Moore Advent Tax Consultants Sdn Bhd v Menang Development (M) Sdn Bhd (WA-22NCC-82-02/2022)

SHUN LEONG KWONG

ONG CHONG CHEE

MOORE ADVENT TAX CONSULTANTS SDN BHD (NO. SYARIKAT: 200501021539 [703669-U]) -DEFENDAN (DALAM TUNTUTAN BALAS) JUDGMENT A. Introduction [1] The parties shall be referred to in the following manner: a. The plaintiff in the main action and the 3rd defendant in the counterclaim, Moore Advent Tax Consultants Sdn Bhd shall be referred to as b. The defendant in the main action and the plaintiff in the counterclaim, Menang Development (M) Sdn Bhd shall be referred to as c. The 1st defendant in the counterclaim, Shun Leong Kwong shall be referred to as and d. The 2nd defendant in the counterclaim, Ong Chong Chee shall be referred to as [2] The following applications were filed by the parties: a. application in enclosure 20, for summary and b. Applications to strike out counterclaim: i. counterclaim against him Striking Out and ii. strike out counterclaim against them and Striking Out Striking Out Application shall collectively be referred to as the [3] After considering the evidence in this court and submissions of counsel, I found the defences of MDSB as well as their counterclaim to be unsupported by contemporaneous documents and evidence. As such, I Striking Out Applications. The full grounds of my decision are as set out below. B. Background Facts [4] Moore claimed that MDSB owed professional fees amounting to RM533,600 Professional to Moore, pursuant to services Moore had provided. [5] The services were initially set out in a letter of engagement dated 26 January 2016 . However, the scope of the services in the Engagement Letter subsequently became inapplicable. [6] This notwithstanding, Moore claimed that a new issue had arisen, which required their advice. Moore claimed they had provided advice based on the new scope of services. [7] Moore issued tax invoices for the services completed. Some payments were made by MDSB, but the Outstanding Professional Fees remain unpaid. [8] MDSB denied being liable for the Outstanding Professional Fees. MDSB also filed a counterclaim against Shun, and Ong and Moore. [9] duties by Shun. MDSB claimed that Shun, with the assistance of Ong and Moore, carried out overt acts of conspiracy with the predominant purpose of injuring MDSB. It is case that Shun had caused MDSB to make improper payments to Moore. [10] In their counterclaim, MDSB sought inter alia a declaration that the Engagement Letter is invalid, null and void. MDSB also sought a return of fees totalling RM1,164,838 that had been paid to Moore. C. Applications Before This Court The Applications [11] The following applications were filed by the parties: a. Summary Judgment Application, for summary judgment against MDSB; and b. The Striking Out Applications, namely: i. Striking Out Application; and ii. to strike counterclaim against them. Summary Judgment Application [12] provides that: in an action to which this rule applies a statement of claim has been served on a defendant and that defendant has entered an appearance in the action, the plaintiff may, on the ground that the defendant has no defence to a claim included in the writ, or to a particular part of such a claim, or has no defence to such a claim or part thereof except as to the amount of any damages claimed, apply to the Court for judgment against that defendant. (emphasis added) [13] The principles of summary judgment as set out in Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400 and Cempaka Finance Bhd v Ho Lai Ying [2006] 2 MLJ 685 are as follows: a. Summary judgment is a procedural device available for prompt and expeditious disposal of an action without a trial. b. To succeed in an application for summary judgment, all substantive issues must be clear, and must be able to be determined once and for all. c. Once the preliminary requirements under order 14 rules 1 and 2 have been met, namely (i) the defendant has entered appearance; (ii) the statement of claim has been served on the defendant; and (iii) the affidavit in support of the summary judgment application has verified the facts upon which the claim is based, and has stated that there is no defence to the claim, the plaintiff has established a prima facie case against the defendant. The burden then shifts to the defendant to satisfy the court as to why judgment should not be given against him. d. Where a assertion, denial or dispute is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents, then such assertion, denial or dispute will be rejected. In such a case, the court may grant summary judgment against the defendant. [14] It is undisputed that the writ and statement of claim had been served on MDSB, and that MDSB had entered appearance in these Application, Moore had verified the facts upon which the claim is based, and had stated that there is no defence to the claim. [15] contemporaneous documents, specifically invoices issued by Moore and on these invoices without any condition or reservation tantamounts to an admission and acknowledgment of debt to Moore. [16] Based on the above, I find that Moore has established a prima facie case against MDSB. The burden then shifts to MDSB to satisfy the court as to why judgment should not be given against them. [17] MDSB raised various issues, premised mainly on allegations of breach of fiduciary duties, and conspiracy between Shun, Ong and Moore. These allegations form the main subject matter of counterclaim. It was claimed by MDSB that no work had been performed by Moore under the Engagement Letter, and that payments made to Moore were made for an improper purpose, and did not benefit MDSB. The Striking Out Applications [18] The Striking Out Applications are filed pursuant to order 18 rule 19(1)(b) and (d) of the Rules of Court 2012. The relevant provision reads: The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious;

