Ooi Chong Seong v Lim Kean Tin (WA-22NCC-104-03/2021)

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1! ! DALAM MAHKAMAH TINGGI MALAYSIA DI KUALA LUMPUR (BAHAGIAN DAGANG) GUAMAN NO: WA-22NCC-104-03/2021 ANTARA OOI CHONG SEONG (NO. K/P: 530706-02-5567) …PLAINTIF

Preamble

Pursuant to the terms of the SPA, the 1st Defendant took over the control and operations of the Educational Institutes including the complete financial management and control of the colleges, effective from 01.07.2015. The Plaintiff remained as a 70% shareholder and a director, together with his wife, for the 3rd Defendant and of the 11 companies. [7] In furtherance to the terms of the SPA, the 1st Defendant paid a sum of approximately RM30 million to the Plaintiff and the Plaintiff caused to be transferred to the 1st Defendant, 30% of his shares in the 3rd Defendant and ITPSB respectively and executed Supplemental Agreements. [8] Disputes arose between the Plaintiff and the 1st Defendant with regards to the implementation of the terms and conditions of the SPA, culminating in the Plaintiff bringing an action vide Suit No. WA- 22NCvC-9-01/2018 (“2018 Suit”) against the 1st and 2nd Defendants. The 2nd Defendant was made a party to the first action as the 1st Defendant had handed over the control, operations and the management of the four colleges to the 2nd Defendant. [9] The Plaintiff and the 1st Defendant subsequently arrived at a settlement of the 2018 Suit with a payment of RM55 million to the Plaintiff, on terms which were contained in a series of letters, between 20.08.2018 and 02.10.2018 (“2018 Settlement Agreement”). [10] Several months after the settlement agreement, the Plaintiff discovered that the statutory payments such as the contributions to S/N iJ43wdpqdEWFXF/u54zVkw 4! ! Employees Provident Fund (“EPF”), Social Security (“SOCSO”), and staff income tax deductions (“PCB”) due to Lembaga Hasil Dalam Negeri (“LHDN”) were delayed by the 3rd Defendant and the other educational institutes. The 3rd Defendant also had outstanding tax liability in excess of RM2.7 million for the tax year 2014. [11] The Plaintiff then obtained an order from the High Court of Seremban in his capacity as a director of the 3rd Defendant to inspect the accounts of the 3rd Defendant. The auditor’s report exposed financial transactions that was indicative of rampant money laundering activities involving the 3rd Defendant, to the tune of approximately RM100 million and the said monies were injected by the 1st Defendant and one Tek Seng Education Group Sdn Bhd (“TSEG”), the nominee of the 2nd Defendant. TSEG is wholly owned by one Tedy Teow Wooi Huat (“Tedy Teow”) who was also a 70% shareholder of the 2nd Defendant. [12] In August 2018, Tedy Teow had been charged in Court for issuing payment instruments in the form of online funds without approval under the Payment Systems Act 2003 and for promoting a pyramid scheme and involvement in money laundering since 2012, and was convicted and fined a total of RM20 million by the Ampang Session Court. The 2nd Defendant was under investigation for running a pyramid scheme by Bank Negara Malaysia, the Police and the Domestic Trade Ministry. [13] The Plaintiff then instituted this proceeding to declare the said SPA to be void on grounds that the SPA was entered by the 1st Defendant as a nominee of the 2nd Defendant for the 2nd Defendant to collect S/N iJ43wdpqdEWFXF/u54zVkw 5! ! illegal deposits and to launder monies through the four Education Institutes. Issues for determination [14] The issues to be determined at trial are whether i. Res Judicata applies (Issue 1) ii. The 1st Defendant was a nominee of the 2nd Defendant (Issue ii) iii. The SPA was tainted by illegality (Issue iii) Analysis and findings Issue i: Res judicata [15] The Defendants contended that as Suit 2018 was filed by the Plaintiff against the 1st Defendant and litigated, the Plaintiff would be estopped by res judicata from pursuing the same issues. [16] It is my finding that res judicata does not apply for the following reasons:

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(ii) “… that the 1st Defendant had in breach of the SPA handed over the control, operation and management of the 4 collages including KULSB to the 2nd Defendant…” [See paragraph 14 of the Statement of Claim of the 2018 Suit]

