Mohd Naguib Bin MD Nadzri v 1. ) Fadzlishah Bin Fadzil (BA-22NCvC-215-06/2023)

FADZLISHAH BIN FADZIL

FNZ SHIPPING & FORWARDING AGENCY (M) SDN BHD (NO. SYARIKAT: 574794-T) …DEFENDAN-DEFENDAN

The subject matter of the Plaintiff’s claim in this case is 160,000 ordinary shares in the 2nd Defendant, FNZ Shipping & Forwarding Agency (M) Sdn Bhd (“FNZ Shares”). The Plaintiff claims that these FNZ Shares are registered to the 1st Defendant but held on trust for him, and the Plaintiff wants 23/07/2025 09:30:26 BA-22NCvC-215-06/2023 Kand. 103 them back with damages. The Plaintiff pleaded an express trust over the FNZ Shares, or unjust enrichment and the imposition of a constructive trust. Competing contentions

FNZ Shipping & Forwarding Agency (M) Sdn Bhd (“FNZ”) was initially owned by one Zulkifli bin Humar and Saifulbahri bin Mohamed in equal shares of 50,000 shares each. Its company secretary was one Mohd Khairul Amini bin A. Ramli (“Khairul Amini”) of SKA Sekretaris Sdn Bhd (“SKA”). On or about 13- 10-2021, the Plaintiff paid RM100,000.00 by cheque in favour of SKA (“Payment”). There is a dispute over the purpose of this Payment.

The Plaintiff claims that the Payment was for the purchase of 80% of the shareholding in FNZ from the 2 existing shareholders following his discussions with Zulkifli bin Humar who testified as DW1 (“Zulkifli”). Describing the 1st Defendant as a trusted assistant and/or employee in his various businesses since 2018, the Plaintiff’s case is that:

He was contacted by Ahmad Hithir bin Zainab about FNZ when he sent word to the market that he was interested in a company with a freight forwarding/customs agent license.

He offered to buy shares in FNZ through a capital injection in FNZ and entered into negotiations with Zulkifli.

He approached the 1st Defendant to hold the FNZ Shares on trust for him and be appointed as a director in FNZ to oversee his interest

He introduced the 1st Defendant to Zulkifli and Khairul Amini.

The share capital of FNZ was increased to 200,000 ordinary shares of which 160,000 (or 80%) was allotted to the 1st Defendant.

He directed FNZ to appoint the following individuals as his nominees and: • 1st Defendant was appointed as a director on 12- 10-2021 and Managing Director of FNZ on 7-9- 2022 • Ahmad Hithir bin Zainal was appointed as director and CEO of FNZ on 7-9-2022 • Abdul Mutalib bin Ismail (“Abdul Mutalib”) was introduced to join as executive chairman of FNZ in October 2022

He was regularly consulted and updated on important decisions involving FNZ.

According to the 1st Defendant, both he and the Plaintiff had either approached or been approached by Zulkifli separately about FNZ which was then struggling financially. Thus, contrary to what the Plaintiff contends, the 1st Defendant’s case is that:

Zulkifli knew him personally, approached him in August 2021 and offered him free shares amounting to 80% of the shareholding in FNZ and a directorship to helm and bring new business to FNZ because of his business expertise.

The Payment was a loan by the Plaintiff and was deposited via the company secretary on 14-10-2021, of which RM69,537.91 was repaid by FNZ to the Plaintiff’s companies, Berkat Alam Resources and 313 Solutions.

At the trial, Zulkifli (DW1) and Abdul Mutalib (PW2) testified for the Defendants and for the Plaintiff respectively. Notably, neither party called Ahmad Hithir bin Zainal or Khairul Amini of SKA to testify. Findings and analysis Recognition of trust 6. There is a point of law forming a major plank of the Defence case that can be briefly dealt with at the outset. The point is that the Articles of Association of FNZ is the standard Table A of the Companies Act 1965, paragraph 7 of which reads: - “7. Except as required by law, no person shall be recognized by the company as holding any share upon any trust, and the company shall not be bound by or be compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or unit of a share or (except only as by these regulations or by law otherwise provided) any other rights in respect of any share except an absolute right to the entirely thereof in the registered holder.”

