Paragon Union Berhad v 1. Wong Chee Kong (22-6-2000)

POH HOCK LENG .... DEFENDANTS GROUNDS OF JUDGMENT [1] The present suit before this Court is factually a simple and uncomplicated case. It is a claim for a breach of contract arising from the failure of materialising a sale and purchase of shares. Though it is a simple case, but the amount of monetary transaction involved is quite substantial which totals up to more than RM 20 million. 2 [2] The Plaintiff’s Statement of Claim was filed in January 2000. However, due to a number of applications filed in the course of the action, the suit was only finally litigated on 31.12.2014, more or less about 15 years from the date Statement of Claim by the Plaintiff. [3] On 31.12.2014, this Court had allowed the Plaintiff’s claim and dismissed the Defendants’ counterclaim. The Plaintiff was also awarded costs of RM60,000.00. [4] The Defendants being dissatisfied with the decision had proceeded to file a notice of appeal against the decision. [5] Since the litigation of this case has taken about 15 years to be disposed, it is only appropriate for this Court to set out first the series of application filed in the course of the action until its final disposal. Briefly, the Plaintiff claims against the Defendants for breaching a contract for the sale and purchase of shares, where the Plaintiff had agreed to purchase and the Defendants had agreed to sell its shares to the Plaintiff. The Plaintiff in the suit is Paragon Union Berhad, a company incorporated in Malaysia under the Companies Act 1950. 3 The Plaintiff is also a public listed company in the Kuala Lumpur Stock Exchange (KLSE) now known as Bursa Malaysia. Whilst the First Defendant and the Second Defendants (“Defendants”) are individuals by the name of Wong Chee Kong and Poh Hock Ling respectively. Both the Defendants are the Directors and Shareholders of one company, Kinma Holdings Sdn Bhd (“Kinma”). [6] The Plaintiff, subsequent to the filing of their Statement of Claim had filed an Order 14 application to enter summary judgment against the Defendants. The summary judgement application was heard by the Senior Assistant Registrar (SAR). The SAR had dismissed the Plaintiff’s application with costs. Against the said decision, the Plaintiff filed a notice of appeal to the Judge in Chambers. Later the appeal was withdrawn by the Defendants. Then, the case was fixed for pre-trial case management before the judge in chambers on 9.6.2004. However, before the pre-trial case management was carried out, the Plaintiff had filed another application, namely Enclosure 24, applying inter alia for an order that Plaintiff be given access to examine records of bank accounts under section 7 Bankers’ Book (Evidence) Act 1949. Both the Plaintiff and the 4 Defendants had later entered into consent order in respect of this Enclosure 24. Thereafter, the case was set down for trial on the 7th and 8th October 2008. However, before the trial commences, there was an exchange of correspondences between the solicitors of both the parties which had led to the trial date being vacated by the Court. Arising from these exchange of correspondences between the parties, the Defendants contended that these correspondences tantamount to the determination of the suit. The Plaintiff contends otherwise in that the intended payment in view of settlement by a third party(ies) payment had fallen through and as such the Defendants are still indebted to the Plaintiff pursuant to the Sale and Purchase Agreements entered between them. As a result, the Plaintiff did not file any Notice of Discontinuance to the case, and intended to continue with the litigation against the Defendants instead. [7] The Defendants in resisting the Plaintiff intention to proceed with the litigation of the present case, had then filed an application under Order 14A of the Rules of the High Court 1980. The High Court Judge had allowed the Defendants’ application resulting in the 5 dismissal of the Plaintiff’s suit. However, the High Court’s decision was reversed by the Court of Appeal. The Court of Appeal instead found that there is an issue to be tried, and that the issue on the settlement, was indeed disputed. Thus, the case it set for full trial for determination in this present case. [8] The obvious effect of the decision of the Court Of Appeal, unsurprisingly was that the Defendants then had taken out a Summons in Chambers applying to amend their Statement of Defence and had applied to include 22 additional paragraphs, all of which are revolving around the correspondences that took place and denying the involvement of a third party or having any knowledge of any third party being the issue in the settlement reached. The Defendants’ application to amend their Statement of Defence was allowed and consequently the Defendants filed their Amended Defence and Amended Counterclaim. The Plaintiff also filed its Amended Reply and Defence to Counterclaim Amended Reply. [9] Now, returning to the present case. The background facts that give rise to the claim by the Plaintiff and Counterclaim by the Defendants 6 are as follows. Through a series of Agreements, the Plaintiff had agreed to purchase and the Defendant had agreed to sell shares of Kinma Holdings to the Plaintiff. The Plaintiff and Defendant finally entered into the final agreement setting the terms of the sale and purchase in the Sale of Shares Agreement dated 23.9.1998 (“Agreement”). (see Bundle B, pages 45 to 119). [10] Section 1.05 of the Agreement does refer to the previous string of contracts which precede the Agreement, namely the Principal Agreement dated 15.10.1997, Letter of Offer dated 15.10.1997, and the two Supplemental Agreements respectively dated 4.3.1998 and 5.5.1998 (collectively, “previous agreements”). The Court from the outset does not intend to delve in details with regards to the terms of these previous agreements as Section 3.01 of the Agreement already stipulated that the vide the Agreement, the previous agreements shall be deemed terminated by mutual consent. Section 3.01 is reproduced here (see Bundle B, page 50): “As of the date of this Agreement, the parties hereby agrees that the Principal Agreement, the Second Agreement and the 7 Supplemental Agreement are deemed terminated by mutual consent.” [11] From the Agreement, the Plaintiff agreed to purchase 70.1% of Kinma for the purchase price of RM38,218,500.00 (see Bundle B, pages 48 to 50). [12] The terms of the Agreement which are cardinal to this dispute are Sections 3.03, 4.01, 4.02 and 9.02. “SECTION 3.03 PAYMENT OF PURCHASE PRICE

upon the execution of this Agreement the sum of Ringgit Malaysia Sixteen Million Five Hundred and Forty Thousand (RM16,540,000-00) only paid by the Purchaser under the Principal Agreement and the Supplemental Agreement shall be deemed paid by the Purchaser to the Vendors under this Agreement as agreed refundable part-payment towards account of the Purchase Price; 8