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(iii) “… in the alternative, the Plaintiff avers that the 1st Defendant has breached clause 9A.1 of the SPA in not consulting the Plaintiff and obtaining the Plaintiff’s consent to hand over/or divest the control, management and operations of Kolej University Linton without the knowledge and/or consent of the Plaintiff.” [See paragraph 15 of the Statement of Claim of the 2018 Suit]

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(iv) “… that the aforesaid acts of the Defendants amount to a fundamental breach of the SPA.” S/N iJ43wdpqdEWFXF/u54zVkw 7! ! [See paragraph 17 of the Statement of Claim of the 2018 Suit] Against the 2nd Defendant in the 2018 Suit

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(ii) “… the 2nd Defendant … is in unlawful occupation, management and control of Kolej Universiti Linton and its main campus land and … that the 2nd Defendant to hand over possession and control of Kolej Universiti Linton and its main campus land to the Plaintiff.” [See paragraph 18 of the Statement of Claim of the 2018 Suit] [17] The law on this point is trite. The Supreme Court in Asia Commercial Finance (M) Bhd v. Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 at page 199 stated as follows:- “… the issue estoppel literally means simply an issue which a party is estopped from raising in a subsequent proceeding. However, the issue estoppel, in a nutshell, from a consideration of case law, means in law a lot more, i.e. that neither of the same parties or their privies in a subsequent proceeding is entitled to challenge the correctness of the decision of a S/N iJ43wdpqdEWFXF/u54zVkw 8! ! previous final judgment in which they, or their privies, were parties. … ‘Issue estoppel … prevents contradiction of a previous determination, whereas cause of action estoppel prevents reassertion of a cause of action.’” (emphasis ours) [18] It is my finding that issues raised in the 2018 Suit, never went to trial and there was no final determination, on any of these issues. The Suit was merely resolved by way of Settlement Agreements in the form of letters. [19] Notwithstanding, juxtapose the 2018 Suit to the current suit, it can be seen that none of the above stated issues are pleaded against the 1st Defendant and are not being litigated. [20] In this present suit, the issues against the 1st Defendant and 2nd Defendants are:-

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(ii) whether monies were illegally injected / deposited into the 3rd Defendant’s account in furtherance of money laundering activities by the 2nd Defendant facilitated by the purchase of the said shares by the 1st Defendant. S/N iJ43wdpqdEWFXF/u54zVkw 9! ! Against the 1st Defendant in the Present Suit In the Present Suit, the case against the 1st Defendant is whether he was the nominee of the 2nd Defendant. Against the 2nd Defendant in the Present Suit In the present suit, the issue against the 2nd Defendant was premised on illegality i.e. money laundering activities. In the 2018 Suit, the allegation against the 2nd Defendant that it was in unlawful occupation of the 3rd Defendant’s campus was based on the breach of Act 555. [21] Although in both the 2018 and the present suit, it was pleaded that the 2nd Defendant was in occupation of the 3rd Defendant’s campus, however no determination by the Courts on this issue was made in the 2018 Suit.

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(ii) There was no documentary evidence produced by the 1st Defendant to show the money trail with regards the said movement of cash from him to his solicitors. No supporting information was produced. Neither was there independent evidence to show such proof that the funds originated form the 1st Defendant.

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(iii) The fact that the 1st Defendant and his employees undertook to purchase an educational institution without any prior experience in the education field is highly suspicious. S/N iJ43wdpqdEWFXF/u54zVkw 11! ! Despite having no experience, the 1st Defendant agreed to the sum of RM130,000,000.00 to have control of the colleges.

