Metroworld Resources Sdn Bhd v 1. ) Doo Chang Wei (WA-23NCvC-43-06/2020)

In attempting to set aside the concluded and completed sale and transfer of fourteen units (14) of high-end condominium units 30 sold by the plaintiff as a set off for financial considerations arising from the collective reading of the Joint Venture Agreement (JVA), the Power of Attorney (PA), the Business Investment Agreement (BIA) and the Turnkey Contract (TCA) for the construction of the condominium units, and 35 09/05/2025 16:10:28 Kand. 109

A declaration to void the four other Sale & Purchase Agreements (SPAs) on four impugned units involving the 7th Defendant (D7) and other prayers. [2] On 28.02.2025: 40 2.1 After considering all cause papers, evidence at the trial, and the parties' respective arguments on a balance of probabilities, I find as follows:

2.2 The Plaintiff (P): The plaintiff has failed to discharge the burden to establish his case 45 against the defendants and I dismissed it accordingly.

2.3 The 3rd Defendant (D3), 4th Defendant (D4) and 5th Defendant (D5): The Counterclaim is allowed with costs against the plaintiff, damages to be assessed (except for exemplary damages that were abandoned), interest and global costs of RM50,000.00 (inclusive of 50 counterclaim) subject to the allocator.

2.4 The 7th Defendant (D7): The counterclaim is allowed with costs against the plaintiff and a global cost of RM50,000.00 (inclusive of counterclaim), subject to the allocator. 55 2.5 Claims against 1st Defendant (D1), 2nd Defendant (D2) and 6th Defendant (D6) are similarly dismissed with no order for costs.

2.6 Aggrieved, the plaintiff (P) filed this appeal, and my reasons are as follows: 60 [3] The witnesses at the trial are as follows:

Plaintiff: PW1: Chantiran a/l Inthirarajah (Landowner) PW2: Kishenraj Kartigesu a/l Selvaraj Loganthan (involved with liquidation of the plaintiff) 65 PW3: Sundarasan a/l Arumugam (Liquidator)

Defendant D3, D4 & D5: DW1: Yap Ching Fa (Solicitor Messrs Norhafizah & Yap) DW2: See Soon Joo (Director Ascrest Sdn Bhd) 70 DW3: Tee Huat (One of the investors for Plaintiff) DW4: Doo Chang Wei (1st Defendant)

Defendant D7: DW5: Chan Kin Kui Barry (Hong Kong Citizen and the Chairman and Director of D7) 75 [4] THE BACKGROUND FACTS IN A NUTSHELL:

4.1 D1 (DW4) was the shareholder and former director of the plaintiff (who resigned w.e.f 20.07.2017), leaving D2 as the sole director of the plaintiff before the Kuala Lumpur High Court wound it up on 03.12.2019 (Winding-Up Petition: WA28PW-582-10/2019).

The landowner’s name Chanthiran a/l Inthirarajah (PW1), a party in the joint venture agreement with the plaintiff, presented the winding-up petition over the unpaid shortfall financial entitlement from the plaintiff under the said JVA.

On 03.12.2019, one Sundarasan a/l Arumugam (PW3) was 85 appointed as the liquidator for the plaintiff in place of the Official Receiver.

The liquidator (PW3) is supposedly taking the current action against the defendants, claiming a debt for the plaintiff totalling RM3,845,906.00 and others.

D1, D2 and D6 did not enter appearance in the present suit. They failed to mount any challenge on the claim against them, leaving D3, D4 and D5 (representing the estate of Law Yeong Chow(deceased)), and D7, who vehemently contested the plaintiff’s claim at the trial of this action. 95 4.2 The backdrop events:

On 01.07.2006, the plaintiff and the landowner (PW1) mentioned above entered into a Joint Venture Agreement (JVA) to develop the landowner’s landed property (Geran 3951, Lot 206, Seksyen 088A, Bandar Kuala Lumpur, approximately 1,667.648 square 100 meters in size) into a high-end, high-rise condominium development of a limited number of units known as Damai 206 @ Embassy Row.

To carry out the intent of the JVA, on 18.07.2006, the said landowner granted the plaintiff as the developer a Power of 105 Attorney (PA) to be exercised by its officers and directors to develop and deal with the said land, which also included the power to execute the necessary instruments, and the various Sale & Purchase Agreements (SPAs) for the sale of the planned eighteen (18) high-end condominium units. 110

The impugned development set-up:

On 17.08.2007, a development order approving the Damai 206 @ Embassy Row project was issued.

It comprises:

A ten-storey luxury condominium.

(ii) 18 units of strata parcels of 3106-3112 sq. ft per unit.

(iii) Built on two blocks (9 units per block).

(iv) The license to commence development was issued on 120 22.10.2008 by the relevant authority.

On 27.7.2010, the Ministry of Housing approved the increased selling price from RM2,950,700.00 to RM4,328,800.00

To fund the venture (agreed financial arrangement), on 125 14.06.2011, the plaintiff and D3 and Law Yeong Chow (deceased) entered into: - (1) Business Investment Agreement (BIA) and - (2) the plaintiff appointed a Turnkey Contractor (Acrest Sdn Bhd) to carry out the construction works (July 2011) 130 under a Turnkey Contractor Agreement (TCA) where the parties thereto in short agreed inter alia (refer exh: D5 and D6):

As the developer, the plaintiff requested funding/financial assistance of RM24,766,050.00 (investment sum) from the BIA investors to finance the proposed development's construction 135 cost.

(ii) The investors (D3 and Law Yeong Chow (deceased)) agreed to the request:

Advanced RM2,000,000.00 directly to the plaintiff towards the investment sum, which the plaintiff acknowledged 140 receipt of.

Undertake to finance the Turnkey Contractor from the balance of RM22,766,050.00 of the investment sum. The plaintiff agreed that payments to the turnkey contractor (Ascrest Sdn Bhd) constitute agreed payments under the 145 BIA.

In addition to the Investment Sum, the plaintiff undertook to settle all the landowner’s entitlement under the JVA under the Joint Venture from the additional advance and investment sum of RM6,200,000.00 (Additional Sum) from 150 the Investors at the request of the plaintiff, payable directly to the landowner or his solicitor.

Under clause 2.1, the plaintiff agreed to repay the Investment Sum (RM24,766.050) and the Additional Sum (RM6,200,000) in kind and/or in contra payment by 155 transferring all title, rights and interest in the condominium units comprised in the impugned development project.

As investors, D3 and Law Yeong Chow, deceased, had agreed in the BIA to fund the plaintiff concerning executing the impugned development project.

4.3 The SPAs on the eighteen (18) condominium units

The eighteen (18) condominium units were sold en bloc by the plaintiff to D1, D3 to D6 on several dates between 23.08.2011 and 29.08.2011 in 18 separate SPAs (CBOD Part B L.33 pp.58-140)

It was a three-party SPAs, naming the plaintiff the vendor, Chantiran a/l Inthirarajah (PW1) the landowner/proprietor, while D1, D3-D6 were the respective purchasers.

On 23.08.2011:

The plaintiff as a developer acting on the PA, honoured the 170 foregoing contractually obligatory clauses 2.1-2.3 in the BIA by executing the SPAs with D3 (DW3) and Law Yeong Chow (deceased) for the sale and purchase of twelve parcels (A2, A3, A5, A6, A8, A9, B2, B3, B5, B6, B8 and B9) of the condominium units with the respective SPAs duly 175 stamped on 08.09.2011 and 26.09.2011.

Two additional parcels, units A-3A and B-3A, were also conveyed to D3 and Law Yeong Chow (deceased) via duly executed SPAs in consideration for the Additional Sum of RM6.2m (landowner (PW1) entitlement under the JVA) 180 advanced to the plaintiff and paid directly to the landowner and/or his solicitor.

D7 involvement is concerning:

The original Principal SPAs dated 29.08.2011 for the four units in Parcels No. A1; B1; A7; and B7 were between the 185 plaintiff and the landowner (PW1) with D1 and D6 purchasers.

These four impugned units purchased by D1 and D6 in the original Principal SPAs were sold under sub-sale agreements to D7 by them.

In the sub-sale agreements (20.02.2014), D7 purchased parcels A1, B1, A7 and B7.

D7 purchased parcels A1 and B1 from D6 for RM2,022,800.00 and RM2,018,900.00 each. While for parcels A7 and B7 were acquired from D1 for 195 RM2,022,800.00 and RM2,018,900.00 respectively (CBOD part B L.33 pp.149 to 197).