the balance of the Purchase Price amounting to Ringgit Malaysia Twenty One Million Six Hundred and Seventy-Eight Thousand and Five Hundred (RM21,678,500-00) only shall be paid to the Vendors by way of the Purchaser issuing or cause to be issued in favour of the Vendors or their nominee(s) the requisite number of ordinary shares of PARAGON UNION BERHAD (“the PUB Shares…” [13] Section 4.01 lays down the condition precedent of the Agreement. Particularly, Section 4.01(2) stipulates that all the approvals from the relevant authorities to execute the transaction must first be obtained. [14] Section 4.02 generally stipulates that both parties must take all the necessary steps to apply to the relevant authorities for their requisite approvals. The section reads: “Within sixty (60) days from the date hereof, each of the parties hereto shall take the necessary steps to apply to the respective authorities for the requisite approvals. Upon such approvals being obtained, the Purchaser shall promptly take steps to 9 obtain the approval of the shareholders of the Purchaser. Both parties shall use their endeavours to assist each other in the applications aforesaid.” [15] The Plaintiff’s claim is that the Defendants had breached the agreement as the Defendants had failed to furnish sufficient information (after being requested to by the Plaintiff) to be submitted to the Securities Commission for appropriate approval. [16] Entailing the alleged failure by the Defendants, the Plaintiff through its solicitors has furnished a notice of termination to the Defendants dated 1.4.1999 (“Termination Notice”) which reads (see Bundle B, page 344): “This is to inform you that the information sought for in our letter has not been furnished to our client as at 31st March 1999. As clearly stated in our letter 17th March 1999, the sale and purchase agreement is therefore annulled.” 10 [17] Following that letter, the Plaintiff through it solicitors has demanded sums as claimed in the action in the letter dated 8.4.1999. (See Bundle B, page 347). [18] Quite interestingly, the Defendants in turn, have by their own volition agreed with the Plaintiff’s termination through their solicitor’s letter dated 4.5.1999 which reads (see Bundle B, page 350): “We note that the sale and purchase agreement had been annulled by you in a letter dated 1st April 1999, and the same had been accepted by our clients” [19] However, the Defendants’ main defence in respect of the Plaintiff’s claim against them for the breach of the sale and purchase agreement of shares is that, the Defendants had never received any payment from the Plaintiff for the shares which had already been transferred to the Plaintiff. The Defendants staunchly disputes the evidence led by the Plaintiff in proving the payment made by the Plaintiff. Furthermore, the Defendants contend that they had entered the Agreement because of the fraudulent misrepresentation of one 11 Dato’ Lim Hui Boon (“Dato’”) who was then the Plaintiff’s Executive Chairman. [20] In cognizance of the above underlying facts, this Court is of the view that the following are the pertinent issues to be dealt with to determine the present dispute.

Whether the Plaintiff and Defendants have validly entered into the Agreement.

Whether the Defendants have breached the Agreement.

Whether the Defendants have received the payments alleged by the Plaintiff with regards to the transfer of shares under the Agreement.

Whether vide the correspondences and letters between the parties, the parties have reached a conclusive, final and undisputed settlement. Issue (a): Whether the Plaintiff and Defendants have validly entered into the Agreement 12 [21] Now, the Defendants fleetingly have contended against the validity of the Agreement dated 23.8.1998 mainly on the ground that they have entered into the Agreement on the reliance of the Dato’s alleged fraudulent misrepresentation particularly on the payments for the purchase of the shares. [22] This Court is however mindful that the Dato’ was not pursued in any action and was not called by the Defendants to give evidence. Neither did the Defendants filed a third party notice to make the Dato’ a party to this action. This Court will now deal with the contention raised by the Defendants regarding the Dato’. It is utterly peculiar and abnormal that notwithstanding such a heavy-handed allegation against the Dato’ leading up to a multi-million Ringgit shares deal, the Defendants have never made any attempts to call the Dato’ as witness and in fact, have never initiated any action against the Dato’ for his alleged fraudulent misrepresentation. The Defendants having relied heavily on the Dato’s alleged fraudulent misrepresentation which caused or induced them into executing the agreements (there are altogether five agreements entered by the Defendants with the Plaintiff) and thereafter signing all of them (executed) not only did not 13 commence or initiate action against the Dato’ for the alleged fraudulent misrepresentation but also did not see it fit to file a simple application namely a third party notice to make the Dato’ a party to this action. If it is true that the execution of all the agreements in particular the Agreement were signed by the Defendants on the premise of fraudulent misrepresentation of this Dato’, then making the Dato’ a third party in this action would be a justified and/or appropriate legal course against the Dato’. Ironically or strangely enough, this was not done by the Defendants. [23] The allegations are bare allegations devoid of any evidence. The Dato’ was not called as a witness, and the veracity of the allegation is indeed questionable as the Defendant had never made any effort to initiate an action against the Dato’ after all these years. Bear in mind, their Defence was filed in the year 2000 and the case has gone back to trial in this Court in the year 2014. After all these years, more than a decade in fact, the Defendants never initiated an action against the Dato’. 