Ong Yew Teik v Kamal Y.P. Tan (W-02(W)-1694-9-2016)

This is an appeal against the orders of the High Court dismissing the plaintiff’s claim and allowing the defendant’s counterclaim. My learned sister Justice Badariah binti Sahamid has read this judgment in draft and had agreed with it.

The appellant’s claim at the High Court was for recovery of the sum of RM8,018,225.00. The claim relied on a document dated 6.11.2006 wherein the respondent is alleged to have acknowledged that that sum is due and owing to the appellant and had further promised to repay the sum by 31.3.2007.

The respondent did not pay, whether by 31.3.2007 or any other date. In fact, the respondent disputed the debt by first denying that he had signed the letter. In the event he is found to have signed that letter, he then disputes indebtedness. First, because there is no consideration, there is no valid contract of debt between the parties. Second, the respondent alleged that he was induced by false representations into signing that document of 6.11.2006. The circumstances being these. 3

The respondent claimed that the appellant owed him a sum of RM3,584, 211.42. In settlement of that debt, the appellant agreed to transfer to the respondent his 271,000 shares in Euroceramic Technology Company Limited (ECT), worth RM10 million. After registering those shares in the respondent’s name, there would be a surplus sum of RM8,018,225.00. That surplus sum was supposed to be paid to the appellant by 31.3.2007. It is in respect of that surplus sum that the respondent signed an undated document acknowledging the promise to pay the appellant that sum.

According to the respondent, a dispute arose as to the ownership of the 271,000 shares in ECT between the appellant and one Roger Yau Sau Yin. As a result of that dispute, the respondent claimed that the shares could not be transferred to him. The respondent further alleged that the shares were only worth RM4.3 million instead of RM10 million, as represented by the appellant. This meant that the respondent could not sell the shares in order to recover the money owed to him by the appellant. The respondent counterclaimed for the sum of RM3,584, 211.42.

In his Reply and Defence to the Counterclaim, the appellant denied the existence of conditions precedent or escrow arrangements as alleged by the respondent; that the acknowledgment was supported by consideration and is valid, that the counterclaim had been compromised on 6.11.2006. 4

After a full trial, the High Court dismissed the appellant’s claim. The Court found that the “crucial point was whether the defendant signed a document dated 6th November 2006 as claimed by the plaintiff or undated document as claimed by the defendant.” On the evidence before the Court, the High Court found that: i. the “pre-condition to the debt stated in the document was not fulfilled”; ii. the shares were never transferred by the appellant to the respondent “due to the dispute on the beneficial ownership over the shares”; iii. the dispute prevented the appellant from transferring the shares to the respondent, freely; iv. the respondent “eventually received the shares from Roger Yue”; v. the share dealing between the appellant and the respondent “never materialized”; vi. there was no money from the proceeds of the share dealings owed by the respondent to the appellant because the shares were never transferred to the respondent for the respondent to then sell the shares to third parties. 5

Bearing in mind that the appellant’s claim relies on the document captioned “Acknowledgment of Debt” and dated 6.11.2006 (Acknowledgment), we are compelled to first of all, record the following observations on the respondent’s most unusual responses to this document. This document, as like most other similar contracts, essentially contains a promise to pay, which promise was not kept, and which the appellant was now seeking to enforce in a court of law. In our view, the pleas at paragraphs 2 to 5, and 8 to 11 of the Defence are of grave concern and are highly improper to the extent of compromising the Defence filed. Although we can appreciate the human frailty of a lapse of memory, the problem and thereby the quality of recall, and the myriad of difficulties involved in instructions, the pleas and positions taken cannot ultimately render the Defence filed to comprise statements and positions which render up contradictory defences. The rules of pleadings permit parties to plead in the alternative, but the defences or line of defence pleaded must be mutually exclusive or at least must not render the defences in conflict or in contradiction with one another.

As we see it, there will be real problems when introducing evidence to support the defence. The trial is not conducted in truncated sessions, with the judge making rulings on a piece-meal basis. It is considered as a whole save if there are orders on bifurcation. An examination of the Defence will readily confirm this concern. 6

The first stance taken by the respondent in relation to the Acknowledgment is a denial that he had signed the Acknowledgment. This can be seen at paragraph 2 of Defence:

Paragraph 3 of the Statement of Claim is denied. The defendant avers that he did not sign the alleged acknowledgment of debt dated 06/11/2006 (“Acknowledgment of Debt”). [11] In that same paragraph 2, the respondent goes on to say there that at all material times, there is no debt due from him to the appellant; that it was the appellant who was “seriously in debt and has no financial means to lend any money to the defendant”; and that “at all material times the plaintiff is indebted to the defendant in the sum of RM3,584,211.42 or thereabout being personal loans given by the defendant to the plaintiff and at the plaintiff’s requests from time to time”. [12] So, at the start of the Defence, the respondent’s position is that he did not sign the Acknowledgment. [13] At paragraph 3, the respondent then makes this further plea, and it is one which operates on a conditional basis, that is, if the earlier plea of denial is not successful:

