Neo Alchemy Build India LLP v Kah Glove Sdn Bhd (BA-22NCvC-501-12/2021)

KAH GLOVE SDN BHD

TAN KOK HUA @ KEN

CHA WEI WEI @ VIVIAN

ANG SOON THYE (NO. K/P: 890828-14-5953) EFENDAN-DEFENDAN GROUNDS OF JUDGMENT Introduction [1] The Plaintiff is an Indian company that ordered large quantities of disposable gloves from Malaysia during the height of the Covid-19 pandemic. In this action, it is seeking to recover USD1,033,420.00 in special damages as well as general, aggravated and exemplary damages 19/03/2025 11:50:07 BA-22NCvC-501-12/2021 Kand. 170 S/N jkKvzflZ2kqAZISBcE7ktw to be assessed by the Court for breach of contract, fraud and conspiracy to injure. [2] The circumstances that led to this action highlighted the existence of an active trade in recycled, second used or used latex and nitrile gloves industry in Malaysia. By this, it seems gloves that are understood to be single-use disposable gloves are collected, washed, repackaged and sold through a web of agents and distributors to end-users. Background Facts [3] The Plaintiff had an influx of customer demand for latex and nitrile gloves in 2020 when it decided to source for glove supply from Malaysia. In that context, the Plaintiff was introduced to the 3rd Defendant, Vivian Cha ( , testifying as SD2) and 4th Defendant, Ang Soon Thye ( , testifying as SD3). D4 was a friend of a nephew of the SP1 ). [4] D3 held herself out as a director of C-Lion Group Sdn Bhd and a Malaysian glove supplier. The evidence showed that D3 and D4 were initially active intermediaries in procuring the supply of gloves for the Plaintiff, initially [5] However, an early attempt by the Plaintiff to remit a USD100,000.00 payment to C-Lion Group Sdn Bhd was blocked by Indian banks because the company was not engaged in any glove-related business. To facilitate payments, one Xylen Marketing ( ) was named as the counterparty in the first transaction. S/N jkKvzflZ2kqAZISBcE7ktw [6] After protracted negotiations evidenced by those WhatsApp communications between the Plaintiff, D3 and D4, orders were placed However, the goods received in Brazil were rejected This transaction is the subject of a separate action by the Plaintiff against D3, D4 and Xylen in Civil Suit No. BA-22NCvC-502-12/2021. [7] The 1st Defendant, KAH Glove Sdn Bhd ( or KAH Glove ) was another supplier introduced by D3 and D4 sometime in March 2021. KAH Glove was apparently introduced as a better supplier to meet the The 2nd Defendant, Ken Tan ( ) is a director of D1. [8] D3 brought KAH Glove to the table and in Whatsapp messages just before the news of the Brazil shipment arrived on or about 21-4-2021, D4 gave the Plaintiff the following assurances: [9] The Plaintiff claimed that through the same modus operandi and involvement of D3 and D4 as it transpired with Xylen, seven (7) glove supply contracts were done between the Plaintiff and KAH Glove for latex powdered/powder free industrial/non-medical gloves and nitrile powder free polymer gloves ( ). S/N jkKvzflZ2kqAZISBcE7ktw [10] As pleaded by the Plaintiff, the Contracts were evidenced by:

Letters of intent ( ) from the Plaintiff dated between 13- 3-2021 and 14-4-2021 which set out the descriptions, specifications, sizes and quantities of gloves the Plaintiff wanted to purchase in bulk to sell to its customers;