14 [24] The Statement of Defence was filed on 17.2.2000 and even after all these years, contending on the Dato’s fraudulent misrepresentation, the Defendants never initiated an action against the Dato’ and never put an inkling of effort to call the Dato’ as a witness in the present dispute. [25] As the Defendants intend to prove the misrepresentation, thus the onus or burden of proof is on the Defendants to lead evidences to prove their assertion and/or allegation. Bearing in mind of the onus, the Defendant had not produced any evidence to that effect. Thus, such allegation by the Defendants shall fail. [26] It is inconceivable that any person, especially Director-shareholders alike the Defendants, even in the farthest stretch of imagination and common sense, would sign an agreement admitting receipt of payment of millions of Ringgit, when they in actual fact, allegedly have not received any payment. [27] Even assuming it was true, the Defendants would be architects to their own misfortune as they cannot go against their own admission in 15 receiving the payment in Section 1.05 of the Agreement. They cannot now go against their own admission on the ground of being misrepresented on the payment by the Dato’. [28] Having contended that they have executed the Agreement under fraudulent misrepresentation of the Dato’ and that the Defendants have not received any payment from the Dato’, the Defendants themselves however, on another breath admitted to the validity of the Agreement in agreeing to terminate the contract. [29] Now, it would be utterly devoid of any common sense that the Defendants would contend that the contract is invalid, when they themselves agreed to the termination of the Agreement vide their letter dated 4.5.1999. When the Defendants agreed to the termination, then it is verily telling that all the Parties have a common understanding that indeed the Agreement was validly executed. Otherwise, there would be nothing for any of the parties to terminate. [30] In this regard, this Court opines that the Defendants have no basis to contend that the whole transaction in respect of the sale and 16 purchase of shares was executed on the Dato’s alleged misrepresentation whereas it is obvious from the conduct of the Defendants, the admission of the Defendants’ themselves in executing the agreement and acknowledging receipt of payment clearly prove that the Agreement was validly entered into by the Parties. It is therefore the judgment of this Court that the Defendants cannot now contend against their own admission and conduct in acknowledging the validity of the Agreement entered between the Parties. Issue (b): Whether the Defendants have breached the Agreement. [31] From the outset, the Court must highlight here that there is no magic in the reference to the word “annulment” used by parties regarding the termination of the Agreement in their correspondences. It is utterly clear that the parties were discussing the termination of the Contract. The Plaintiff in its termination letter had referred to the Defendants’ failure in furnishing the requisite information for approval in terminating the Agreement. It is vividly clear that the Plaintiff’s 17 Termination notice intends to evince the Plaintiff’s termination of the Agreement. There is no reason for this Court to consider otherwise. [32] Now, the Plaintiff contends that it has vide its solicitors written to the Defendants requesting the requisite information and/or documents laid down in the Plaintiff’s Statement of Claim paragraphs 10(a) to (f) at page 20 of Bundle A. [33] There is a string of correspondences which shows this particular dispute on the requisite documents. Now, the Defendants in their submissions have very little to say on the allegation of breach by the Plaintiff. In fact, the only defence the Defendants have led in their Reply Submission is that the Plaintiff ought to have called someone from either Siew Boo Yeong (Plaintiff’s accountants) or Vital Factor Consulting Sdn Bhd (Plaintiff’s Market Research Consultants) to prove allegations made by the Defendant. However, the Court also took notice that the request for the requisite documents and/or information was also made by the Plaintiff vide its solicitors at that time. The Plaintiff’s solicitors have written to the Defendant requesting the requisite documents and/or information on 4.3.1999, 18 and 17.3.1999 to which the Defendants never replied to these requests. [34] The absence of response by the Defendants regarding the requisite information had led the Plaintiff to terminate the Agreement vide its Termination Notice. And it is more interesting to note that even in the Defendants’ letter in agreeing with the termination, (see Bundle B, page 350) the Defendants’ never denied the Plaintiff’s allegation of the Defendants not furnishing the requisite documents and/or information. The Defendants even agreed to the termination as though agreeing that there was a cause to terminate (which is the failure to furnish the requisite documents and/or information). [35] Indeed, the Defendants in their letter in response to the Plaintiff’s Termination Notice never denied their failure to furnish the requisite documents and/or information. In fact, even the Defendants’ ensuing letter dated 25.5.1999 (see Bundle B, page 351) straight away requested for the return of the shares from the Plaintiff. The Defendants never denied the allegation by the Plaintiff and even agreed to the Plaintiff’s termination. 19 [36] The only denial that the Defendants wrote in their letters was that there is money owing from the Defendants to the Plaintiff. [37] The Defendants, in their desperate attempt to deny the Plaintiff’s claim had in their counsel’s submission challenged the validity of the notice of termination. This Court is mindful that the Defendants have fleetingly contended in the Defendants’ submissions that the Plaintiff had not given sufficient notice in their Termination Notice based on Section 9.02 of the Agreement. (See Bundle B, page 347 to 348). [38] Now, indeed Section 9.02 of the Agreement stipulates that a notice of 60 days must be given in the instance the Plaintiff terminates the contract and that the Termination Notice by the Plaintiff had only given 7 days. However, the Court shall not take cognizance of this contention on two grounds:

The issue on the Propriety of the Notice was not pleaded by the Defendants in their Defence 20 [39] The Court is minded that the contention on the propriety of Termination Notice is not pleaded in the Defendants’ Amended Defence and Counter-Claim. [40] It is trite law that the parties may not raise and the Court may not consider issues which are not within the confines of the pleadings. [41] It is trite law that parties are bound by their pleading. There is a myriad of authorities on this. (See i. RHB Bank Bhd (substituting Kwong Yik Bank Bhd) v Kwan Chew Holdings Sdn Bhd [2010] 2 MLJ 188. ii. The Chartered Bank v Yong Chan [1974] 1 MLJ 157. iii. Pembinaan SPK Sdn Bhd v Jalinan Waja Sdn Bhd [2014] 2 MLJ 322. iv. State Government of Perak v Muniandy [1986] 1 MLJ 490. v. Astrovlanis Compania Naviera AS v Linard [1972] 2 QB 611, [1972] 2 All ER 647. vi. Spedding v Filzpatrick 1888 38 Ch D 410 at p 413. vii. Thomson v Birkley (1882) 31 WR 230. viii. Bousted Trading (1985) Sdn Bhd v Arab Malaysian Merchant Bank Berhad [1995] 4 CLJ 283.) 21 [42] Thus, the Court will not consider the Defendants’ contention on the propriety of the notice on this basis.