If contrary to the defendant’s contention it be held that the defendant did sign the alleged Acknowledgment of Debt, the defendant contends and will contend that by virtue of the fact that at all material times there was no debt and still no debt due from the defendant to the plaintiff, there was no or no 7 valuable consideration to support the alleged Acknowledgment of Debt and by reason thereof the alleged Acknowledgment of Debt is null and void. [emphasis added] [14] This form of what may be described as a contingent plea, appears again at paragraph 4:

If contrary to the defendant’s contention it be held otherwise the defendant would further aver that sometime in August 2006 or thereabout, the plaintiff in order to induce the defendant to sign an undated acknowledgment of debt orally represented to the defendant that:

the plaintiff is the absolute beneficial owner of 271,000 ordinary shares (Shares) of Euroceramic Technologies Company Limited (“Company”);

the Shares is valued at more that RM10,000,000.00 and that the plaintiff was able to transfer and register the Shares in the defendant’s name free from all claims, any form of security interest or any obligation encumbrances and with all rights attached or accrued thereto as full settlement of the personal loans then due and owing from the plaintiff to the defendant and that the defendant could pay the plaintiff for the balance of the value of the Shares approximately RM8,018,225.00 by 31/2/2007;

the signed but undated acknowledgment of debt would not take effect or be operative or enforceable until the fulfilment of the certain conditions among them the conditions mentioned in paragraphs (a) and (b) above (“Conditions Precedent”). 8 [15] At paragraphs 5, 6 and 7, the respondent then pleads that he had relied on and was induced by the appellant’s false representations; and the respondent further pleads that the appellant was in breach of the representations:

Induced by and in reliance upon the plaintiff’s said representations, the defendant signed the undated acknowledgment of debt and delivered it to the plaintiff merely as an escrow, upon terms that it should not take effect or be operative or enforceable until the fulfillment of the Conditions Precedent.

The plaintiff’s said representations were false and the plaintiff was in breach thereof in that:

the plaintiff was not the absolute beneficial owner of the Shares. The Shares at all material times legally and beneficially belong to the plaintiff’s uncle namely Yue Sau Ying (NRIC No. 501007-04-5195) (“Roger Yue”);

the plaintiff was not able to transfer and register the Shares in the Defendant’s name free from all claims any for on security interest or any obligation encumbrances and with all rights attached or accrued thereto. In fact Roger Yue gave notice to the other remaining shareholders and directors of the Company of initiating criminal and civil proceedings for fraudulently removing his wife and him as director and shareholder of the Company without his knowledge or consent. As a result of the said letter dated 04/09/2006 Roger Yue’s interests in the Shares and Company were restored. The Shares were subsequently sold to the defendant at a total consideration of 9 RM4,300,000.00 via an Agreement dated 20/10/2006 and subject to the terms and conditions therein contained;

the Shares were only values at RM4,300.000.00;

despite the fact that the Conditions Precedent were not fulfilled the plaintiff without the defendant’s knowledge or consent filed the present action based on the alleged Acknowledgment of Debt and/or otherwise enforced the alleged Acknowledgment of Debt.

By reason of the matters stated in paragraphs 4, 5 and 6 above the defendant contends and will contend that he is not bound by the alleged Acknowledgment of Debt or at all. [16] Up to this point, the Defence is a denial that he signed the Acknowledgment. But, if the Court disagrees and finds that he did sign the Acknowledgment, then the plea at paragraph 3 is that the Acknowledgment is void for want of consideration. It is noted that this plea of void for want of consideration is repeated at paragraph 8 where the respondent pleads a further and/or alternative plea of want of valuable consideration. [17] If this plea of want of consideration also proves unsuccessful to the earlier plea of denial of signing the Acknowledgment, then the respondent’s next plea is false representations and breach of representations. In other words, that he was induced into signing the Acknowledgment by certain representations made by the appellant. The Acknowledgment was then signed “in escrow” and on terms. The respondent claimed that he was not 10 bound by the Acknowledgment or at all because the appellant was in breach when the representations turned out to be false. [18] We find this line of pleas untenable. The primary plea of the respondent is that he did not sign the Acknowledgment. Through the use of “contingent” pleas, the respondent contradicts himself and in fact admits signing the Acknowledgment albeit on terms. Whether his signing was indeed in escrow and undated at the material time is a matter of evidence and proof. But, in relation to the central issue of the Acknowledgment, it cannot lie in the mouth of the respondent that he never signed the Acknowledgment. These pleas or defences are not mutually exclusive, with the ultimate result of inconsistent and contradictory pleas which must not be allowed to stand. [19] What makes the pleadings worse are the ensuing paragraphs 9 to 12. At paragraph 9, this time through an alternative plea, the respondent alleges alteration of the Acknowledgment:

Further and/or in the alternative the defendant avers that while the undated Acknowledgment of debt was in the custody of the plaintiff the same was altered by the insertion at the end thereof without the knowledge or consent of the defendant of the words “08 NOV 2006”. The defendant further avers that after the undated Acknowledgment of debt was altered in the manner aforesaid the plaintiff without the knowledge or consent of the defendant released the same to the Stamp Office for stamping. 11

The said alterations were material alterations and by reason thereof the Acknowledgment of Debt has become null and void and it is denied that the plaintiff is entitled to the relief claimed in the Statement of Claim or any relief.

