Low Chee Group Sdn. Bhd. v 1. ) Wong Kit Leong (BA-24NCvC-1405-07/2024)

WONG KIT LEONG (NRIC No.: 710506-03-5523)

MONTEIRO GERARD CLAIR (NRIC No.: 710725-71-5035)

RAYMOND TAN (NRIC No.: 601016-10-6349) … RESPONDENTS

This is an Originating Summon (OS) filed by the Plaintiff for an order to compel the Defendants to perform their obligations under the alleged Letter of Undertaking dated 13.12.2022 (the LOU) and subsequent prayers thereto.

The application was heard and, upon considering the submission from both parties, I allowed the OS and ordered that the Defendants to carry out, amongst others, the following obligations:

To redeem the property known as No. Hakmilik Geran Mukim 222, Lot 833, Mukim Batu, Daerah Gombak, Negeri Selangor Darul Ehsan (the property) from Insas Credit & Leasing Sdn Bhd (Insas) with costs and expenses borne by H2O Holding Sdn Bhd (H2O) within 60 days from the order (28.2.2025);

To ensure that the property is discharged and is free from all encumbrances;

To ensure that H2O delivers to the Plaintiff the Issue Document of Title in respect of the property, free from all encumbrances, within 60 days from the order.

A penal notice was also issued against the Defendants for non-compliance with the order.

The Defendants now appealed to the Court of Appeal, and below are my reasons.

Insas and H2O entered into two separate Moneylending Agreements dated 9.2.2011 and 19.5.2011, where Insas agreed to lend H2O (previously known as Red Zone Development Sdn Bhd) a sum of RM9,500,000.00 and RM5,000,000.00, respectively.

In consideration of the loans given by Insas, H2O was required to furnish various securities. H2O does not own any properties to be used as security for the Moneylending Agreements; hence, the Defendants approached the Plaintiff and requested the Plaintiff's property to be borrowed as security. Plaintiff agreed to the Defendants' request with the intention to help H2O. At the material time, the Defendants were the Directors of

Subsequently, the Defendants executed the LOU, wherein the Defendants had jointly and severally given an undertaking to the Plaintiff to perform several obligations, amongst others, to redeem the Plaintiff's property, which was given as security for the Moneylending Agreements.

The Defendants had given an undertaking to perform the following obligations (quoted verbatim as per the letter in enclosure 2, pages 10-11):- “We refer to the Moneylending Agreements both dated 9 February 2011 and 19 May 2011 between Insas Credit & Leasing Sdn. Bhd. (as lender) (“ICL”) and Red Zone Development Sdn. Bhd. (now known as H2O Holdings Sdn. Bhd.) (as borrower) (“H2O”, (collectively, “Moneylending Agreements”).

We, Monteiro Gerard Clair, Raymond Tan and Wong Kit-Leong (being the only directors and shareholders of H2O) (“we”, “us” or “our”) hereby irrevocably and unconditionally undertake to Low Chee Group Sdn. Bhd. (formerly known as Low Chee & Sons Sdn. Bhd.)(“LCG”) as follows:-

to undertake, procure and take all steps necessary to ensure that H2O fulfils all of its obligations and covenants under the Moneylending Agreements;

on or prior 31 December 2023 to redeem the Property from ICL at H2O's cost and expense and to undertake, procure and take all steps necessary to ensure that the property is discharged and free from all encumbrances with LCG's interests as the registered proprietor remaining intact (“Discharge of Property”). For this purpose, we shall procure and ensure that on or prior to 31 December 2023, H2O shall at H2O’s sole cost and expense deliver to LCG (i) the issue document of title in respect of the property registered in the name of LCG as the proprietor free from all encumbrances whatsoever and (ii) the relevant documents submitted to the Companies Commission of Malaysia evidencing the Discharge of Property.

to pay and be liable for such sum (i.e. an amount sufficient for the Discharge of Property) owing to ICL in the event default by any party under or pursuant to the Moneylending Agreements for any reason whatsoever;

unless and until the Discharge of Property is duly fulfilled in accordance with paragraph 2(b) hereof, to maintain our direct shareholding in H20 and not to allow any change in the shareholding of H-20;

unless and until the Discharge of Property is duly fulfilled in accordance with paragraph 2(b) hereof, to maintain our directorship in H2O and not to allow any change in the directorship of H20;

to pay and be liable for all damages, costs and expenses incurred by LCG in enforcing this letter; and

to indemnify LCG against all losses damages costs and expenses which LCG may incur or be liable for in respect of any claim, demand, liability, action, proceedings or suits arising out of or in connection with any breach by any party under or pursuant to the

However, despite the above, the Defendants have refused, failed and/or neglected to perform the said obligations that were agreed by them.

On 5.7.2024, the Plaintiff filed this OS premised on an alleged breach of obligations in the LOU. The grounds in support of this application were submitted by Plaintiff as follows:

There is a valid and binding contract by virtue of the said LOU.

The Defendants have breached the contract by failing to perform their obligations.

No valid and reasonable grounds by the Defendants to oppose this application.

In response, the Defendants stated that the Plaintiff is not legally entitled to enforce the terms of the LOU against them for the following reasons:-

The LOU is void for lack of consideration.

In order to redeem the property, the Plaintiff should add H2O as a party in the OS herein, as they are the proper party to this action.