(ii) The Defendants have already acknowledged and admitted to the termination of the Agreement. [43] Notwithstanding the stipulations of the Section 9.02 of the Agreement, it is clear from the correspondences of the parties that the 7 days’ Termination Notice by the Plaintiff is a valid notice of termination. [44] The Defendants themselves acknowledged and accepted the Plaintiff’s termination not once, but in fact twice in their letters dated 4.5.1999 and 25.5.1999. (See Bundle B pages 350 and 351). The content of which are reproduced here: a. Defendants’ letter dated 4.5.1999: “We note that the sale and purchase agreement had been annulled by you in a letter dated 1st April 1999, and the same had been accepted by our clients.” 22 b. Defendants’ letter dated 25.5.1999: “The annulment has been accepted by our clients and therefore our clients are entitled to the return of their share certificates and the transfer forms.” [45] Thus, although the Agreement does stipulate that the requisite Notice is 60 days, parties (especially the Defendants) should be seen to have waived the strict compliance and implementation of the term where the parties have conducted themselves in a manner that evinced their understanding, acknowledgment and/or intent that the 60 days’ notice may not be strictly be adhered to. And from the conduct of both parties and the above correspondences, it is this Court’s judgment that it is evident that the parties have agreed to the validity of the termination of the Agreement vide the Plaintiff’s Termination Letter with 7 days’ notice notwithstanding the fact that it was not in-compliance with the Agreement. Thus, the parties (especially the Defendants) cannot now contend against their own understanding, admission and/or acknowledgment in this regard. 23 [46] Hence, notwithstanding the letters from Siew Boo Yeong or Vital Factor Sdn Bhd, it is sufficiently compelling that through the correspondences of the Plaintiff and the Defendants that the Defendants had never denied the allegation of breach and had even agreed, acknowledged and admitted to the Plaintiff’s termination and cause to terminate the Agreement. Issue (c): Whether the Defendants have received the payments alleged by the Plaintiff with regards to the transfer of shares under the Agreement. [47] Now, one of the main evidential issues contended at length in the present dispute is the proof of receipt of payment in consideration of the shares. However, the Court must highlight that the Defendants’ contention on this issue in their submissions are verily light and utterly brief. Rather than proving non-receipt or disproving receipt, the Defendants only submitted rhetorical questions in a desperate attempt to incite doubts on the probability of the proof of receipt in the face of clear and unadulterated documentary evidence which was led by the Plaintiff. 24 [48] The Plaintiff’s case is very clear, succinct and simple. In claiming for the refund of the payment it made to the Defendant, the Plaintiff furnished the following evidences: a. Section 1.05 of the Agreement; b. Section 5 of the 2nd Supplemental Agreement dated 5.5.1998; c. Payment Voucher for the amount of RM12,540,000.00; d. 1st Defendant’s letter dated 14.11.1997 e. Payment Voucher for the amount of RM2,300,000.00 dated 19.11.1997 f. Payment Voucher for the amount of RM1,700,000.00 dated 19.11.1997. [49] Section 1.05 of the Agreement is verily clear that the Parties have agreed and acknowledged that the Plaintiff has made a payment of RM16,540,000.00 which shall be considered as a refundable part-payment to the purchase price of the shares. 25 [50] Additional to this clear admission, acknowledgment of receipt of payment through the Agreement, the Plaintiff have further furnished additional proofs of payment culminating a total of RM16,540,000.00. [51] Section 5 of the 2nd Supplemental Agreement which precedes the Agreement itself, already have the Parties agree, acknowledge and admit the receipt of the sum of RM4,000,000.00 paid by the Plaintiff to the Defendant on 19.11.1997. The Section reads: “On 19th November 1997, the Purchase has advanced a sum of Ringgit Malaysia Four Million (RM4,000,000-00) only to the Vendors (“the Advance”) which was agreed to be repaid to the Purchaser upon request. [52] This Section is clearly coherent with the letter by the 1st Defendant himself dated 14.11.1997 who himself had requested for the advanced payment of RM4,000,000.00 from the Plaintiff. (See Bundle B, page 32): 26 “Further to my meeting with YB Dato’ Lim a few days ago regarding the above matter, I now officially write to request for RM4,000,000.00 as advance and further payment of the above purchase consideration for settlement of my personal urgent commitment. In the event of non completion of the above agreement, I will repay all monies required to be repaid in accordance with the terms and conditions of the said agreement” (emphasis added) [53] And about 5 days after such request from the First Defendant, there were two payment vouchers respectively dated 19.11.1997 which were issued and accordingly signed by the First Defendant for the amounts of RM2,300,000.00 and RM1,700,000.00 amounting to a total of RM4,000,000.00. (See Bundle B, pages 34 to 35). Both vouchers read the description of: “Further payment towards purchase consideration of KINMA HOLDINGS SDN BHD”. 27 [54] For the remainder of RM12,540,000.00 the Plaintiff referred the Court to the Payment Voucher at Bundle B, page 1 which reads the following being the description of the RM12,540,000.00 paid: “Being payment of refundable deposit of 40% of the total purchase consideration of RM57 million for 55% of Kinma equity interest (55% of RM57,000,000 x 40%) -KINMA RUBBER MFG (M) SDN BHD-KINMA AUTO PARTS SDN BHD Cheque no: MBB 049590” [55] Accompanying this Payment Voucher, the Plaintiff also referred to a cheque issued by the Plaintiff to the same amount. (See Bundle B, page 2) [56] This Court finds that all of these turn of events, correspondences, documents and agreements are coherent to the build-up leading to the Agreement. There is ample proof, acknowledgment and even admission by the Defendants on receiving the total amount of RM16,540,000.00. 