Further and/or in the alternative the defendant contends and will contend that by reason of the matters stated in paragraphs 2, 3, 4, 5, 6, 7, 8, 9 and 10 above the plaintiff has no reasonable cause of action against the defendant. [emphasis added] [20] It is unclear how this line of defence interfaces with the pleas made thus far. As a further defence, it is unclear whether this alternative defence of alteration is relied on in relation to the Acknowledgment that was signed in escrow, or that it is an alternative to the denial of signing any acknowledgment in the first place. [21] The Court identified the appellant’s claim as one which is based on the Acknowledgment dated 6.11.2006, whilst the defence was that the Acknowledgment was undated. When the learned Judge said that the “crucial point was whether the defendant signed a document dated 6th November 2006 as claimed by the plaintiff or undated document as claimed by the defendant”, implicitly the learned Judge had rejected the defence that the respondent did not sign the Acknowledgment or that the Acknowledgment is invalid for want of consideration. [22] This is the controversial Acknowledgment which was signed by the respondent but which he claimed was signed in escrow and undated: 12 ACKNOWLEDGMENT OF DEBT I, KAMAL Y.P. TAN (NRIC NO: 520229-71-5071 / H0257258) c/o Suite B-12-01 Plaza Mont Kiara, No. 2, Jalan Kiara. Mont Kiara, 50480 Kuala Lumpur hereby acknowledge the following:

At my request, you, ONG YEW TEIK (NRIC NO: 650719-10- 6303/A0289608) of No. 47, Persiaran Bruas, Damansara Heights 50490 Kuala Lumpur have agreed to lend to me and have lent to me, a sum of Ringgit Malaysia Eight Million Eighteen Thousand Two Hundred and Twenty Five (RM8,018,225) (“the Debt”) and I hereby acknowledge unconditionally and unequivocally as at the date of this Acknowledgment of Debt that the Debt has been received by me and is owing by me to you.

At my request, you have agreed to allow me to repay the Debt, free of interest, by the 31st day of March 2007 (“the Due Date”).

I hereby undertake to repay and shall repay the Debt to you no later than the Due Date without any prior demand or notice given by you.

I hereby declare that I understand fully the contents, nature and effect of this Acknowledgement of Debt and that I have voluntarily executed this instrument.

This Acknowledgment of Debt shall be binding upon my heirs, estates and personal representatives and shall enure to the benefit and shall be enforceable by you and your heirs, estates, personal representatives, assigns and nominees. Dated this 06 day of November 2006. Signed in the presence of Wong Yoke Yen (NRIC No. 670815-08-5846) [23] The learned Judge first found that having “perused and considered all the evidence produced before me I found that the plaintiff failed to proof [sic] that the Acknowledgment of debt dated 6th November 2006 was signed by 13 the plaintiff [sic] as per date stated. Going through testimonies of the plaintiff’s witnesses, I found that only the plaintiff’s (PW1) evidence able to relate how the dealing was negotiated and concluded. The other witnesses called by the plaintiff gave evidence mainly in relation to shares ownership dispute between the plaintiff and Roger Yue.” [24] The learned Judge was not prepared to accept the appellant’s evidence that when the Acknowledgment was signed, it was already dated and that the Acknowledgment was not delivered to him in escrow. The Judge found that the evidence adduced by the appellant did not prove that there was a tripartite agreement between the appellant, respondent and Roger Yue, in which the respondent was allowed to receive the shares from Roger without objection from the appellant. According to the Judge, the “evidence proved that there were serious dispute between Roger and the plaintiff on the ownership of the shares.” [25] The learned Judge then chose to believe the respondent’s version on the Acknowledgment. The respondent himself had testified as DW1; and he had testified that he had signed the Acknowledgment “somewhere in August

