual Defendants were the directors and controlling minds of Genneva at all material times. Khairuddin was the Director and Vice-Chairman. Philip was the Marketing Director responsible for marketing. Tan was the Adminstrative Director. These individuals controlled Genneva’s business operations and its finances, particularly with regard to the business model adopted and the monies deposited by customers for the purchase of gold. They knew that Genneva was entering into agreements to sell gold whilst lacking the ability or intention to deliver. They knowingly allowed the breaches to occur and continued to accept payments from customers whilst aware that Genneva would not fulfil its contractual obligations. In these circumstances, the individual Defendants are personally liable for the breaches of contract committed by Genneva. [212] The breach of contract claim therefore succeeds. Each Plaintiff has established that a binding contract was formed with Genneva for the purchase of gold, that Genneva breached that contract by failing to deliver the gold as agreed, and that the Defendants, including the individual Defendants, are liable for those breaches. The Plaintiffs are entitled to damages for breach of contract, assessed as the value of the gold that should have been delivered to them, as addressed in the section on quantum above. Money Had and Received [213] The claim for money had and received is a restitutionary claim founded on the principle of unjust enrichment. As stated by the Supreme Court in New Kok Ann Realty Sdn Bhd v Development & Commercial Bank Ltd New Hebrides (In Liquidation) [1987] 2 MLJ 57 at page 64, citing the views of Lord Haldane L.C. in Royal Bank of Canada v Rex [1913] AC 283 at 296: “It is a well-established principle of the English common law that when money had been received by one person which in justice and equity belongs to another, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff, the latter may recover as money had and received to his use.” [214] This principle was affirmed by the High Court in Affin Bank Bhd v MMJ Exchange Sdn Bhd & Anor [2011] 9 MLJ 787 at paragraphs 46-47. [215] In the House of Lords decision in Banque Financiere de la Cite v Parc (Battersea) Ltd [1998] 1 All ER 737 at 740h and 747d-g, a four-stage inquiry for determining claims in unjust enrichment was established. This four-stage inquiry was expressly adopted by the Federal Court in Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441, where Azahar Mohamed FCJ at paragraph 112 held: “Since then English law has recognised an independent law of unjust enrichment by recognising a claim for restitution based on unjust enrichment... the highest courts have now conclusively recognised that unjust enrichment is a distinct source of rights and obligations in English private law that ranks alongside contract and civil wrongs in importance and accordingly calls for discrete stand-alone treatment.” At paragraph 117, the Federal Court stated: “The principle underlying the cases... is that, in the context of the present case, a cause of action in unjust enrichment can give rise to a right to restitution where it can be established that: (1) The Plaintiff must have been enriched; (2) The enrichment must be gained at the Defendant’s expense; (3) That the retention of the benefit by the Plaintiff was unjust; and (4) There must be no defence available to extinguish or reduce the Plaintiff’s liability to make restitution.” [216] At paragraphs 130-131, the Federal Court concluded: “On the factual matrix of the present case, in our judgment, injustice has occurred to such an extent that the Defendant has not only suffered a loss, but the Plaintiff is at the same time made richer by the Defendant’s loss by the same amount... The Plaintiff should not be allowed to reap the windfall at the expense of the Defendant... To conclude, we hold that the Defendant had made out a cause of action in unjust enrichment in that the plaintiff has been enriched, that this enrichment was gained at the Defendant’s expense, and that the Plaintiff’s enrichment was unjust.” [217] The Federal Court thus expressly recognised unjust enrichment as a separate cause of action in Malaysia which gives rise to restitution, independent of the existence of a contract. [218] Applying the four-stage inquiry to the present case, the evidence clearly establishes that the Defendants have been enriched. Monies were paid into Genneva’s CIMB trust account bearing account