Power Kk Resources Sdn Bhd v Pearl Amrin Sdn Bhd (JA-22NCvC-26-02/2021)

PEARL AMRIN SDN BHD [COMPANY NO. : 1138889-H]

HAMDAN BIN MOHAMED DALI [NRIC NO. : 810322-01-6377]

PEARL AMRIN ENTERPRISE [NO. : 201003062181 (JM0566573-K)] …DEFENDANTS GROUNDS OF JUDGMENT 10/05/2026 13:40:35 JA-22NCvC-26-02/2021 Kand. 77 Introduction

The Plaintiff claims against all three Defendants jointly and severally for –

(a) damages to be assessed by this Honourable Court;

(b) an order that the deposits in the sum of RM2.1 million and RM1.4 million paid by the Plaintiff under the Agreement be returned to the Plaintiff;

(c) interest at the rate of 5% per annum on the total sum of RM3.5 million from the date of filing of the Writ until the date of judgment;

(d) interest at the rate of 5% per annum from the date of judgment until full satisfaction;

(e) costs of this action; and

(f) any other relief deemed fit by this Honourable Court.

The Plaintiff also seeks a declaration that the corporate veil of D1 be lifted in the interest of justice.

In turn, D1 counterclaims for, inter alia –

(a) a declaration that the termination of the Agreement is valid in law;

(b) the outstanding sum of RM190,204.80 as at 14.9.2020 together with all payments due under the Agreement until the cessation of mining activities;

(c) that the deposits held by D1 be applied to offset all costs and losses suffered in restoring the mining site;

(d) that the Plaintiff bear all costs of engaging a third-party specialist contractor to close the holes, after deduction of the deposits;

(e) special and general damages;

(f) costs; and

(g) interest at 5% per annum from the date of judgment until full satisfaction.

The trial was conducted on several dates from December 2025 to

January 2026 (8.12.2025, 9.12.2025, 10.12.2025, 11.12.2025,

1.2026, 7.1.2026 & 21.1.2026).

The Plaintiff called three (3) witnesses at trial – REF. NAME CAPACITY SUMMARY OF EVIDENCE PW1 Azizan bin Ali Officer, Majlis Keselamatan Negara (MKN) Testified on the Standard Operating Procedures during the Movement - Subpoena witness Control Order (MCO) and its impact on sand extraction activities during COVID-19. Confirmed that from May 2020, non-essential activities including sand extraction were permitted subject to obtaining police permits. PW2 Koo Choon Kiang 760212-01- 6947] Director of the Plaintiff company Gave evidence on the Plaintiff's corporate background and the contractual dispute. His Witness Statement was marked as WSSP-2. PW3 Koh Choon Keat (NRIC NO. : 931211-01- 5751) Manager of the Plaintiff company The Plaintiff's principal witness. Gave detailed evidence on day-to-day operations, payments, the alleged instruction to mine to 40 feet, area restrictions and WhatsApp communications with the site supervisor "Eddy". Made key admissions under cross-examination regarding non-payment from May 2020. His Witness Statement was marked as WSSP-3.

The Defendants called three (3) witnesses – REF. NAME CAPACITY SUMMARY OF EVIDENCE DW1 Haniza binti Ahmad 720304-01- 5662] Solicitor - prepared the Agreement and the termination letter Testified on the preparation of the Agreement, the demand letter dated 14.9.2020, and the termination letter dated 3.12.2020. Admitted under cross-examination that the 14.9.2020 letter was issued on behalf of D3 (not D1). Confirmed Clause 4.14 was intended to protect D1 from breaching Permit 4C conditions. Her Witness Statement was marked as WSSD-1. DW2 Jackson Chan (Chan Choon Soon) Director, JR Soon Enterprise (M) Testified on the cost of rehabilitating the mining site. Visited the site and Sdn Bhd - Rehabilitation contractor (Subpoena witness) estimated costs at RM550,000.00 per acre based on an average hole depth of 25 feet (8 meters), requiring approximately 4,000 lorry loads of fill per acre. Did not take precise measurements. His Witness Statement was marked as WSSD-2. DW3 Hamdan bin Mohamed Dali 810322-01- 6377] 2nd Defendant - Director and 99% shareholder of D1; sole proprietor of D3 The Defendants' principal witness. Gave comprehensive evidence on the contractual relationship, Permit 4C and its staged issuance, payment terms and calculations, MCO concessions, the Plaintiff's payment default, the termination, the depth limit issue and rehabilitation costs. His Witness Statement was marked as WSSD-3. Background

This civil action arises from a sand mining agreement dated 2 January 2017 ("the Agreement") entered into between the Plaintiff and the 1st Defendant ("D1"). Under the Agreement, the Plaintiff was appointed as the sole sub-contractor to carry out sand extraction and sale at an area known as Ladang Felda Kledang 2, Mukim Penggerang dan Pantai Timor, Daerah Kota Tinggi, Negeri Johor, covering an agreed area of approximately 350 acres ("the said Area"). D1 had been appointed by FELDA as the main contractor for sand extraction activities in the said Area.