D1 and D6 acknowledged in the sub-sale agreements that D7 has paid the entire purchase price, accompanied by the usual deed of assignments regarding the purchased 200 parcels.

Gross Development Value (GDV) 4 On 10.10.2011, the plaintiff had unilaterally determined that the landowner’s entitlement under the JVA computed on the percentage of the en-block sale of the eighteen condominium units 205 (RM30,587,586.00) was RM6,529,268.92. They proceeded to forward payments to settle the landowner’s entitlement by the advance (BIA) from D3 and Law Yeong Chow (deceased) by 19.10.2011:

However, after receipt of the money, the landowner disputed the 210 gross development value (GDV) used by the plaintiff to determine his entitlement under the JVA, which led him to initiate an arbitration proceeding to contest the GDV against the plaintiff.

The arbitrator on 18.12.2015 found that the price attributed to 215 the eighteen (18) condominium units was undervalued and that the appropriate GDV was between RM750.00-RM790.00 per sq. ft. The GDV was revised to total up to RM 43,090,740.00 and the plaintiff was ordered to make good a shortfall of RM 2,744,536.00 to the landowner’s (PW1) entitlement (CBOD 220 L.35 Part B pg 565-566):

At the arbitration proceeding, the validity and the agreed terms in the Business Investment Agreement (BIA) and the Turnkey Contractor Agreement (TCA) were not disputed.

(ii) The TCA was acknowledged in the Final Arbitration Award (clause 225 26.1) and the Contract Sum to be paid under the BIA.

(iii) The Final Arbitration Award also acknowledged the BIA (clause 26.2) and the consideration for the Investment Sum (12 units of condominium) in clause 26.2(a). 230

By a High Court order (OS: WA-24C(ARB)-28-09/2016) on 08.12.2016, the order by the arbitrator was registered with the High Court and the landowner (PW1) was allowed to enforce the said order against the plaintiff.

On 24.07.2017, the landowner presented a winding-up petition 235 for the shortfall against the plaintiff. The High Court granted the winding-up order against the plaintiff on 18.09.2017:

The Official Receiver took over the affairs of the plaintiff from 18.09.2017 to 03.12.2019 as the provisional liquidator.

(ii) After two years, on 03.12.2019, by a Court Order, Mr. Sudarasan a/l 240 Arumugam (PW3), a private liquidator, was appointed in place of the Official Receiver on the application by the landowner (PW1).

4.5 All Memorandum of Transfer (MOT) were duly executed and perfected (as of September 2018) by the plaintiff’s directors for the 245 fourteen (14) units of condominium to D3 and Law Yeong Chow (deceased).

The relevant authority issued the condominium units' Certificate of Completion and Compliance (CCC) on the development on 19.08.2014.

Presently, all fourteen (14) impugned condominium units have been registered under D3 and Law Yeong Chow (deceased) in the respective strata titles.

4.6 D1 (DW4), the plaintiff's MD at the time, issued a Letter of 255 Acknowledgement on 23.08.2011 confirming that the purchase consideration for the fourteen (14) units had been fully settled and received by the plaintiff, taking into consideration the financial arrangement in the BIA and TCA (exh: IDD7). 260

4.7 On 30.06.2020, the liquidator (PW3) took out the present suit against the defendants and prayed for:

To set aside the sale and transfer of fourteen units of high-end condominium units sold by the plaintiff as a set off for financial considerations arising from the collective reading of the Joint 265 Venture Agreement, the Power of Attorney, the Business Investment Agreement and the Turnkey Contract for the construction of the condominium units, and the SPAs.

As against D7, a declaration to void the four SPAs on four impugned units impacting D7.

A declaration that D7 has no proprietary claim on those four impugned units and that D7 had unlawfully taken possession of the said units.

Breach of directors' duties by the plaintiff’s directors.

Engaged in fraudulent trading 275

Costs [5] The Defence:

5.1

(A): Defence of D3, D4 and D5 In denying the plaintiff’s claim, the Defendants, in particular, D3, D4 280 & D5 (representing the estate of Law Yeong Chow(deceased)), counterclaim as follows:

D3, D4 and D5 have beneficial ownership over the impugned units arising from the SPAs and the BIA pending the perfected transfer of the said units by law.

That the registration process for the transfer of the impugned units from the landowner/registered proprietor was carried out by Messrs Norhaliza Yap & Neo upon the issuance of the strata titles.

The Form 14A forms were duly executed by the plaintiff's 290 directors via an irrevocable PA on 06.03.2017 before the plaintiff was wound up on 18.09.2017.

The PA can only be revoked upon the termination of the JVA. The PA and the JVA have not been revoked and have remained valid and effective.

The plaintiff's monetary claim is for sums owed to the landowner (PW1) (shortfall on the entitlement). It cannot be taken from 14 units already divested by the plaintiff via the PA in the financial scheme of arrangement for the development of the land.

The alleged fraudulent design by the plaintiff had not been 300 proven. Therefore, they ask for the following:

A declaration that the Form 14A duly executed before the winding up of the plaintiff is valid and registrable to effect the legal transfer of the impugned units as set out in the SPAs.

In the alternative, an order for the learned SAR of the High Court to be empowered to duly execute the required Form 14A to effectuate the transfer of the impugned units.

That the caveat encumbering the impugned units be removed forthwith to facilitate the transfer of the said units.

General damages.

Exemplary damages, (abandoned on 28.02.2025).

Special damages.

Interest.

Cost. 315

5.2

(B): Defence of D7 In denying the plaintiff’s claim, D7 counterclaims as follows:

Asserts a position that it had rightfully and legally sub-purchased the four impugned units and duly paid the consideration in full. The deed of assignment had duly transferred the beneficial 320 rights of the impugned units to D7.

D7 is an innocent bona fide purchaser for value with no knowledge of any supposed impropriety or as a party acting in concert as alleged by the plaintiff. Parties are unrelated.

The duly executed statutory transfer instruments over the 325 impugned units remain valid and registrable. D7, therefore, claims as follows:

That the liquidator for the plaintiff forthwith surrenders the strata titles and the transfer instruments to D7 within seven days from the date of the order of the Court.

An order that the Registrar of Titles of Kuala Lumpur duly registers the impugned four units in the name of D7.

General damages, interest, costs. [6] THE PARTIES SUBMISSIONS 335 6.1 The plaintiff argued (briefly): The present claim is predicated on the following suppositions:

Supposed void instrument of transfer.

The sale and purchase transactions were supposedly a sham, as the plaintiff presumably received no consideration.

The sale and purchase prices were supposedly lower than the market value.

The impugned four units involving D7 are supposedly a sham, as the plaintiff received no consideration.

It is a supposedly fraudulent trading involving deceit and breach 345 of fiduciary duties.

Void Memorandum Of Transfer (MOT) 2 The plaintiff argued that the liquidation:

Resulted in the plaintiff's affairs being taken over by the liquidator (Section 483 Companies Act 2016).

Any disposition of the plaintiff’s assets after the presentation of the winding-up petition is void unless validated by the Court (Section 472 CA 2016).

The PA authorises the plaintiff to act for the landowner (PW1), and not any individual officers of the plaintiff.

The directors' powers were displaced upon granting the winding-up order on 18.09.2017.

D1 and D2, directors and officers of the plaintiff, executed the 360 MOT (Form 14A) after 03.10.2017 and presented it for registration between 21.05.2018 and 27.09.2018 after the winding-up order was granted.

The MOT were therefore void, and titles granted to D3-D5 are defeasible. 365 From the foregoing facts, I observed that:

On 24.07.2017, the landowner presented a winding-up petition for the shortfall against the plaintiff.

The High Court granted the winding-up order against the 370 plaintiff on 18.09.2017.

The Official Receiver (OR) took over the plaintiff's affairs from 18.09.2017 to 03.12.2019 (over two years) as the liquidator. There is no evidence that the OR had taken any action to challenge and invalidate the impugned SPAs or 375 the MOT. No evidence has been offered to explain and clarify this position.

The landowner (PW1), after over two years, on 03.12.2019, applied for and by a Court Order, Mr. Sudarasan a/l Arumugam (PW3), a private liquidator, was appointed in 380 place of the Official Receiver, who, after six months, took out the present suit on 30.06.2020 to cater for the interests of the landowner (PW1) when there is no definitive evidence adduced before the Court that the landowner’s Proof of Debt (POD) has been accepted and registered by 385 the OR. Proof of receipt is not proof of acceptance.