28 [57] Against all of the above, the only contentions that the Defendants afforded to the Court (besides all of the unanswered baseless rhetorical questions in their Defence and Counter-claim) are that: All of the agreements, and payment vouchers issued by the Defendant were signed by the Defendant(s) under the misrepresentation and assurance of the Dato’? [58] Now, the Defendants were heavily hammering on this contention against the Plaintiff. It was particularised at length in their Amended Defence and Counter-claim in Bundle A(1), at pages 2 to 3. [59] However, again the Court must reiterate that the Court shall not take cognizance of this allegation of misrepresentation. Namely on the grounds that: a. It is a cause of action against the Dato’ which was never (even up to this point) taken up by the Defendants. 29 [60] It is utterly peculiar that albeit the Defendants’ strong sentiments on the fraudulent misrepresentation of the Dato’ that the Defendants never ever took any actions against the Dato’. [61] It is utterly beyond the realm of logic and probability that even before the execution of the Agreement in the year 1998, (where the alleged payments were already documented to have been made and received), the Defendants by their own volition still opted to enter into agreements and issue vouchers which expressly admit that the Plaintiff had made payments to the Defendants although the Defendants claim that they have not been paid and was misrepresented (which the Court disagrees). [62] The legal position is clear that whatever allegations of misrepresentation or fraudulent misrepresentation against the Dato’ is a cause of action against the Dato’ personally and not the Plaintiff as the Plaintiff is an incorporated company separate and distinct from the Dato’. 30 [63] Furthermore, the Court finds it very questionable that amidst the strong sentiment of the Defendants on the misrepresentation of the Dato’ regarding the payment of a massive amount of money (RM16,540,000.00), the Defendants never saw it fit to report the fraudulent misrepresentation to the Police. In fact, during the cross-examination of the First Defendant, the First Defendant himself agreed and admitted that he has indeed done wrong in not pursuing against the Dato’. In fact, both the Defendants had admitted to have not made any Police reports on the Dato’s alleged misrepresentation. b. The Dato’ was not made a party or even called to give evidence of such allegation of misrepresentation by the Defendants. [64] Now, even bearing mind that, the anchor that holds the Defendants’ case is the allegation of misrepresentation of the Dato’ it is peculiar to note that the Defendants have not taken any efforts to call the Dato’ to be examined by the Court and testify in Court. [65] It is the Defendants who intend to prove their allegation of misrepresentation of the Dato’. It is laden upon the Defendants then, 31 to adduce evidence to prove their allegation. The burden of proof lies on the Defendants to prove their assertion. [66] It is vividly clear that the Dato’ would be a crucial witness in the Defendants’ case on the allegation of misrepresentation. The Court agrees with the Plaintiff that it is incumbent on the Defendants to subpoena the Dato’ as a witness to prove its case. [67] The Defendants themselves are well aware of this as they themselves had referred to the case of Subry bin Hamid v Husaini bin Tan Sri Ikhwan & Anor [2006] 6 MLJ 229 where the Court of Appeal has held: “So, where a party to an action provides no reasons as to why material witnesses were not called to give evidence, the Court will normally draw an adverse inference” [68] And the Court finds that the failure of the Defendants to call this material witness (the Dato’) warrants the Court to draw an adverse inference against the Defendants’ case. 32 [69] It is also submitted on behalf of the Defendants that the Plaintiff had failed to fulfil the burden of proof. The Defendant had contended that the whole discourse on the proof of payment may be simply determined if the Plaintiff had adduced the accounts proving the payment being made (information which is only the Plaintiff’s privilege). [70] However, the Court sees it is important to highlight here that such preposition by the Defendants is not supported by any law. The Defendants themselves had not referred to any particular rule of law or precedent in submitting as such. [71] The Plaintiff is at liberty to forward any evidence to prove their assertion of payment. And alluding to the mass of correspondences, documents and agreements above, without a single shade of doubt, the Plaintiff had already proven payment and in fact the Defendants had admitted to the receipt of payments vide their Payment Vouchers and the execution of the 2nd Supplemental Agreement and the Agreement. The Plaintiff has indeed fulfilled their burden of proof. 33 There is no necessity for the Plaintiff to adduce further accounts to prove their assertion on the payment. [72] In this regard, the Court is of the view that the Defendants have indeed received payment from the Plaintiff for the amount of RM16,540,000.00. Issue(d): Whether vide the correspondences and letters between the parties, the parties have reached a conclusive, final and undisputed settlement. [73] The contention of the Defendants on this point is relatively simple. The Defendants contend that notwithstanding the dispute at hand, there is a line of correspondences which indisputably indicate that the Parties have reached a final and conclusive settlement. [74] The Defendants have submitted an array of authorities in attempting to support this contention. Now, it needs to be understood that the Court does not intend to differ from those authorities. It is indeed the law that an agreement may be construed from a line of 34 correspondences. However, the Court does not agree that the line of correspondences relied on by the Defendants would indicate so. [75] Now, the Plaintiff’s contention against this supposed settlement is that there was no final and conclusive settlement. The Plaintiff submitted that the settlement fell through and had failed as there was a failure by a third party in making arrangements for the payment of