The Plaintiff claims that D1 wrongfully terminated/repudiated the Agreement via its solicitor's letter dated 3.12.2020 and seeks the return of deposits totalling RM3.5 million (comprising RM2.1 million under Clause 6.1 and RM1.4 million under Clause 6.2 of the Agreement), together with damages to be assessed, interest at the rate of 5% per annum and costs.

The Defendants deny that the termination was wrongful. D1 contends that the Plaintiff committed fundamental breaches of the Agreement by –

(a) failing to make payment for sand extracted from May 2020 onwards;

(b) mining beyond the contractual depth limit of 15 feet contrary to Clause 4.14; and

(c) failing to rehabilitate the mining site contrary to Clause 4.8. D1 has counterclaimed for, inter alia, the outstanding sum of RM190,204.80, a declaration that the termination was lawful and that the deposits be applied towards costs and losses suffered by D1.

The Plaintiff further seeks to lift the corporate veil of D1, alleging that D1 is a mere façade and puppet of the 2nd Defendant ("D2"), who through the 3rd Defendant ("D3"), is the alter ego and controlling mind and will of D1.

The key facts agreed between the parties (Enclosure 9) include –

(a) D1 is a company incorporated under the Companies Act 1965, carrying on business inter alia as a contractor for steel works;

(b) D2 is a director and 99% majority shareholder of D1;

(c) D2 is also the sole proprietor of D3, which carries on business in laundry services and the buying and selling of sand;

(d) on 2 January 2017, the Plaintiff and D1 entered into the Agreement for the extraction and sale of sand at the said Area;

(e) the contract term was 10 years covering 350 acres; and

(f) D1 terminated the contract via its solicitor's letter dated 3.12.2020, citing non-payment of RM190,204.80. Analysis

The parties agreed on the following issues for trial (Enclosure 48) – Issue 1 : Whether there was any breach of contract by the Plaintiff and/or whether the termination by the 1st Defendant was wrongful or lawful; Issue 2 : Whether the 1st Defendant has the right to retain the deposits in the sum of RM2.1 million and RM1.4 million, and if so, to what extent; and Issue 3 : Whether the 2nd Defendant through the 3rd Defendant is the alter ego and controlling mind and will of the 1st Defendant.

Before turning to the detailed analysis, I record that the Plaintiff's sole authority in its Bundle of Authorities (Enclosure 71) is Syarikat Binaan Utara Jaya (a firm) v Koperasi Serbaguna Sungai Glugor Bhd [2009] 2 MLJ 546, a decision of the Court of Appeal cited by the Plaintiff for the proposition, that where a contract is reduced to writing, the parties are confined to the four corners of the document and the court must give effect to the plain meaning of the words used. I accept this proposition as a correct statement of the law on contractual interpretation. However, as the Federal Court observed in Wong Yee Boon v Gainvest Builders (M) Sdn Bhd [2020] 3 MLJ 571, the plain meaning of individual words must be ascertained in the context of the contract read as a whole, in a manner that gives harmonious effect to every clause. Applied to the present Agreement, this principle favours the Defendants' construction of Clauses 6.1 to 6.8 as an integrated regime, rather than the Plaintiff's selective reliance on Clauses 6.4,

3.10 and 5.4 in isolation.

This Court's analysis and findings on each issue are as follows – Issue 1 : Breach of Contract And Validity Of Termination

(a) The Plaintiff's Failure to Make Payment

This Court observed that It is not in dispute and indeed was admitted by the Plaintiff's own principal witness, PW3 (Koh Choon Keat), under cross-examination that from May 2020 onwards, the Plaintiff continued to carry out sand extraction activities at the said Area but failed to make any payment whatsoever to D1 or D3 for the sand extracted.

The following exchange during cross-examination of PW3 is instructive – "KL : Ok. Then En Koh akan setuju dengan saya, walaupun sejak bermula dari Mei 2020, Power KK Resources telah memulakan kerja pengeluaran pasir. Dan tadi Encik dah sah, sudah ada rekod pengeluaran pasir bagi bulan Mei, bulan Jun, bulan Julai, bulan Ogos. Tapi Power KK secara langsung tiada membuat apa-apa bayaran kepada Pearl Amrin Enterprise ataupun Pearl Amrin Sdn Bhd. SP-3 : Betul".

This admission from the Plaintiff's own manager is devastating to the Plaintiff's case. It confirms that the Plaintiff enjoyed the benefits of the Agreement, extracting and selling sand, while refusing its corresponding obligation to pay.

The documentary evidence before this Court establishes that the outstanding sum as at 31 August 2020 was RM190,204.80. DW3 (Hamdan) provided a detailed breakdown in his witness statement (Questions 9 - 18, WSSD-3), supported by the following documents in Bundle B –

(a) Additional Payment for May 2020 : RM12,000.00 (pages 124 - 125, Bundle B);

(b) Additional Payment for June 2020: RM12,000.00 (pages 126 - 127, Bundle B);

(c) Sand Extraction Consultancy Payment for July 2020 : RM35,117.25 (pages 133 - 135, Bundle B);

(d) Additional Payment for July 2020 : RM12,000.00 (pages 136 - 137, Bundle B);

(e) Sand Extraction Consultancy Payment for August 2020 : RM100,800.00 (pages 140 - 141, Bundle B);

(f) Additional Payment for August 2020 : RM12,000.00 (pages 144 - 145, Bundle B); and

(g) Extraction of 'tanah liat' in August 2020 : RM6,287.55 (pages 142 - 143, Bundle B).