Proforma Invoices and Invoices issued under the name of

Remittances effected by the Plaintiff to the bank account of

Exchanges of communication between the parties via WhatsApp, email and phone calls. [11] Four (4) containers of gloves (C1-C4) were received by the Plaintiff in Chennai and 1 container (C5) arrived in Bangalore in April 2021. They contained supplies from KAH Glove. Due to the experience with Xylen, the Plaintiff had opened the bonded consignment at the port in Chennai for re-packaging in India. However, C1-C4 (and later, C5 in Bangalore) were subject to seizure by Indian Customs authorities at the port because they contained used gloves declared as new ( ). [12] According to the Plaintiff, C1-C5 contained gunny sacks filled with foul-smelling, torn and blood-stained gloves in the mix. [13] Ultimately, the Plaintiff claims that it paid a total sum of USD1,033,420.00 to KAH Glove for 7 shipments of some 37 million pieces of latex and nitrile gloves under the Contracts, but again received garbage in 5 of the shipments. The sum claimed represents the full payment made by the Plaintiff for 5 container shipments (C1-C5) and 50% S/N jkKvzflZ2kqAZISBcE7ktw payment for the last 2 container shipments (C6, C7) which were not delivered. [14] The common defence of the Defendants was that the Plaintiff was supplied what it had ordered, i.e. the quality of gloves that were supplied were downgraded allegedly because the Plaintiff could not afford to pay the prices quoted for the Grade A gloves as specified by the Plaintiff in its LOIs to KAH Glove and had settled for the cheap gloves. [15] The Defendants did not mince their words in pleading and testifying through D2, D3 and D4 cted and defective [16] Although disputing the transactions and denying that KAH Glove was privy to the transactions with the Plaintiff, D1 and D2 pleaded a joint counterclaim for the balance 50% payment of USD177,050.00 for the last 2 of the containers (C6, C7) that was not shipped as well as general, aggravated and exemplary damages to be assessed. [17] D3 and D4 pleaded that they were the er to source for glove supplies. They took the same position as KAH Glove that there was no agency between them and KAH Glove, and that they took instructions from the Plaintiff. D3 and D4 also filed a counterclaim for an unquantified sum o did not receive from the Plaintiff and also general, aggravated and exemplary damages. S/N jkKvzflZ2kqAZISBcE7ktw Issues for determination [18] There were many factual disputes ventilated at the trial of this case. However, despite an invitation by the Court in post-trial directions to address the issue raised by the Court on the legality of the trade in used latex and nitrile gloves, neither party addressed the issue in their written submissions. [19] This Court had noted that although the gloves ordered by the Plaintiff were described as non-medical and industrial gloves, the Defendants testified that the gloves they supplied to the Plaintiff included used gloves i.e. recycled after washing, from various sources. In fact, it wa-sarung tangan yang selalunya dibekalkan dan yang mempunyai permintaan yang tinggi ialah sarung tangan-sarung tangan yang digunakan di hospital atau sarung tangan-sarung tangan yang pernah dipakai oleh pekerja-pekerja [20] The activities around the recycling, repackaging and reuse of what are understood to be single use disposable gloves presented obvious market raised questions which were not addressed. [21] Confining matters to the pleaded case, the issues for determination were as follows:

Whether there was a breach of the Contracts by D1

Whether fraud was perpetrated by D2, D3 and D4

Whether there was a conspiracy between D2, D3 and D4 S/N jkKvzflZ2kqAZISBcE7ktw

Whether the Court should lift the corporate veil between D1 and D2

Whether D1 and D2 can recover on its counterclaim for USD177,050.00

Whether D3 and D4 can recover on its counterclaim for commissions [22] of the transaction between the parties, the Court first examined the evidence to determine what the Plaintiff received in C1-C5. For that, it was necessary to consider the admissibility cuments relating to the Indian Customs Action and inspection reports. Analysis and Findings Admissibility of Documents [23] The admissibility of the following documents was objected to by the Defendants: Document Marking 1. Indian Customs Show Cause Notice dated 9-8-2021 re. Import of goods declared as - 3622318 dated 19-4-2021. IDP-1

HQTS Inspection Certificate (Bangalore) dated 17-10-2022 [Inspection of latex powder free industrial gloves supplied by KAH Glove under PI No. NEO/LOI-KGSB- 04-03/21] IDP-2 S/N jkKvzflZ2kqAZISBcE7ktw

HQTS Inspection Report (Bangalore)

HQTS Inspection Certificate (Chennai) dated 2-9-2021 and 3-9-2021 [Inspection of latex powdered non-medical, nitrile non-medical, nitrile powder free polymer gloves supplied by KAH Glove under PI NEO/LOI-KGSB-01-03/21; 02-03/21; 03/21 and 05-03/21]

HQTS Inspection Report (Chennai)

Letter from Assistant Commissioner of Customs Bengaluru (Customs Order)

Letter from Additional Commissioner of Customs Chennai (Customs Order) IDP-12 [24] The makers of the documents were the Joint Commissioner of Customs from Chennai, the Indian inspectors from Helmsman Quality & Technology Services Co, Ltd ( HQTS ), the Assistant Commissioners of Customs from Bangalore and the Additional Commissioners of Customs from Chennai. Requiring their attendance as witnesses to tender the disputed documents would certainly cause undue delay or expense. [25] This Court finds that for admissibility of the disputed documents, it is appropriate to invoke the exceptions to section 73A(2) of the Evidence Act 1950 to dispense with formal proof of the documents. As determined, it would cause undue delay and expense to require the makers to attend trial as they are overseas and not compellable by a subpoena of this Court. S/N jkKvzflZ2kqAZISBcE7ktw [26] Furthermore, this Court observed that there was no credible challenge to the authenticity of the disputed documents. The contemporaneous discussions between the parties on WhatsApp and e-mail after the arrival of C1-C5 in India were consistent with the existence of the disputed documents. [27] Further, related to the disputed documents are the following documents that were not disputed as to admissibility and already formed part of the body of evidence at the trial: a) a letter from the Plaintiff to Indian Customs dated 6-8-2021 to seek a decision on the Indian Customs Action; b) WhatsApp and emails to D2, D3 and D4 regarding the Indian Customs Action; and c) a Trade Complaint by the Plaintiff to the High Commissioner for India dated 7-10-2021 which reference the Indian Customs Action. [28] In response to objections to the admissibility of the disputed documents, the Plaintiff also furnished the original copies of IDP-1, IDP- 5, IDP-11 and IDP-12 and the original envelopes that they were received in before the trial concluded. There was no reason for this Court to doubt the authenticity of these documents and by extension, the other related documents objected to by the Defendants. [29] The only shade thrown by the Defendants on the disputed documents was the fact that KAH Glove Proforma Invoice Ref: KAH5174 was shipped out in C5 to Bangalore using Bill of Lading TGPKL210038 which was not adduced in evidence. It was not otherwise S/N jkKvzflZ2kqAZISBcE7ktw disputed that C5 corresponding to the said proforma invoice was shipped to Bangalore. [30] Based on the above considerations, this Court accepts IDP-1 to IDP-5, IDP-11 and IDP-12 to be marked in evidence as P1 to P5, P11 and P12. Quality of Gloves Received [31] This Court considered the probative value of P1 to P5, P11 and P12 to be intact as there was little challenge as to its substantive content. This Court accepts that they related to C1-C5. Based on the HQTS inspection reports, random glove samples from the inspections of the consignments reportedly had the following descriptions (accompanied by photographic evidence):