Based on this, the Defendants say that no trust in any share of FNZ can exist. This is incorrect as a proposition of law. A trust can exist and be enforceable as between the trustee and cestui que trust. The aforesaid provision of Table A of the Companies Act 1965 and similar formulations of the condition affect only the cestui que trust vis a vis the company, in that the company is not obliged to recognize any beneficial ownership.

In Pua Kim Seng v Mohamad Khashim bin Abdul Sakor & Anor [2010] 5 MLJ 791, the Court of Appeal observed that the same articles of association cited by the Defendants merely provides protection to the company so that it is not bound to recognize beneficial shareholders, but it does not invalidate a trust deed which was still enforceable. Existence of trust

Proof of the existence of a valid trust is at the heart of this case. As a matter of law, no particular form of words or writing requirement are necessary to create an express trust (Wan Naimah v Wan Mohamad Nawawai [1974] 1 MLJ 41; ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd [2005] 2 MLJ 422). However, three requirements must be fulfilled:

Certainty of intention;

Certainty of subject matter; and

Certainty of the object of the trust. A trust is void if there is uncertainty in any of these three elements (Knight v. Knight [1840] 49 ER 68).

The trust is claimed over the FNZ Shares registered to the 1st Defendant. There is no written record of the trust in this case and it was left to this Court to make the necessary inferences whether the trust exists or not.

Subject matter of trust 11. The 1st Defendant contended that the subject matter of the trust is uncertain because the RM100,000.00 Payment did not correspond to any recognizable consideration for 80% of the share capital of FNZ before or after the share capital increase from 100,000 shares to 200,000 shares.

This Court would regard this point as a non-issue since consideration for the FNZ Shares need not necessarily be at par value of RM1.00. It is quite irrelevant whether the transacting shareholders agreed to the transfer of shares at a discount, or at a premium. In relation to the company, no evidence was led that the FNZ Shares represent any other capital raised.

(ii) Object of the trust 13. The 1st Defendant also contended that there is no certainty of object or purpose for the 1st Defendant to hold the FNZ Shares on trust for the Plaintiff. In this regard, it is not particularized why the 1st Defendant says the object is uncertain.

This Court finds that the pleaded object of the trust was sufficiently certain in that the FNZ Shares would be held for the benefit of the Plaintiff, as is typical in nominee shareholding arrangements. Accordingly, the 1st Defendant would act on the Plaintiff’s instructions in all dealings with FNZ as the beneficial shareholder of the FNZ Shares during the subsistence of the trust, and that the FNZ Shares would have to be transferred to the Plaintiff on his instructions.

(iii) Certainty of intention to create trust 15. This is the element that requires inferences to be drawn from the totality of the evidence, primarily based on who paid for the shares and the subsequent conduct of the parties. As the 1st Defendant has pleaded an entirely different narrative for how he came to be the registered shareholder of the FNZ Shares, the credibility of this alternate case must also be evaluated by this Court. • Payment for the FNZ Shares 16. It is not disputed that through his personal enterprise called Berkat Alam Resources, the Plaintiff issued a cheque dated 13-10-2021 for RM100,000.00 in favour of SKA and on the same day, SKA wrote an email to Zulkifli to state that SKA would act as trustee for payments received, including the injection made to raise the paid up capital of FNZ. It appeared that Zulkifli was personally in debt to SKA who was controlling the movement of funds in relation to FNZ.

The Plaintiff and the 1st Defendant were part of a WhatsApp Chat group called “Project khas.” On 4-4-2022, the 1st Defendant was asked by someone in the group to sign a directors’ resolution for the transfer of shares. On 13-4-2022, the 1st Defendant reported to the group “Share dah jadi 80% n 20%.” In the absence of a more compelling explanation, this was consistent with a report by the 1st Defendant to the Plaintiff on the utilization of the Payment.