Each of these demands was accompanied by extraction records duly signed and stamped by the Plaintiff's representative, confirming that sand extraction had taken place. PW3 confirmed the authenticity of these records under cross-examination.

The Plaintiff's case is that the non-payment was attributable to the COVID-19 pandemic and the Movement Control Order (MCO). However, PW1 (Azizan bin Ali, officer from Majlis Keselamatan Negara), the Plaintiff's own subpoena witness, confirmed under examination that from May 2020 onwards, non-essential activities including sand extraction were permitted subject to obtaining police permits. When asked about the position from May to December 2020, PW1 stated : "Aktiviti dibenarkan tapi kena ada kebenaran PDRM". PW3 himself admitted that the Plaintiff had in fact obtained such police permits and continued extraction activities.

Furthermore, the Plaintiff's letter dated 18.5.2020 (page 51, Bundle A) attributed its inability to pay to financial constraints, not to any pandemic-related legal incapacity. As DW3 testified (Question 9(k), WSSD-3), the Plaintiff wrote requesting to pay based on actual lorry loads and metric tonnes extracted rather than the contractual minimums, citing a declining economy. This undermines any suggestion that the non-payment was caused by the MCO.

I also note that DW3 testified extensively (Questions 9(f)-(m), WSSD- 3) on the significant concessions D1 had already given to the Plaintiff–

(a) reducing the ganti pokok deduction from 70% to 30% in February 2018;

(b) reducing the minimum consultancy payment from RM144,000.00 to RM90,000.00 per month from May to December 2019;

(c) waiving payment during the full lockdown period of 18.3.2020 to 14.4.2020; and

(d) extending payment relaxation to July 2020. Despite these concessions, the Plaintiff still failed to make any payment from May 2020 onwards.

Accordingly, I am satisfied on the evidence that the Plaintiff's failure to make payment from May 2020 onwards, while continuing to extract and sell sand, constitutes a clear and admitted breach of Clauses 4.6 and 6.8 of the Agreement.

(b) The Plaintiff's Reliance on the COVID-19 Act 2020

In its Reply to Defence and Defence to Counterclaim, the Plaintiff sought to rely on the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 [Act 829] as an explanation for its non-payment from May 2020 onwards. The Defendants submit that this reliance is an afterthought because it was not pleaded in the Statement of Claim and that in any event the Plaintiff has failed to meet the statutory threshold under Section 7 of Act 829.

Section 7 of Act 829 operates only where a party establishes that its inability to perform a contractual obligation arising from a category of contract specified in the Schedule to Part II is caused by measures prescribed, made or taken under the Prevention and Control of Infectious Diseases Act 1988 [Act 342] to control or prevent the spread of COVID-19.

Having considered the authorities placed before this Court, I adopt the principles set out in Ravichanthiran a/l Ganesan menjalankan amalan guaman di Tetuan G Ravi) v Lee Kok Sun (menjalankan perniagaan milikan tunggal dengan nama dan gaya sebagai L & L Brother Engineering Services) & Ors and another case [2021] MLJU 1876, where the Court held that the burden of proof rests on the defaulting party to establish the statutory elements and that mere unwillingness or refusal to pay does not fall within the purview of "inability" under Section 7 of Act 829. I further observed that 829 is not a statute to be invoked by any litigant attempting to avoid liability or debt merely because such debt arose during the Covid-19 pandemic. This principle was reinforced in Besjaya Maju Sdn Bhd v HIM Development Sdn Bhd & Ors [2025] MLJU 1324, where the Court held that a defaulting party must prove on a balance of probabilities that the COVID-19 pandemic was the primary reason for its failure to fulfil contractual obligations and that conclusive evidence must be adduced to show that COVID-19 directly prevented the performance of the contractual obligation. [See : also Semangkuk 2 Bhd v Airmarine (M) Sdn Bhd [2024] MLJU 2419].

Applying these principles to the evidence before me, I find that the Plaintiff has not discharged the statutory burden under Section 7 of Act 829 for the following reasons –

(a) PW1 (Azizan bin Ali of Majlis Keselamatan Negara), the Plaintiff's own subpoena witness, confirmed that from May 2020 onwards sand extraction activities were permitted subject to obtaining police permits;

(b) PW3 admitted under cross-examination that the Plaintiff had in fact obtained such permits and continued its sand extraction activities throughout the material period and that the Plaintiff's lorries were able to transport the extracted sand to its customers without hindrance from the police;

(c) the Plaintiff's own letter dated 18.5.2020 attributed its inability to pay to financial constraints and a declining economy and not to any statutory incapacity or pandemic-related legal impossibility; and

(d) there is no contemporaneous documentation or correspondence between the parties attributing the non-payment to the COVID- 19 pandemic or invoking Act 829.

In the circumstances, the Plaintiff's reliance on Act 829 fails. Mere commercial difficulty or reduced demand from customers does not amount to statutory incapacity or legal impossibility of performance contemplated under Act 829.