The LOU cannot be enforced against the Defendants personally, as they were merely acting as officers and/or agents of H2O; and

A unilateral variation of the Moneylending Agreements is unlawful. Analysis of the Court

The law is clear that when a party enters into a contract, it governs the relationship between them, unless the signature was obtained by fraud or misrepresentation. This Court now have a duty to enforce such a promise and to uphold the sanctity of contracts into which the parties had entered (see Satiavathi Kayambu v. Tamby Raja Perumal [2023] 1 LNS 268 and Anthony Lawrence Bourke & Anor. v. CIMB Bank Bhd. [2018] 1 MLJ 104, CA). Is the undertaking a contract? An undertaking is defined as a pledge, a promise, and a guarantee (see Public Bank Bhd v Perwira Affin Bank Bhd [2001] 3 MLJ). The same principle of construction that applies to an ordinary contract is applied to the undertaking. It was decided in the Public Bank case (mentioned aforesaid) that the intention of the parties is to be gathered from the language used, and they are presumed to have intended what they said. In addition, a breach of an undertaking is similar to a breach of contract and attracts damages in the same manner.

Premised on the above-cited authorities, I agree with the Plaintiff that due to the execution of the LOU by the Defendants, they had undertaken to perform their obligations and to take the necessary steps to ensure the property is discharged and free from all encumbrances on or before 31.12.2023. The LOU is a valid and binding contract which the Defendants are estopped from denying or disputing. Was there a breach of the said contract?

The charges/securities registered by Insas against the property on 23.2.2011, 13.6.2011, and 18.8.2011, up to the date of filing this OS, have not been discharged. This was in breach of Clause 2(b) of the LOU. This assertion was supported by and evident from the land search made as exhibited at pages 63-65 of the affidavit in support.

It was submitted that the Defendants had failed to pay the amount owing to Insas to enable them to discharge the property, again in breach of Clause 2(a) and (c) of the LOU.

Therefore, the Plaintiff was correct to submit that Defendants had failed to perform their obligation under the LOU and consequently were liable for all damages, costs and expenses incurred pursuant to Clause 2(f) and (g) of the LOU. Were there valid and reasonable grounds by the Defendants to oppose this application?

The Defendants had submitted their grounds in objecting to this application, but I agree with the Plaintiff that those contentions were merely bare assertions and baseless allegations.

The Defendants state that the LOU was entered into without valid consideration by the Plaintiff, and the Defendants had signed it for and on behalf of H2O in their capacities as directors and shareholders. The Defendants assert that the proper party to answer the present claim is H2O, not them.

It is relevant to note that the Defendants did not dispute the validity of the LOU; however, they alleged that it was not issued by them in their personal capacity, but on behalf of H2O.

Regarding the issue of inadequate consideration, I refer to Section 26 of the Contract Act, 1950, which states that an agreement made with consent is not void merely because the consideration is inadequate. The adequacy of consideration is a factor that this Court should take into account when determining whether the parties freely gave their consent.

Again, the existence and validity of the LOU were not disputed. It was signed and executed by the Defendant, and therefore, I find that they had acknowledged and consented to be bound by its terms and conditions. Thus, the issue of consideration does not arise.

Whether it was executed on behalf of H2O, obviously, a company would act through its human directors or shareholders in relation to execution of any agreement on behalf of the company (H2O).

An undertaking is a pledge and a promise that only a human/individual could convey or act upon. The LOU clearly states that the Defendants, in their individual/personal capacities, irrevocably and unconditionally undertake to the Plaintiff of the said agreed obligations. More so, it was freely and voluntarily given by the Defendants. Furthermore, nowhere in the LOU states that these undertakings were pledged on behalf of H2O.

Hence, I am of the opinion that the Defendants are bound by the four corners of the contract and were estopped from disputing and denying their responsibilities and obligations under the LOU.

The other issue raised concerns the assertion that any variation to the terms of the Moneylending Agreements, without written consent from Insas and H2O, would not be permissible in law. Regarding this, I am of the view that this OS relates to a consensus between the Plaintiff and the Defendants, and the Plaintiff is not a contractual party to the Moneylending Agreement; thus, whatever terms or effects of the agreements would not be relevant to the Plaintiff.

In addition, according to the LOU, the Defendants undertake to take all steps necessary to ensure that H2O fulfils all its obligations and covenants under the Moneylending Agreements. Any purported breach will be at the Defendants' own risk with Insas. Therefore, it cannot be considered a unilateral variation affecting the Plaintiff, as they were not a party to the transaction.

I also find that the issue of privity raised by the Defendants is not relevant as the OS is only premised on the pledge and undertakings under the LOU and not in relation to the Moneylending Agreements.

At the outset, I find merit in the Plaintiff's application. The Defendants, being clearly aware of their obligations under the LOU, had failed to perform them, thus entitling the Plaintiff to the relief sought in the application.

Enclosure 1 is hereby allowed with costs of RM10,000.00, subject to the allocator. Damages will be assessed, and a penal notice may be inserted in the order. Dated this: 8 October 2025 ~signed~ (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR Counsels: For the Applicant: Jasbeer Singh Kaura together with Jeyshini Naidu a/p G. Kali Das Messrs Jasbeer, Nur & Lee For the Respondent: Alvin Tang Wye Keet together with