D3-D5 claimed that D1 (DW4) signed the instrument of transfer (Form 14A) on 06.03.2017, months before the winding-up order was granted. What continues to transpire is the completion of the registration process. 390 SPAs were sham transactions.

6.3 The plaintiff submitted that the 14 impugned SPAs were a sham and void, with no consideration given to the plaintiff and refer to section 26 of the Contracts Act, a contract without consideration is void:

It was argued that the plaintiff received no consideration for the impugned 14 SPAs with D3 and Law Yeong Chow (deceased).

In support, the plaintiff referred to the:

The dormant Housing Development Account (PBOD L.32 pp.2-36).

(ii) Audited accounts for 2011 & 2012 do not reflect any sale 400 consideration for the MOT on the impugned 14 units (CBOD Part B L.35 pp.677-724).

(iii) The income statement showed no revenue (CBOD Part B L.35, pp.689 & 713).

(iv) The impugned development captured as the plaintiff’s asset in the 405 balance sheet (CBOD Part B L.35, pp.688 & 712).

The cash flow statement does not capture any payments received (CBOD L.35 pp.691 & 715; Accounting Policy CBOD l.35 pp.694 & 718).

(vi) The S&P price for the 14 impugned units is lower than the sale price 410 approved by the Ministry of Housing.

In the circumstances, it was submitted that the whole transaction involving the impugned 14 units is a sham transaction that renders the titles granted to D3 and Law Yeong 415 Chow (deceased), defeasible.

The plaintiff argued that the burden lies on D3-D5 to establish the genuineness of the BIA and TCA in the whole scheme of the financial arrangement with the plaintiff: 420 I find this argument by the plaintiff not probable, because:

It is trite law there is no such burden as it lies on the plaintiff throughout the proceedings to establish his claim before any purported burden shits to the defendant.

The evidentiary burden is trite, that those who allege a fact 425 are duty-bound to prove it (see s.101, 102, and 103 of the Evidence Act 1950). -Selvaduray v Chinniah [1939] 1 MLJ 253, 254, CA observed that the burden of proof under section 102 of the Evidence Enactment is upon the person who would fail if no 430 evidence were given. Accordingly, the plaintiff must establish his case. If he fails to do so, it will not avail him to turn around and say that the defendant has not established his. The defendant can say it is wholly immaterial whether I prove my case or not. You have not proved yours. 435 -In Johara Bi bt. Abdul Kadir Marican v. Lawrence Lam Kwok Fou & Anor [1981] 1 MLJ 139, FC observed that it was all a matter of proof. Until and unless the plaintiff has discharged the onus on her to prove her case on a balance of probabilities, the burden did not shift to the defendant. 440 Even if the defendant's case was completely unbelievable, the claim against him must, in these circumstances, be dismissed.

In this regard, the plaintiff sought to discredit:

The evidence of DW1-DW4 on the invested sum of 445 RM30,966,050.00 in the impugned development via the BIA:

On the supposed confirmation that the initial advance of RM2M by cheque was released to the plaintiff (CBOD L.33 Part B pg56)

(ii) Balance of the construction cost paid by a cheque (NOP L.86, 450 pp.319 & 320).

(iii) Turnkey Contractor letter acknowledging the receipt of the balance construction cost (ACBOD L.56 pg.1).

(iv) D1 (DW4) (the plaintiff's MD at the time) issued a Letter of Acknowledgement on 23.08.2011 confirming that the purchase 455 consideration for the fourteen (14) units had been fully settled and received by the plaintiff (IDD 7). Other than this, the defendants had not adduced any other evidence on compliance with the BIA. 460

I find, it did not in any way discredit the evidence, nor did it deny the Investment Sum and the Additional Sum being transacted.

It cannot be denied that the parties agreed to that financial arrangement. They couldn’t renege on it or untie it based 465 on unfounded speculations by the liquidator (PW3), who assumed control over the plaintiff's affairs on 03.12.2019, the plaintiff’s affairs that predate his appointment by eight

years, unless cogent evidence is produced to support the stand taken. I find no such compelling materials.

In the circumstances, I take cognisance that:

The project had been completed successfully.

All financial commitments to the contractor, landowner (save for the shortfall, which is the plaintiff's contractual 475 obligation), and relevant authorities had been met.

How the officers of the plaintiff elect to reflect the transactions (JVA, PA, BIA & the TCA) in their books and records is not the concern of D3-D5. It is the plaintiff's internal management affairs.

There is no court order that invalidates the JVA, PA, BIA and the TCA. This is the contractual and financial arrangement of parties that they had expressly agreed to.

It does not impair the validity of the SPAs duly executed before the winding-up order was granted, save where 485 actual impropriety is proven.

The only default is the payment of the RM2M+ shortfall of the landowner’s entitlement, which is the plaintiff's responsibility, not the defendants. 490 The four SPAs involving D7 were also sham transactions.

6.4 The plaintiff asserted that the impugned four units of condominium acquired under sub-sale agreements from D1 and D6 by D7 are sham transactions:

There is no record of payments received by the plaintiff under 495 the principal SPAs by D1 and D6.

D1 (DW4), in his evidence, claimed that the impugned units were the director’s contra units (he explained that internally, the director buys his units not captured in the company’s 500 account (NOP: L86, pp.405-407).

Therefore, it is argued that these sham transactions are supposedly void for the absence of consideration.

The plaintiff claimed it is the lawful and beneficial owner of the 505 impugned 4 units that had rights never divested to D1 and D6. I observe that this assertion does not fit the facts before the Court. The plaintiff is only the developer, having no proprietary ownership over the land and the condominiums built on it. It 510 could not be the lawful and beneficial owner. It only resides with the landowner (PW1). All SPAs are three-party agreements.

D1 and D6 supposedly do not have any rights to deal with those units under the sub-sale agreements with D7, which allegedly 515 makes D7 a trespasser over those units:

D7 (DW5) claimed that it paid RM8,083,400.00 for the units:

The initial 10% was paid in cash.

(ii) The purchase price balance was paid partly to the plaintiff, the bank, and D1:

RM1,507,872 by remittance from Hang Seng Bank Ltd to Am Islamic Bank Berhad (IDD3).

RM3,875,000 via Messrs Paul Ong & Associates.

RM363,050 via Messrs Sheah Tan & Rahman.

RM1,529,138 to D1.

The plaintiff made a misplaced interpretation by doubting the probability of the foregoing payments, citing the evidence of D1 (DW4) that claimed he received more than RM1,529,138.00, which he thinks he deposited in the bank, 530 as well as paying RPGT for the sale of the said units (NOP: L86, pp.409-412). I observed that the sub-sale agreements are between D7 and D1 and D6. The plaintiff is not party to it. When D1 gives evidence that he had received payment, and when on 535 the other side there is no material evidence to contradict that it must be accepted. It cannot be rejected because the plaintiff doubted it. That entirely speculative evidence that the Court will not entertain.

To challenge this plaintiff can only made a bare assertion 540 that other than this oral evidence, there is no other evidence to corroborate this position. Again, I observed that, it is for the plaintiff to prove its assertion. It does lie on D1 or D6 to disprove it.

D7 (DW5) said that he merely followed the instructions of 545 D1 on the payments to be made for the said units. The plaintiff nevertheless argued that:

D7 (DW5) could not explain why he paid RM1,507,872.00 instead of RM1,220,000 as instructed (D2, IDD3, NOP L.86 pp.465-467).

(ii) D7 (DW5) could not explain why the details in the remittance form showed payment for investment rather than settlement of the balance purchase price (NOP L.86, pp.467-468).

(iii) D7 (DW5) could produce any evidence for payment via Messrs Paul Ong and Messrs Sheah Tan & Rahman (NOP L.86, 555 pp.468-471).

The plaintiff further argued that the purported transactions were not bona fide without evidence of payments of consideration. D7 (DW5) failed to discharge its burden to establish ownership over the four impugned units. 560

D7 (DW5) argued that the present action by the plaintiff is barred by res judicata and issue estoppel:

The relief claimed could have been ventilated at the arbitration proceedings determining the GDV issue:

This action is not bona fide as it serves the landowner's interest, not the general body of creditors. The liquidator could not confirm whether the landowner's proof of debt was accepted.