At the time of signing the document, the defendant did not owe any money from the plaintiff. The plaintiff also had not repaid the personal loan he took from the defendant. The defendant further contended that after the signing of the document the plaintiff took an additional loan from him to a total amount of RM1,240,219.42.” – see paragraph 22 of the grounds of judgment. 14 [26] At the trial, the respondent had testified that he remembered signing the Acknowledgment on 15 August 2006 because it was the birthday of his secretary, DW2. The respondent claimed that the date was altered to “6.11.2006”. The learned Judge further reasoned that his finding was supported by DW2’s evidence: [32] The defendant’s evidence that the document was not dated when he signed it was supported by DW2 evidence. Having perused the whole evidence I accepted evidence by the defendant that the document he signed was not dated. On the totality of the evidence before me, it is my finding that the document was singed in escrow and gave to the plaintiff earlier than the stated date. [27] DW2 was Ms. Wong Yoke Yen, the respondent’s personal assistant before whom the respondent had signed the Acknowledgment. [28] The learned Judge accepted the respondent’s claim that prior to the “share dealing” or the sale of the ECT shares, the appellant had borrowed money from the respondent and the share dealing was to enable the appellant to repay his loan to the respondent. The learned Judge further accepted the respondent’s claim that the Acknowledgment was created in relation to the ECT shares dealing. In that dealing, the appellant was to transfer his 271,600 ECT shares to the respondent for his on-sale to third parties. The proceeds from the share sale would be first utilized to repay the appellant’s debt to the respondent leaving an “estimated surplus”. The Acknowledgment “was signed in anticipation of the surplus”, that the respondent will be indebted to the appellant if the respondent eventually 15 acquired the shares to be sold to third parties and “there is surplus from the proceeds of the sale, after deducting the money borrowed by the plaintiff. Therefore, it is clear the share dealing is pre-condition to the debt of the defendant”. [29] According to the learned Judge, it was under those circumstances that the Acknowledgment was signed in escrow; that it was pending the fulfillment of these conditions precedent by the appellant. Thus, when the conditions precedent were not fulfilled, the appellant was not entitled to rely on the Acknowledgement to recover any monies as no monies were due. [30] We find the conclusion reached by the learned Judge plainly erroneous and not at all supported by the whole body of evidence before the Court. On the contrary, there was abundant evidence to show that the respondent’s claim that he signed the Acknowledgment in escrow in August 2006 is inherently improbable. The evidence at the trial actually proved convincingly that the respondent did sign the Acknowledgment on the date mentioned in the Acknowledgment itself, that is, 6.11.2006. [31] The trail of documentary evidence were not examined or examined, properly. The evidence included emails exchanged between the parties and their representatives as well as several other contemporaneous documents which were undeniably signed by the respondent himself at the relevant time. [32] On the trail of emails exchanged between the parties, we agree with the submissions of learned counsel for the appellant that such evidence ought to have been properly admitted and considered by the learned Judge. 16 The learned Judge had marked these emails as “IDs” [“IDP 69” to “IDP 72”]. The respondent was copied in on the emails and one of the makers, PW9, testified. [33] We agree with the appellant that these emails are admissible evidence under sections 65 and 66 of the Evidence Act 1950 and ought to have been marked as exhibits. The respondent had been issued with a Notice to Produce the originals of the identified emails received by him. The emails in question were copied in to the respondent at the material time. Once the Notice to Produce under section 66 had been issued to the respondent and the respondent fails to produce the same, the appellant is entitled to rely on secondary evidence of those emails in the form of copies made of the originals. See Dato Mohd Anuar bin Embong & Another v Bank Bumiputra Malaysia Bhd [2003] 3 MLJ 37 and Kok Kee Kwong v Pubic Prosecutor [1972] 1 MLJ 124. [34] In the latter case, Raja Azlan Shah J [as His Highness then was] held: “Section 65(a)(i) states that secondary evidence of the contents of a document may be given when the original is shown or appears to be in the possession or power of the accused and when after due notice as mentioned in s 66 the accused does not produce it. Roscoe’s Criminal Evidence, 15th Edn, p 11 states: When a document is in the hands of the adverse party, a notice to produce it in Court must be given to him, before secondary evidence of its contents can be received. Its object is not, as formerly thought to give the holder an opportunity of providing the proper testimony to explain or confirm the document but it is merely to enable him to 17 produce it if he likes at the trial and thus to secure the best evidence of its content.” [35] The