100% of inspected pieces were observed with physical defect with cuts, tears, discoloration, dirt, stain, sticky and crumpled;

10% of the inspected pieces observed with blood stain on the product

100% of the goods were observed with inconsistent color varying pieces to pieces at different bags

100% of the inspected pieces and bags were observe with bad smell

100% goods were observed with physical defect with cuts, tears, damaged cuff rings, missing cuff rings, discoloration, dirt, stain, used glove and watermark

Critical defect of blood stain were observed at product packing S/N jkKvzflZ2kqAZISBcE7ktw

100% of the goods were observed with inconsistent color varying pairs to pairs at different bags

100% of the goods were observed with bad smells [32] It is not an overstatement for this Court to say that the photographs attached to the HQTS reports revealed that the gloves were in a highly degraded and unusable state. Based on P1 to P5, P11 and P12, this Court finds on a balance of probabilities that the gloves shipped by the Defendants to the Plaintiff arrived in Chennai and Bangalore substantially in the state described in the HQTS inspection reports. Breach of Contract Formation of the Contracts [33] D2 took the position that D3 and claimed the transaction documents (LOIs, Proforma Invoices and Invoices) evidencing the Contracts with KAH Glove were unreliable because they were unilaterally created by D3 at the behest of the Plaintiff and did not reflect the reality of the transactions. [34] While KAH Glove appeared as the contracting party in the supply Contracts with the Plaintiff, D2 contended that it was in reality only an intermediary that acted on instructions from the Plaintiff via D3 and D4 to pass through the stock of gloves sourced by them, and to receive/disburse payments from its USD account. [35] Although the precise terms of the Contracts between the Plaintiff and KAH Glove were made out to be unclear, it was not seriously disputed that there were concluded contracts between them for the supply of gloves. There was no dispute that under those contracts, the Plaintiff had S/N jkKvzflZ2kqAZISBcE7ktw paid USD1,033,420.00 to KAH Glove and KAH Glove had received the same. [36] Based on all the evidence seen, this Court was able to conclude that contractually, D3 and D4 acted as intermediaries for both the Plaintiff and KAH Glove in the formation of the Contracts between the Plaintiff and KAH Glove. Whose interest they served in doing so is a separate question. [37] In any case, D2 was seen to have acknowledged by words and conduct that KAH Glove was bound by the Contracts as the supplier of the gloves in that:

KAH Glove willingly participated in the transaction as the named contracting party in the transaction documents

D2 allowed D3 to use the KAH Glove office, staff and his signature and company stamp to prepare the transaction documents

D3 admitted in the documentation she prepared with the full knowledge of

KAH Glove accepted the contractual payments from the

KAH Glove is still pursuing a counterclaim based on 2 of the Contracts that formed the series of transactions identified by the Plaintiff. [38] I and demands, it was part of his business to source for alternative supplies of gloves because there was a market for rejected, defective and used S/N jkKvzflZ2kqAZISBcE7ktw gloves. In an occasional appearance of discord between the Defendants, D3 and D4 held out KAH Glove as the supplier to the Plaintiff and that KAH Glove was itself a manufacturer: [39] Based on the evidence, this Court finds that D2 was also an active participant in the performance of the Contracts with the Plaintiff in the following ways:

D2 testified that he set the price at which the gloves were sold by KAH Glove to the Plaintiff in order to take a cut of the profit.

D2 was featured in videos to the Plaintiff.

when the Plaintiff decried the state of C1-C5 and the resulting Indian Customs Action.

D2, D3 and D4 were all in a separate WhatsApp chatgroup for the Contracts.

Both D3 and D4 testified that D2 was the decision-maker who sourced for and liaised with the ultimate suppliers of the gloves.