In his testimony however, Zulkifli was clearly under the impression that the 1st Defendant had personally furnished the Payment to him as consideration for his shares. While he did at least confirm that there was only one payment of RM100,000.00 to SKA from which he “used RM75,000 to settle his debts” and kept RM25,000.00. His evidence directly contradicted the 1st Defendant’s evidence that he got the FNZ Shares from Zulkifli for free. The inconsistency concerned a material aspect of the case.

It was not unreasonable to conclude based on Zulkifli’s performance on the stand, that he was neither a decision maker nor fully apprised of what was going on. He appeared to be improvising his evidence under cross examination when he was asked how much he and Saifulbahri bin Mohamed received from the 1st Defendant for the FNZ Shares. Considering how pivotal this is as part of the competing narratives in this case, Zulkifli’s testimony lacked credibility and undermined the 1st Defendant’s case.

Zulkifli’s evidence tended to prove that, consistent with the Plaintiff’s case, he discussed a potential partnership with the Plaintiff in FNZ and received RM100,000.00 from the Plaintiff. Beyond this, the 1st Defendant had either mischaracterized the Payment from the Plaintiff to Zulkifli as a loan or that both he and Zulkifli had not very artfully concocted the defence case that the Payment was a loan instead of consideration for the FNZ Shares.

The defence case that the Payment was a loan was too improbable to merit any consideration as no reasonable businessman would hand over RM100,000.00 as a loan to FNZ without any documentation, terms or prospect for its return. Further, it made no sense that FNZ paid the Plaintiff’s companies RM69,537.91 towards the settlement of Zulkifli’s personal loan as alleged. It was more believable that RM69,537.91 were repayments for customs clearance work undertaken by FNZ in collaboration with those companies as contended by the Plaintiff.

Based on the above considerations, this Court finds that the purpose of the Payment was for the Plaintiff to acquire the FNZ Shares and was not a loan as contended by the 1st Defendant. • Subsequent Conduct 23. There are undisputed facts pertaining to the parties’ subsequent conduct based on the contemporaneous documentary evidence, which is the best evidence available in the circumstances on what the parties intended when the 1st Defendant became the registered shareholder of the FNZ Shares.

To start with, while not decisive of any particular fact, it was not beyond the pale based on WhatsApp communications that the 1st Defendant was a trusted aide of the Plaintiff who treated the Plaintiff with some deference. These WhatsApp communications revealed references to the Plaintiff as “abang,” the running of errands by the 1st Defendant for the Plaintiff, and expressions of gratitude to the Plaintiff, the subjects of which are not relevant for present purposes.

What is relevant is the subsequent conduct of the parties as it related to the control of FNZ. On 28-7-2022, the 1st Defendant responded “Okay baik bg” to the Plaintiff’s message instructing him to discuss the signing of “reso hongleong” with “syaiful” and “hithir”; followed by a message from the 1st Defendant to the Plaintiff seeking approval on draft details of the authorized signatories for cheques and maker/checker for online banking.

On 17-10-2022, the 1st Defendant forwarded by WhatsApp to an SKA employee, photos of Abdul Mutalib’s IC with the message “Salam” and “Utk buat reso appoint as executive chairman.” On 7-11-2022, the 1st Defendant messaged by WhatsApp to the same SKA employee, querying whether a meeting is necessary to appoint a chairman and requesting for the resolution, which was forwarded.

The Plaintiff and the 1st Defendant were part of a WhatsApp group called “FNZ x 313 x BS”. On 17-10-2022, the 1st Defendant responded to forward “Sales Report utk September” requested by the Plaintiff. On 9-11-2022, the 1st Defendant forwarded a FNZ resolution to Abdul Mutalib with the message “Salam abg @Mutalib ni resolution”.