genuineness of these emails was actually not in issue and consequently, they ought to have been considered. The emails concerned were mainly exchanged between Nicholas Ng [PW9] and Yeap Hong Imm although there is even one sent directly to the respondent by Yeap Hong Imm – see page 1304 of the Record of Appeal. PW9 assisted the respondent in the deal while Yeap Hong Imm was the appellant’s solicitors at the material time. [36] The appellant called one Liew Siew Pen [PW7], a lawyer at the Messrs. Christina Chia Ng & Partners to confirm that the emails emanated from their office as Ms. Yeap Hong Imm, the solicitor in the firm who handled the transactions between the parties, could not be located. Ms. Yeap sent or was the person referred to in the emails cited earlier. PW7 confirmed that the emails emanated from their firm and further told the Court that she did not know the current whereabouts of Ms Yeap Hong Imm. [37] Nicholas Ng or Ng Wai Pin [PW9] testified for the appellant. Though PW9 could not remember the details of the emails sent [he repeatedly told the Court that he “can’t remember … as the transaction happened some 9 years ago in 2006”, he nevertheless identified his email address and he told the Court that he had been brought in by the respondent, through the respondent’s late brother, Tajuddin Tan to assist the respondent by reviewing the documents related to the sale of the shares. With PW9’s 18 attendance, the emails ought to have been admitted and marked as exhibits and not left as Identification only documents. [38] In our view, since the emails and their contents are genuine, PW9’s evidence should have been properly examined. Had these emails been admitted and considered, this evidence would have had a material bearing on the outcome of the issues and case before His Lordship. In fact, such evidence corroborated the appellant’s case. Since the evidence were not considered, we will now address the same. [39] First, looking at the emails at pages 1304 to 1307 of the Record of Appeal, and all these emails were all copied in to the respondent, it is evident that the respondent’s claim that he had signed the Acknowledgment in escrow “somewhere in August 2006” simply cannot stand, and that the appellant’s version of the events is credible and true. These emails were exchanged in October 2006. This exchange shows quite clearly, that the content and form of the Acknowledgment was still very much in discussion even in October of 2006. In fact, a draft sample Acknowledgment of Debt was sent by Yeap to Nicholas for attention – see email on 18.10.2006 at 11:16 am at page 1304 – “IDP 69”. [40] In the email dated 20.10.2006 sent at 12:48 pm to both the respondent and Nicholas, it was proposed that a meeting “next Thursday for everything to be signed simultaneously” be scheduled; that “everything” referred inter alia to the “Acknowledgment of debt by Kamal (final draft enclosed).” – see page 1305, “IDP 70”. That did not materialize as the contents of the drafts were still being discussed – see emails dated 24.10.2006 [where Nicholas 19 records that his comments were made subject to confirmation from Kamal, the respondent, on the amounts – page 1305]; 26.10.2006 [4 emails one of which indicated signing of the agreements on 26.10.2006 – page 1306 and 1580]; 30.10.2006 [page 1307]; 31.10.2006 where the signing of the acknowledgments by the respondent in favour of the appellant was scheduled for “Friday, 3rd November 2006” [page 1307]; and 1.11.2006 where it was confirmed that the signing will now take place on “6 November 2006 at 9.30 am” [page 1191]. [41] All these emails clearly fortify the appellant’s case. With parties still in negotiation and the Acknowledgment still in draft, there was no room for accepting the respondent’s claim that he signed the Acknowledgment in escrow or that he had left the Acknowledgment, undated in August. The trail of contemporaneous documentary evidence in fact, fly in the face of the contentions of the respondent. The learned Judge was clearly erroneous in having accepted the respondent’s version of the facts. [42] On the other hand, the evidence led by the appellant firmly sustained his claim that the Acknowledgment was indeed signed and dated on 6.11.2006. [43] To start with is Letter of Pre-Agreement dated 26.10.2006 [Letter]. This was marked as “exhibit P38”. We agree with the appellant that the Acknowledgment must be read together with this Letter, the date of which is not in dispute. Exhibit P38 is dated 26.10.2006 and it reads as follows: 20 No. 21, Lengkok Setiabudi Damansara Heights 50490 Kuala Lumpur To ONG YEW TEIK (NRIC NO: 650719-10-6303/A0289608) No. 47, Persiaran Bruas Damansara Heights 50490 Kuala Lumpur Dear Mr. Ong Re: Euroceramics Technologies Company Limited (“ECT”) In consideration of you, ONG YEW TEIK (NRIC NO: 650719-10-6303/A0289608), agreeing at my request to allow or not to object to the existing shares in ECT in your name (and/or the right to subscribe for new shares) to be registered in the name of YUE SAU YIN (NRIC No: 5010007-04-5195) (“YSY”), I, KAMAL Y.P. Tan (NRIC NO: 520229-71-5071 / H0257258) hereby undertake to execute the following documents in your favour within three (3) days upon registration of 271,000 ordinary shares of Baht 100 in ECT in the name of YSY:-