(c) The Validity of D1's Termination

The Agreement provides two bases for termination under Clause 8. Clause 8.1 permits termination where a breach cannot be remedied by any means. Clause 8.2 permits termination where a remediable breach is not remedied within 60 days from notice by the innocent party.

The Plaintiff's principal submission is that D1 failed to comply with Clause 8.2, specifically, that the termination letter dated 3.12.2020 terminated the Agreement immediately without giving the Plaintiff 60 days to remedy. The Plaintiff further argues that the earlier demand letter dated 14.9.2020 was issued on behalf of D3 (not D1) and therefore cannot constitute valid notice under the Agreement. On this point, DW1 (Haniza binti Ahmad) admitted under cross-examination that the 14.9.2020 letter was indeed issued on behalf of D3 and that she was only acting for D1 when she issued the termination letter of 17 3.12.2020. This admission lends some force to the Plaintiff's technical argument.

However, I must consider the broader picture. Even accepting the Plaintiff's technical argument regarding Clause 8.2, this Court is of the view that D1 is entitled to rely alternatively on Section 40 of the Contracts Act 1950 [Act 136], which provides – "When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance".

The Plaintiff's conduct in continuing to extract sand for over 6 months without making any payment constitutes, in my judgment, a refusal to perform a fundamental obligation going to the root of the contract. As held by the Court of Appeal in Ching Yik Development Sdn Bhd v Setapak Heights Development Sdn Bhd [1996] 3 MLJ 675 – "Where the term that has been flouted is fundamental to the contract, the innocent party is entitled to treat himself as being discharged from further obligations under it".

Payment for sand extracted is a core reciprocal obligation. Without payment, the entire commercial purpose of the Agreement is defeated. This amounts to unjust enrichment, as recognised by the Federal Court in Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441, which held that – "…the time has come for this court to recognise the law of unjust enrichment by which justice is done in a range of factual circumstances…"

Moreover, the Plaintiff itself accepted D1's termination. By its solicitor's letter dated 26.1.2021 (page 44, Bundle A), the Plaintiff confirmed the repudiation and put D1 on notice of a claim for damages. This acceptance is consistent with the termination being effective.

(d) The Depth Issue (15 feet vs 40 feet)

The Plaintiff alleges that it was forced by D1 and D2 to mine to a depth of 40 feet, contrary to the contractual limit of 15 feet in Clause 4.14. The Defendants deny this and contend it was the Plaintiff who breached Clause 4.14 by mining deeper than permitted.

The Plaintiff's evidence on this issue rests primarily on the testimony of PW3 (Koh Choon Keat). During examination-in-chief, PW3 was referred to his answer at Question 29 of his witness statement (WSSP-3) and was asked how he could prove that the Plaintiff was instructed to excavate deeper than 15 feet. PW3 referred to a WhatsApp voice transcript with "Eddy", who is said to be D2's site manager at page 16 of Bundle C. The following exchange took place– "Peguamcara Plaintif : Adakah dia bersetuju untuk kamu korek lebih dalam sehingga 40 kaki? : Ya, dia ada. Peguamcara Plaintif : Siapa yang suruh korek sampai 40 kaki? : Eddy yang suruh. Peguamcara Plaintif : Siapa bagi arahan kepada Eddy? : Hamdan".

DW3 (Hamdan) flatly denied this allegation. In his witness statement (Question 22, WSSD-3), he testified –

(a) The Plaintiff's claim is entirely baseless and must be proven by the Plaintiff;

(b) The Agreement clearly limits mining to a maximum depth of 15 feet;

(c) Permit 4C issued by Pejabat Tanah dan Galian stipulates mandatory conditions and non-compliance would result in penalty action against him personally as D1's director;

(d) It is unreasonable and inconceivable for him to expose himself to such risk; and

(e) If the Plaintiff mined deeper than permitted and obtained more sand, the benefit accrued to the Plaintiff, not to him.

I note at the outset that neither party called one "Eddy", said to be the site supervisor appointed by D2 to oversee day-to-day mining operations at the said Area, to give evidence. I found that his omission has significant implications for the evaluation of the evidence on the depth issue.

Having carefully weighed the evidence, this Court makes the following findings –

First, "Eddy" was not called as a witness by either party. The Plaintiff argues that the burden shifted to the Defendants to call Eddy to rebut PW3's evidence. However, the initial burden lies on the Plaintiff to prove its case. WhatsApp messages and voice notes exchanged with a person who was not produced for cross-examination carry limited probative value. The transcribed messages show discussions about tree-cutting permissions, but do not, in my assessment, constitute clear evidence of instructions to mine to 40 feet.

Second, DW3's evidence that it would be irrational for him to instruct deeper mining, given the risk of Permit 4C revocation by Pejabat Tanah dan Galian Negeri Johor, enforcement action by Jabatan Alam Sekitar and personal criminal liability, carries considerable logical force. The Plaintiff has not explained why DW3 would voluntarily expose himself to such consequences for the Plaintiff's benefit.

Third, the independent evidence of DW2 (Jackson Chan from JR Soon Enterprise) corroborates that when he visited the site, the holes were approximately 25 feet (8 meters) deep, significantly exceeding the 15-foot contractual limit. While DW2's evidence relates to rehabilitation costs, it independently confirms that mining had exceeded the permitted depth.

