Safety Capital Sdn Bhd v Malaysia Steel Works (Kl) Bhd (BA-22NCC-82-07/2019)

This is the judgment of the Court after a full trial spanning two days 22 with 2 witnesses each testifying respectively for the Plaintiff and the 23 Defendant. 24 25

After hearing the evidence of the 4 witnesses and upon a 26 consideration of the written submissions/oral clarification of parties, this 27 Court was satisfied that the Plaintiff had failed to prove its case on a 28 balance of probabilities and dismissed its claim. 29

Dissatisfied with the decision the Plaintiff has appealed to the Court 1 of Appeal. 2 3 Background Facts 4

The Plaintiff is a private limited company incorporated in Malaysia 5 and has its registered address at Plaza Permata, Jalan Kampar, Kuala 6 Lumpur. 7 8

The Defendant is a public listed company incorporated under the 9 Malaysian Companies Act and has a registered address in Petaling Jaya 10 Selangor. 11 12

The late Dato Tai E King (Dato Tai) is an integral and pivotal 13 individual in this litigation. Dato Tai was at the material time a common 14 director of the Plaintiff and the Defendant company. 15 16

The Plaintiff has alleged that at all times Dato Tai in breach of his 17 fiduciary and statutory duty to the Plaintiff to act in good faith and in the 18 best interest of the Plaintiff thereof had between 3.10.2002 to 8.4.2004 19 fraudulently and illegally transferred a total sum of RM44,625,000.00 to 20 the Defendant. 21 22

Between 13.11.2002 to 4.3.2004 the Defendant transferred to the 23 Plaintiff the sum of RM33,944,000.00 leaving a balance sum of 24 RM10,681,000.00. 25 26

On 31.5.2004 a Notice of Assignment of the balance sum of 27 RM10,681,000.00 was executed by the Plaintiff to Soon Seng Co 28 (Selangor) Sdn Bhd. The transactions and the Assignment were duly 29 recorded and reflected in the Plaintiff’s General Ledger. The General 1 Ledger and all supporting documents for the transactions including the 2 Plaintiff’s bank statements were kept in its office. After the assignment the 3 balance in the General Ledger reflected a zero balance. 4 5

The Plaintiff avers it only discovered the fraudulent and/or illegal 6 transfer of the said sum of money to the Defendant sometime in 7 February/March 2019. 8 9

The Plaintiff has alleged that at all material times the remittance of 10 those sums of money to the Defendant was done despite there being no 11 resolutions passed by the Board of Directors authorizing the transfer of 12 the money. 13 14

The Plaintiff has confirmed that it and the Defendant have had no 15 business dealings and there were no sums due and owing between them. 16 17

It is against this background that the Plaintiff is claiming against the 18 Defendant for the recovery of that sum of RM10,681,000.00 which the 19 Plaintiff claims is the Constructive Trust Sum held on trust by the 20 Defendant which if retained by the Defendant would be unjust enrichment. 21 22 The Defence 23

In this regard the Defendant’s defence in a nutshell is three fold. 24 25

At the heart of the Defendant’s defence is that the transactions were 26 made between it and the Plaintiff being family owned companies for 27 working capital and that this was a regular practice in these family 28 companies. It was claimed that at the time of the transactions, Dato Tai 29 and other members of the family were the shareholders whether directly 1 or indirectly in the Plaintiff as well as in the Defendant company. 2 3

The Defendant’s witnesses have attested to the practice that the 4 group of companies used to make advances to others in the same Group 5 whenever funds were needed for working capital. In this case it was 6 averred that the transactions in question were merely advances and 7 repayments for working capital purposes. 8 9

The Defendant further claims the Notice of Assignment dated 10 31.5.2014 has extinguished the Plaintiff’s rights to the sum of 11 RM10,681,000.00 and transferred it to Soon Seng Co (Selangor) Sdn 12 Bhd. By reason thereof the Plaintiff has no locus standi to bring this action 13 against the Defendant. 14 15

Finally the Defendant avers that the Plaintiff’s claim against it is 16 unmaintainable as limitation had set in. 17 18 Undisputed Facts 19