number 14560000662104. The evidence adduced at trial confirms that the account details match the relevant transactions. Lim Ting Chai paid RM188,570.00 by Hong Leong cheque number 216157 dated 30.8.2012. Sha Li Li paid RM136,760.00 by CIMB bank transfer dated 4.9.2012. Mother Mangalam paid RM309,560.00 by remittance application dated 19.9.2012. Upon receipt of these payments, SPAs were generated: Lim Ting Chai’s SPA dated 5.9.2012, Sha Li Li’s SPA dated 5.9.2012, and Mother Mangalam’s SPA dated 20.9.2012. Genneva thus acknowledged and accepted the payments for the intended purchases. Genneva’s General Manager (DW5) admitted in cross-examination that “once payment has been made, the transaction is effectively completed.” Although the monies were paid into Genneva’s trust account, all of the Defendants benefitted and were enriched from these transactions, as the monies in Genneva’s accounts were diverted into other company accounts owned and controlled by Genneva’s operators. [219] This enrichment occurred at the expense of the Plaintiffs, who did not receive the gold they contracted to purchase: Lim Ting Chai did not receive his 5,230 grams of gold valued at RM1,093,070.00 and suffered the loss of his 4,500 grams of returned gold and cash payment of RM188,570.00; Sha Li Li did not receive her 4,490 grams of gold valued at RM938,410.00 and suffered the loss of her 3,970 grams of returned gold and cash payment of RM136,760.00; Mother Mangalam did not receive her 1,420 grams of gold valued at RM309,560.00 and suffered the loss of her cash payment of RM309,560.00. [220] The third and fourth elements of the inquiry are equally satisfied. Given the failure to deliver the gold, the Defendants’ retention of the monies paid is clearly unjust. In Lipkin Gorman (a firm) v Karpnale Ltd and another [1992] 4 All ER 512, the House of Lords at page 517e held that in a claim for monies had and received arising from funds obtained through fraudulent means resulting in unjust enrichment, it is sufficient for the claimant to establish that the money belonged to them and was paid to the defendant, by which the defendant was unjustly enriched. [221] The Court of Appeal in Koh Siak Poo v Sayang Plantation Bhd [2002] 1 MLJ 65 at page 71 held that an action for monies had and received is a question of fact, and where there is a total failure of consideration, a claim for restitution will succeed: “…In such circumstances their Lordships can see no reason in principle why the company should not be able to recover the amount of the advance made by them to the defendants on the ground that the money had been paid for a consideration which had failed, viz the failure of the defendants to perform their contractual obligation to repay the loan, there being no suggestion of any illegality or other ground of policy which had precluded recovery in restitution in such circumstances.” [222] On the facts of the present case, there has been a total failure of consideration. The Plaintiffs paid monies to Genneva for the purchase of gold. Lim Ting Chai and Sha Li Li also deposited gold for the purpose of acquiring additional gold. Not only did the Defendants fail to deliver the gold purchased by the Plaintiffs, but the monies and gold paid remain retained by the Defendants. There is no bona fide defence that can deny restitution. The fact that Genneva had been subject to forfeiture proceedings does not constitute a defence to this claim. [223] The Defendants have therefore been unjustly enriched at the expense of the Plaintiffs, having received and retained the benefit of the payments without performing their corresponding consideration. The foundation for the payments, namely the delivery of gold, has wholly failed. In line with the principles established in Lipkin Gorman and Koh Siak Poo, the Defendants are under a duty to make restitution. Where there has been a total failure of consideration, as is clearly the case here, the law imposes an obligation on the recipient to return the benefit received. The Plaintiffs are entitled to be reimbursed the monies paid. This claim is straightforward and clearly made out. Money was paid, consideration failed, and therefore the money is held for the Plaintiffs and must be returned. The claim for money had and received succeeds. Quantum of Damages [224] Having found in favour of the Plaintiffs on liability, I must determine the quantum of damages. [225] For Lim Ting Chai: He is entitled to recover RM1,093,070.00, being