KAH Glove produced documents to prove that it had purchased 58 tonnes of latex gloves from Accura BioCare on or about 18-3-2021 and 19-3-2021 for RM638,000.00, 26 tonnes of nitrile gloves from Impaxive Sdn Bhd for RM364,000.00 on or about 23-3-2021, about 25 tonnes of nitrile and latex gloves from Wayee Group Sdn Bhd for S/N jkKvzflZ2kqAZISBcE7ktw RM315,062.50 on or about 19-4- orders. [40] Thus, although D2 sought to distance KAH Glove from the transactions by identifying itself as just another intermediary connecting ith no contractual liabilities, this Court finds such a proposition to be untenable. [41] It was also evident from the WhatsApp communications between the Plaintiff and D3, D4 and later, also D2, that the Plaintiff had no knowledge of, contact with or any privity of contract with any other entity in the supply chain and treated KAH Glove as it did Xylen, as the supplier of the gloves. [42] Contractually, the Plaintiff could only look to KAH Glove in the transaction. KAH Glove presented no basis to lawfully disclaim the Contracts with the Plaintiff. If KAH Glove takes the position that another party is at fault for what the Plaintiff received, it could have, if there is cause, taken out third party proceedings against one or more of the other parties in the supply chain but did not do so. Instead, it blames the Plaintiff. Terms of the Contracts [43] The contract documents that the Plaintiff relied upon are those connected to the confirmed shipments of gloves for which USD1,033,420.00 were paid. The payments were against invoices issued by KAH Glove, namely:

Invoice No. KAH5168 (12/3/2021);

Invoice No. KAH5169 (12/3/2021); S/N jkKvzflZ2kqAZISBcE7ktw

Invoice No. KAH5170 (9/3/2021) [explained by SP1 to be erroneously pleaded as KAH5179];

Invoice No. KAH5171 (9/3/2021);

Invoice No. KAH5172 (24/3/2021);

Invoice No. KAH5173 (24/3/2021);

Invoice No. KAH5174 (29/3/2021);

Invoice No. KAH5175 (6/4/2021); and

Invoice No. KAH5177 (1/4/2021). As the form and content of these invoices are material, an example of an invoice is reproduced here: S/N jkKvzflZ2kqAZISBcE7ktw [44] The corresponding LOIs were disputed by KAH Glove who argued various inconsistencies in the documentation. However, both parties conceded that there were variations to the orders before the gloves were shipped out in March/April 2021 as evidenced by the WhatsApp communications. [45] Ultimately, the only bone of contention between the parties as to the terms of the Contracts related to the quality of the gloves ordered and supplied:

The Plaintiff contended that it had ordered good quality, fresh gloves sold in bulk packaging and sorted to meet the quality specified in the LOIs as Grade A, 1.5-4% AQL, thickness 4 mil.

The Defendants contended that the Plaintiff had ordered an unsorted mix of used and unused, rejected and defective gloves which are Perfect . [46] As opposed to the transaction documents referred to by the Plaintiff and WhatsApp communications between the Plaintiff, D3 and D4, the Defendants produced one isolated screenshot of an undated WhatsApp from a chatgroup between D2, D3, D4 and Bosco ( ). That WhatsApp was tendered to suggest that the Plaintiff instruction was to procure gloves with . [47] In contrast, there were copious printouts of WhatsApp communications between the Plaintiff, D2, D3 and D4 which this Court examined. Based on the WhatsApp group chats between the Plaintiff, D3 S/N jkKvzflZ2kqAZISBcE7ktw Glove Supply Chatgroup , between the Plaintiff, D2, D3 and Kah Glove - Neo Chatgroup and the private WhatsApp chats between the Plaintiff and D3 P/D3 Chats and D4 ( s ) respectively, t 20 with D4, with D3/D4 in December 2020 and with D2 in May 2021. [48] From reviewing these WhatsApp discussions, this Court finds it improbable that the Plaintiff intended to order unsorted used, rejected and defective gloves. Not only was there no indication at all that the Plaintiff was being offered used or recycled gloves, there were assurances to the contrary, i.e. that the Grade A/B/C gloves supplied were factory rejects and not used or recycled. After the fallout from the Xylen transaction, D4 had even expressed shock after the shipments were received from Xylen in Brazil that Xylen is involved in a recycle . [49] Considering the above, it was improbable that the Plaintiff would have thereafter agreed to accept used gloves from KAH Glove and paid USD1,033.420.00 for them. [50] As mentioned, the WhatsApp communications made no mention of the quality specification anywhere other than in the Defendants Chatgroup which was not produced in full. On the contrary, the WhatsApp messages from SP1 consistently referenced gloves, sorted from defective gloves. S/N jkKvzflZ2kqAZISBcE7ktw [51] To illustrate how the discussion progressed with the Xylen transaction, the following extracts from the WhatsApp chats are instructive: S/N jkKvzflZ2kqAZISBcE7ktw [52] There were no quality specifications in the purchase of rejected gloves in bulk packaging when KAH Glove was introduced by D3 and/or D4 to the Plaintiff sometime in March 2021. In also said that the gloves ordered from KAH Glove were of a similar nature to those ordered from Xylen. The WhatsApp showed repeated focus by the Plaintiff on the quality of the sorted gloves: S/N jkKvzflZ2kqAZISBcE7ktw [53] There was some confusion about whether the gloves were ultimately of Grade A, B or even C. None of the witnesses who testified were experts in the glove manufacturing and sale industry to provide any persuasive opinion on what the different Grades meant objectively. The Plaintiff testified that he believed the grades were subjective labelling choices. It emerged in the evidence that D4 referred to Grade B as non-premium gloves made of thinner materials, but assured that it did not mean used or recycled. [54] The only conclusion that this Court could draw is that the quality of the gloves was supposed to be as represented by D3 and/or D4 as described in the WhatsApp communications. They were to have been S/N jkKvzflZ2kqAZISBcE7ktw sorted factory rejected gloves of the type, size and colours specified with 97%-100% of acceptable quality, but not used/recycled gloves. [55] The defence advanced by D2, D3 and D4 that SP1 could not afford the gloves he specified and had accepted the cheaper variety, and that he could not reasonably have expected to get Grade A box quality gloves for the price he was paying. Tested against the evidence, this did not represent the apparent consensus ad idem on the specifications for the gloves. [56] The Defendants relied on WhatsApp communications that showed SP2 dropping negative descriptions of the gloves from shipping related documents as proof that the Plaintiff knew that it was ordering something else. Despite recommendations by Dr. Wira as conveyed through D3 and hould remain in the invoice and shipping documents to ensure that the goods could clear customs without checks, SP1 requested that the term be removed. [57] This Court finds that SP1 well understood that the gloves were factory rejected gloves. This is quite different from used/recycled gloves. description of the gloves was to avoid inconsistencies with the other transaction documents. Consistent with the contemporaneous WhatsApp communications, SP1 testified that he was concerned to avoid issues with the release of funds by the Indian banks, as illustrated by in the WhatsApp extract below: S/N jkKvzflZ2kqAZISBcE7ktw [58] From this Court s review of the copious WhatsApp communications between them, the following are the irresistible findings of fact:

the Plaintiff was led to believe that the loose gloves sourced by D2, D3 and D4 were freshly manufactured gloves from big name factories like Top Glove, Supermax, RUBBEREX and Kossan that had been rejected due to defects

one could get in some cases, about 5 million good gloves from about 30 tonnes of rejected defective gloves

the Plaintiff was encouraged to undertake the glove sorting in India but the Plaintiff only wanted the good gloves and paid for the sorting to be done in Malaysia

the Plaintiff explicitly said the gloves must be fresh/new and not used/recycled gloves, be they latex or nitrile and whatever the colour or size. [59] The preponderance of evidence did not support the case put forward by D2, D3 and D4 that the Plaintiff had ordered unsorted, used, rejected and defective gloves. The evidence also points to the fact that D2, D3 and D4 knew this and if they were honest traders, D2, D3 and D4 should have turned down the business. Instead, they proceeded to supply what the unsorted used, rejected and defective gloves they procured. S/N jkKvzflZ2kqAZISBcE7ktw Breach of the Contracts [60] The Defendants relied on several video clips tendered in evidence to show the sorting of the gloves and piles of gloves in a warehouse to submit that ultimately, despite what was said in the WhatsApp exchanges, the visual evidence showed that the gloves were unsorted and packaged in gunny sacks and bear the signs of used and unused, rejected and defective gloves. Therefore, they say that the Plaintiff was happy to accept the gloves in that condition. [61] Based on the videos viewed by the Court, they were numerous but brief snippets ranging between several seconds to several minutes long. It was impossible to ascertain what went into the sacks that were ultimately shipped or if what was shown by D3 and D4 on video to the Plaintiffs was an accurate representation. [62] The Defendants had sought to show in the videos that the gloves were good with no pinholes or broken cuffs and although there were in large piles, bags and/or gunny sacks at a warehouse, there was not a single torn, defective or blood stained glove seen. SP1 testified that the one occasion when a defective cuff was shown by D3, he had praised her for the thorough sorting. [63] It may be inferred that the Plaintiff accepted the shipments from KAH Glove based to a large extent on trust after repeated calls for D3 to ensure the quality. This Court therefore finds that on a balance of probabilities, what the Plaintiff received did not fit the description of the glove ordered whether as contended by either the Plaintiff or the Defendant based on the HQTS inspection reports. S/N jkKvzflZ2kqAZISBcE7ktw [64] Further to the finding that the gloves received by the Plaintiff in Bangalore and Chennai were substantially in the state described by the HQTS inspection reports, this Court also finds that such must have been the quality of the gloves supplied by KAH Glove for the following reasons:

Neither the photographs nor the descriptions by the inspectors revealed that the gunny sack packaging were compromise to suggest that the observed physical defects were caused by external factors such as pests.