Fourth, DW1 (Haniza binti Ahmad), the solicitor who drafted the Agreement, confirmed in her witness statement (Question 6, WSSD- 1) that Clause 4.14 was included specifically to ensure compliance with Permit 4C conditions. She testified that the depth restriction was a protective measure for D1, not a term that D1 would have an interest in breaching.

On the balance of probabilities, I find that the Plaintiff has not discharged its burden of proving that it was forced to mine to 40 feet. The more probable inference from the evidence is that the Plaintiff exceeded the 15-foot limit for its own commercial benefit. This constitutes a further breach of the Agreement by the Plaintiff.

(e) The 350 Acres vs 45 Acres Issue

PW3 testified (Questions 25 and 28, WSSP-3) that the Plaintiff was restricted to only 45 acres although 350 acres were provided under the Agreement.

DW3 denied this restriction. In his evidence (Question 6, WSSD-3), he explained that Permit 4C was not issued for the entire 350 acres at once but in stages, after extraction in one area was completed, a new Permit 4C had to be applied for the next area. This was corroborated by DW1 (Haniza), who testified (Questions 3 - 5, WSSD- 1) that the Permit 4C was issued by PTG in D1's name, that it was not for the entire area at once ("Permit 4C tidak dikeluarkan untuk keseluruhan kawasan secara sekaligus") and that under Clauses 4.2 and 4.5, it was the Plaintiff's obligation to apply for new Permit 4C at its own cost.

DW3's evidence that the Plaintiff never claimed sand had been exhausted in the permitted area, and never took any steps to apply for additional Permits, was not effectively rebutted. If the Plaintiff had truly been prevented from accessing 350 acres, one would expect contemporaneous complaints or correspondence demanding access. No such evidence was produced.

This Court finds that the Plaintiff's allegation of being restricted to 45 acres is not sufficiently proved on the evidence.

I note, in passing, the Defendants' submission that the Plaintiff's position is internally inconsistent. On the one hand, the Plaintiff attributes its non-payment to the COVID-19 pandemic; on the other, to interference by D1 and D2 that allegedly rendered mining unprofitable. These explanations cannot stand together. A party cannot approbate and reprobate by advancing mutually inconsistent explanations for the same default. This internal inconsistency further reinforces my finding that the Plaintiff's allegations of interference are an afterthought and are not made out on the evidence.

(f) Finding on Issue 1

For the reasons stated above, this Court finds as follows –

(a) the Plaintiff was in breach of the Agreement by failing to make payment from May 2020 onwards while continuing to extract sand, as admitted by PW3 under cross-examination;

(b) D1 was entitled to terminate the Agreement, whether under Clause 8 of the Agreement or Section 40 of the Contracts Act 1950, given the Plaintiff's fundamental breach;

(c) the Plaintiff has not proved on the balance of probabilities that it was forced to mine to 40 feet or restricted to 45 acres, the evidence of DW3, supported by DW1 and DW2, is preferred over the evidence of PW3 on these points; and

(d) the Plaintiff's own conduct in exceeding the 15-foot depth limit and failing to rehabilitate the site under Clause 4.8 constitutes further breaches of the Agreement.

Accordingly, this Court answers Issue 1 in favor of the Defendants that the termination by D1 was lawful. Issue 2 : Right to Retain The Deposits

(a) The RM2.1 Million Deposit (Clause 6.1)

This deposit was paid under Clause 6.1 as security for testing ("wang jaminan untuk ujikaji"). DW3 testified (Question 9(a), WSSD-3) that the deposit comprised RM250,000.00 paid on 23.12.2016 for site testing and the balance of RM1,850,000.00 delivered by way of cheque on the date the Agreement was signed.

Under Clause 6.3, this deposit together with the ganti pokok payment serves as a guarantee ("jaminan") for the Plaintiff's appointment as sole contractor. Under Clause 6.4, the deposit is refundable within 3 months of lawful termination, after deducting all administrative, rehabilitation and damage costs arising from the mining activities.

Having found that the termination was lawful, Clause 6.4 applies. The deposit is refundable in principle, but subject to deduction of all costs of administration, rehabilitation and damage.

The Defendants rely on the quotation of JR Soon Enterprise (M) Sdn Bhd (DW2, Jackson Chan) at page 4 of Bundle C, which estimates rehabilitation costs at RM550,000.00 per acre. DW2 testified (Question 8, WSSD-2) that for one acre with an average hole depth of 8 meters, the minimum number of 10-tyre lorries required is approximately 4,000, and the minimum cost per acre is approximately RM600,000.00 covering the cost of purchasing sand, transportation, and labour for draining, filling and levelling.

The Plaintiff challenges DW2's evidence on several grounds –

(a) that he did not take precise measurements;

(b) relied on information from D2;

(c) visited the site in 2023 but prepared the quotation only in October 2025; and

(d) the quotation lacked itemisation. The Plaintiff also submits that no evidence was produced regarding the condition of the site over the intervening 5-year period and suggests other contractors may have worked the site.