the total value of what he should have received. In August 2012, he agreed to purchase 5,230 grams of gold from Genneva at RM209 per gram for RM1,093,070.00. He provided full consideration by: (1) returning 4,500 grams of gold previously purchased from Genneva in May 2012 at RM201 per gram (valued at RM904,500.00), evidenced by Certificates of Ownership dated 8.5.2012 and 25.5.2012; and (2) paying RM188,570.00 cash via cheque dated 30.8.2012 into Genneva’s Trust Account. Genneva issued a CPO dated 30.8.2012 and SPA dated 5.9.2012 confirming the transaction, but failed to deliver the purchased gold. Lim Ting Chai received neither the 5,230 grams of new gold, nor the return of his 4,500 grams of original gold, nor his cash payment. Having provided full consideration and received nothing in return, he is entitled to recover RM1,093,070.00. [226] For Sha Li Li: She paid RM136,760.00 in cash and delivered 3,970 grams of gold valued at RM801,940.00, for a total consideration of RM938,490.00. She was entitled to receive 4,490 grams of gold. She received neither the new gold nor the return of her payment and original gold. She is entitled to recover RM938,490.00 being the value of what she transferred to Genneva. DETERMINATION OF ALL ISSUES TO BE TRIED [227] The parties agreed upon ten issues to be tried, as set out in the document dated 31.7.2023 (Enclosure 49, Marked “B”). For clarity and completeness, I shall now summarise how each issue has been addressed and determined in the foregoing analysis: Issue 1: Limitation Act 1953 - Whether the Plaintiffs’ actions ought to be dismissed on the ground that their claims are statute-barred under the provisions of the Limitation Act 1953. [228] This issue is addressed at paragraphs 65 to 85 above. I have found that the Plaintiffs’ claims are not statute-barred. The claims based on fraudulent breach of constructive trust fall within section 22(1)(a) of the Limitation Act 1953, for which no limitation period is prescribed. For other causes of action based on fraud, section 29 postpones the limitation period until discovery of the fraud, which occurred on 4.8.2020 when the High Court convicted the Defendants in criminal proceedings. The suits filed on 30.3.2022 are therefore within time. Additionally, the claim for money had and received has no prescribed statutory limitation period. Issue 1 is determined in favour of the Plaintiffs and answered in the negative. Issue 2: Res Judicata - Whether the Plaintiffs are estopped from filing their actions in this suit under the principle of res judicata. [229] This issue is addressed at paragraphs 45 to 64 above. I have found that the principle of res judicata does not bar the present action. The Federal Court declared the 2014 Suit null and void ab initio due to the absence of prosecutorial consent required under AMLA. When proceedings are void from inception, they produce no valid judicial determination capable of founding a res judicata defence. The Plaintiffs are therefore not estopped from bringing the present action. Issue 2 is determined in favour of the Plaintiffs and answered in the negative. Issue 3: False/Fraudulent Representations - Whether the Defendants had falsely and/or fraudulently represented that Genneva was a licensed body to carry out legitimate gold trading. [230] This issue is addressed at paragraphs 124 to 129 above. I have found that the Defendants did make false and fraudulent representations that Genneva was a licensed and legitimate gold trading business. These representations were made through promotional materials, talks, and consultant networks. The representations were false because Genneva was not licensed under BAFIA and was operating an illegal deposit-taking scheme disguised as gold trading. The representations were made fraudulently, as the Defendants knew or were reckless as to their falsity, as evidenced by their conduct in publicly disclaiming the buy-back guarantee whilst continuing to operate it in practice, and by the systematic concealment found by the criminal court. Issue 3 is determined in favour of the Plaintiffs and answered in the positive. Issue 4: Reliance on Representations - Whether the Plaintiffs relied on the Representations in purchasing Gold from Genneva and in entering into agreements with Genneva. [231] This issue is addressed at paragraphs 133 to 141 above. I have found that each Plaintiff relied on the fraudulent representations made by the Defendants. Lim Ting Chai attended