Mah Sau Cheong v Tan Eng Chin (BA-22NCVC-408-07/2017)

By Notice of Application dated 9 October 2017, the Plaintiff seeks Summary Judgment under Order 14 of the Rules of Court 2012 (Enclosure 8) in relation to its claim in these proceedings. It claims Summary Judgment for RM3,635,880-67 (RMB5,739,093) plus interest, being monies allegedly due under a Share Purchase Agreement reached between the parties, costs and other relief; 2

The Plaintiff’s claim is plain and obvious and the Defendant has no defence to the Plaintiff’s claim and there are not triable issues;

The cause papers for this application are as follows:

Notice of Application affirmed on 9 October 2017;

Plaintiff’s Affidavit in Support duly affirmed on 9 October 2017;

Defendant’s Affidavit in Reply affirmed on 26

Plaintiff’s Affidavit in Reply duly affirmed on 28

Plaintiff Statement of Claim dated 4 July 2017;

Defendant Statement of Defence dated 5

Plaintiff Reply to the Statement of Defence dated 3 October 2017.

To simplify the above affidavits, the Plaintiff is premised on a Share Purchase Agreement dated 7 January 2014 entered into between the Plaintiff and the Defendant. The Defendant has failed to honour his obligations and had never transferred the said shares from the Defendant to the Plaintiff despite Plaintiff’s having duly paid RMB5,739,093 in the manner provided in the Agreement. 3

Having gone through the pleadings and affidavits filed by the respective parties, I have concluded the facts below :

The Defendant is a Director and Shareholder of Enersave Projects Sdn. Bhd. Enersave Projects was at the material time indebted to South Malaysia Industries Berhad (SMIB) for the sum of RM2,994,600-50;

The Defendant then, in his capacity of Enersave Project to settle its debts to SMIB (Defendant Intention). The Directors of Econsave projects the n formally resolved to give effect to the Defendant’s intention;

To give effect to the Defendant’s intention, the Defendant had requested the Plaintiff to remit monies due and/or payable to him under the Share Purchase Agreement executed on 7 January 2014 to Enersave to enable Enersave Projects to repay its debt to SMIB. The Plaintiff then placed the sum of RM2,994,600-50 with his son, Mah Chong Wei Micheal as trustee; 4

(d)

Also on 15 October 2014, Enersave Projects informed SMIB of the Plaintiff’s son and trustee, Mah Chong Wei’s remittance of the sum of RM2,994,600-50 to SMIB directly as settlement of Enersave Project’s debts to SMIB. Enersave Projects also issued a Payment Voucher to SMIB to confirm the settlement of its debts to SMIB for the sum of RM2,994,600-50;

As such, the Plaintiff has fulfilled his obligations in the Agreement by paying the sum of RM2,994,600- 50 to SMIB as requested and intended by the Defendant through the Plaintiff’s son and trustee,

Under clause 4.1 of the Agreement, the date for completion is on 28 November 2014. By this Closing Date, certain events as described in Clause 4.1(a) and 4.1(b) of the Agreement have to take place; 5

The Operational Agreement was not signed by the Closing Date i.e., the condition in Clause 4.1(a) of the Agreement was not met by 28 November 2014. This was admitted by the Defendant at paragraph 17.2 of the Defendant’s Affidavit in Reply;

Thus, despite the Plaintiff performing his end of the bargain by paying the sum of RM2,994,600-50 as provided for in the Agreement, the Defendant’s 625,000 shares in Enersave International (HK) Limited were never transferred to the Plaintiff;

Since the said event in Clause 4.1(a) of the Agreement was not performed by the closing Date and the shares were never transferred to the Plaintiff, the Plaintiff decided to exercise his rights under the Agreement via the Plaintiff’s solicitor’s letter dated 25 July 2016 to terminate the

(k)

Also in the Plaintiff’s solicitor’s letter dated 25 July 2016, the Plaintiff demanded for the Purchase Consideration to be repaid by the Defendant. Till to date, the Defendant has failed to repay the Plaintiff the Purchase Consideration. DEFENDANT’S OPPOSITION TO SUMMARY JUDGMENT

In summary, the Defendant resisted the application for Summary Judgment on the following grounds :

The Plaintiff’s application for Summary Judgment is misconceived as it was filed too late, when the trial date has already been fixed and preparation for trial are already under way; 7

The Defendant claims that the Operational Agreement was signed after the date specified in the Share Sale Agreement when in fact the signing of such agreement was within the Plaintiff’s control and tantamount to an Estoppel;

The Defendant never received the money personally;

The Plaintiff’s claim that the shares were never transferred to him when in fact all documents were already signed and delivered; and

The Plaintiff’s allegation are now clearly an afterthought and for an ulterior motive. PRINCIPLES GOVERNING ORDER 14 APPLICATIONS

