M9 COMPLETE TECHNOLOGY SDN BHD (Dahulunya dikenali sebagai M7 Complete Technology Sdn Bhd) v 1. ) KUM MENG WEI (WA-22NCC-60-02/2021)

KUM MENG WAI (NRIC No: 840510-08-6858)

SOLUMIE BINTI ODIAH (NRIC No: 780314-12-5552)

ARSHAD BIN ASRI (NRIC No: 700212-08-5171)

MILLIE JUSTINES BAHARUM (NRIC No: 770626-12-5114) ... … DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] This is my judgment in respect of the Plaintiff's claim against the Defendants for a sum under the profit guarantee in a Shareholders Agreement dated 24 December 2017 ("the SHA"). [2] The Plaintiff, M9 Complete Technology Sdn Bhd (formerly known as M7 Complete Technology Sdn Bhd), claims against the Defendants, jointly and severally, for the sum of RM4,457,934.40 representing shortfalls in profit guarantees for the years 2018, 2019 and 2020. [3] At the conclusion of the trial, I allowed the Plaintiff’s claim. Issues for Determination [4] The key issues for determination are: i. Whether the Plaintiff paid for the purchase of the initial 20% block of shares in Petrosahabat Engineering Sdn Bhd (PESB) in accordance with the SHA; ii. Whether the Plaintiff paid for the purchase of the additional 20% block of shares in PESB in accordance with the SHA; iii. Whether the Defendants are liable to the Plaintiff for the profit guarantee under the SHA; and iv. Whether the 2nd Defendant’s (Solumie Binti Odiah) remaining shares in PESB were unlawfully transferred to Cheung Tai Yin and M9 Agric Mac Sdn Bhd. Background Facts [5] The Defendants were the original shareholders of PESB. On or around 24 December 2017, the Plaintiff and the Defendants entered into the SHA. The salient terms of the SHA included: a. The Plaintiff agreed to inject RM2,500,000.00 into PESB to acquire 20% of the shares; b. The Plaintiff had the option to purchase an additional 20% block of shares within 2 years from May 2018 at the fixed price of RM3,500,000.00; c. The Defendants guaranteed an annual profit of RM5,000,000.00 (before taxation) for each financial year for 5 years commencing from 2018; d. For security of the profit guarantee, the Defendants pledged all their shares; and e. In the event the profit guarantee was not achieved, the Defendants agreed to pay the shortfall to the Plaintiff in accordance with the proportion of the Plaintiff's shareholdings. [6] The Plaintiff exercised its option to acquire the additional 20% shares, bringing its total shareholding in PESB to 40%. [7] PESB failed to achieve the guaranteed profit of RM5,000,000.00 for each of the financial years 2018, 2019, and 2020. The Plaintiff is therefore claiming the shortfall based on its 40% shareholding in PESB. Analysis and Findings Issue 1: Payment for Initial 20% Block of Shares [8] The Plaintiff adduced evidence that it had injected RM2,612,513.42 into PESB, comprising RM1,058,520.00 in cash and RM1,431,750.00 for operational expenses such as salaries, EPF, and SOCSO. This was supported by the testimony of PW1 (Ahmad Saifullah Bin Abdullah), whose evidence remained largely unchallenged. [9] Crucially, a Statement of Account dated 10 October 2018 (page 86, Bundle B1) signed by all Defendants acknowledged this injection of funds. During cross-examination, DW1 (Kum Meng Wai) admitted to signing this document and confirmed that the funds were paid by the Plaintiff. [10] DW1 further admitted that neither he nor any of the other Defendants made any payments toward the increased paid-up capital. The admission by DW1 clearly reinforces the Plaintiff’s claim that there was payment by the Plaintiff to PESB. [11] There is also a letter to the company secretary dated 10 October 2018 (pages 88-89, Bundle B1), signed by DW1, DW2, and the Plaintiff, authorizing an increase in the paid-up capital of PESB by RM2,490,000.00. This increase directly corresponds with the Plaintiff's injection of funds. [12] It is my finding that the said company secretarial document represents the best evidence to support the Plaintiff’s claim for the payment made. It is a contemporaneous document which can be considered by the court. The Federal Court in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229, commented on the reliability of contemporaneous documentary evidence over conflicting oral testimony. The court held: “For myself, I would with respect feel somewhat safer to refer to and rely on the acts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe his subsequent recollection or version of it, particularly if he is a witness with a purpose of his own to serve and if it did not account for the statements in his documents and writings. …” [13] In contrast, DW1 admitted he made no written complaint claiming that the Plaintiff failed to pay the RM2.5 million for the shares. DW1's police report concerning the alleged non-payment was only made after receiving the cause papers for this suit, suggesting it was an afterthought. [14] Based on the evidence, I am satisfied that the Plaintiff did pay the sum of RM2.5 million for the initial 20% block of shares in PESB. The documentation, including the Statement of Account and the letter to the company secretary, together with the admissions of the Defendants, lead me to conclude that the payment was made in accordance with the SHA. Issue 2: Payment for Additional 20% Block of Shares [15] Regarding the additional 20% block of shares, the Plaintiff presented bank remittance forms showing payments totalling more than RM4 million to PESB. These payments were made between August 2018 and January 2019. [16] Payment vouchers for these transactions were produced, all of which were signed by DW1 and described as "Advance Payment." These include: i. Payment voucher dated 8 August 2018 for RM300,000.00 (page 593, C1) ii. Payment voucher dated 24 August 2018 for RM500,000.00 (page 608, C1) iii. Payment voucher dated 14 September 2018 for RM700,000.00 (page 614, C1) iv. Payment voucher dated 23 October 2018 for RM500,000.00 (page 620, C1) v. Payment voucher dated 19 November 2018 for RM200,000.00 (page 624, C1) vi. Payment voucher dated 4 January 2019 for RM2,000,000.00 (page 630, C1) [17] During trial, the Defendants did not dispute receiving these funds but claimed they were for the purchase of a property known as the “Zhen Bangsar Property”. This defence was not pleaded in the Defendants' Statement of Defence. The Defendants only raised this allegation for the first time in DW1's witness statement. [18] It is trite law that the Plaintiff is bound by its own pleadings. A party is not permitted to improve its pleading in any other manner other than by way of an application to amend. Without such an amendment, whatever that is being raised cannot be used at trial. It would be unfair and prejudicial to the opposing party if an issue that was not within the contemplation of the parties is allowed to be considered by the Court at trial. (see Giga Engineering & Construction Sdn Bhd v Yip Chee Seng & Sons Sdn Bhd & Anor [2015] 6 MLJ 449). [19] I find the explanation that the said monies paid by the Plaintiff was meant to be for the purchase of the Zhen Bangsar Property to be an afterthought. I find this belated explanation unconvincing for several reasons: 1) Firstly, the last payment of RM2,000,000.00 was received on 4 January 2019, while the Sale and Purchase Agreement for the Zhen Property was only dated 15 April 2019. This clearly shows the inconsistency in the claim as it would be strange for the payments to be received four months before the purported purchase of the property. 