(ii) The four units were never the assets of the plaintiff, who was only contracted to develop the land.

(iii) D7 is a bona fide purchaser for value. The General Manager of the plaintiff issued a letter to Messrs Sng & Partners confirming that the plaintiff has received the full purchase price from D1 and D6: exh IDD1 (court order marked as D1) 575

The plaintiff argued that the subject matter at the arbitration proceeding, and the present action differ, involving different parties. The liquidator is presently acting for the plaintiff. The legal concern on the validity of the MOT and the sale of the four units is a post-arbitration issue. In the 580 circumstances, the plaintiff argued that res judicata does not apply. Fraudulent trading involving deceit 6.5 D1, in concert with D6, defrauded the plaintiff by dissipating or 585 attempting to dissipate the foregoing impugned four units. The necessary elements for conspiracy to injure are (1) an agreement between two or more persons, (2) with an intent to injure, and (3) action carried out on that agreement resulting in a loss for the plaintiff are present:

D1 and D6 owed the plaintiff fiduciary duties (good faith, honesty, fidelity, and avoiding conflict of interest). They were the plaintiff's guardians and trustees over the assets, which they breached.

They conducted the plaintiff's affairs to defraud the landowner.

6 The plaintiff claimed to have discharged the burden on their claim, and in the circumstances, prays for an order in terms of L1 with costs. D3-D5 argued as follows: 600 [7] In addition to the existence and validity of the JVA, PA, BIA, TCA and SPA, the parties have entirely carried out the terms of the agreements, including the payments were paid in full, that subsequently establishes D3 and Law Yeong Chow (deceased) as the beneficial owners of the 14 units of the impugned condominiums 605 as at the date of full payment of the consideration. Under a valid contract for property sale, the beneficial ownership passes to the purchaser who becomes the equitable owner: Yeong Ah Chee v Lee Chong Hai & Anor and Other Appeals [1994] 2 MLJ 614, SC.

1 The plaintiff confirmed that payments had been made in full in its letter of 23.08.2011 (exh: IDD 7). Any attempt to void the MOT will not alter that D3-D5 are beneficial owners of the impugned 14 units:

Completing the ownership is merely a conveyancing process.

This is not a determination of legal ownership but merely to 615 register D3 and the estate of Law Yeong Chow (deceased), as the registered proprietors on the strata titles once issued.

D3-D5 cited IB Capital Sdn Bhd v Ivory Indah Sdn Bhd & Anor [2021] MLJU 1388 that cited and followed the Federal Court’s observation in Tan Ong Ban v Teoh 84. Kim Heng 620 [2016] 3 MLJ 23, FC that:

When a purchaser of a property has performed his or her contractual obligation upon the full settlement of the purchase price, besides executing all the formal documents to affect the registration of ownership, equity accords him or her with all the rights and privileges 625 of a legal owner over the property.

(ii) The purchaser thus enjoys the benefit of owning the acquired property even though he or she has yet to become its registered owner.

(iii) A beneficial or equitable property owner stands in the same position 630 as the legal owner in enforcing proprietorship rights against the world at large. The only difference is that a beneficial owner has yet to be vested with the legal title (registration process).

7.2 It was argued:

That the SPAs (Schedule H) for the 14-unit condominiums and the respective MOTs were prepared following the Housing Development (Control & Licensing) Act 1966.

They are statutory controlled agreements that are not amenable to variation or amendments not intended by the statute.

The successful transfer of all 14 units to the Defendants' name in the title constitutes strong evidence that the transfers were made in accordance with the law, including all documents submitted to the land office.

It renders the titles indefeasible save for fraud or a void 645 instrument (Section 340 NLC). The plaintiff has failed to adduce compelling evidence to establish actual fraud in the present case, save for its bare assertions.

7.3 It was further argued that it is a standard procedure:

That in a conveyancing transaction, the vendor (the plaintiff’s directors: D1 & D2) will sign the SPAs and other related documents, including the MOT, in advance to be perfected at a subsequent date, once the transfer is ready to take place.

The transfers of the 14 units were registered following the law 655 as there were no defects and/or discrepancies in the registration process for the perfection of transfer at the land office, which resulted in the issuance of the strata title under the name of D3 and Law Yeong Chow (deceased).

Citing IB Capital Sdn Bhd v Ivory Indah Sdn Bhd [2021] 660 MLJU 1388, which observed that the defendant's rights to the 14 units were established when the full purchase price was paid, and not when the MOT was executed or registered. The defendants enjoy the benefits of ownership over the 14 units, although they have yet to be formally registered as the 665 registered owners. The defendants argued that they are entitled to enforce their proprietary rights over the units as though they were the legal owners of the said properties, though the legal ownership has yet to be duly registered.

It is D3 and Law Yeong Chow (deceased) position that D1 670 (DW4), as the director of the plaintiff, executed the MOT on 06.03.2017 pending the completion of the registration process with the issuance of the strata title in May to September 2018 as the registration process was commenced before the winding-up order was granted on 18.09.2017.

In the alternative, it was also argued that if the Court finds that the MOT are to be invalid though it was executed before the winding-up order, the present liquidator is still duty bound to effectuate the transfer of ownership on the fourteen (14) impugned units as agreed in the BIA (Sec. 486(1) CA 2012).

7.4 In disputing allegations of complicity or collusion in fraudulent trading, it was argued by D3 and Law Yeong Chow (deceased), that:

That the Gross Development Value (GDV) were determined by supposed professionals appointed by the plaintiff, unrelated to 685 the defendants, to support any inference of adverse influence.

Contractual obligations between parties are within the boundaries of the BIA, D3 and Law Yeong Chow, (deceased), paid out the Investment Sum and the Additional Sum as agreed.

What governs the landowner, and the plaintiff would be the JVA (01.07.2006) and the PA they voluntarily entered into, to which D3 and Law Yeong Chow (deceased), are neither a party to nor privy to.

The adverse allegations of the sales consideration being below 695 the market value are a matter agreed to by the parties. It is a trite law that the supposed insufficiency of consideration does not void a contract without proven vitiating factors. D1 (DW4), the director of the plaintiff, reasonably explained in his evidence at the trial, as seen in the NOP, L.86 pp.431-433, that:

The plaintiff tried to dispose of the units at the approved market price, but there were no takers.

(ii) They transacted on all the units to calculate the contracted returns to the landowner within three years, as they were committed to under the JVA we entered.

(iii) The project was successfully completed.

(iv) He is the plaintiff's majority shareholder. Why would he want to do anything to hurt his interest in it? The plaintiff’s allegations don’t make sense. He did my best.

Any unfounded allegations of breach of duty by D1 (and D2) 710 cannot void the SPAs on the impugned 14 units. That is an internal management issue between the plaintiff and its directors and officers. It does not concern D3 and Law Yeong Chow (deceased), good-faith investors and purchasers under the BIA, with the plaintiff, and they are entitled to the contractual 715 bargains that were entered between the parties.

7.5 Counterclaim against the plaintiff:

The present suit is founded on the landowner being the supposed sole creditor of the wound-up plaintiff. In his evidence, 720 the landowner (PW1), acknowledged that he is the sole creditor: (NOP, L.86 pg.20).

It would appear that the liquidator (PW3), is merely safeguarding the interests of one party, the landowner (PW1).

The transfer of beneficial ownership of the 14 units has been established since 2011 under the three-party SPAs, when consideration under the BIA passed. What has transpired was the continuing process of effecting the legal transfer of property 730 from the landowner to D3 and Law Yeong Chow (deceased), under the strata title, duly completed by the relevant authority in 2018.

If the MOT are found to be invalid, the Liquidator must execute 735 fresh MOT to complete the transfer and registration. In the circumstances, D3 and Law Yeong Chow (deceased), counterclaimed for:

A Declaration that all the Transfer Instruments for the 14 Units through the 740 Irrevocable Power of Attorney dated 06.03.2017 are valid and enforceable.

(ii) Alternatively, if the Transfer Instrument is deemed invalid, the liquidator shall perform the duties on behalf of the plaintiff by signing a new Memorandum of Transfer for the 14 Units.

(iii) The Court grants an order for a stamp duty exemption to exclude the stamp 745 duty on the transfer already paid by D3 and Law Yeong Chow, deceased.