the refund of RM16,540,000.00. [76] The Court shall address these two issues separately. a. Was there an involvement of a third party for the payment obligation in the alleged settlement? [77] It is the Plaintiff’s contention that there was correspondences in which third party(ies) had evinced an intention to take on the Defendants’ indebtedness and pay the sum owing in the Defendants’ stead. The settlement of the Defendants’ debt by arrangement of third party(ies) has been going on even before the suit is filed and continued until 2008 (the case was fixed for hearing on 7th and 8th October 2008) 35 which later resulted in the hearing dates being vacated. The Plaintiff mainly referred to: - The Letter by the Dato’s solicitors to the Defendants dated 16.9.1999 (see Bundle B, page 355) [78] In this letter, the Dato’ had written to the Defendants that he intends to assume responsibility to pay the amount claimed to be refunded by the Plaintiff. The letter reads: “In view of the intended claim against you by Paragon Union Berhad (“Paragon”) for, inter alia, the refund of RM16,540,000.00 (“the Paragon Debt”), our client intends to assume responsibility for repayment to Paragon of RM 12,540,000-00… Please let us know by 21st July 1999 whether the above proposal is acceptable to you so that we can advise our client to proceed with immediate negotiation with paragon.” 36 - Letter by Poly Summit Sdn Bhd dated 7.10.1999 (see Bundle B, page 360) [79] Another third party who have stepped up and proposed to undertake the Defendants’ debt was a company known as Poly Summit Sdn Bhd (Co. no 491587-M) (“Poly Summit”). Poly Summit had written to the Plaintiff of their intention through their letter which reads: “In relation to the RM16.54 Million owing to you by the Vendors, we like to put forward for your consideration, a proposal by us for the settlement of part only of the said sum: i. we will undertake and assume primary obligation to pay to you the sum of RM 12.54 Million only;” - The Settlement Agreement (“SA”) between Paragon Union Berhad and Projek Perwira Sdn. Bhd. (“PPSB”)( page 383-392, Bundle B) 37 [80] Tan Hong Kien (PW1) who is the Executive Director of the Plaintiff, in his evidence stated that this SA was executed as an attempt to settle the matter or dispute between the Plaintiff and the Defendants. Paragraph 3.3 of the SA sets out the schedule of instalment payments to be made by PPSB to the Plaintiff to settle the Defendants’ debt by way of six post-dated cheques. PW1 in his evidence also stated that only the first cheque amounting 1,254,000.00 was cleared according to the scheduled date of payment i.e 20.8.2008. The second cheque did not materialise, thus resulting the intended settlement to fail. It has to be noted that the SA was a Part B document. Therefore parties have already agreed on its authenticity and existence. The Defendants’ contention on this SA is focused to question the credibility and authenticity of the document. However, as the SA was a part B document, the Defendants cannot now question the authenticity of this SA. Furthermore, the Defendants have never objected to the SA being a part B document during the course of the trial. [81] Now, the Plaintiff contended against the settlement argument on the basis that there was no settlement concluded as the third party(ies) 38 who are obligated to pay them had not made arrangements to effect such payments. The Plaintiff wrote so to the Defendant in their letter dated 3.6.1999. This letter reads (see Bundle B, page 407): “The intended settlement between your client and our client was premised on payments made by a third party to our client, in settlement of the debt due from your clients to our client. Your clients were fully aware of this underlying premise at all material times. However, the arrangements relating to the payments to be made by the third party have since fallen through, as a result of which the debt remains, and will remain, unpaid. In the circumstances, the intended settlement with your clients cannot be effected, and our client has no option but to continue with the litigation against your clients.” [82] In their efforts to deny any involvement of third party(ies) and in denying having any knowledge of any third party(ies) in the 39 settlement arrangement to paid the Plaintiff’s debt, the Defendants’ had even contradicted themselves. [83] It is verily bold but ultimately very reckless for the Defendants to label the Plaintiff’s contention on the involvement of a third party(ies) as a deliberate “ruse” in their submissions. The Defendants contend that the Defendants have no knowledge of any involvement of any third party in the settlement. So far as the Defendants are concerned, the only correspondences which entail the whole tale of the settlement are the correspondences which the Defendants are referring to. However, the Court must highlight here, that the tables are turned against the Defendant, and it was turned by the Defendants themselves. And instead of the Plaintiff staking a ruse, the Court would otherwise is of the view that it is indeed more probable that the Defendants who are making a ruse. - Contradiction between the Defendants’ pleadings and the Defendants’ own Summary of Facts “Ringkasan kes Defendan-Defendan” 40 [84] The Defendants initially seemed robust in their pleadings. The Defendants pleaded to have no knowledge of the involvement of a third party in the settlement. For ease of reference, the relevant portion of the Defendants’ pleading is reproduced here (see Bundle A(1), at page 10): “36. The Defendants deny that there was any involvement of a third party nor do they have knowledge of any third Party being an issue in the settlement reached” [85] Now, it is vivid here that this is the Defendants’ case. However, although initially seemingly robust, the Defendants themselves sought to go against their own case and contending to exact opposite of their pleading and even against the totality of their case. This is abundantly evident in the Defendants’ own Summary of Facts of the Case. The Court verily believes that it is vital to reproduce the portion of it to bring the contradiction into the limelight, both in English and in Bahasa Malaysia: In Bahasa Malaysia: 41 “RINGKASAN KES DEFENDAN-DEFENDAN 10) Melalui surat bertarikh 16.09.1999, peguamcara Plaintif, Tetuan T.S. Teoh & Partners telah memaklumkan Defendan-Defendan bahawa Dato tersebut berhasrat untuk mengambil tanggungjawab untuk membayar kepada Plaintif RM12,540,000-00 yang dikatakan telah dihutang oleh Defendan-Defendan kepada Plaintif, yang mana Defendan-Defendan telah bersetuju. 