Acknowledgment that you have fully paid to me a sum of RM361,603 in consideration of which I shall assign to you all my rights, interest, title and benefits in and to my undivided share in the property known as Lot 6 Tropicana Golf & Country Resort in the format as attached hereto as Appendix A;

Another Acknowledgment that you have fully repaid to me all personal loans granted by me to you totaling RM2,289,992 in the format as attached hereto as Appendix B;

An Acknowledgment that I shall be indebted to you in the sum of RM8,110,225 (such amount to be adjusted if there shall be any monies remaining outstanding by you to me which is not paid under paragraphs (a) and (b) above which I shall confirm with you by 3 November 2006 failing which the amount will be taken as conclusive) and shall repay same to you within the agreed time period in the format as attached hereto as Appendix C. Dated this 26th day of October 2006 21 Signed by KAMAL Y.P. Tan In the presence of: Nicholas Ng [44] The validity and existence of exhibit P38 is not in dispute. However, this piece of material evidence was not addressed by the learned Judge. [45] Exhibit P38 is material. It explains how the Acknowledgment and two other documents which were also acknowledgments came to be drawn up and signed. Exhibit P38 is the respondent’s document, signed by him and, it is amongst his terms and requirement that an Acknowledgment of Debt in the format in Appendix C be prepared. Since the draft of this Letter did not come about till October 2006, the respondent’s contention that he had signed the Acknowledgment “somewhere August 2006” including 15.8.2006, is untenable and untrue, and ought to have been rejected. [46] Exhibit P38, the Letter, also specifies a sum different from that in the Acknowledgment; and the sum specified in the Acknowledgment could only and was in fact finalized by the respondent himself. That finalization of the sum which subsequently appeared in the Acknowledgment did not materialize till 1 November 2006 in which case, the respondent could not possibly have signed the Acknowledgment on the date [August 2006] and in the circumstances as he had claimed. 22 [47] In the Defence and at the trial, the respondent contested only the Acknowledgment which in exhibit P38 would have been Appendix C. The other two documents as well as exhibit P38 itself were not disputed. Those two other documents were also acknowledgments, one for the appellant’s payment of RM399,603.00 for the respondent’s property at Lot 6, Parcel 2, Tropicana Golf & Country Resort [Appendix A], the other was an acknowledgment by the respondent that he had received full repayment of personal loans of RM2,343,992.00 to the respondent [Appendix B]. These two other acknowledgments were marked as exhibits P51 and P50. These two acknowledgments were also dated 6th November 2006. With the existence of these three documents [exhibits P38, P50 and P51], it is clear that the respondent was not consistent and was extremely economical with the truth. These pieces of material and relevant documents were unfortunately not considered by the learned Judge; and this is basis enough for appellate intervention. [48] Further, there was evidence before the learned Judge that the respondent exercised his right to make final adjustment to the three amounts mentioned in exhibit P38. This may be seen in email dated 1.11.2006 sent by Yeap at 3:02 pm to Nicholas Ng and copied to the respondent at page 1191 [exhibit P37]. [49] That email meant for the respondent reads: Dear Mr Kamal, Telecon today refers. 23 You have informed us of following:-

that there is an additional sum of USD15,000 remitted for Coquet deal. You agree for the same to be converted to RM54,000 at conversion rate of USD1:RM3.6. Accordingly, the personal loans considered repaid will increase from RM2,289,992 to RM2,343,992.

there is an additional sum of RM38,000 paid for Tropicana lot. Accordingly, the sum considered paid for Tropicana will increase from RM361,603 to RM399,603.

that consequently to para (a) and (b), the debt owing by you to OYT will REDUCE from RM8,110,225 to RM8,018,225. Since this matter has been resolved, we hereby confirm the meeting for signing the above documents at your office next Monday, 6 November 2006 at 9.30 a.m. Either myself or my colleague, Ms Siew Pen, will attend. Please also get your secretary to get ready the original stamped SPA, JVA and PA in respect of Lot 6 Tropicana to be returned to us. Thanks in advance: Hong Imm c.c. OYT – As spoken, please also attend above meeting. [50] We further agree with the appellant that this material evidence, too, was overlooked by the learned Judge. This exhibit P37 substantially explained the backdrop and circumstances leading to the signing of the Acknowledgment. [51] As for the oral evidence, the learned Judge had dismissed the evidence of the appellant’s witnesses, finding their testimonies not related to the signing of the Acknowledgment but concerned the share ownership dispute between the appellant and Roger Yue. 24 [52] With respect, that is erroneous. The evidence of such a large number of witnesses, when examined, actually supported the appellant’s case. Their testimonies were consistent between themselves and with the appellant’s. These witnesses were not ordinary employees of ECT, but were either shareholders, directors or persons within ECT who had real and relevant information on the share dealing. Their evidence helped explained the intricacies involved in that dealing, how parties were exploring various options, especially the respondent; thus giving developing instructions as reflected in the emails and draft transaction documents that were prepared at the relevant time for consideration and negotiation. The timelines of the negotiations as testified by these witnesses corroborated and proved the appellant’s case, and disproved the respondent’s. Unfortunately, the learned Judge treated their evidence as irrelevant to the issue at hand. [53] The appellant’s witnesses were Choa Swee Lin [PW2], Warayut Amornpongchai [PW3], Edward Moses Julius Josepath [PW4], Kong Ah Choo [PW5], Yau Sau Yin [PW6], Liew Siew Pin [PW7], Ng Wai Pin [PW9]. Other than PW7 and PW9, each of these witnesses were involved with the appellant in setting up of ECT, either by investing their own funds or were promised free shares due to the different roles that they would play in ECT. [54] Here, we must deal with the erroneous expungement of the evidence given by PW2 on the basis that he was a bankrupt. We agree with the submissions of the appellant that the insolvency of PW2 does not render him incompetent – see section 118 of the Evidence Act 1950 and the Federal Court decision in Tong Soon Tiong & Ors v FA Securities Sdn Bhd [2013] 2 CLJ 448. PW2 testified on 11.9.2012 but had been adjudged a bankrupt 25 two months earlier, on 17.7.2012. Following the objections of the respondent, PW2’s evidence was expunged. [55] With respect, that ruling is clearly erroneous from a reading of section 118 of the Evidence Act which states: Who may testify