The principles to be applied in determining whether or not to give Summary Judgment under Order 14 Rules of court are not controversial. The Court may give Summary Judgment in a plain and obvious case where the Defendant plainly and obviously has no defence to the Plaintiff’s claim or part of the Plaintiff’s claim. See Bank Negara Malaysia v. Mohd Ismail Ali Johor & Ors. (1992) 1 CLJ 627; (1992) 1 CLJ (Rep) 14; (1992) 1 MLJ 400, Chen Heng Ping @ Tian Seow Hock 5Ors. v. Intradagang Merchant Bankers

(M) Berhad (1995) 3 CLJ 690; (1995) 2 MLJ 363, United Malayan 8 Banking Corp. Bhd. v. Palm & Vegetable Oils (M) Sdn. Bhd. & Ors. (1982) CLJ 547; (1982) CLJ (Rep) 358; (1983) 1 MLJ 206, and Abdul Rahim Abdul Hamid & Ors. v. Perdana Merchant Bankers Bhd. & Ors. (2000) 2 CLJ 457; (2000) 2 MLJ 417.

It is also a settled principle that in an application for Summary Judgment, the defendant will not be given leave to defend based on mere assertions alone, in Bank Negara (supra),the Supreme Court observed: “……Under Order 14 application, the duty of a judge does not end as soon as a fact is asserted by one party, and denied or disputed by the other on affidavit. Where such assertion, denial or dispute is equivocal, or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherentlyimprobable in itself, then the Judge has a duty to reject such assertion or denial, thereby rendering the issue are not triable………….”

The standard to be applied was eloquently articulated by Laddie J in Microsoft Corporation v. Electro Wide Limited (1997) FSR 580, where he said at page 593 to 594 that: “…….It is not sufficient just to look at each factual issue one by one and to consider whether it is possible that the Defendant’s story in relation to that issue is credible. The Court must look at the complete account of events put forward by both the Plaintiff and the Defendants and…….look at the whole situation. The mere fact that the Defendants support their defence by sworn 9 evidence does not mean that the Court is obliged to suspend its critical faculties and accept that evidence as if it was probably accurate. If, having regard to inconsistency with contemporaneous documents, inherent implausibility and other compelling evidence, the defence is not credible, the court must say so. It should not let the filing of evidence which surpasses belief deprive a Plaintiff of its entitlement to relief…….”

In an application for Summary Judgment, I am also guided by the principles laid down in National Company for Foreign Trade v. Kayu Raya Sdn. Bhd. (1984) 2 CLJ 220 (FC), George Seah FJ stated that: “……We think it appropriate to remind ourselves once again that in every application under Order 14, the first considerations are (a) whether the case comes within the order and (b) whether the Plaintiff has satisfied the preliminary requirements for proceeding under Order 14. For the purposes of an application under Order 14, the preliminary requirements:

The Defendant must have entered an appearance;

(ii) The statement of claim must have been served on the Defendant;

(iii) The Affidavit in Support of the application must comply the requirements of Rule 2 of the Order 14 ……………………………… If the Plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If however, these considerations are satisfied, the Plaintiff will have established a prima facie case and he becomes entitled to judgment. This burden then shifts to the Defendant to satisfy the Court why judgment should not be given against him……………….” 10

Similarly in the case of Cempaka Finance Bhd. v. Ho Lai Ying & Anor (2006) 3 CLJ 544 (FC), Steve Shim CJ (Sabah & Sarawak) in allowing the appeal has said that: “………In an application under Order 14 RHC, the burden is on the Plaintiff to establish the following conditions: (i) that the Defendant must have entered an appearance; (ii) that the statement of claim must have been served on the Defendant; and (iii) that the Affidavit in Support must comply with Rule 2 of Order 14 RHC in that it must verify the facts on which the claim is based and must state the deponent’s belief that there is no defence to the claim. Once those conditions are fulfilled, the burden then shifts to the Defendant to raise triable issues. The law on this is trite…………..”

With the above principles in mind, I turn now to consider the Defendant’s position. FIRST ISSUE Payment for shares not made to Defendant? Why? Any reasons?

Based on paragraph 3 to 9 of the Affidavit in Support, it was clear that the Defendant had requested the Plaintiff to remit monies due and/or payable to him under the Agreement to Enersave to enable Enersave 11 Projects to repay its debt to South Malaysia Industries Berhad (SMIB). In view of this request, later on 15 October 2014, the Plaintiff had then remitted the sum of RM2, 994,600-50 with his son, Mah Chong Wei Micheal as trustee directly to SIMB as settlement of Enersave Project’s debts to SMIB. Enersave Projects also issued a Payment Voucher to SMIB to confirm the settlement of its debts to SMIB for the sum of RM2, 994,600-50.