2) Secondly, none of the payment vouchers mentioned the Zhen Property. All vouchers were simply labelled "Advance Payment”. A company must maintain its accounts in a manner that is clear and ambiguous. The term “Advance Payment” cannot be extended to mean payment for a property. 3) Thirdly, DW1 admitted during cross-examination that there was a separate loan taken out for the Zhen Property. This is a clear example of the DW1 himself destroying the line of defence put up by the Defendants at trial. [20] I am satisfied that the Plaintiff paid for the additional 20% block of shares, which exceeds the RM3.5 million stipulated in Clause 13A of the SHA. The timing of the payments, the documentation provided, and the Defendants' failure to provide convincing contrary evidence all support this finding. Issue 3: Liability Under the Profit Guarantee [21] Having established that the Plaintiff paid for its 40% shareholding in PESB, I now turn to whether the Defendants are liable under the profit guarantee provision in the SHA. [22] Clause 2.4(a) of the SHA clearly states: "The First Party guarantees to the Second Party, that the Company shall achieve a net profit of RM5,000,000 (before taxation) any given financial year for the next 5 years commencing from Year of 2018. In the event the First Party is unable to procure the minimum profit of RM5,000,000.00 (before taxation) in any given financial year, the Second Party is agreeable to grant the First Party an extension of time of one (1) year to make good the shortfall provided always that the First Party at any year end must have procured a minimum of RM3.5 million (before taxation) for that year." [23] Clause 2.4(d) further states: "In the event that the profit guarantee is not achieved in any year and subject to clause 2.4(a), the First Party shall pay the deficit and/or shortfall of the guaranteed profit to the Second Party based on the Second Party's proportion of shareholdings in the Company..." [24] The audited financial statements of PESB show the following profits: i. Year 2018: RM2,400,800.00. ii. Year 2019: RM154,764.00 iii. Year 2020: Loss of RM5,274,239.00 [25] During the trial, all Defendants admitted during cross-examination that they were aware of the profit guarantee clause and its binding effect. DW1 specifically acknowledged: Q: "Tetapi you tahu bahawa kalau profit guarantee tak dipenuhi mesti buat bayaran, betul?" A: "Ya, that's what insurans lah, sekuriti lah." [26] DW1 further confirmed that the profit guarantee was so serious that the Defendants pledged their shares and deposited them with Messrs SK Ting & Co. The emphatic admissions by the 1st Defendant demonstrates his understanding of the agreed position that parties had taken when the SHA was signed. [27] The Defendants' argument that the SHA is invalid because it was executed by a bankrupt (PW2, Alan Kuan) must fail. The evidence shows that PW2 was not the sole signatory for the Plaintiff. Ms. Lau Pei See, a director of the Plaintiff, was also a signatory to the SHA. Moreover, as established in Public Bank Bhd v Ria Realiti Sdn Bhd & Ors [2021] 4 MLJ 537, applying the "trio of considerations" test from Patel v Mirza [2016] UKSC 42, denying the Plaintiff's claim on the ground of illegality would be disproportionate, especially since the Defendants have gained advantages from the Plaintiff's investments. [28] In general, there is no legal provision that states a bankrupt cannot enter into a contract. There is no blanket provision anywhere in the Bankruptcy Act to the effect that a bankrupt was incapable of entering into a contract. (See in Kwan Chew Shen v. Citibank, NA [1987] 1 CLJ 314; [1987] CLJ (Rep) 704). [29] Parliament could have easily legislated a clause to prohibit bankrupts from entering into agreements if there was intention to do so. In the absence of any express prohibition under the Act, I do not find the SHA being invalid in any manner as a result of PW2 being a signatory. [30] Based on the shortfall in profits from the guaranteed amount of RM5 million per year, the Plaintiff is entitled to the following amounts: a. 2018: RM519,840.00 (based on 20% shareholding) b. 2019: RM1,938,094.40 (based on 40% shareholding) c. 2020: RM2,000,000.00 (based on 40% shareholding) [31] This totals RM4,457,934.40, which I find the Defendants jointly and severally liable to pay to the Plaintiff. Issue 4: Transfer of 2nd Defendant's Shares [32] The 2nd Defendant (Solumie) alleged that her signature on share transfer forms was forged, resulting in the unauthorized transfer of her shares to Cheung Tai Yin and M9 Agric Mac Sdn Bhd. [33] However, the 2nd Defendant has not produced any contemporaneous documents or expert evidence to support her allegation of forgery. During cross-examination, she admitted: Q: "Adakah awak kemukakan apa-apa dokumen yang menunjukkan tandatangan awak dipalsukan?" A: "Tak ada." [34] An allegation of forgery is a serious one to make. However, the conduct of the witness is contrary to the weight of the allegation made. Such an inconsistent stand attracts a finding of untruthfulness on the part of the witness in establishing her claim that her signature was forged. I accordingly dismiss the line of defence raised by the 2nd Defendant. [35] The police report lodged by the 2nd Defendant regarding the alleged forgery was made only three days after the Defence and Counterclaim was filed and about a month after she allegedly discovered the transfer of shares, suggesting it was an afterthought. [36] Furthermore, the 2nd Defendant admitted that she was not actively involved in the management of PESB and typically followed her husband's (DW1) instructions: Q: "Tetapi saya difahamkan Puan tak aktif langsung. Segala perkara diuruskan oleh suami, betul?" A: "Betul." [37] I also made an observation of the demeanour of the 2nd Defendant. She was clearly a housewife who was not connected with the running a business. Her testimony was clearly tailored to suit the Defence filed. [38] In the circumstances, I find that the 2nd Defendant’s evidence is of doubtful testimonial credibility, and that it is unsafe to accept her oral evidence unless it is corroborated by cogent and reliable contemporaneous documents. Counterclaim [39] The Defendants' Counterclaim contains two main elements:

Return of the 40% shares in PESB: The Defendants claim that the 40% shares in PESB should be returned to them because the Plaintiff allegedly failed to pay the purchase consideration as agreed in the SHA. The Defendants argue there was a "total failure of consideration" - meaning they never received the RM2.5 million for the initial 20% shares and the RM3.5 million for the additional 20% shares.

(ii) Return of the remaining 60% shares: The Defendants claim that their remaining 60% of shares in PESB were either: a) Wrongfully and unlawfully transferred to the plaintiff's nominees (Cheung Tai Yin and M9 Agric Mac Sdn. Bhd.), or b) Were to be held on trust by these nominees for the benefit of the 1st Defendant [40] Specifically, the 2nd Defendant claims her signature was forged on share transfer forms, and the other defendants claim they transferred their shares on the representation that they would be held on trust for the 1st Defendant. [41] The defendants are essentially seeking either the return of all 100% shares in PESB or equivalent damages, claiming the plaintiff failed to pay the agreed purchase price for the shares and wrongfully obtained control of the entire company. Finding on the Counterclaim [42] Given the analysis made in the preceding paragraphs, I would be contradicting myself if any consideration is made in favour of the Counterclaim. As the facts on both the claim and Counterclaim hinges on the issue of proof of payment by the Plaintiffs for the 40% shares and whether there was forgery involved in the transfer of the 2nd Defendant’s shares, it self-evident that the Counterclaim fails. Conclusion [43] For the reasons set out above, I allow the Plaintiff's claim and order as follows: a. The Defendants are jointly and severally liable to pay the Plaintiff the sum of RM4,457,934.40 representing the shortfall in the profit guarantee for the years 2018, 2019, and 2020; b. Interest on the above sum at the rate of 5% per annum from the date of filing of this suit until the date of full and final settlement; c. That the Defendants pay a sum of RM50,000.00 as costs, subject to allocator. - sgd- (AHMAD FAIRUZ BIN ZAINOL ABIDIN) Judge High Court of Malaya Kuala Lumpur Dated: 30th May 2025 Counsel Krishna Dallumah and Dinesh Yokheswaren (PDK) for the Plaintiff Messrs. Krishna Dallumah & Indran Jamie Wong and Sheldon Russel for the Defendants Messrs. Jamie Wong