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(iv) Even after taking control of the colleges, the 1st Defendant could not explain satisfactorily how the colleges were run. This also included the inability to provide basic information such as the number of students despite the 1st Defendant was purportedly controlling the 3rd Defendant. [25] All the above clearly points to the fact that there was no satisfactory evidence that monies paid to purchase the Colleges came from the 1st Defendant. The explanation was not supported by proof. It was a mere assertion without more. [26] Having determined that the 1st Defendant had no capacity to undertake the purchase of the colleges, it lends credence to the Plaintiff’s submission that the 2nd Defendant was in fact the de facto purchaser of the colleges. [27] This court had carefully examined the Plaintiff’s claim that the 2nd Defendant was controlled by Tedy Teow. This Court takes judicial notice that Tedy Teow was arrested by the Thai police in 2022. A simple search on the internet would reveal that “The 55-year-old Teow founded the MBI Group and operated entertainment complexes, including a resort in Danok at the Thailand-Malaysia border. He also built a business empire from dubious online investment schemes that attracted investors from China, Thailand, Malaysia, Indonesia and Macau.” S/N iJ43wdpqdEWFXF/u54zVkw 12! ! [28] Not withstanding the negative press release against Tedy Teow, I made an independent assessment and arrived to my finding that Teddy Teow via the 2nd Defendant MBI had used the colleges purchased by the 1st Defendant as a vehicle to lure members of the public to invest with him. [29] The promotional brochure issued by the 2nd Defendant MBI and the evidence of PW3 supports this fact. Furthermore, the video recording of Teddy Teow’s speech fortifies the finding that the Colleges were used as a front to convince and lure unsuspecting investors. With the background of the 2nd Defendant MBI, it is more probable that the 2nd Defendant was the party with the financial muscle to purchase the Colleges at the agreed price of RM 130,000,000. [30] As such, from the circumstantial evidence, it can be inferred that the 2nd Defendant MBI was the de facto owner of the colleges and that the 1st Defendant was nothing but a nominee of the 2nd Defendant. Issue iii: The SPA was tainted by illegality [31] It is the finding of this Court that the SPA was tainted by illegality for the following reasons: S/N iJ43wdpqdEWFXF/u54zVkw 13! !

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(ii) Evidence of Auditor PW2 [38] This court accepts the evidence of PW2 when he concluded that there were suspicious deposits made into the account of the 3rd Defendant. More importantly this Court is of the view that the source of the funds were dubious as they originated from deposits which were made from various unidentified sources. This Court also finds that the explanation by the lawyer from Han & Partners (DW2) to be un satisfactory. [39] This court is puzzled by the 1st Defendant’s stand in response to the serious allegation made in the Statement of Claim at paragraphs 22 & 23 which alleged rampant money laundering activity up to the tune of RM100,000,000.00 in the 3rd Defendant’s account. It can be seen that the response was merely a denial. Even in court, no explanation was offered by the 1st Defendant on how the RM100,000,000.00 was injected into the 3rd Defendant’s account. S/N iJ43wdpqdEWFXF/u54zVkw 15! ! [40] DW2 explained that the RM100,000,000.00 came from the 1st Defendant. This is in contradiction to the 1st Defendant’s pleaded case that he denied the said RM100,000,000 inflow of the such sum into the 3rd Defendant’s account. DW2 also contradicted his own evidence where he said that RM 95,062,270 from the RM100,000,000.00 was used to pay creditors. As such there were many inconsistencies in the response to the serious allegation. [41] Suffice to say that this Court is not convinced by the explanation given by DW1 and DW2 on the monies being paid into the account of the 3rd Defendant. It reinforces the view of this Court that that the monies that were pumped into the 3rd Defendant’s account originated from sources which are highly questionable. [42] PW2’s finding that RM37,000,000and RM 62,000,000 being pumped into the 3rd Defendant’s account from the TSEG group and unaccounted depositors remains unrebutted. The said deposit clearly had traits of illegal deposit taking and money laundering. [43] In emphasising his point, the Plaintiff produced a list of individuals depositing monies. The names are not typical Malaysian names or names that can be said to be local names. These individuals appear to have made payments into the account of the 3rd Defendant. The sums paid were highly suspicious as they do not relate to any payment for tuition fees whatso ever. Instead it reeks of a deposit taking activity. S/N iJ43wdpqdEWFXF/u54zVkw 16! ! [44] From the circumstantial evidence produced, I find that the 2nd Defendant was controlled by Tedy Teow who was also a 70% shareholder of the 2nd Defendant. [45] Therefore, it is a finding of this court the 2nd Defendant being the de facto owner of the colleges including the 3rd Defendant had used the 3rd Defendant as a vehicle to collect deposits from unknown sources. [46] From the facts discussed above it is safe to arrive at a conclusion that there are transgressions of the law namely Section 137 of Financial Services Act 2013, the said provision reads: Section 137. Restriction on accepting deposits

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(1) No person shall accept deposits except under a licence granted under section 10 regardless of whether the transaction is described as a loan, an advance, an investment, a savings, a sale or a sale and repurchase or by whatever name called.