(iv) The Senior Assistant Registrar/Deputy Registrar is directed and granted the authority to sign all documents related to the transfer of the 14 Units under the National Land Code 1965 on behalf of the Plaintiff if the Liquidator fails to sign within 14 days from the date of delivery of the sealed 750 judgment.

The plaintiff and/or the landowner and/or the liquidator are directed to cancel the private caveat on the 14 Units within 7 days from the date of this judgment, with all costs to be borne by the Caveator.

(vi) If the Caveator fails to cancel the caveat within the stipulated period, the 755 Defendants shall be entitled to claim the costs involved in removing the caveat, including legal and court fees (if any).

(vii) Special damages for the amount paid by D3 and the Deceased to the Plaintiff, if D3 and Law Yeong Chow: deceased, are deprived of ownership of the 14 Units. 760 Therefore, D3, D4 & D5 (for the estate of Law Yeong Chow (deceased)) pray that the plaintiff’s claim be dismissed and the counterclaim be allowed with costs. 765 D7 took the position: Res Judicata [8] When the landowner (PW1) initiated the arbitration proceedings to challenge his dissatisfaction with the plaintiff’s Gross Development Value (GDV) to determine his monetary entitlement under the JVA 770 with the plaintiff on 03.03.2014 (Arbitration Award: CBOD L.35 Part B pp.548-612).

The landowner (PW1) elected not to void the sub-sale SPAs on the 4 impugned units sold to D7 for consideration by D1 and D6.

He was only interested in getting the shortfall of his monetary 775 entitlement under the JVA with a revised figure in the GDV. He could have taken issue with the sub-sale agreements if he wanted to. The High Court subsequently registered the arbitration award for enforcement against the plaintiff. It had nothing to do with D7.

To allow the plaintiff to take this action against D7 to void the sub-sale agreements would be barred by res judicata and issue estoppel: Asia Commercial Finance (M) Berhad v Kawal Teliti Sdn Bhd [1995] 3 CLJ. Such estoppel of cause of action has been extended to all other causes of action (based on the 785 same facts or issues) which should have been litigated or asserted in the original earlier action resulting in the final judgment that was not deliberate or due to inadvertence.

D7 argued that:

Since the arbitration ruled in favour of the landowner 790 (PW1), against the plaintiff and awarded monetary compensation, the present action by the plaintiff is merely to advance PW1’s interest based on the same set of facts.

It must be barred by res judicata since the relief sought in the present action could have been filed and obtained at 795 the arbitration, which the plaintiff and, by extension, the landowner acting through the plaintiff, did not do. The plaintiff is not seeking to void the sub-sale agreements.

8.1 Since the plaintiff is not seeking to void the impugned sub-sale transactions, they remain valid and enforceable:

It must be noted that the plaintiff does not purport to revoke the impugned sub-sale agreements and the deed of assignments that go with them. PW2 in his evidence agreed that the challenge on the validity of the MOT pertains to the 14 impugned units affecting D3 and Law Yeong Chow (deceased).

The plaintiff’s allegation that they are a shell transaction is unfounded and unsustainable:

They took that position because they were challenging the validity of the 18 principal SPAS because the said 18 SPAs supposedly were transacted below market value, with no 810 passing of the monetary consideration to the plaintiff. In short, it was all a sham. Since the principal SPAs are supposedly a sham, it would legally impair the four sub-sale agreements between D1 and D6 with D7.

This argument does not fit the facts before the Court as it 815 failed to consider the parties' financial arrangements regarding the BIA and TCA. That arrangement is not illegal or against public policy without supporting vitiating factors. Illegality cannot be established on conjectures or speculations. This arrangement completely negates the 820 plaintiff’s arguments of not receiving any consideration.

D7 cited Yoganathy A.S Thambiya v Harta Pusaka Idris Osman [2020] 6 CLJ 151, which referred to and followed the English Court of Appeal in Hitch & Ors v Stone [2001] STC 214, which laid the test for sham transaction: 825 The considerations in appraising the evidence are:

The court is not restricted to examining the four corners of the document. It may examine external evidence, including explanations and circumstantial evidence, such as the parties' subsequent conduct.

(ii) The test of intention is subjective. They must have intended to give a false impression of those rights and obligations to third parties.

(iii) The fact that the act or document is uncommercial or even artificial does not necessarily mean it is a sham.

(iv) The fact that parties subsequently depart from an agreement does not necessarily mean that they never intended the agreement to be effective and binding. The proper conclusion may be that they agreed to vary their agreement and have become bound by the agreement as varied.

The intention must be a common intention

8.2 The liquidator (PW3) breach of duty:

The present action by the plaintiff, taken by the liquidator (PW3), is not bona fide. It is not for the benefit and interest of the general 845 body of creditors and is merely in the landowner's interest.

The liquidator (PW3) in his evidence admitted that he is acting only on one Proof of Debt (the landowner (PW1)). The POD has yet to be proven accepted or rejected by the Official Receiver (OR).

That sole POD was filed with the OR on 24.04.2019 before he was appointed the liquidator. There was no evidence that the OR had accepted the POD to register the landowner (PW1), as a legitimate creditor. Proof of receipt is not approval. D7 cited the Federal Court in Tee Siew Kai 855 v Machang Indah Development Sdn Bhd (In Liquidation) [2020] 4 CLJ 841, FC, which observed that any allegation of selling at an undervalued price, even if true, is only available to a creditor or contributory, which presently there is no definitive proof that the landowner: 860 PW1 is an approved creditor by the OR.

Since his appointment, he has yet to advertise the filing of the POD for all potential creditors to come forward and prove their claim as required under Rule 91 of the Companies (Winding-Up) Rules.

The landowner (PW3) could not produce any evidence whether his POD has been accepted or rejected by the OR. Therefore, the landowner (PW1), is not a creditor of the plaintiff as required under the Companies (Winding-Up) Rules, and he cannot be referred to as a creditor in the 870 present suit.

The landowner (PW1) appointed this private liquidator (PW3), to liquidate the plaintiff for his benefit and inappropriately close the list of other potential creditors by not advertising for the POD of potential creditors in the 875 distribution of assets. D7 cited the Court of Appeal in Shencourt Sdn Bhd v Shencourt Properties Sdn Bhd [2019] 3 CLJ 791, CA, that removed a liquidator for such inappropriate conduct.

The liquidator (PW3) failed to verify the details of the 880 development and ownership claims of the four impugned units by D7. D7 cited the Court of Appeal in Jagdis Singh Banta Singh & Anor v Return 2 Green Sdn Bhd [2021] 3 CLJ, CA, concerning the removal of a liquidator for keeping silent on the rejection or approval of the POD by Jagdis as 885 an investor that would impair his motion to remove the liquidator.

The liquidator (PW3) failed to comply with section 485 of the Companies Act 2916 when there is no evidence of his having submitted the statement of affairs of the plaintiff.

There is no evidence that the liquidator had complied with the mandatory requirement of section 485 by submitting the preliminary report to the Winding up court on the plaintiff's affairs. It would impair the Court in determining the plaintiff's affairs and creditors. It aptly shows the abject failure of the 895 liquidator (PW3), in carrying out his duties.

The Federal Court in Genisys Integrated Engineers Pte Ltd v UEM Genisys Sdn Bhd (In Liquidation) & Ors [2023] 5 CLJ 1 ordered the liquidator personally liable for costs occasioned by the unnecessary legal action. It 900 reminded that the court's direction must be sought in cases where there is doubt before commencing action.

The plaintiff is not the legal or beneficial owner of the impugned four units, as it is still in the landowner's name (PW1). The plaintiff cannot invalidate the four principal 905 SPAs and the sub-sale agreements. The strata titles to the four units were with the solicitor of D7 awaiting completion of the transfer process when the liquidator (PW3), wrongfully and without basis, ordered the solicitor holding the titles to hand them over to him.

D7 is a bona fide purchaser who paid the purchase price in full for valuable consideration without notice, unrelated to

It had acted in good faith without fraud, deceit, dishonesty, negligence or recklessness in purchasing the four impugned 915 units. It can rely on the Indoor Management Rule against the plaintiff: Maysie Long & Anor v Rahimah Mohd Noor & Ors [2023] 1 LNS 1917, CA.

(ii) The ordinary precautions of a reasonable and prudent purchaser had been taken by its solicitor, Messrs Sng & Co, 920 who conducted the relevant searches at the Land Office, the Insolvency Department and Registrar of Companies to establish a good and registrable title satisfactorily.