All persons shall be competent to testify unless the Court considers that they are prevented from understanding the questions put to them or from giving rational answers to the questions by tender years, extreme of old age, disease, whether of body or mind, or any other cause of the same kind. Explanation-A mentally disordered person or a lunatic is not incompetent to testify unless he is prevented by his condition from understanding the questions put to him and providing rational answers to them. [56] In any event, PW2 obtained the sanction of the DG of Insolvency on 5.11.2012 in which case, the learned Judge ought to have allowed the appellant’s application to recall him. We agree with the appellant that PW2’s evidence was wrongly excluded and ought to have been taken into consideration. [57] Returning then to the oral testimonies of the appellant’s witnesses, they gave material and credibly evidence on how the appellant was in the glove industry, how he had first mooted the idea of setting up a ceramic formers manufacturing business in Thailand using a nominee structure in order that ECT could potentially sell formers to the appellant’s competitors, the start-up of ECT; the involvement of Roger Yue; how the relationship between Roger Yue and the appellant went sour when they disagreed over 26 the expansion of ECT which led to inter alia Roger refusing to sign related loan documents or to be guarantor; why a shareholders consent and statutory declarations were signed by them affirming inter alia the nominee arrangements; how the sale of ECT shares was to be transacted. [58] On the matter of Roger being the appellant’s nominee, Warayut Amornpongchai [PW3] who was involved in the management of ECT at the material time testified that when he first joined ECT, the appellant had told him that he was the majority owner of ECT and that his shares in the company were held by his nominee, Roger. Roger, himself had also told him “at least twice that he is Mr. Ong’s nominee” – see Q&A 10 of PW3’s witness statement. PW2, PW4 and PW5 gave similar testimonies on this. [59] According to these witnesses, because of the nominee arrangements that were originally made, the sale required the shareholders to transfer or register their shares back to Roger around October 2006 with Roger then transferring the appellant’s shares to the respondent and the rest back to the original transferors. To do that, the shareholders consent and the statutory declarations had to be prepared. Amongst the documents tendered to prove the shareholding structure were company searches in the form of lists of shareholders of ECT for various periods made at the Department of Business Development, Ministry of Commerce in Thailand. These documents were originally in the Thai language had been translated by PW10 [Dato Sa Wai], ought to have been admitted by the learned Judge. [60] What is interesting and certainly significant is Roger’s evidence which did not seem to have been considered by the learned Judge. He, too, 27 invested in ECT by providing the working capital and other loans, advances and guarantor for ECT’s banking facilities. He also confirmed that he had agreed to act as the appellant’s nominee. He was also the nominee of several other shareholders. In fact, his firm, an accounting firm had billed the appellant for such services, and the bills were produced in Court. Roger further confirmed that the tripartite discussions over the ECT sales took place after his “4 September letter”. In that letter addressed to the directors of ECT, Roger complained of the removal of both his wife and him as shareholders and directors of ECT without his consent or agreement, written or otherwise, and his threat to institute “necessary criminal and civil proceedings against the perpetrators”. [61] What was even more important was Roger’s confirmation that the appellant had transferred his 271,600 shares to him on 31.10.2006 and that on the following day, 1.11.2006, Roger had transferred those same shares to the respondent. This clearly pointed to the existence of a tripartite agreement, contrary to the learned Judge’s findings that there were none. [62] It can therefore be seen that the credibility of the respondent’s testimony was not properly evaluated by the learned Judge; and that that error has had a real and substantial impact on the eventual outcome of the claim and counterclaim before the learned Judge. This is reason enough to allow the appeal and set aside the decision of the learned Judge. [63] Moving then to the matter of the pre-conditions as alleged by the respondent. The learned Judge had found that the Acknowledgment was “created in relation to the ECT shares dealing as claimed by the defendant”; 28 that prior to this dealing, the appellant had borrowed money from the respondent and that the share dealing was to enable the appellant to repay the loan to the respondent, that the proceeds of sale of the shares to third parties will be utilized first to repay the respondent and, that the surplus from the dealing will be paid to the appellant. The Court found that the “acknowledgment of debt document was signed in anticipation of the surplus”; and that “the share dealing is pre-condition to the debt of the defendant.” Since the pre-conditions were not fulfilled, the respondent was not expected to honour the terms contained therein. [64] Again, with respect, we must disagree. [65] The Letter and the testimony of Roger, in particular, were not examined by the learned Judge. Had the contents of the Letter been examined, the learned Judge would have readily found for the appellant as it supported the appellant’s case. This Letter would yield that the respondent’s version of the events that led to the Acknowledgment and consequently, his allegation of false representation, highly suspicious and not borne out in the documentary evidence that he himself signed. [66] In the opening lines of the Letter, the respondent clearly agreed to execute three acknowledgments in favour of the appellant in consideration of the appellant’s agreeing to the respondent’s