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(2) Any person who contravenes subsection (1) commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding ten years or to a fine not exceeding fifty million ringgit or to both. [47] There is also a breach of Section 4 of Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. The said provision reads as:

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(1) Any person who— S/N iJ43wdpqdEWFXF/u54zVkw 17! !

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(2) For the purposes of subsection (1), it may be inferred from any objective factual circumstances that— S/N iJ43wdpqdEWFXF/u54zVkw 18! !

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(3) For the purposes of any proceedings under this Act, where the proceeds of an unlawful activity are derived from one or more unlawful activities, such proceeds need not be proven to be from any specific unlawful activity. [48] As such it is my finding that the SPA, the supplemental agreement & 2018 Settlement Agreement are null & void and unenforceable for reasons of illegality and opposed to public policy. S.24 of the Contracts Act 1950 is applicable. Whether a Civil Court is entitled to make a determination of a money laundering activity leading to a declaration that the relevant agreement to be unlawful for illegality [49] In contesting the claim of the Plaintiff on the issue of illegality, the 1st Defendant argued that “the allegations of unlawful money laundering are of a criminal offence and must be proven in a criminal court rather than a civil court.” [50] It is critical that this issue is issue of law is clarified. S/N iJ43wdpqdEWFXF/u54zVkw 19! ! [51] It must be emphasised that the Court is not making finding that any particular criminal offence has been committed or proved. That is a matter for the criminal court to decide. [52] What this Court is embarking is determining if the Plaintiff has succeeded in establishing paragraph 32 of the Re-Amended Statement of Claim as follows: “[32] … the object of the sale and purchase of the Plaintiff’s said shares by the 1st Defendant is tainted with illegality and/or is against public policy and is therefore unlawful.” [53] It is trite law that the Court by Section 24 of the Contracts Act 1950, has been vested with the jurisdiction to determine if the object of an agreement is forbidden by law or is opposed to public policy. [54] From the facts presented, it is the Plaintiff’s case that the 1st Defendant entered into the SPA with the object of enabling the 2nd Defendant to collect deposits in breach of Section 137 of the FSA, which prohibits deposit collection for any person or body without license. This has been found proven as previously discussed. [55] As such, this Court is entitled for the purpose of Section 24 of the Contracts Act 1950, to determine on the balance of probabilities, if the deposits have been collected in contravention of Section 137 of the FSA in a manner “forbidden by a law”. S/N iJ43wdpqdEWFXF/u54zVkw 20! ! [56] This Court is also entitled to make a determination that the object of the SPA was for the defendants to collect deposits in breach of Section 137 of the FSA and therefore, is against public policy. This is within without doubt within the determination of the Civil Courts. [57] This issue is not novel. The courts have made determinations with regards to the breach of any prohibition in any statute, whilst determining if any contract is lawful or is against public policy for the purposes of Section 24 of the Contracts Act 1950. [58] Reference is made to Menaka v. Lum Kum Chum [1977] 1 MLJ 91 where the Privy Council made a finding of fact that the appellant in that case had contravened the provisions of Section 8 of the Money Lenders Ordinance, which was a criminal offence as it imposed a penalty:- “Section 8 of the money lenders ordinance provides in terms for criminal sanction by way of a fine or imprisonment on any person who is guilty of an offence under the section…”. [59] Similarly, in Chung Khiaw Bank Ltd v. Hotel Rasa Sayang Sdn Bhd & Anor [1990] 1 MLJ 356 it was contended that a loan security was unlawful as the loan was for the purpose of the purchase of the company’s own shares in breach of Section 67 of the Companies Act 1965 and therefore void under Section 24 of the Contracts Act 1950. [60] The Supreme Court at page 360 of the judgment after looking at the evidence, made a determination that the loan was clearly a S/N iJ43wdpqdEWFXF/u54zVkw 21! ! contravention of section 67 of the Companies Act 1965 stated as follows: “Looking at the documents, we agree with the learned judge in this case that the documents here speak for themselves. We also agree that the original loan in 1980 was clearly a contravention of section 67 of the Companies Act.” It must be pointed out that Section 67 of the Companies Act had criminal sanctions for breach in that:- “(3) If there is any contravention of this section, the company is, notwithstanding section 369, not guilty of an offence but each officer who is in default shall be guilty of an offence against this Act. Penalty: Imprisonment for five years or one hundred thousand ringgit or both.” [61] In Lori (M) Bhd (Interim Receiver) v. Arab-Malaysian Finance Bhd [1999] 3 MLJ 81 the Federal Court at page 98 made a finding that Section 67 of the Companies Act 1965 had not been breached after careful consideration of all the facts:- “Nevertheless, the Judge did embark upon a most careful examination of the allegations of illegality made by Mr Augustine and, having done so, we consider he was amply S/N iJ43wdpqdEWFXF/u54zVkw 22! ! justified in resolving the conflict of evidence on affidavit, in accordance with the principles enunciated in Eng Mee Yong v Letchumanan (ibid), and coming down strongly in favour of the Lender… … We must next address the alternative submission of the Borrower Company which alleged that the loan transaction and the charge given as security for it, were in contravention of s 67 of the Companies Act, read with s 24 of the Contracts Act, and therefore illegal, void and unenforceable.” [62] The above cases clearly establish the fact that a court exercising its civil jurisdiction powers, has the jurisdiction to determine if a statute that caries criminal sanctions has been breached, for the purpose of determining if a civil transaction is void for illegality. [63] If the court has no jurisdiction in such cases, then, the provision in Section 24 of the Contracts Act 1950, which warrants the finding of fact if any statutes with criminal sanctions for breach have been breached, would be otiose. [64] Contrary to the argument of the Defendants, this Court is not declaring any particular criminal offence has been committed or not committed. I therefore find the reliance on the case of Lai Soon Oon v. Chew Fei Meng [2019] 2 MLJ 96 and Lina Joy v. Majlis Agama Islam Wilayah Persekutuan & Ors [2004] 2 MLJ 119 to be misconceived. S/N iJ43wdpqdEWFXF/u54zVkw 23! ! [65] Thus, this Court finds no reason to accept the argument of law raised by the Defendants. Conclusion and Finding on the claim made by the Plaintiff [66] It is the finding of this Court that the Plaintiff has established his claim based on the requisite standard of proof namely on a balance of probability. [67] Therefore, this Court allows prayers contain in Paragraph 47 (i), (iii),