(iii) The solicitor obtained various statutory confirmations of the Developer/plaintiff under section 22D (4) of the Housing 925 Development Act on all outstanding matters on the Principal SPAs between the plaintiff/vendor, the landowner, PW1, and D1 & D6 purchasers.

(iv) The plaintiff then replied and issued the statutory confirmation for the four units by letter dated 19.08.2014, and the first and 930 sixth defendants have fully complied with all terms and conditions in the Principal SPAs, the letters of confirmation from the plaintiff, for unit A1; for unit B1; for unit A7; and for unit B7.

These letters were marked ID1-ID4 at the trial as the maker was not called, but they have since been admitted as D1-D4, without 935 calling the maker (as he could not be located). The contents are a statement of relevant facts under section 32(1)(b) EA made in the ordinary course of business: Lee Chee Keong v Fadason Holdings Sdn Bhd & other Appeals [2017] 7 CLJ 295, CA, held s.32(1)(b) and s.73A applies in such circumstances.

(vi) D7’s application for property approval by a foreign entity was obtained from the FIC: (CBOD Part B L.33 pg 198 for parcel A1, pg.199 for parcel A7, pg. 200 for parcel B1 and pg. 201 for parcel B7).

The liquidator (PW3) failed to produce any compelling evidence 945 to corroborate his testimony at the trial that the plaintiff received no money concerning the development project:

DW4 and DW5 gave evidence that two cheques issued by the solicitors Messrs Norhafiza, Yap & Neo to the plaintiff in the sum of RM1.2 million and RM800,000.00 were paid into 950 the plaintiff's accounts.

The liquidator (PW3) denied them as it claimed he could not locate the payments in the plaintiff’s account but refuses to tender the supposed account (statement) to corroborate his unsupported evidence.

When confronted by D7, the liquidator (PW3), only produced the HDA account, not the company operation or office account where monies are usually paid.

From his appointment on 03.12.2019 to date of the trial (almost 5 years), he is not able to produce any bank 960 account(s) or statement(s) of the plaintiff but was able to deliver the complete HDA account of the company.

The abject failure of the liquidator (PW3), to prove the acceptance of the landowner (PW1), as an approved creditor by the OR, failure to advertise for PODs by 965 potential creditors, failure to file the plaintiff’s statement of affairs with the Winding-Up Court as mandated by law, and his failure to verify the payments in the plaintiff’s account reflect adversely on his impartiality and good faith as the liquidator. 970 8.3 The JVA and the land ownership:

D7 argued that the JVA merely grants the right to develop the land and the subsequent right to sell the 18 completed condominium units. 975

Nothing in the JVA bequeaths the plaintiff with legal or beneficial ownership rights over the land and the completed condominium units. The legal and beneficial rights continue to reside with the landowner: PW3 at the point of sale under the three-party SPAs. 980

There is no valid legal foundation to support the liquidator’s (PW3) action to invalidate the said eighteen principal SPAs as they are valid agreements with valid considerations that had passed under the agreed terms of the financial arrangement between the parties (BIA and TCA).

In support of D7’s position, the Court of Appeal’s observation was cited in Eadie Voon Architect v Stylish Houz Development Sdn Bhd (In Liquidation); Koperasi Kemas Negeri Sembilan Bhd & Ors (Interveners) [2022] 10 CLJ 562, 990 CA that concerned two landed properties belonging to the Koperasi as at the date of the winding-up order of the company:

The Liquidator applied under sections 472(1), 472(2), 475, 483, 487(3), and 511 CA 2016 for the return of the two lands originally in the company's name that were transferred to 995 the Koperasi under two (2) consent orders.

The Court held that the sole issue for determination is whether the lands were the company’s property when transferred from the company to the Koperasi.

The application by the liquidator was dismissed. 1000

The enabling provisions state that the condition precedent for any action for return, recovery and/or vesting must relate to the company's property.

It was observed that Sections 472(1), 472(2), 475, 483, 487(3) and 511 of the Act speak about "the property of the 1005 company", "all the property to which the company is or appears to be entitled", "property belonging to the company", "recovering its property", "assets of the company", and money, property, books and papers in his hands to which the company is prima facie entitled." 1010

The plaintiff in the present case still owes the arbitration award of RM2M+ to the landowner (PW1). It does not support the position that the plaintiff in such circumstances has the legal and beneficial ownership of the landowner’s (PW1) land. 1015

The plaintiff does not dispute the sub-sale agreements for the four impugned units since the agreements are listed in Part B of the Bundle of Agreements, where the validity is not disputed.

As regards the payments by D1 and D6 in the principal SPAs, 1020 D1 (DW4) in his evidence stated that the six units that he bought, which included the four impugned units, were contra profit owed to the directors of the plaintiff.

D7 asserts that full consideration (RM8,083,400.00) had been 1025 paid for the impugned four units following the instructions of D1 (DW4), who was also handling the transaction for D6. The Court of Appeal in Bitara Angkasa Sdn Bhd v Cheok Lam Chuan & Ors [2024] 1 CLJ 202, CA allowed the appeal, holding that Bitara was a bona fide purchaser for valuable consideration. 1030 The CA disagreed with the High Court in doubting the bona fides of Bitara merely because of the unsatisfactory, unorthodox, complicated financing arrangement that was done. It found no mala fide involved, though the conveyancing and financing are imperfect. What mattered was that Bitara had paid the full 1035 purchase price and had taken all the necessary precautions.

8.4 Among the Federal Court’s determinations were referred to, which I had observed as follows:

D7 cited the Federal Court’s observation in Pushpalella R 1040 Selvarajah & Anor v Rajamani Meyappa Chettiar & Other Appeals [2019] 3 CLJ 441, FC, in setting aside the findings of the Court of Appeal, ruled that: “...It is now well settled that subsequent purchaser in good faith is entitled to raise the shield of indefeasibility and a registered interest of a 1045 subsequent purchaser can only be liable to be set aside if the interest is acquired not in good faith… “

In Malayan Banking Bhd v Mohd Affandi Ahmad & Anor [2024] 10 CLJ, where the Federal Court held that:

A registered document of title is conclusive evidence of the 1050 indefeasibility of title under section 89 of the NLC, unless any of the vitiating factors in section 340(2) of the NLC are present to render the title defeasible. Hence, even if the Bank did not conduct a site visit of the borrower’s land before disbursement of the loan, it does not defeat the 1055 Bank’s good faith as long as the Bank had carried out a land search which shows that the borrower is the registered owner of the land.

The common law doctrine of constructive or equitable notice is not applicable under the NLC as the caveat system 1060 has replaced it. Therefore, a subsequent purchaser's rights and good faith should not be negated through applying the equitable doctrine of notice concerning any unregistered interest, unless actual notice has been officially recorded as a private caveat lodged on the land. 1065

It would be erroneous to impose an unduly heavy and commercially unrealistic burden on a financier to prove that it was "impossible" to discover any unlawfulness in the transaction after critically examining documents to which the financier is not privy. This was clarified in the case 1070 of Bayangan Sepadu Sdn Bhd v Jabatan Pengairan dan Saliran Negeri Selangor & Ors [2022] 1 MLJ 701, which laid down the correct principle for measuring good faith or bona fide of a purchaser within the meaning of the proviso to section 340(3) of the NLC. 1075

8.5 In the circumstances, D7 took the position that it is a bona fide purchaser for valuable consideration that deserved protection under section 340(3) NLC:

Allowing the plaintiff to claim the four units would be unjust 1080 enrichment. The liquidator: PW3 made it clear in the pleading that the suit is intended to compensate the Landowner for the award in the arbitration which remained unsatisfied.

It is not denied that the plaintiff had benefited the BIA and the TCA: Lee Kwee Foh Sdn Bhd v Loke Kooi Chuan Properties 1085 Sdn Bhd & Anor [2024] CLJU 1362, CA in dismissing the appeal held it would be most inequitable that the appellant having received the benefit of the purchase price be allowed now to invalidate the SPA and the instruments of transfer 1090 On the premises, D7 prays that the plaintiff’s L.1 be dismissed, and its counterclaim be allowed with costs. THE LAW [9] In a nutshell: 1095 Legal Burden 9.1 It is trite in law that all cases are decided on the legal burden of proof being discharged.