The length of time for the sea voyage from Klang to Bangalore/Chennai and the subsequent period of detention by customs before the gloves were inspected by HQTS also could not explain away the physical defects, blood stains and inconsistent colours. [65] own admission, the gloves they shipped to the Plaintiff were mix of used, rejected and defective gloves of which 10% were totally defective. Further b admission in her testimony at the trial, the shelf-life of the recycled gloves sold to the Plaintiff were only about a month. These factors would have explained the bad smell and the fact that the products were sticky and degraded. [66] The above findings show that what was supplied was contrary to the repeatedly highlighted requirements of the Plaintiff that they be sorted fresh gloves. It cannot be overlooked that the Plaintiff paid over a million USD for the supply. S/N jkKvzflZ2kqAZISBcE7ktw [67] This Court is prepared to go further and make the finding that the Defendants understood that the gloves were intended to be repackaged for consumer use based on the totality of evidence sighted, and that 100% of the goods shipped by the Defendants to the Plaintiff were not only in breach of the terms of the Contracts but were of unmerchantable quality. Fraud By Deceit [68] Fraud is a generic term that covers all manner of cheating, deceit and dishonesty. As defined by section 17 of the Contracts Act 1950, fraud includes acts committed with the intent to deceive or induce another party into a contract, which encompasses: a) the suggestion, as to a fact, of that which is not true by one who does not believe it to be true; b) the active concealment of a fact by one having knowledge or belief of the fact; c) a promise made without any intention of performing it; d) any other act fitted to deceive; and e) any such act or omission as the law specially declares to be fraudulent [69] Since the decision in the landmark Federal Court case of Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 5 MLJ 1, it is established that there are only two standards of proof, i.e. beyond reasonable doubt for criminal cases and balance of probabilities for all civil cases even if criminality is alleged, and that civil fraud need only be proven to the civil standard. [70] The question of whether a fraud had been perpetrated in this case been any knowingly or S/N jkKvzflZ2kqAZISBcE7ktw recklessly false representations, concealment of important facts and/or empty promises made by D2, D3 and D4 that induced the Plaintiff to act to its detriment. [71] There were broadly 2 periods of time that the Court looked at before and after the Indian Customs Action on C1-C5 at the end of April 2021. In respect of the former, this Court has found that the representations made to the Plaintiff by D3 and D4 about the source and quality of the gloves were patently false. They promised to sort the factory rejected gloves to the level of acceptable qualities stipulated with no intention of doing so and concealed the fact that the gloves were used. [72] It was inconceivable that D3 and D4 honestly believed that the Plaintiff accepted unsorted, used, rejected and defective gloves after the fall out with Xylen. Tested against the subsequent revelations, the reaction of D3 and D4 to the Xylen shipment was further evidence of their fraud: S/N jkKvzflZ2kqAZISBcE7ktw [73] In one of the videos in evidence D4 was heard saying "Sir this is all I will send you for the 2 containers to compensate Brazil one with zero defect." Further, D4 also implicated D2 under cross examination: [74] After the shipments of C1-C5 were received in Chennai and Bangalore, D4 conceded that they were not what the Plaintiff ordered and just as it was with the Xylen transaction, D3 and D4 also made S/N jkKvzflZ2kqAZISBcE7ktw representations to the Plaintiff about remedial measures they would undertake to correct the situation. [75] In the case of C1-C5, they claimed that the containers were sent by mistake and that replacement stocks would be given to the Plaintiff. D2 denied making any such promises. The following record of communications to that effect were alleged to be fabricated and were also objected to by the Defendants as to their admissibility: Document Marking 1. Letter from KAH Glove to the Plaintiff dated 13-5-2021 IDP-6 2. Credit Note No. CN/KAH 2302 IDP-7 3. Credit Note No. CN/KAH 2303 IDP-8 4. Letter from KAH Glove to the Plaintiff (undated) IDP-9 5. Letter from KAH Glove to the Plaintiff dated 26-4-2021 IDP-10 S/N jkKvzflZ2kqAZISBcE7ktw [76] The disputed documents are reproduced below for good measure as they all bear the letterhead, signature and stamp of KAH Glove and D2: IDP-6 IDP-7 IDP-8 IDP-10 IDP-9 S/N jkKvzflZ2kqAZISBcE7ktw [77] According to the Defence case, these disputed documents emanated from the Plaintiff who wanted them generated to respond to the Indian Customs Action. However, there was no evidence that the Plaintiff unilaterally generated the disputed documents without the knowledge or consent of D2, D3 and D4. SP1 testified that he did ask for a written explanation and clarity from D2 and D3 about C1-C5 and the remedial measures to be taken, and that the disputed documents were provided by D3/D4 in the KAH Glove-Neo Chatgroup. [78] As acknowledged by D2 and D3, D3 had been given access to KAH transactional documents. Despite the denials and disavowals by D2, D3 and D4, the inference is compelling that D3 generated these documents S/N jkKvzflZ2kqAZISBcE7ktw in the same way that she generated the Proforma Invoices and Invoices on behalf of KAH Glove. [79] The Plaintiff was cross examined by counsel for KAH Glove about certain inconsistencies in the disputed documents e.g. errors in the letterhead in IDP-9 and a missing reference to Invoice No. KAH-5174 in IDP-10, but the questions appeared to be misdirected. D2 laid no blame on D3 and did not lodge any police report about the alleged forgery and when he did so, he only complained about IDP-6 and IDP-10 in a police report on 1-11-2024. [80] Furthermore, D2 was in the same KAH Glove-Neo Chat group in COO resembling IDP-9 which D2 did not question or clarify: [81] Based on the above considerations, it is the disputed documents were on a balance of probabilities, also created by D3. They are accordingly admitted in evidence as P6, P7, P8, P9 and P10. [82] In any case, the truth of the content of the disputed documents is quite immaterial in the circumstances. As acknowledged by D2 at the trial, KAH Glove had no intention of replacing the stocks or compensating the Plaintiff and so in that sense, the contents of the disputed documents are S/N jkKvzflZ2kqAZISBcE7ktw admittedly false. The question is whether these false representations were knowingly made, contributed to or acquiesced by D2. [83] The compelling inference is that the false representations were made, contributed to or acquiesced by D2 based on the following facts:

As determined, was privy to the creation and implementation of the Contracts. D2 was financially invested in the transactions and it is irrelevant that D2 did not initiate contact with the Plaintiff. Whatever the true circumstances that brought D2, D3 and D4 together in the dealings with the Plaintiff, they were all involved in the implementation of the Contracts. D2 testified that he took a 20% cut, far in excess of the cost he allegedly paid to his suppliers.

There was no report of any shock or disbelief in the reaction of D2 to reports of the Indian Customs Action about the shipments of the gloves KAH Glove supplied. The WhatsApp communications showed that on the contrary, D2, D3 and D4 responded to news about C1-C5 from the Plaintiff in much the same way that Xylen, D3 and D4 responded to the Xylen shipment. They made overtures to resolve the matter.

There were no attempts to make the justifications they made at the trial of this action. Instead, they continued in their effort to sell more gloves to the Plaintiff: S/N jkKvzflZ2kqAZISBcE7ktw [84] The distinct impression that this Court got from reviewing the evidence is that D3 and D4 brought D2 into the conversation with SP1 to engender an otherwise dissipating trust of the Plaintiff by offering a replacement of stocks and generate other business: S/N jkKvzflZ2kqAZISBcE7ktw [85] At all material times, D2 did not react in the way that one would reasonably expect. The false representations in P6 to P10 were knowingly made, contributed to or acquiesced by D2 and had the effect of assuaging the Plaintiff. The Plaintiff was still pressing D2 and D3 for a resolution until they went silent in July 2021. [86] Interestingly, there was an apparent capitulation by D4 who turned on D2 and D3 in the P/D4 Chats. D4 ostensibly aligned himself with the Plaintiff against D2 and D3 as shown in the following extracts of the WhatsApp communications: S/N jkKvzflZ2kqAZISBcE7ktw S/N jkKvzflZ2kqAZISBcE7ktw S/N jkKvzflZ2kqAZISBcE7ktw [87] The reason for doubt is that D4 took a completely difference stance at the trial and he too went silent in September 2021. [88] Based on all of the above observations on the contemporaneous evidence, this Court finds that all of D2, D3 and D4 had knowingly engaged in communicating false information to the Plaintiff in an extended transaction from which they extracted USD1,033,420.00. Conspiracy [89] As cited in Ling Hang Tsyr v Public Prosecutor [2019] MLJU 1182 in the context of a criminal conspiracy, the following observation of the Supreme Court of India in Noor Mohammad Mohd. Yusuf Momin v. The State of Maharashtra AIR 1971 SC 885, is apt: conspiracy from its very nature is generally hatched in secret. It is, therefore, extremely rare that direct evidence in proof of conspiracy can be forthcoming from wholly disinterested quarters or from utter strangers. But, like other offences, criminal conspiracy can be proved by circumstantial evidence. Indeed in most cases proof of conspiracy is largely inferential though the inference must be founded on solid facts. Surrounding circumstances and antecedent and subsequent conduct, among other factors, constitute relevant material. In fact because of the difficulties in having direct evidence of S/N jkKvzflZ2kqAZISBcE7ktw criminal conspiracy, once reasonable ground is shown for believing that two or more persons have conspired to commit an offence then anything done by anyone of them in reference to their common intention after the same is entertained becomes, according to the law of evidence, relevant for proving both conspiracy and the offences committed pursuan [90] The same observation was made by the Court of Appeal here in the case of MGG Pillai v Tan Sri Dato Vincent Tan Chee Yioun & Other appeals [1995] 2 MLJ 493: is a tort that is not always capable of proof by direct evidence. Like so many other facts, an agreement to do an unlawful act by unlawful means may be established by evidence of circumstances from which such an agreement may be inferred. It is axiomatic that there must be proof and not mere conjecture. In the present case there was sufficient evidence which conspiracy could be properly inferred [91] The following principles extracted from Clerk & Lindsell on Torts, The Common Law library 17th Edition in Chapter 23 on the cornerstone of the cause of action are also instructive: combination. The tort requires an agreement, combination, understanding, or concert to injure, involving two or more persons. Of the various words used to describe a conspiracy, has been preferred on the ground that might be thought to require some agreement of a contractual kind, whereas all that is needed is a combination of common intention... A party to a conspiracy need not understand the legal effect of it; but he must know that the facts on which the combination is S/N jkKvzflZ2kqAZISBcE7ktw The conspirators need not all join in at the same time, nor need they have exactly the same aim in The question is how far the defendant was aware of the plant and then in the of it. A person may be a party to a combination to use unlawful means, even though he himself cannot commit the unlawful acts in The question is whether a particular defendant, having regard to his knowledge, utterances, and actions, was sufficiently a party to the combination and the common design Conspiracy to do an unlawful