This Court finds that DW2's evidence, while not without weaknesses in terms of precision, establishes a reasonable basis for estimating rehabilitation costs. Critically, the formula of 4,000 lorries per acre at RM550,000.00 per acre was not challenged during cross-examination. Under the principle in Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen & Ors and another appeal [1995] 2 MLJ 770, failure to cross-examine on a material point amounts to an acceptance of the witness's testimony on that point.

Even on a conservative estimate, the rehabilitation costs substantially exceed the RM2.1 million deposit. D1 is therefore entitled to retain the entirety of the RM2.1 million deposit under Clause 6.4 to be applied toward these costs.

For completeness, I would also accept the Defendants' alternative submission that the RM2.1 million is liable to be forfeited as a deposit paid for the Plaintiff's performance of its obligations under the Agreement.

The Privy Council in Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89 held that a deposit is a guarantee that the contract shall be performed and if the party who paid the deposit repudiates or defaults on the contract, that party has no right to recover the deposit. This principle was affirmed and elaborated by the Federal Court in Cubic Electronics Sdn Bhd (in liquidation) v Mars Telecommunications Sdn Bhd [2019] 6 MLJ 15, where the Federal Court held that while part-payments made in advance of performance may be recoverable upon breach, a deposit paid as a guarantee of performance is generally not recoverable. The Federal Court further held that the onus lies on the payer to show that the forfeiture is excessive, unreasonable or disproportionate.

Clause 6.3 of the Agreement expressly characterises the RM2.1 million deposit and the RM1.4 million bayaran ganti pokok as "jaminan atas perlantikan Power KK Resources Sdn Bhd sebagai kontraktor tunggal" and as a guarantee for the permission granted by D1 to carry out mining activities in the said Area. The RM2.1 million is therefore a true deposit serving as security for performance - not a mere part-payment.

Having found that the Plaintiff breached the Agreement by failing to make payment from May 2020 onwards, by exceeding the 15-foot depth limit, and by failing to rehabilitate the mining site, the conditions for forfeiture are met. The Plaintiff has not adduced any evidence, nor indeed did it argue at trial, that the forfeiture of RM2.1 million would be excessive, unreasonable or disproportionate in light of the scale of the rehabilitation obligation. In the terms used in Cubic Electronics Sdn Bhd (in liquidation), the Plaintiff "has not discharged its burden of proof" on this point.

Accordingly, on this alternative basis also, D1 is entitled to retain the RM2.1 million deposit.

(b) The RM1.4 Million Deposit (Clause 6.2 - Bayaran Ganti Pokok)

The RM1.4 million was paid under Clause 6.2 as compensation for trees to be felled in the mining area, at the agreed rate of RM200,000.00 for every 50 acres. Clause 6.6 provides the exclusive mechanism for return of this sum : it shall be repaid to the Plaintiff by way of deduction of 70% from the total monthly sand extraction payments (later agreed by the parties at 30%), commencing from the first month payment of sand is made to D1, until completion.

The Plaintiff submits that because only 45 acres (on its version) were actually worked, the bayaran ganti pokok on a proportionate basis should be only RM180,000.00, and the balance of RM1,220,000.00 ought to be refunded. The Plaintiff further submits that the return of the bayaran ganti pokok falls within Clause 6.4, or alternatively under Clauses 3.10, 5.4 and 7 of the Agreement.

With respect, I couldn’t agree with these submissions for the following reasons –

First, Clause 6.2 fixes the RM1.4 million as the total sum payable and expresses the RM200,000/50 acres as the mode of calculation to arrive at that total. Read as a whole with Clause 6.6, the Agreement does not contemplate any pro-rated refund of the bayaran ganti pokok based on actual acreage excavated. Clause 6.6 is the sole mechanism for its return and that return is by deduction from monthly sand extraction payments and not by refund.

Second, Clause 6.4 by its plain language refers only to "deposit tersebut" (i.e. the RM2.1 million paid under Clause 6.1 as "wang jaminan untuk ujikaji"). It makes no mention of the bayaran ganti pokok. As a matter of construction, Clause 6.4 has no application to the RM1.4 million.

Third, the documentary evidence in Bundle B (pages 1 - 122) demonstrates that the bayaran ganti pokok has in fact been fully repaid to the Plaintiff through monthly deductions. The Defendants have produced an itemised schedule in their Submission in Reply, which I have independently verified against the underlying documents. From March 2018 to September 2020, the total deductions amount to RM972,000.00 and taking into account the further deductions between January 2017 and February 2018 (acknowledged by the Plaintiff's own solicitors' letter at pages 52 - 53, Bundle A), the cumulative deductions in fact exceed the original RM1.4 million.

In these circumstances it is plainly untenable for the Plaintiff to claim a further refund of RM1.4 million or any part of it. To allow such a claim would amount to double recovery and would unjustly enrich the Plaintiff at D1's expense.

Accordingly, the Plaintiff's claim for the return of the bayaran ganti pokok in the sum of RM1.4 million (or RM1,220,000) is dismissed.

(c) The Plaintiff's Arguments on Clauses 3.10 and 5.4

The Plaintiff advances a further argument that Clauses 3.10 and 5.4 of the Agreement each contain a proviso requiring that any costs or losses to be deducted from the deposit must first be "dibincangkan dan dipersetujui oleh kedua-dua pihak" (discussed and agreed by both parties). The Plaintiff submits that because no such discussion or agreement has taken place, D1 is precluded from making any deduction and the full RM3.5 million must be returned.