it may prejudice, embarrass or delay the fair trial of the action; or

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case (emphasis added) [19] Shun, Ong and Moore contend that the counterclaim involving the alleged breach of fiduciary duties by Shun and the alleged conspiracy between Shun, Ong and Moore is fabricated, and the allegations are an excuse not to pay the Outstanding Professional Fees. It is their case that the counterclaim is obviously unsustainable. D. Considerations And Findings [20] After considering the evidence before this court and the submissions of learned counsel, I found both MDS counterclaim against Shun, Ong and Moore lack merit and are inconsistent with contemporaneous evidence. [21] My finding is premised on the following considerations: a. scope of services and fees had been agreed; b. Moore carried out and completed the services; and c. invoices were partly paid. [22] The services provided by Moore concerned advice on a consortium and joint venture arrangement. On 26 March 2010, a consortium agreement was executed between - Radzi Punniyakumaran (who later assigned his rights to Runding Jaya Sdn Bhd [23] The Consortium Agreement finalised the terms of a joint venture between the parties, in respect of several plots of lands in Klang owned establishment and incorporation of a special purpose vehicle, Pacific Bright Sdn Bhd [24] between Menang-Lands, that the ownership of the Lands is vested in the SPV, and that MDSB holds the Lands on trust for the SPV. [25] In November 2011, Menang-Corp was informed by the Malaysian compulsorily acquired MDSB, as the registered owner of the Acquired Lands, was expected to receive a compensation of between RM50 to RM100 million for the Compulsory Acquisition. [26] With the Compulsory Acquisition, the JVA Partners required the transfer of the beneficial ownership of the Acquired Lands from the SPV to MDSB to be regularised [27] Moore was engaged to provide tax advisory services in relation to the Proposed Transfer. [28] The scope of services is set out in the Engagement Letter. The provisions of the Engagement Letter include the following: a. That it is the intention of the SPV to enter into an agreement to regularise the transfer of the beneficial ownership of the Acquired Land from the SPV to MDSB. b. That Moore shall provide advice on amongst others, the tax implications of the Proposed Transfer, a suitable strategy to be adopted to optimise the tax efficiency with regard to the Proposed Transfer and documentation required to implement the Proposed Transfer. c. That professional fees will be equivalent to 2.5% of the compensation received for the Compulsory Acquisition. [29] It was subsequently discovered that the Lands had in fact not been transferred from MDSB to the SPV. This rendered the scope of work under the Engagement Letter redundant. [30] Notwithstanding such revelation, Moore claimed that: a. A new issue subsequently arose, namely the potential tax payable by MDSB and the SPV upon receipt of compensation from the Compulsory Acquisition. Moore claimed that they had provided advice on this issue. b. During a meeting held at office on 21 September 2016, which was attended by amongst others, Shun and Ong, the professional fees for engagement were agreed to be reduced to RM1,600,000, and the fees were Ng Kim Fong, the senior group accountant of Menang-Corp, which confirmed the advice provided by Moore on 23 August 2016, executed between the JVA Partners, out, inter alia, a structure involving the assignment by Menang-Corp of all rights, benefits and interests under the Consortium Agreement to MDSB, and the allocation of compensation from the Compulsory Acquisition, as well as the profits and proceeds from the development and sale of the Lands. The memorandum was acknowledged to be wholly borne by MDSB Professional [31] The question arising is whether the scope of the services and the fees constituting the Revised Professional Engagement had been agreed. Taking into account the totality of the evidence before this court, I am of the view that on a balance of probabilities, the services and fees had been agreed between the parties. [32] Two main reasons led me to reach this conclusion. [33] The first is the existence of the following documents that prove that services were carried out and completed by Moore: a. tax issues involving MDSB; and b. following advice given by Moore. This memorandum sets by Menang-Corp in their annual financial statement. A of Re-iteration and dated An internal memorandum dated 18 July 2016 issued by to MDSB, for the first 50% of total professional fees, amounting to RM800,000 st The progress billing, out-of-pocket expenses and taxes amount to RM849,272, as reflected in the 1st Invoice. The 1st Invoice was paid in full by way of a cheque dated 7 MDSB, for the next 15% of total professional fees, amounting to RM240,000 nd The progress billing, out-of-pocket expenses and taxes amount to RM255,566, as reflected in the 2nd Invoice. The 2nd Invoice was paid in full by way of a cheque dated 5 to MDSB, for the final 35% of total professional fees, amounting to RM560,000 rd The progress billing, out-of-pocket expenses and taxes amount to RM593,600, as reflected in the 3rd Invoice. Part-payment of RM60,000 was made on the 3rd Invoice, by way of a fund transfer from MDSB, on 23 November [34] The second reason relates to the issuance of invoices by Moore. These invoices had either been fully or partly paid by MDSB. [35] Moore issued three invoices: a. October 2016, issued by MDSB. b. July 2017, issued by MDSB. c.