Philip’s talk and relied on the materials shown. Sha Li Li relied on representations made by Kavita, who was Genneva’s consultant trained and authorised by the Defendants. Mother Mangalam similarly relied on representations made through Genneva’s promotional materials and consultant network. The representations were made for the very purpose of inducing investment, and they did induce the Plaintiffs to invest. Issue 4 is determined in favour of the Plaintiffs and answered in the positive. Issue 5: Constructive Trust - Whether Genneva held the Returned Gold and the additional sums deposited (RM188,570.00 by Lim Ting Chai and RM136,760.00 by Sha Li Li) on constructive trust. [232] This issue is addressed at paragraphs 146 to 158 above. I have found that a constructive trust arose when the Plaintiffs paid money to Genneva and/or delivered gold to Genneva pursuant to the fraudulent misrepresentations. At the moment these transfers occurred, Genneva and its operators held the Plaintiffs’ money and gold on trust to perform the contracts. Malaysian law recognises that where property is obtained through fraud, a constructive trust arises over that property. Issue 5 is determined in favour of the Plaintiffs and answered in the positive. Issue 6: Money for Use of Plaintiffs - Whether Genneva had received the following sums as money for and to the use of the Plaintiffs being the value of the Purchased Gold: RM1,093,070.00 from Lim Ting Chai; RM938,410.00 from Sha Li Li; RM309,560.00 from Mother Mangalam. [233] This issue is addressed at paragraphs 213 to 223 above under the heading “Money Had and Received.” I have found that Genneva received money from the Plaintiffs for their use (to purchase gold), but the consideration wholly failed as no gold was delivered. The claim for money had and received is a restitutionary claim for unjust enrichment which is clearly made out. The money was paid, consideration failed, and therefore the money is held for the Plaintiffs and must be returned. Issue 6 is determined in favour of the Plaintiffs and answered in the positive. Issue 7: Breach of Fiduciary Duties - Whether the Defendants breached their fiduciary duties as constructive trustees by failing/refusing to return the Returned Gold and additional deposits, and/or deliver the Purchased Gold or its value. [234] This issue is addressed at paragraphs 146 to 158 above under the heading “Constructive Trust.” I have found that once the constructive trust arose, the Defendants came under fiduciary duties to deal with the trust property properly. Instead of performing this trust obligation by delivering the Purchased Gold or returning the money and gold received, the Defendants fraudulently retained the Plaintiffs’ property. This constitutes a fraudulent breach of the constructive trust and a breach of the fiduciary duties owed by trustees to beneficiaries. Issue 7 is determined in favour of the Plaintiffs and answered in the positive. Issue 8: Fraud - Whether the Defendants committed fraud by: (i) falsely or recklessly representing that Genneva was licensed to carry out gold trading when it was involved in money laundering activities under the guise of gold trading; (ii) entering into agreements with the Plaintiffs with full knowledge that it was not licensed to carry out gold trading; and (iii) fraudulently holding the Returned Gold, additional deposits, and/or the Purchased Gold and/or the value of the Purchased Gold. [235] This issue is comprehensively addressed at paragraphs 89 to 145 above under the heading “Fraudulent Misrepresentation” and at paragraphs 159 to 167 under the heading “Money Laundering.” I have found that all three limbs of fraud are established. The Defendants made false representations knowing them to be false (paragraphs 94 to 129). They entered into agreements knowing Genneva was not licensed, as evidenced by their conduct in disclaiming the buy-back guarantee publicly whilst operating it in practice (paragraphs 110 to 129). They fraudulently held the Plaintiffs’ property by retaining it and failing to deliver the Purchased Gold or return the money and gold received (paragraphs 146 to 158). The criminal court found that Genneva was engaged in money laundering under the guise of gold trading, and these findings are binding in the present proceedings (paragraphs 159 to 167). Issue 8 is determined in favour of the Plaintiffs on all three limbs and answered in the positive. Issue 9: Breach of Agreement - Whether the Defendants