I am unable to accept this submission. The Plaintiff's argument, taken to its logical conclusion, would mean that a breaching party could veto any deduction by refusing to engage in discussions, thereby defeating the commercial purpose of the deposit as a security for performance. Such a construction would produce an absurd and uncommercial result, which the Federal Court in Wong Yee Boon v Gainvest Builders (M) Sdn Bhd [2020] 3 MLJ 571 has cautioned against : the intention of the parties is to be ascertained by reading the contract as a whole, giving the words used their natural and ordinary meaning, and the court must give effect to every part of the contract in a way that brings the clauses into harmony with one another.

Clauses 3.10 and 5.4 must be read together with Clauses 6.4, 6.5, 7 and the termination regime in Clause 8. On a harmonious reading, the requirement for discussion and agreement is a contractual expectation that operates in good faith during an amicable cessation or completion of mining activities. Where the Agreement has been lawfully terminated for the Plaintiff's own fundamental breach and where the Plaintiff has absented itself from any engagement on the quantum of deductions, the Plaintiff cannot rely on its own failure to engage as a shield against D1's contractual right to apply the deposits toward costs and losses.

Accordingly, the Plaintiff's arguments on Clauses 3.10 and 5.4 fail. Issue 3 : Alter Ego And Lifting The Corporate Veil

The Plaintiff seeks to lift the corporate veil of D1, alleging that D1 is a mere façade and puppet of D2 who through D3 controls D1 and diverted payments away from the company.

PW3 (Koh Choon Keat) testified (Questions 7 - 8, WSSP-3) that D2 through D3 is the alter ego controlling D1. His basis : all payment demand notices and consultancy fee notices (pages 29 - 30 and 33 - 40 of Bundle A, and pages 124 - 144 of Bundle B) were issued on D3's letterhead, and all cheques were paid to D3's account (Question 12, WSSP-3). PW3 also testified (Question 13, WSSP-3) that the only written contract was between the Plaintiff and D1 dated 2.1.2017 and D3 had no separate contract with the Plaintiff.

DW3 (Hamdan) explained (Questions 2(c) and 11 - 12, WSSD-3) that D3 was appointed by D1 to monitor the site and collect sand extraction consultation payments on D1's behalf. He testified that this was done under D1's right in Clause 3.6 of the Agreement to monitor mining activities. He further stated that D1 had informed the Plaintiff from the outset of D3's role and the Plaintiff accepted this arrangement without objection.

The law on lifting the corporate veil is well-settled. In Ahmad Zahri bin Mirza Abdul Hamid v AIMS Cyberjaya Sdn Bhd [2020] 5 MLJ 58, the Federal Court identified the recognised grounds as : agency, fraud, sham/façade, group enterprise, or unfairness/injustice. In Mackt Logistics (M) Sdn Bhd v Malaysian Airline System Bhd [2014] 2 MLJ 518, the Court of Appeal, following Tenaga Nasional Bhd v Irham Niaga Sdn Bhd & Anor [2011] 1 MLJ 752, held that the veil cannot be lifted merely on grounds of justice. There must be fraud or other recognised grounds, clearly pleaded. In Law Kam Loy And Anor v Boltex Sdn Bhd And Others [2005] MLJU 225, the Court of Appeal held that it is not open to courts to disregard the corporate veil purely on the ground that it is in the interests of justice to do so, and that the plaintiffs must lay an evidential foundation.

Having examined the pleadings and evidence, I find that several factors militate against lifting the corporate veil –

(a) the Plaintiff has not pleaded fraud with particulars. While the Plaintiff argues that fraud can be "implied" from D2's conduct, the authorities are clear that the plea must be raised with specificity in the pleadings;

(b) the arrangement whereby D3 monitored the site and collected payments is consistent with Clause 3.6 of the Agreement, as explained by DW3. This is a legitimate appointment of an agent to perform specific functions under the contract;

(c) most tellingly, the Plaintiff accepted the payment arrangement whereby D3 collected payments on behalf of D1, without objection, for over three years (2017 - 2020). The Plaintiff made regular payments to D3, accepted D3's receipts and never once during that period raised the issue that payments should be made to D1 instead. The Federal Court in Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 held that where a party has conducted itself in a manner consistent with a particular understanding and the other party has acted on that understanding, it is unjust for the first party to resile from that position. In Boustead Trading Sdn Bhd, the fact that the appellant had honoured invoices bearing a 14-day term without complaint for some months was held to estop the appellant from later contending that the term was not binding. The facts of the present case are, if anything, stronger : the Plaintiff accepted and acted on the payment structure for over three years. Further, the Plaintiff's related argument, that its payments to D3 constitute discharge of its obligations to D1 under the law of agency, such that D1 is now estopped from demanding the outstanding RM190,204.80 is misconceived. The Plaintiff's admission under cross-examination (per PW3) is that the outstanding sum was not paid at all, whether to D1 or to D3. The agency/discharge argument assumes that payment was made to D3 and is therefore of no application to the outstanding RM190,204.80. The Court in Hong Leong Bank Bhd v HGM Machinery Sdn Bhd [2013] 9 MLJ 412 also confirms that the filing of a counterclaim by D1 itself constitutes sufficient notice of the claim against the Plaintiff, such that any technical objection to the absence of prior demand by D1 is without merit.; and

(d) the fact that D2 holds 99% shares in D1 and is the sole proprietor of D3 does not, without more, justify lifting the corporate veil. Majority shareholding and active directorship is commonplace in private companies and does not make the company a façade.