11) Pada atau sekitar 07.10.1999, Defendan Pertama telah menerima sepucuk surat dari sebuah syarikat bernama Poly Summit Sdn. Bhd. yang mencadangkan bahawa Poly Summit Sdn Bhd. mengakui janji untuk membayar Plaintif jumlah RM12,540,000-00 tersebut. 12) Walaupun Defendan-Defendan telah bersetuju kepada kedua-dua cadangan di atas cadangan-cadangan tersebut tidak pernah dijalankan.” (emphasis added) 42 In English: “DEFENDANTS’ SUMMARY of FACTS 10) By a letter dated 16.09.1999, the Plaintiff’s solicitors, Messrs. T.S. Teoh & Partners informed the Defendants that the said Dato intended to assume responsibility for payment to the Plaintiff of RM12,540,000-00 allegedly owing to the Plaintiff by the Defendants, to which the Defendants agreed. 11) On or about 07.10.1999 the 1st Defendant received a letter from a company styled Poly Summit Sdn Bhd, suggesting that this company would undertake to pay the Plaintiff the said sum of RM12,540,000-00. 12) Though the Defendants agreed to the aforestated 2 proposals, they were never carried through” (emphasis added)” 43 [86] Now, with the above reproduction of the Defendants’ own case, the Court would categorically list down the array of contradictions which the Defendants blatantly put forth to the Court: i. Against the contention that the Defendants have no knowledge of the third party involvement, it was the Defendants’ own case that the First Defendant have been informed and had even received the letter regarding the third party’s settlement proposal. ii. Against the contention that the Defendants have no knowledge of the third party involvement, it was the Defendants’ own case that they had agreed to at least to two out of the three third party proposals. iii. Against the contention that the Defendants have no knowledge of the third party involvement, it was the Defendants’ own case that (at this point unsurprisingly) they are in agreement with the 44 Plaintiff that indeed the third party payment were “never carried through” or in the Plaintiff’s language, “fallen through”). The Documents are coherent with the fact that the Defendants are indeed aware of the third party proposals [87] In scrutinising the letters above, it is very much probable that indeed the Defendants are well aware of these third party settlement proposals. [88] The Letter from the Dato’ clearly was addressed to both of the Defendants. The top left of the letter indicates the following: “1. Wong Chee Kong 2. Poh Hock Leng Both c/o Kinma Holdings Sdn Bhd Dear sirs” 45 [89] There is a stark contrast between the Defendants’ own pleading and their own case. The degree of contradiction is beyond any conceivable notion of logic or justification. [90] Thus, entailing from this barrage of contradiction, firstly the Court indeed does question the veracity of the Defendants’ case. It seems as though the Defendants themselves are unsure of their own stance in the dispute and are conjuring contentions which they themselves do not understand. [91] Secondly, the Defendants should be estopped from contending otherwise than the fact that they themselves knew and had full knowledge and awareness of the involvement of third party(ies) in the settlement. The Court is guided by the case referred to by the Plaintiff where the Federal Court in the case of Boustead Trading

Sdn Bhd v Arab Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 had referred to Lord Denning’s decision in the Amalgamated Investment case which reads: 46 “The width of the doctrine has been summed up by Lord Denning in the Amalgamated Investment case (at p 122) as follows: The doctrine of estoppel is one of the most flexible and useful in the armoury of the law. But it has become overloaded with case. That is why I have not gonre through them all in this judgment. It has evolved during the last 150 years in a sequence of separate developments: proprietary estoppel, estoppel by representation of fact, estoppel by acquiescence, and promissory estoppel. At the same time, it has been sought to be limited by a series of maxims: estoppel is only a rule of evidence, estoppel cannot give rise to a cause of action, estoppel cannot do away with the need for consideration, and so forth. All these can now be seen to merge into one general principle shorn of limitations. When the parties to a transaction proceed on the basis of an underlying assumption either of fact or of law – whether due to misrepresentation or mistake makes no difference – on which they have conducted the dealings between them – neither of them will be allowed to go back on the assumption when it would be unfair or unjust to allow him to do so.” (emphasis added) 47 [92] It is utterly and evidently ironic, that the sanctimonious Defendants can lackadaisically scrutinize the Plaintiff’s submission on the third party’s involvement as a “ruse”, when in fact, it is the Defendants’ case which was in total contradiction. This goes to the very core of the Defendants’ case and shakes its very foundation. The contradiction is beyond any justification. The Court takes note of this clear and stark departure or contradiction by the Defendant which evidently indicates that it is the Defendants’ contention instead was a “ruse”. b. Do the correspondences evince an agreement to settle between the parties? [93] The string of correspondences relied upon by the Defendants begin from Bundle B, pages 393 to 406. Mainly though, the Defendants relied upon their own email of 28.8.2008 (Bundle B, page 393), the email from Plaintiff’s solicitors of 11.9.2008 to the Defendants (Bundle B, page 394) and the Defendants’ email of 15.9.2008 to the Plaintiff’s solicitors (Bundle B, page 395). 