act or use unlawful It has been held that whenever an act is itself tortious, a combination to do that act is tortious conspiracy. Thus, a combination which does damage to the Plaintiff by means is [92] In proving a conspiracy therefore, one way is to show that the words and actions of the parties indicate their concert in the pursuit of a common object or design, giving rise to the inference that their actions must have been co-ordinated by arrangement beforehand. These actions and words do not of themselves constitute the conspiracy but rather constitute evidence of the conspiracy (Public Prosecutor v Yeo Choon Poh [1993] SGCA 76). [93] This Court considered the overt acts of the alleged conspirators and inferred from those acts whether there was an agreement to further the common object of the combination. In this case, the overt acts of D2, D3 and D4 in their dealings with the Plaintiff point irresistibly to a conspiracy between D2, D3 and D4 in that each played a distinct role that could not be reconciled with any other theory of the case: D4 found the Plaintiff and engendered trust, D1 was offered as a reputable front in the supply, D2 himself sourced and procured the actual supply of questionable origins and D3 generated all the paperwork to give the transaction a veneer of S/N jkKvzflZ2kqAZISBcE7ktw legitimacy. All of them made false representations to the Plaintiff who was strung along for about 9 months. [94] Ultimately, D1 and D2 received over a million USD while ostensibly paying out about a million MYR for the glove supply. The difference is not accounted for anywhere. In the prior transaction, D4 clearly conveyed to SP1 that Dr Wira had not paid them their commissions, suggesting that commissions were similarly payable out of the proceeds by D2. Until the trial when all the trial documents were discovered, no third party proceedings were taken out for contribution or indemnity between the requirements or D3/D4 against D2 for net profit he made from the monies received from the Plaintiff. Instead, as noted at the outset, they inexplicably laid the blame on the Plaintiff. [95] The Defendants were challenged at trial on their failure to adduce and D4. These are contemporaneous evidence that was proved by the Defendants themselves to exist and directly relevant to the matters in issue. Thus, as far as the absence of direct evidence is concerned, this Court is minded to invoke section 114(g) of the Evidence Act 1950 to draw an adverse inference against the Defendants. In particular, it may be presumed that if produced it would reveal evidence unfavourable to the Defendants. Lifting the Corporate Veil [96] Based on the same considerations, this Court is also prepared to find that KAH Glove was used by D2 as an instrument of fraud and that S/N jkKvzflZ2kqAZISBcE7ktw D2 was an alter ego of KAH Glove. KAH Glove was incorporated on 21- 09-2020 about 6 months before the Contracts when D2 was already the director of another existing company, Kualiti Alam Hijau Sdn Bhd for trading goods, including gloves. D2, D3 and D4 all participated in representing to the Plaintiff that KAH Glove was a manufacturer of gloves. Counterclaim for C6-C7 [97] As C6-C7 were never shipped by KAH Glove and because no case was put that C6-C7 contained gloves of the specification ordered by the Plaintiff in a transaction that was carried out on a different premise from C1-C5, the counterclaim for the balance payment for these shipments is dismissed. Counterclaim for Commissions [98] As D3 and D4 neither pleaded nor proved any basis in law or in fact for the recovery of commissions from the Plaintiff, their counterclaim is also dismissed. It is difficult to believe that for the entire period of the transaction, D3 and D4 worked without any remuneration. It is more probable that they received their cut from the sums paid by the Plaintiff. Conclusions [99] In conclusion, on the Plaintiff for the Plaintiff against D1. instrument of fraud in the transaction and find D2 personally liable. On the Plaintiff [in the deceit by D2, D3 and D4] and conspiracy to injure, I find for Plaintiff against D1, D2, D3 and D4. I find that D2, D3 S/N jkKvzflZ2kqAZISBcE7ktw and D4 are joint tortfeasors in the pleaded torts. Counterclaims by D1/D2 and D3/D4 are dismissed. [100] The operative orders are as follows:

As the damages suffered by Plaintiff for breach of contract and the torts arise out of the same transaction and no other general damages was proved at trial, I award USD1,033,420.00 in damages to Plaintiff, jointly and severally against D1, D2, D3 and D4.

As no particulars of aggravated or exemplary damages were pleaded or proved, no other award of damages is made.

Interest to accrue on the Judgment sum at 5% p.a. from 15-4- 2021, the date of the last payment made by the Plaintiff to D1, until full settlement. Costs of the action in the sum RM200,000.00 to be paid jointly and severally by D1, D2, D3 and D4 to the Plaintiff. Bertarikh : 19 Mac 2025 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM S/N jkKvzflZ2kqAZISBcE7ktw Peguam Untuk Plaintif: Muhammad Noor Azfar Bin Noor Azmi, Messrs Azfar Azmi & Co. Untuk Defendan Pertama dan Kedua: Fitzgerald Joseph Kilroy Augustin, Messrs Fitzgerald Augustin & Co. Untuk Defendan Ketiga dan Keempat: Lew Cho Kong (with Aishah Nurfitri), Messrs Haeme Lew S/N jkKvzflZ2kqAZISBcE7ktw