breached any agreement with the Plaintiffs by refusing to deliver the Purchased Gold and/or pay the value of the Purchased Gold to the Plaintiffs. [236] This issue is addressed at paragraphs 203 to 212 above under the heading “Breach of Contract.” I have found that binding contracts were formed when the Plaintiffs made offers to purchase gold by submitting CPOs and making payment, and Genneva accepted by issuing SPAs and in some cases Letters of Hibah. Genneva breached these contracts by failing to deliver the Purchased Gold to the Plaintiffs. The individual Defendants are also liable for these breaches as they were the controlling minds of Genneva and knowingly allowed the breaches to occur. Issue 9 is determined in favour of the Plaintiffs and answered in the positive. Issue 10: Loss and Damages - Whether the Plaintiffs suffered loss and damages as a consequence. [237] This issue is addressed at paragraphs 142 to 144 (under fraudulent misrepresentation), and comprehensively at paragraphs 224 to 226 above under the heading “Quantum of Damages.” I have found that each Plaintiff suffered loss directly flowing from their reliance on the fraudulent representations and from the Defendants’ breaches. Lim Ting Chai is entitled to recover RM1,093,070.00 being the value of the gold he should have received. Sha Li Li is entitled to recover RM938,490.00 being the value of what she transferred to Genneva (RM136,760.00 cash plus 3,970 grams of gold valued at RM801,940.00, totalling RM938,700.00, though the pleaded amount is RM938,410.00 which I shall adopt). Mother Mangalam is entitled to recover RM309,560.00 being the monies she paid. Issue 10 is determined in favour of the Plaintiffs and answered in the positive. CONCLUSION AND ORDER [238] For the reasons set out above, I find that the Plaintiffs have proven their claims against all four Defendants. The defences based on res judicata and limitation fail. The substantive claims in fraudulent misrepresentation, breach of constructive trust, money laundering participation, breach of contract, and money had and received are all established. [239] The Defendants operated a systematic fraudulent scheme that deceived the Plaintiffs and many other members of the public. They made false representations that Genneva was a licensed and legitimate business when they knew, or were reckless as to the fact, that it was operating an illegal deposit-taking scheme. They induced the Plaintiffs to part with substantial sums of money and gold on false pretences. They hold the Plaintiffs’ property on constructive trust and have fraudulently breached that trust. [240] The individual Defendants cannot shelter behind the corporate veil. They were the controlling minds and operators of the fraudulent scheme and are personally liable alongside the company. [241] Accordingly, I enter judgment for the Plaintiffs against all four Defendants jointly and severally as follows: For Lim Ting Chai (Suit No. WA-22NCC-141-04/2022): a) Special damages in the sum of RM1,093,070.00, together with interest at 5% per annum from 30.8.2012; b) Alternatively to (a) above, an order that the Defendants forthwith return 4,500 grams of gold, specifically 999/999.9 gold wafer or bullion, and payment in the sum of RM188,570.00 to the Plaintiff; and c) Costs in the sum of RM60,000.00, subject to allocatur. For Sha Li Li (Suit No. WA-22NCC-142-04/2022): d) Special damages in the sum of RM938,490.00, together with interest at 5% per annum from 4.9.2012; e) Alternatively to (d) above, an order that the Defendants forthwith return 3,970 grams of gold, specifically 999/999.9 gold wafer or bullion, and payment in the sum of RM136,760.00 to the Plaintiff; and f) Costs in the sum of RM60,000.00, subject to allocatur. For the estate of Mangalam A/P S. Iyaswamy Iyer (Suit No. WA-22NCC-163-04/2022): g) Special damages in the sum of RM309,560.00, together with interest at 5% per annum from 19.9.2012; h) Alternatively to (g) above, an order that the Defendants forthwith return 1,420 grams of gold, specifically 999/999.9 gold wafer or bullion, and payment in the sum of RM309,560.00 to the Plaintiff; and i) Costs in the sum of RM60,000.00, subject to allocatur. 23 January 2026 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiffs: Ambiga Sreenevasan, Raja Eileen Soraya binti Raja Aman, Gokul Radhakrishnan and Amirah Huda binti Ahmad Nazree (Messrs Raja, Darryl & Loh) For the Defendants: Karnan A/L Rajanthiran (Messrs M.Sujata & Associates)