A tax invoice no. INV09120 dated 6 August 2018 issued A tax invoice no. INV07636 dated 3 July 2017 issued to A tax invoice no. INV06950 dated 5 October 2016 issued [36] From the payments made, the Outstanding Professional Fees amounting to RM533,600 remain outstanding. [37] There are a few observations I made in relation to the issuance and payment of the invoices. [38] First, the total sum of the professional fees set out in the invoices is RM1,600,000, namely RM800,000 in the 1st Invoice, RM240,000 in the 2nd Invoice and RM560,000 in the 3rd Invoice. The total amount of RM1,600,000 is consistent with the professional fees Moore claimed had been agreed to at the meeting on 21 September 2016. [39] Next, the invoices have the same reference number as the Engagement Letter, which means that they are issued in respect of the services in the Engagement Letter (or any variation of the services). [40] Finally, full payments were made on the 1st Invoice and the 2nd Invoice, and part payment was made on the 3rd Invoice, unconditionally and without reservation. I also note that Whatsapp messages on payments of the invoices, specifically the 3rd Invoice, were exchanged between Simon Wee (the chief financial officer of MDSB) and Ong in

There was no challenge to the quantum of the professional fees or the Outstanding Professional Fees in these messages. [41] On this issue, I am guided by KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd [1996] 1 MLJ 233, where it was held that an appellant was estopped from the denying its status as a sub-agent, after receiving statements of accounts from the respondent, without objection. The Court judgment, and held as follows: the key to the whole case lies in the conduct of the appellant in this case. Encik Darshan Singh, in response to a question put to him by a member of the panel hearing this appeal, frankly conceded that his client did indeed receive the statements of account of which we have earlier spoken. It follows that a reasonable man similarly circumstanced as the appellant would, if it were really true that there had been no appointment of sub-agency as later claimed by it, have, post haste sent these accounts back to the respondent and denied any liability. But that is not what happened. The appellant remained silent, held onto the accounts, and did nothing about it. The denial by its solicitor's letter of 4 January 1993, came long after the delivery of the account. When asked why his client had kept silent for a rather long period of time, Encik Darshan Singh's response was that his client was a large company and did not do anything until the letter before action was received. We trust that we will be forgiven if we are unable to detect the logic in this response. We are of the view that it would be a travesty of justice if we were to accede to the appellant's arguments. We are left in no doubt that the undisputed facts of this case admit of the conclusion that the respondent was, by the conduct of the appellant, lulled into the belief that the appellant had no challenge to the accounts, leave alone the legal relationship between the parties. To put it another way, the appellant, by its silence coupled with the other circumstances of the case, encouraged the respondent to believe that it intended to raise no challenge to the existence of a prior legal relation between the parties or to the figure which the account showed as owing by it. Having done so, it ought not to be permitted to now contend otherwise. It follows that it does not, therefore, lie in the mouth of the appellant to now deny the respondent's claim. It would be plainly inequitable to do so. An examination of the facts leads us to this conclusion. The legal basis upon which such a conclusion may be sustained is well-settled and is now beyond