The 1st Defendant, Abdul Mutalib and others were part of a WhatsApp group called “FnZ (Account)”. On 14-11-2022, the 1st Defendant sent the following message to the group: Between November 2022 and January 2023, various operational messages were sent by Abdul Mutalib to the 1st Defendant and Zulkifli. For example, Abdul Mutalib gave directions to the 1st Defendant on trade payments and on 25- 12-2022, the 1st Defendant messaged the Plaintiff to ask if he can release salaries for the month:

Abdul Mutalib bin Ismail who testified at the trial as PW2, was appointed by the Plaintiff to oversee the operations of FNZ due to his corporate experience and he corroborated the Plaintiff’s case that the 1st Defendant was acting on the Plaintiff’s instructions as trustee of the FNZ Shares. The distinct impression that this Court got from the testimonies of Zulkifli and the 1st Defendant, is that Abdul Mutalib must have become an unwelcome steward in the affairs of FNZ and that this led to a change of heart.

In WhatsApp messages between the Plaintiff and Khairul Amini in early 2023, it was evident that the 1st Defendant had ghosted the Plaintiff, leading to speculation on the part of Khairul Amini that: The Plaintiff also learned that the 1st Defendant had arranged for new bank accounts to be opened for FNZ with one Syaiful Bakthiar bin Abd Rahim and his wife as signatories.

There followed a series of letters of demand and correspondence between solicitors for the Plaintiff and Khairul Amini/SKA who, incidentally, did not deny the existence of the trust as asserted by the Plaintiff in his letter of demand. The 1st Defendant did not respond to letters addressed to him, alleging that the letters that were emailed and posted to him were not received.

This Court finds that the evidence of payment and exercise of control by the Plaintiff as set out above is consistent with the existence of a trust over the FNZ Shares from the outset, and that there was a breach of that trust when the 1st Defendant later decided to assert beneficial title over the FNZ Shares. It was less probable that all of the Plaintiff’s participation in the business of FNZ, control of bank accounts and general interference in the affairs of FNZ were simply tolerated because he was Zulkifli’s creditor, as contended by the 1st Defendant. • Adverse inference 33. A key factor that the Court considered was the failure to call Khairul Amini of SKA to the stand to testify and the adverse inference that might be invoked for this failure. The question might be asked whose onus it was to call Khairul Amini and therefore, against whom should the adverse inference be drawn? Generally, there is no property in witnesses and the onus is on the party who will fail if no further evidence is called. Based on the preponderance of evidence, the onus had shifted to the Defendant.

Khairul Amini was FNZ’s Company Secretary and answerable to the 1st Defendant as a named director. He was an obviously material witness that the Defendants could have easily summoned to give evidence as he was in a position to give a first-hand account of the matter in controversy. Crucially, Khairul Amini could have refuted under oath, the Plaintiff’s contention that the Payment was consideration for the FNZ Shares, explain the representation by SKA’s solicitors that it would issue a receipt for the Payment and his WhatsApp message to the Plaintiff on the 1st Defendant’s intentions when the Plaintiff was ghosted.

In the circumstances, this Court invokes section 114(g) of the Evidence Act 1950 against the 1st Defendant for failing to call Khairul Amini to the stand. If he had testified, there is every likelihood that Khairul Amini would have given evidence consistent with the Plaintiff’s intention for the Payment, and the 1st Defendant’s intended role when the FNZ Shares were registered in his name.

For all of the reasons set out above, this Court concludes that the Plaintiff has proved on a balance of probabilities that the 1st Defendant held the FNZ Shares on trust. The 1st Defendant failed to turn the case around when the onus of proof shifted to him and on the contrary, advanced a case so improbable that this Court had little difficulty disbelieving it.

Accordingly, the Plaintiff’s claims in prayers (a) to (d) are allowed with costs. No damages were proved. An award of costs RM30,000.00 is made against the 1st Defendant and no order as to costs is made against 2nd Defendant who is a nominal party in the circumstances. Bertarikh : 18 Julai 2025 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam bagi Plaintif: Lim Wei Jiet Tetuan Lim Wei Jiet Peguam bagi Defendan-Defendan: Ahmad Ezmeel Ahmad Tarmizi (bersama Ahmad Zakiuddin Adnan) Tetuan Ezmeel & Co.