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(iv), (v), (vi), (vii) and (viii) of the Amended SOC:

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(iii) for an order that the 1st Defendant carries out all the necessary acts to re-transfer the shares in the target companies (as listed in Schedule 1 to the Statement of Claim), which have been transferred to the 1st Defendant and/or his nominees pursuant to SPA, supplemental agreements thereto and the 2018 settlement!agreement, to the Plaintiff and/or his nominee, within seven (7) days of this judgment.

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(iv) an order that the Plaintiff returns/restores to the 1st Defendant the monies (if any) which are lawfully due and payable, in consequence of prayer (i) above, subject to the set off of all or any damages that has been suffered by the Plaintiff as a consequence of the 1st Defendant’s occupation, control and management of International Institute of Science Mantin Sdn. Bhd. (Company No.663209-A); ITP Sdn Bhd (Company No.188561-U); ITP Ventures Sdn Bhd (Company No.602842-K); Jati Cerah Sdn. Bhd (Company No.266085-H); Kolej Universiti Linton Sdn. Bhd. (Company No.449905-P); Linton International School Sdn. Bhd. (Company No.848937-U); Legenda Education Group Sdn. Bhd. (Company No.683871-T); Janabadi Sdn. Bhd. (Company No.733654-X); Ideal Metro Development Sdn. Bhd (Company No. 954531-K); Jendela Cerdik Sdn. Bhd (Company No. 740324-P) and Premier Gold Sdn. Bhd. (Company No. 709969-K) (“Target companies”) and/or the educational companies, as well as the four colleges; S/N iJ43wdpqdEWFXF/u54zVkw 25! !