question. See Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 (emphasis added) [42] In CLLS Power System Sdn Bhd (No 2) v Sara Timur Sdn Bhd [2015] 11 MLJ 674, summary judgment was allowed, where payments for works completed were made without any condition, protest or reservation. The High Court held as follows: [13] I agree with the plaintiff that the facts and the conduct of the defendant are even stronger than those in KGN Jaya Sdn Bhd not only did the defendant keep quiet, it made three payments made by MDSB on three separate occasions, to the invoices issued by Moore, are conclusive proof that MDSB had admitted and acknowledged the total professional fees of RM1,600,000, as well as the Outstanding Professional Fees. I find the challenges mounted by MDSB to the Outstanding Professional Fees as nothing more than mere afterthought designed to avoid liability to Moore. I am of the considered view that the on the alleged breach of his fiduciary duties by Shun and acts of MDSB in making payments for invoices. Had there been suspicions of acts of conspiracy by Shun, Ong and Moore and improper payments, MDSB would not have made payments of the invoices, totaling RM550,000. Each time the defendant paid, it did so without complaint, without hesitation; with no conditions, no protest and no reservation. Having kept quiet and having the plaintiff into the belief that the debt is not to claim otherwise. A quick examination of the documents cited bears this (emphasis added) [43] In the present case, the unconditional and unreserved payments payments made negate the defences raised by MDSB. [44] I am of the further view counterclaim, which centres conspiracy by Shun, Ong and Moore are also negated by the actions of specifically part payment of the 3rd Invoice in November 2020. [45] As a final point, my decision that judgment should be granted summarily against MDSB would in any event have a direct effect on the would effectively nullify arguments on acts of conspiracy by Shun, Ong and Moore and improper payments made to Moore (see defences of MDSB as well as their counterclaim to be denials and allegations unsupported by contemporaneous evidence. They are in my view, afterthoughts designed to avoid liability. MDSB has not raised any defences that would necessitate this matter to be determined by way of a outcome of the Striking Out Applications, as the issues to be determined in Summary Judgment Application are the same as the issues in the Striking Out Applications. [46] In this regard, my findings in Summary Judgment Application that services had been provided and completed by Moore and that payments made by MDSB on invoices are conclusive proof Lonpac Insurance Bhd v Koridor Padu Sdn Bhd [2021] LNS 982 and Small Medium Enterprise Development Bank Malaysia Berhad v Primanora Medical Centre Sdn Bhd [2019] 1 LNS 484).

[47] With the considerations and findings set out above, I found the trial. This is also a plain and obvious case for the court to exercise its power to strike out MDSB's counterclaim. [48] As such, I allowed Summary Judgment Application and the Striking Out Applications, with costs. that MDSB had admitted and acknowledged their indebtedness to Moore, Dated 31 March 2023 - sgd - Adlin Abdul Majid Judicial Commissioner High Court of Malaya Commercial Division (NCC6) Kuala Lumpur Counsel: Plaintiff in original action / : T Sudhar (together with Tania Edward) 3rd defendant in counterclaim of Messrs. Steven Thiru & Sudhar and 2nd defendant in Partnership counterclaim Defendant in original action / : Mohamed Izzul Faris Mohd Ghani Plaintiff in counterclaim (together with Layyin Teh Hassan and Khavenesh Devanandan) of Messrs. Syed Ibrahim & Co 1st defendant in counterclaim : B Thangaraj (together with Nadeem Muhd Rafiq) of Messrs. Thangaraj & Associates