9.2 The burden of proof in establishing a case is on the plaintiff. It is not the defendant’s duty to disprove it. The evidentiary burden is trite that 1100 those who allege a fact are duty-bound to prove it (see s.101, 102, and 103 of the Evidence Act 1950). Selvaduray v Chinniah [1939] 1 MLJ 253, 254, CA held: "The burden of proof under section 102 of the Evidence Enactment is upon the person who would fail if no evidence at all were given on either side, and 1105 accordingly, the plaintiff must establish his case. If he fails to do so, it will not avail him to turn around and say that the defendant has not established his. The defendant can say it is wholly immaterial whether I prove my case or not. You have not proved yours". 1110

9.3 Johara Bi bt. Abdul Kadir Marican v. Lawrence Lam Kwok Fou & Anor [1981] 1 MLJ 139, FC held: "It was all a matter of proof, and until and unless the plaintiff has discharged the onus on her to prove her case on a balance of probabilities, the burden did not shift to the defendant. Even if the defendant's case was completely unbelievable, 1115 the claim against him must, in these circumstances, be dismissed. With respect, we agree with this judicial approach."

9.4 The law on section 540 of the Companies Act 2016: “Section 540. Responsibility for fraudulent trading 1120

If in the course of the winding up of a company or in any proceedings against a company, it appears that any business of the company has been carried on with intent to defraud the creditors of the company or creditors of any other person or for any fraudulent purpose, the Court on the application of the liquidator or any creditor or contributory of the company, 1125 may, if the Court thinks proper so to do, declare that any person who was knowingly a party to the carrying on of the business in that manner shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court directs.

Where a person has been convicted of an offence under subsection 539(3) 1130 in relation to the contracting of such debt as is referred to in that section, the Court, on the application of the liquidator or any creditor or contributory of the company may, if the Court thinks proper so to do, declare that the person shall be personally responsible without any limitation of liability for the payment of the whole or any part of that debt. 1135

When the Court makes any declaration under subsection (1) or (2), the Court may give such further directions as it thinks proper for the purpose of giving effect to that declaration and, in particular, may make provision for making the liability of any person under the declaration a charge on any debt or obligation due from the company to the person, or on any charge 1140 or any interest in any charge on any assets of the company held by or vested in the person or any corporation or person on his behalf, or any person claiming as assignee from or through the person liable or any corporation or person acting on his behalf, and may from time to time make such further order as is necessary for the purpose of enforcing any charge 1145 imposed under this subsection.

For the purposes of subsection (3), “assignee” includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation or charge was created, issued or transferred or the interest created, but does not include an assignee for valuable consideration and 1150 consideration by way of marriage, given in good faith and without notice of any of the matters on the ground of which the declaration is made.

Where any business of a company is carried on with the intent or for the purpose mentioned in subsection (1), every person who was knowingly a 1155 party to the carrying on of the business with that intent or purpose commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding one million ringgit or to both.

This section shall have effect notwithstanding that the person concerned is 1160 criminally liable under this Act in respect of the matters on the ground of which the declaration is made.

On the hearing of an application under subsection (1) or (2), the liquidator may give evidence or call witnesses himself.” 1165 9.5 This section seeks to provide for the responsibility of any person for fraudulent or unlawful trading if it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose. Section 540(1) of the Act is designed to prevent any 1170 company from being used to perpetrate fraudulent trading on unsuspecting creditors. The court is empowered to declare the culprit responsible for all the debts and liabilities of the company. See: Jalex Sdn Bhd v City Properties Sdn Bhd [2018] AMEJ 0606. 1175 9.6 Carrying on the business with intent to defraud has been defined as the person intending that the creditor shall never be paid or be paid a fraction of what he is owed. See: Tan Hung Yeoh v PP Tan Hung Yeoh v PP [1999]. 1180 9.7 Dissipation of a company’s assets resulting in creditors being unable to recover any payment amounts to fraudulent trading. The conduct of transferring the company’s assets and trade receivables to the holding company at no consideration was conduct which came within fraudulent trading: See: LMW Electronics Pte Ltd v Ang Chuang 1185 Juay & 4 Ors [2010] 7 AMR 25; [2010] 1 MLJ 185. FINDINGS [10] Firstly, I have duly considered the circumstances of exhibits marked as IDD1 (confirmation letters by the plaintiff in A2, L43, pp. 72 and 73, paragraphs 70 and 72; pg. 74, paragraph 82 for all the four 1190 impugned units) as alluded to by the learned counsel for D7 in his submissions. I agree with his arguments that the said exhibits should be appropriately admitted, and I so order that IDD1 be marked as exhibit D1. I also ordered that IDD3 be marked as exhibit D3, and IDD 10 be marked as exhibit D10. 1195

10.1 I have examined all-cause papers, the evidence at the trial, and the parties' submissions. Considering my observation in the totality of the evidence, in particular my observation in the foregoing paragraphs [4]: The Facts, [5] Pleadings & Prayers, [6]: Plaintiff, [7]: 1200 D3 and Law Yeong Chow (deceased), and [8]: D7 the parties' respective submissions, I find that:

The plaintiff failed to discharge its evidential burden. Apart from bare assertions, incorrect interpretation of facts, and unfounded allegations, no compelling evidence was adduced to support its 1205 claim, particularly on fraudulent trading. Not only were the relevant sections of the Companies Act 2016 not cited as a foundation, but there is also no cogent evidence to support the bare allegations of impropriety.

I find the position of the liquidator (PW3), legally impaired by 1210 breach of duty as mandated in the Companies Act 2016 in failing to carry out his duties professionally and impartially. The evidence alluded to by D7 has not been rebutted:

Failure to advertise for POD from possible creditors at large, thereby inappropriately closing the list of possible 1215 creditors, showed partiality in his action.

Failure to address and file the required statement of affairs of the plaintiff with the Winding-Up Court to definitively ascertain the state of affairs and possible creditors of the plaintiff, evinced failure of duty as mandated by law. 1220

There is no evidence that the impugned POD by the landowner (PW1), had been accepted as the legitimate creditor by the OR to serve as a foundation for this action. Sans such confirmation, I agree with D7 that the landowner (PW1), cannot be the basis or foundation in the suit. 1225

The plaintiff is not the legal owner/registered proprietor of the impugned land where the eighteen units were constructed. Evidently, the liquidator (PW3), did not conduct his job objectively and impartially to verify facts before proceeding. He went on conjectures and adverse 1230 speculations.

Evidently, under the Power of Attorney, Joint Venture Agreement, Business Investment Agreement, and Turnkey Contract, the plaintiff did not acquire any registrable interest over the landowner’s land. It only has contractual rights to 1235 deal with the said land within the confines of the agreements. Nothing in the JVA grant the plaintiff with legal or beneficial ownership rights over the land and the completed condominium units. The legal and beneficial rights remain with the landowner (PW1) at the point of sale 1240 under the three-party SPAs.

The plaintiff, therefore, is not in a position to claim or exert any of the rights associated with a registered proprietor of the impugned land in the present proceedings without citing and making the landowner (PW1), a party in this suit. Only 1245 the registered landowner can exert such rights:

The liquidator cannot go on a frolic of his own to recover assets or properties not belonging to the plaintiff in liquidation.

(ii) I am guided by the Court of Appeal in Eadie Voon 1250 Architect v Stylish Houz Development Sdn Bhd (In Liquidation); Koperasi Kemas Negeri Sembilan Bhd & Ors (Interveners) [2022] 10 CLJ 562, CA, which dismissed the application by the liquidator in that case by determining that: 1255

The sole issue for determination is whether the lands were the company’s property when transferred from the company to the Koperasi.

The enabling provisions state that the condition precedent for any action for return, recovery and/or vesting must 1260 relate to the company's property. It was observed that Sections 472(1), 472(2), 475, 483, 487(3) and 511 of the CA 2016 speak about "the property of the company", "all the property to which the company is or appears to be entitled", "property belonging to the company", "recovering 1265 its property", "assets of the company", and money, property, books and papers in his hands to which the company is prima facie entitled."

Considering the bundle of documents, all evidence adduced at 1270 trial, and all respective arguments by the parties, by and large, I find no hesitation in holding that the present suit by the plaintiff is untenable and must be dismissed.