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(vi) a declaration that all documents, power of attorney and deeds of trust executed by the Plaintiff and/or his representatives, attorneys, trustees and nominees in relation to the SPA, the supplemental agreements thereto, the 2018 settlement agreement and in relation to any matter or dealing involving the shares and/or the assets of the educational companies be cancelled and be void and unenforceable;

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(vii) an order that the Registrar of the High Court to execute the instruments of transfer of the shares of the 1st Defendant in the Target companies or any other shares that have been transferred in the Target companies, back to the Plaintiff, in the event the 1st Defendant refuses and/or fails to execute and deliver the instruments in accordance with the order in para (ii) hereinabove within five (5) working days from the date of the service of this order on the 1st Defendant’s solicitors;

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(viii) an order for the 1st Defendant to account to the Plaintiff for all the assets, both moveable and immoveable, of the Target companies that has been dissipated by the 1st S/N iJ43wdpqdEWFXF/u54zVkw 26! ! Defendant during the period of the occupation and management of the companies, within three (3) months of the date of this order; The Counterclaim [68] The Counterclaim is premised on the claim that the Plaintiff had breached the SPA, the Supplemental Agreements and the Settlement Agreement 2018. [69] The relief sought in the Counterclaim are reproduced for ease reference. They are as follows: “77. Justeru, D1 kini menuntut balas terhadap P untuk – a) satu perintah pengisytiharan (declaration) bahawa Perjanjian Jual Beli bertarikh 30.6.2015 (“Perjanjian tersebut”) serta Perjanjian Tambahan-Perjanjian

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(ii) jumlah wang sebanyak RM55,000,000-00 yang telah dibayar oleh D1 pada 10.09.2018; dan

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(iii) jumlah wang sebanyak RM1,958,902-81 yang dibayar oleh D1 kepada Lembaga Hasil Dalam Negeri pada November 2018. f) satu perintah bahawa Plaintif sama ada melalui ejen-ejen dan/ atau pekerja-pekerja dan/ atau wakil-wakil Plaintif dihalang daripada mengganggu (interfere) proses penyempurnaan syarat terdahulu klausa 4 Perjanjian tersebut; g) satu perintah untuk menegah dan/ atau menghalang dan/ atau menahan Plaintif dan/ atau nominee-nominee Plaintif dan/ atau ejen-ejen Plaintif daripada menjual dan/ atau memindah dan/ atau berurus dengan saham-saham Syarikat-syarikat Sasaran tersebut yang akan dijual kepada D1 di bawah Perjanjian tersebut kepada mana-mana pihak yang lain; …” S/N iJ43wdpqdEWFXF/u54zVkw 29! ! [70] It is obvious that the Counterclaim presupposes the Sale and Purchase Agreement dated 30.6.2015 was not tainted with illegality. Unfortunately, the contrary was found by this Court. Given the finding of the SPA & the related agreements hereto are null & void the prayers in the Counterclaim falls and is dismissed. Conclusion [71] In summary, the Plaintiff’s claim is allowed to the extent mentioned above. The Counterclaim is dismissed. [72] Costs of RM60,000.00 to be paid by the 1st Defendant and RM30,000.00 by the 2nd Defendant to the Plaintiff. - Sgd - (AHMAD FAIRUZ BIN ZAINOL ABIDIN) Judge High Court of Malaya Kuala Lumpur Dated: 17th December 2024 S/N iJ43wdpqdEWFXF/u54zVkw 30! ! Counsel Dato' V Manokaran, Yohendra Nadarajan and M R Kumar for the Plaintiff Messrs. Yohendra Nadarajan Mr. Phang Soon Mun, Mr. Chin Choon Loong & Mr. Chew Chun Wei for the 1st Defendant Messrs. Han & Partners Mr. Loh Chun Hoo and Mr. Fong Yi On for the 2nd Defendant Messrs. Chun Hoo & Partners S/N iJ43wdpqdEWFXF/u54zVkw