request to allow or not to object to the 217,600 shares in ECT then registered in the appellant’s name and/or the right to subscribe for new shares to be registered in the name of Roger Yue. The respondent agreed to execute the 3 acknowledgments within 3 days upon the registration of the ECT shares in Roger Yue’s name. 29 [67] The purpose of each acknowledgment is clearly set out in the Letter; the first is an Acknowledgment that the appellant has fully paid the sum of RM361,603.00 in consideration of the respondent’s assignment to the appellant, the respondent’s share in Lot 6 Tropicana Golf & Country Resort. The second is an Acknowledgment that the appellant has fully repaid all personal loans totaling RM2,289,992.00 that were granted by the respondent. The third and final Acknowledgment mentioned in the Letter is the Acknowledgment which forms the subject matter of the present appeal. [68] In this third Acknowledgment, the respondent acknowledges that he is indebted to the appellant in the sum of RM8,110,225.00. Because this acknowledgment is set against the earlier two, the Letter states that the respondent could adjust this amount “if there shall be any monies remaining outstanding by the appellant to the respondent which is not paid” under the earlier two Acknowledgments. The respondent was, however, required to confirm the sum by 3.11.2006, failing which the amount stipulated would be taken as conclusive. By this Acknowledgment, the respondent had further agreed to repay the mentioned sum to the appellant within the agreed time period mentioned in the draft Acknowledgment that was attached as Appendix C. [69] The evidence before the Court shows that after the respondent had signed the Letter, the three Acknowledgments were executed and the various matters mentioned in those Acknowledgments attended to. 30 [70] In particular and for the purpose of the Acknowledgment in question, the appellant did not object and had allowed his 271,600 shares to be transferred to Roger on 31.10.2006. Not only was there the testimony of the appellant himself which was supported by the documentary evidence, the appellant’s version was confirmed by Roger who testified as PW6 – see page 1360 of CBD 8. On 1.11.2006, Roger transferred the shares to the respondent pursuant to a sale and purchase of shares agreement dated 20.10.2006 [SSA] between Roger and the respondent. Following this SSA, the respondent informed Ms Yeap Hong Imm, the appellant’s solicitors, on the adjustments to be made to the amount mentioned in all three Acknowledgments. [71] With this timeline and the several matters that had to be organized and attended to before any transfer of the shares could be made, the appellant’s case that on 6.11.2006, the respondent signed all three Acknowledgments which contained the sums, now adjusted, was clearly the version that was proved. The evidence led by the appellant were cogent and credible, supported by contemporaneous documentary evidence coming from third parties such as the lawyers who dealt with the documentation and even from the respondent himself. All these material and corroborative evidence were unfortunately, not considered or evaluated properly by the learned Judge. Ultimately the share was transferred to the respondent through Roger. It was never the agreement nor the pleaded defence that the ECT shares were to be transferred for free. The respondent is therefore bound to the admission found in the Acknowledgement. The learned Judge was thus plainly wrong in dismissing the claim when the weight of the evidence before the Court was overwhelmingly in support of the appellant’s claim. 31 [72] Further, and for the same reasons, it was plainly wrong to allow the counterclaim of the respondent. The undisputed documents record that the appellant had settled the personal loans taken from the respondent, and that there was also a transfer of the property at Lot 6 Tropicana for the same. Exhibit P51 sent by the respondent to the appellant clearly states: Re: Lot 6, Parcel 2, Tropicana Golf & Country Resort, Petaling Jaya, Selangor Darul Ehsan held under individual title H.S. (D) 97786, P.T. 29972 in the Mukim of Sungai Buloh, District of Petaling and State of Selangor Darul Ehsan In consideration of the sum of Ringgit Malaysia Three Hundred Ninety Nine Thousand Six Hundred and Three (RM399,603.00) now paid by you to me (the receipt of which I hereby acknowledge), I, KAMAL Y.P Tan (NRIC NO: 520229-71- 5071 / H0257258) hereby assign all my rights, interest, title and benefits in and to all my undivided share in the above property under or pursuant to an Agreement dated 20th January 2005 made between Michael Gunalan Benedict of the first part to you, ONG YEW TEIK (NRIC NO: 650719-10-6303/A0289608) [73] Since the respondent’s own undisputed documents, exhibits P50, P51 and P38 record that the appellant’s loans had been resolved, it is puzzling how the counterclaim could be considered proved. Clearly, the respondent had not proved his counterclaim, even on a balance of probabilities and the counterclaim consequently, ought to have been dismissed. 32 Conclusion [74] For the reasons explained above, we are satisfied that this is an appropriate case for appellate intervention. The appeal is therefore allowed, the decision of the High Court is set aside; and judgment is entered for the appellant’s claim as per prayer (a) in the Statement of Claim together with interest at 5% per annum from the date of filing to the date of realization; and, the respondent’s counterclaim is dismissed. We would further order costs against the respondent. Dated: 10th January 2019 (MARY LIM THIAM SUAN) Judge Court of Appeal Malaysia 33 Counsel/Solicitors For the appellant: Wong Chong Wah (Harold Tan Kok Leng, Wong Chun Keat, Chan Jia Ying and Izzah Azman with him) Messrs Izzah Azman & Co. Unit 9-2-4, Kelumpuk Serindit Block B, AU3 Ampang Hulu Klang 54200 Kuala Lumpur For the respondent: Yee Teck Fah (Ong Gek Lin with him) Messrs Yee Teck Fah & Co. 705, Block E, Phileo Damansara 1 Jalan 16/11, Section 16 46350 Petaling Jaya Selangor.