The Court answered Issue 3 in favour of the Defendants : there is no legal basis to lift the corporate veil of D1. Accordingly, The Plaintiff's claim against D2 and D3 in their personal capacities is dismissed. The Defendants' Counterclaim

Having found in favour of the Defendants on all three issues, I turn to D1's counterclaim.

(a) Outstanding Payment of RM190,204.80

D1 has established through the documentary evidence in Bundle B (pages 124 - 145), the detailed testimony of DW3 (Questions 9 - 18, WSSD-3), the corroborating evidence of DW1 regarding the demand letters and the admission of PW3 under cross-examination that the Plaintiff owes RM190,204.80 in outstanding sand extraction payments. The Plaintiff has offered no credible defence to this claim. The counterclaim for RM190,204.80 is allowed.

(b) Declaration that the Termination was Lawful

For the reasons stated under Issue 1, this Court declares that D1's termination of the Agreement dated 2.1.2017 via its solicitor's letter dated 3.12.2020 is valid and lawful.

(c) Deposits to be Applied toward Costs and Losses

For the reasons stated under Issue 2, D1 is entitled to retain the deposits of RM2.1 million and RM1.4 million to be applied toward the costs of rehabilitation, outstanding payments, and other losses arising from the Plaintiff's breaches.

(d) Rehabilitation Costs

The Defendants counterclaim for the costs of engaging a third-party contractor to rehabilitate the mining site. The evidence of DW2 estimates these costs at RM550,000.00 per acre. While the formula was not challenged under cross-examination, I am mindful that the quotation is an estimate without precise measurements and legitimate questions have been raised about the 5-year gap between termination and quotation.

The Plaintiff submits that D1's counterclaim for rehabilitation costs must fail because special damages have not been specifically pleaded with particulars, and that without itemisation the Plaintiff has been "ambushed". The Plaintiff further submits that the quotation of JR Soon Enterprise (M) Sdn Bhd (DW2) is a sham, that it lacks particulars, and that the absence of pleaded special damages is fatal.

While I accept that special damages must ordinarily be specifically pleaded and strictly proved, the Court of Appeal in UOB Kay Hian Pte Ltd v MA Boon Lan [2014] 1 MLJ 874 has held that the failure to plead loss and damage is fatal only as to an immediate order for damages to be paid, but is not fatal to obtaining an order for assessment of damages. Gopal Sri Ram JCA (as he then was) observed that civil procedure does not require the law to be pleaded, and that an objection based on failure to plead is not to be taken beyond its proper purpose.

Applying UOB Kay Hian Pte Ltd to the present case, I am satisfied that D1 has established liability on the part of the Plaintiff for the costs of rehabilitation, arising from –

(i) the Plaintiff's failure to close the mining holes contrary to Clause 4.8; and

The quantum of those rehabilitation costs is a matter for assessment. I accept the Plaintiff's criticisms of DW2's quotation as going to quantum rather than liability : in particular, the absence of precise measurement, the 5-year gap between termination and quotation, and the lack of itemisation are matters that can be properly ventilated at assessment, with leave to both parties to adduce further evidence.

It follows that the Defendants' reliance on an unchallenged formula under the principle in Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ 770 is sufficient to establish a prima facie basis for rehabilitation costs for the purposes of ordering assessment, but is not sufficient to justify a specific monetary award without further evidence.

In the circumstances, I am not minded to make a specific monetary award for rehabilitation costs beyond the deposits already retained by D1. However, I order that the quantum of any additional rehabilitation costs beyond the RM3.5 million in deposits shall be the subject of assessment of damages, with parties at liberty to adduce further evidence on the actual costs incurred. Court’s Decision

For the foregoing reasons, I make the following orders –

(a) The Plaintiff's claim is dismissed in its entirety;

(b) The Defendants' counterclaim is allowed as follows –

(i) a declaration that the termination of the Agreement dated 2.1.2017 by D1 via its solicitor's letter dated 3.12.2020 is valid and lawful;

(v) interest at the rate of 5% per annum on the sum of RM190,204.80 from the date of filing of the counterclaim until the date of full realisation.

(c) costs of RM 150,000.00 being costs of the Plaintiff's claim and the Defendants' counterclaim paid by the Plaintiff to the Defendants subject to the allocator fees. Dated : 2 April 2026 -signed-Dr Noradura binti Hamzah Judicial Commissioner High Court Civil 2 Johor Bahru Solicitor for the Plaintif : : Sritharan a/l K Govindan together with Chai Yi Ng Messrs. G.K. Sritharan & Co. Solicitor for the Defendants : : Kenny Lo Jia Yi Messrs. K S Pang & Co.