48 [94] Now, the Defendants’ contention is simply that, in this line of correspondences, there was never a mention of payment or involvement of a third party, when the Plaintiff’s solicitors “confirmed” the terms of settlement. Hence, notwithstanding the payment, the Plaintiff has already agreed to settlement by merely withdrawing their action and returning the share certificates and transfer forms back to the Defendants. [95] However, the Court has the opportunity and indeed has scrutinised the correspondences referred to. [96] Now, the string of correspondence cannot begin just from the email of 28.8.2008. The string was spun even before that correspondence. Even that email referred to a previous discourse leading to resolution: “…informed by the defendants that the parties have resolved their differences and it only remains for their…” [97] There must have been a 1st half of the story that precedes this email. If not, there is no justification on the reason the Defendants stated 49 that there are remaining issues (which is the return of shares) when the parties have already resolved their differences. [98] It is apparent that the ensuing correspondences which only mentioned of the share transfers are only half of the whole story. The correspondences were replied in that fashion only because the Defendants had only raised the issue of the shares in their email. At no point in time was it mentioned that the Plaintiff is willing to forego the payment. [99] When the Defendant’s solicitor wrote the email in reference to a resolution, which is expressly separate to the transfer of shares: (“…that the parties have resolved their differences…”) (1st half of the story) and (“…and it only remains…”) (2nd half of the story) what was resolved here must have referred to the payment, which was not at any point in time foregone or acquiesced by the Plaintiff. 50 [100] In fact, even after the supposed finality of the settlement based on the two terms (which the Court disagrees), it was the Defendants themselves who wrote to the Court the following in their letter dated 30.9.2008: “Sebagai peguamcara kedua-dua Defendan, kami ingin mengesahkan bahawa kedua-dua pihak telah bersetuju menyelesaikan guaman ini di mana hanya beberapa terma-terma masih belum diselesaikan” (emphasis added) (see Bundle B, page 398) [101] In this instance, even the Defendants admit that besides the terms for the share transfers, there are matters still not yet settled. And besides the share transfers, there is nothing left to be considered, except for the payment in consideration for the return of the shares. It is very plain. Nothing else would be of importance as a term besides the return of the shares, and the payment for the return. [102] This Court opines that the line of correspondences which mentioned the arrangement of shares transfer, merely proved the settlement on 51 the transfer of shares and not the settlement of the debt owing to the Plaintiff. Thus, it is this Court’s considered view that the correspondences do not automatically prove the settlement on payment. The Defendant’s letter itself set the tone of the correspondence; That is, to separate the discourse and discussion on the payment (which is referred to in the passage “…resolved their differences…”) and the transfer of shares (which was referred to in the passage “it only remains for the…”) [103] It was the Defendants who first set the tone of the ensuing correspondence to separate the issue of payment and return of the shares. Thereto, there is no reason for the Plaintiff to mention it in their replies. It was the tone of the string of correspondence that payment is separate and not included in the discussion at the time. [104] Thus, it is only fitting, and justifiable that the Plaintiff raised the failure of the third party’s obligation to pay only after the line of 52 correspondences relied onto by the Defendants, as the Defendants were already demanding for the return of the shares. [105] It is evidently clear that the correspondences relied onto by the Defendants were only one part of a whole settlement which ultimately fell through because the other part of the settlement was not put into effect (which is the third party’s failure to effect payment). [106] In cognizance of the above, the Court finds that the correspondences relied upon by the Defendants do not at all evince a final and conclusive settlement agreement reached between the Parties. This finding is especially compelling and probable owing to the preceding finding that the third party involvement is known to both of the parties especially the Defendants themselves. [107] In view of the above finding, the Defendants’ contention on the Plaintiff’s failure to return their shares, need not be necessary delved into by this Court as there was never a concluded final settlement between the parties and especially because the Defendants’ never paid the sum due and owing to the Plaintiff. 53 [108] With regard to the Second Defendant’s case, it is the Court’s view that, from his own testimony in Court, it is evident that he merely echoes the defence set up by the First Defendant and his Defence shall similarly fail on the same grounds as the First Defendant. [109] Having considered the evidence before this Court in its totality, it is this Court judgment that upon the balance of probabilities, the Plaintiff has proven its case against both the Defendants. Therefore, the Court allows the Plaintiff’s claim and orders the Defendants to pay the Plaintiff the sum claimed, due and owing: a. RM 16 540 000.00 together with interest at the rate of 12% from 8.6.1999 until judgment date and 5% until full settlement. b. RM 3 821 850.00 together with the interest of 8% from 9.4.1999 until judgment date and 5% until full settlement. [110] The Defendants’ counter-claim accordingly is dismissed. 54 On the issue of costs [111] Having heard a brief submission from both counsels for the Plaintiff and the Defendants, the First and Second Defendants shall pay the Plaintiff RM60,000.00 in costs. t.t. ...................................................... (DATUK AZIMAH BINTI OMAR) Judicial Commissioner High Court Shah Alam Selangor Darul Ehsan Dated the 31st December 2014. For the Plaintiff - Tetuan Kamaruddin & Partners Encik Won Walter Pereira Encik Rameshwaran A/L Ramachandran For the Defendants - Tetuan Ong & Manecksha Encik R.J Manecksha