10.2 Looking at the facts and background of the present case, I am guided by the Court of Appeal in Guan Teik Sdn Bhd v Hj Mohd Noor bin 1275 Hj Yakob & Ors [2000] 4 MLJ 433, CA in observing that the Court must not only weigh such evidence on a balance of probabilities but must also consider the surrounding circumstances and evaluate contemporary documents that may tend to establish the truth or otherwise of a given fact. Amongst other things, I had duly 1280 considered the following in arriving at my conclusions:

In addition to the existence and validity of the JVA, PA, BIA, TCA and SPAs, the parties have entirely carried out the terms of the various agreements, including the payments that were paid in full, that subsequently establishes D3 and Law Yeong Chow 1285 (deceased) as the beneficial owners of the 14 units of the impugned condominiums as at the date of full payment of the consideration.

The plaintiff confirmed that payments had been made in full in its letter of 23.08.2011. The trite legal position is determined in 1290 IB Capital Sdn Bhd v Ivory Indah Sdn Bhd & Anor [2021] MLJU 1388, which cited and followed the Federal Court’s observation in Tan Ong Ban v Teoh 84. Kim Heng [2016] 3 MLJ 23, FC that pending completion of the registration process, equity accords the purchaser with all the rights and privileges of 1295 a legal owner over the 14 impugned units that enjoy the protection of section 340 NLC, all the more so now that the authorities have issued the strata title.

Financial scheme of arrangement and contractual obligations between the parties are within the boundaries of the BIA and 1300 TCA, where D3 and Law Yeong Chow (deceased), paid out the Investment Sum and the Additional Sum as agreed:

What governs the landowner, and the plaintiff would be the JVA and the PA they voluntarily entered, to which D3 and Law Yeong Chow (deceased), are neither a party/privy to. 1305

As pointed out by D7 in The Court of Appeal in Bitara Angkasa Sdn Bhd v Cheok Lam Chuan & Ors [2024] 1 CLJ 202, CA that:

Ruled out doubts on a bona fide purchaser for valuable consideration merely because of the unsatisfactory, 1310 unorthodox, complicated financing arrangement that was done.

(ii) No mala fide was found, though the conveyancing and financing were imperfect.

(iii) What mattered was that the entire purchase 1315 consideration had been paid after all, taking the necessary precautions.

As alluded to by D7, in Lee Kwee Foh Sdn Bhd v Loke Kooi Chuan Properties Sdn Bhd & Anor [2024] CLJU 1320 1362, CA, it was determined that it would be most inequitable that the appellant having received the benefit of the purchase price be allowed now to invalidate the SPA and the instruments of transfer.

10.3 I also considered the following: 1325

The landowner (PW1) initiated the arbitration proceedings to challenge his dissatisfaction with the plaintiff’s Gross Development Value (GDV) to determine his monetary entitlement under the JVA with the plaintiff on 03.03.2014 and the said Arbitration Award: 1330

The award was subsequently registered as a Court order and used as the foundation to wind up the plaintiff for failing to meet the shortfall on the entitlement.

In taking all these proceedings, he elected not to challenge the validity of the 18 principal SPAs (when it is a fact that 1335 he is a party in it: three-party SPAs), and similarly on the four sub-sale SPAs on the units sold to D7 for consideration by D1 and D6.

By and large, it is my finding, in the circumstances, that res judicata and issue estoppel apply, as it should have been 1340 litigated or asserted in the original earlier action, resulting in the final judgment that was not deliberate or due to inadvertence. It must be barred by res judicata.

The present action by the plaintiff, taken by the liquidator (PW3), is not bona fide: 1345

It is not for the benefit and interest of the general body of creditors, and is merely in the landowner's interest, whose POD has not been proven at the trial. Therefore, the landowner (PW1), should not be referred to as the foundation of the present action by the liquidator (PW3), 1350 whose impartiality, good faith and objectivity are suspect. He failed in his duty when he could not establish compliance with section 485 of the Companies Act 2016 in submitting the statement of affairs of the plaintiff. I am guided by the Federal Court decision in Genisys 1355 Integrated Engineers Pte Ltd v UEM Genisys Sdn Bhd (In Liquidation) & Ors [2023] 5 CLJ 1 that ordered the liquidator to be personally liable for costs caused by the unnecessary legal action. It reminded that the court's direction must be sought in cases where there is doubt 1360 before commencing action.

His failure to prove the acceptance of the landowner (PW1), as an approved creditor by the OR, failure to advertise for PODs by potential creditors, failure to file the plaintiff’s statement of affairs with the Winding-Up Court as 1365 mandated by law, and his failure to verify the payments in the plaintiff’s account reflect adversely on his impartiality, objectivity and good faith as the liquidator.

From his appointment on 03.12.2019 to date of the trial (almost 5 years), he is unable to produce any bank 1370 account(s) or statement(s) except for the complete sets of HDA accounts to support his improbable presentation of the facts to support his position.

10.4 I accept the evidence of D7 that his solicitor had obtained various statutory confirmations of the Developer/plaintiff under section 22D 1375

of the Housing Development Act on all outstanding matters on the Principal SPAs between the plaintiff/vendor, the landowner (PW1), and D1 and D6 purchasers before paying the entire purchase price. He had carried out the necessary precaution required by the law to accord him the protection of a bona fide purchaser for value 1380 without notice. I take guidance from the Federal Court in Malayan Banking Bhd v Mohd Affandi Ahmad & Anor [2024] 10 CLJ, FC:

A registered document of title is conclusive evidence of the indefeasibility of title under section 89 of the NLC, unless any of the vitiating factors in section 340(2) of the NLC are present to 1385 render the title defeasible. The common law doctrine of constructive or equitable notice is not applicable under the NLC. Therefore, applying the equitable notice doctrine should not negate a subsequent purchaser's rights and good faith. The apex court held that section 340(3) protects the title of bona 1390 fide purchasers unless fraud is established, and reaffirmed the Torrens system’s principles, thereby excluding the application of the English equitable doctrine of notice.

It would be erroneous to impose an unduly heavy and commercially unrealistic burden to prove that it was "impossible" 1395 to discover any unlawfulness in the transaction after critically examining documents to which the purchaser is not privy.

The Torrens system is based on the principle of conclusiveness of the title register, precluding the need for purchasers to investigate beyond the title unless statutory exceptions are met. 1400 This approach would be consistent with the Federal Court’s decision in Pushpaleela a/p R Selvarajah & Anor v Rajamani d/o Meyappa Chettiar and other appeals (supra), where it protects registered proprietors and subsequent purchasers who have duly reviewed the title register, and thereby reinforces the 1405 system’s reliability and security. In the circumstances, it is correct for D7 to take the position that it is a bona fide purchaser for valuable consideration that deserves protection under section 340(3) NLC. 1410 CONCLUSION [11] In light of the foregoing, and after all things are considered:

11.1 The plaintiff’s claim in L.1 is dismissed with costs to the defendants.

11.2 D3, D4 & D5 (for the estate of Law Yeong Chow (deceased)): 1415 The Counterclaim is allowed with costs against the plaintiff. The following prayers are allowed (L.43 PDF 126-128):

71.1, 71.2, 71.3, 71.4, 71.5, 71.6,

71.7 Abandoned (on 28.02.2025)

71.8 and 71.9 Damages to be assessed 1420 71.10 Interest at 5%

11.3 Global costs of RM50,000.00 (inclusive of counterclaim)

11.4 D7: The counterclaim is allowed with costs against the plaintiff. The following prayers are allowed (L.43 PDF 208-209): 1425 74 (a, b, c, d, e, f, g, h (damages to be assessed) 74 (j) Global cost of RM50,000.00 (inclusive of counterclaim)

11.5 All costs are payable by the plaintiff within ninety (90) days from the 1430 date of this order.

11.6 Claims against D1, D2 and D6 are similarly dismissed with no order for costs. 1435 Dated 09.05.2025. 1440 HAYATUL AKMAL ABDUL AZIZ JUDGE HIGH COURT OF MALAYA WILAYAH PERSEKUTUAN KUALA LUMPUR 1445 Parties: Prakash Lachimanan 1450 Messrs Prakash Lachimanan for the Plaintiff Kee Mohd Thariq together with Nurul Zaemah Messrs Hifdzi Kee Hanisah & Co. for the 3rd, 4th and 5th Defendants 1455 Shahabudin Shaik Alaudin, together with Rosnida bt Che Ibrahim, Burhanudeen Abdul Wahid and Muhammad Adam Burhanudeen (PDK) Messrs Burhan & Company for the 7th Defendant