Despite the Defendant’s opposition to Summary Judgment and had raised this as one of the issues as appears at page 2 of the written submission ie. the Defendant never received the money personally. Upon scrutinized the Defendant’s Affidavit in Reply at para 10 and 11, I found out that prior to the Agreement being executed, Enersave Projects owed SMIB a sum equivalent to the Purchase consideration. The Defendant agreed to the Plaintiff paying the Purchase Consideration in one lump sum and he eventually and mutually agreed with the Plaintiff that the Purchase Consideration shall be used to pay the debts of Enersave Projects to SMIB. On these fact and the affidavits by both parties, it has actually explained as to why the monies for the payment of shares was not made to the Defendant. SECOND ISSUE Any breach of Clause 4.1(a)(b) Operational Agreement?? Time is of the Essence??

Clause 4.1 of the said Agreement reads as follow: 12 “…..The Closing shall take place on the day the conditions pertaining to the Nangang Project between XIANDA and Tianjin Technological Development Area (hereinafter referred to as “TEDA”)/ relevant authorities as follows are obtained by 28th November 2014: The signing of the Operational Agreement; and

The Approval of the Feasibility Study Report (hereinafter referred to as the “Closing Date”) It is clear from the above agreement that the date for completion is on 28 November 2014. By the Closing Date, the said events as described above in the agreement hasto take place. Nevertheless, the Operational Agreement was not signed by the Closing Date by the 28 November 2014 as per Clause 4.1(a). To this effect, it was admitted in the Defendant’s Affidavit in Reply as inparagraph 17.2. Despite the action taken by the Plaintiff in paying RM2, 994,600- 50 as provided in the Agreement, the Defendants shares in Enersave International (HK) Limited were never transferred to the Plaintiff.

Though the Defendant had admitted this fact, the counsel had submitted that it is an established principle that even if there is an express stipulation that “time shall be of essence” in a contract, the court has to take into account the intention of the parties in making such contract and the surrounding circumstances. Having regard to this, it is best to look at Clause 4.6 of the Agreement which read as follows : 13 “……Time shall be of the essence of this Agreement. The Purchaser shall at his sole discretion to terminate this Agreement if the closing Date shall not be materialized on or before 28 November 2014. In the event of such termination by the Purchaser, the purchase price of Chinese Yuan Five Million Seven Hundred Thirty Nine Thousand and Ninety Three (RMB5,739,093) paid to the Vendor shall be converted into a Term Loan to be repaid on or before 28th November 2016……….” Having examined the above clause, to my mind, the wordings are very clear and unambiguous. Moreso, the Defendant has not produced any documents which say otherwise. Never at any time did the Plaintiff had agreed that the timelines in Clause 4.1 may be abandoned. To conclude on this point and having clear wordings in the Agreement, the Defendant’s contention that time is not an essence is without merit and justification.In this regard, it remind me again on the assertion in the case of: Wooley Development Sdn. Bhd. v. Mikien Sdn. Bhd. (2008) 1 MLJ 585, Hamid Embong JCA (as he then was) : “……..When an issue of facts is raised in an affidavit opposing an application for a summary judgment the trial judge thus is duty bound not to merely accept it superficially and in a cursory manner. He is not bound to accept any allegation uncritically. In exercising his judicial discretion the judge is obliged to critically examine any assertion of fact and to do so in a fine-toothcomb manner if need be to determine if it were a bone fide factual dispute worthy of determination at a full trial……. 14 ……….in Malayan Insurance (M) Sdn. Bhd. v. Asia Hotel Sdn. Bhd.

2 MLJ 183, it was held that a summary judgment procedure under Order 14 of the RHC is not entended to shut out a Defendant and should only be exercised in clear case. It must be emphasized conversely, that a Plaintiff should not be put through the long-drawn costly process of a full trial in an action against a Defendant who is without a bona fide defence. This is the philosophy behind a summary judgment procedure…….”

Since the said event in Clause 4.1(a) of the Agreement was not performed by the Closing Date and the shares were never transferred to the Plaintiff, the Plaintiff has exercised his rights under the Agreement via the Plaintiff’s solicitor letter dated 25 July 2016;

Having said under clause 4.6 of the Agreement, upon the Plaintiff’s termination of the Agreement, the Purchase Consideration is converted into a Term Loan to be repaid by the Defendant to the Plaintiff on or before 28 November 2016;

By virtue of the Plaintiff’s solicitor’s letter dated 25 July 2016, the Plaintiff demanded for the Purchase Consideration but till to date the Defendant has failed to repay the Plaintiff.

In the light of the foregoing and in the upshot, after hearing the submission by both parties, the points made by the Defendant in its 15 Affidavit has no substance or afford it a defence or constitute a triable issue. Accordingly, I allow the Plaintiff’s application for Summary Judgment and costs of RM5, 000 to the Plaintiff. Dated 18 January 2018. (DATO’ HJ. MOHAMAD SHARIFF BIN HJ. ABU SAMAH) Judicial Commissioner (NCVC 6) High Court of Malaya Shah Alam, Selangor Darul Ehsan Counsel For the Plaintiff : Ashok Kandiah & Prathib Pathmanaban (Messrs. Kandiah Partnership.) For the Defendant : Ng Chek, K. Shanmuga & S. Kiattlin (Messrs. Ng Chek& Co.)