Parties do not dispute these pertinent facts :

the late Dato Tai was a director of the Plaintiff and the 21 Defendant at the same time; 22 23

between 3.10.2002 to 8.4.2004 a total of RM44,625,000.000 24 was transferred to the Defendant. The Defendant transferred 25 back to the Plaintiff RM33,944,000.00 leaving behind a 26 balance of RM10,681,000.00 which is the subject matter of the 27 instant suit. 28 29 On Whom lies the Burden of Proof 1

Pursuant to section 101 (1) of the Evidence Act it is the Plaintiff who 2 has to discharge the burden to prove its claim. The Plaintiff must prove 3 such facts as the Plaintiff desires the court to give judgment as to its right 4 to claim against the Defendant. 5 6

It is trite that the standard of proof at law for a civil case even when 7 there is fraud alleged as is the case here is on a balance of probabilities 8 (see Sinnaiyah & Sons Sdn Bd v Damai Setia Sdn Bhd [2015] 5 MLJ 9 1). 10 11 The Issues 12

The core issues arising in this instant case center mainly upon the 13 following questions :

whether the Plaintiff has proven that Dato Tai acted 15 fraudulently or dishonestly;

(ii) whether there was a valid assignment of the transaction sum;

(iii) whether proof of the Defendant’s knowledge and assistance 18 of the fraud and assignment has been proven;

(iv) whether the Defendant was unjustly enriched through the 20 transaction; and 21

whether the Plaintiff’s claim is defeated by limitation. 22 23

whether the Plaintiff has proven that Dato Tai acted 25 fraudulently or dishonestly 26

It is the basis of the Plaintiff’s claim that Dato Tai being the director 27 of the Plaintiff owed the Plaintiff a statutory and/or fiduciary duty to act in 28 good faith and in the best interest of the Plaintiff. The Court was referred 1 to Section 213(1) of the Companies Act 2016 which reads as follows : 2 3 “(1) A director of a company shall at all times exercise his powers 4 in accordance with this Act, for a proper purpose and in good 5 faith in the best interest of the company.” 6 7

In order to determine whether the best interest of the company was 8 complied with, the question for the court now to consider would be “whether 9 an honest and intelligent man in the position of a director of the company concerned 10 could, in the whole of the existing circumstances, have reasonably believed that the 11 transaction was for the benefit of the company.” This guideline is found in the 12 Federal Court case of Tengku Dato’ Ibrahim Petra Tengku Indra Petra 13 v Petra Perdana Bhd & Anor Appeal [2018] 2 CLJ 641. 14 15

On the facts of this case, there is clear evidence to show that Dato 16 Tai had given the go ahead to remit a total sum of RM44,625,000.000 to 17 the Defendant between 3.10.2002 and 8.4.2004. It is clear too that there 18 were no resolutions issued by the Plaintiff’s Board of Directors authorizing 19 these remittances. PW 1 who is presently the Plaintiff’s Managing Director 20 has testified that there were no Board of Directors’ Resolutions that were 21 passed by the Plaintiff company to approve the transfer of these funds 22 from the Plaintiff to the Defendant. However it came out in evidence that 23 this was not an uncommon occurrence in family companies such as that 24 found in the Plaintiff and Defendant company. PW 1 conceded that 25 intercompany transfers of money were a common practice between family 26 companies. 27 28 29

Dato Tai and the other directors of the Plaintiff company at that 1 particular moment in time were present when the decision to allow the 2 money to be transferred from the Plaintiff to the Defendant was decided 3 upon and undertaken. All the directors of the Plaintiff company would have 4 witnessed the RM44,625,000.00 moved out of the Plaintiff’s bank account. 5 It is undeniable that they would have had access to all the supporting 6 documents. Quite significantly none of the directors did anything to 7 challenge the transactions as well as the Assignment, either at the time it 8 occurred or thereafter years later. 9 10

It was put to PW 1 and she agreed and accepted that none of the 11 directors raised any objections nor did they bring any action to challenge 12 that decision. Now more than a decade later only did it occur to PW 1 to 13 question the integrity of the transfer of those funds. 14 15

Critically, it is worth noting that the transfer was done quite openly 16 and transparently. There was no shroud of secrecy surrounding it. There 17 were no secret transfers nor were there any manipulation of entries in the 18 General Ledger. 19 20

The contemporaneous documents such as the bank statements, 21 payment vouchers and the general ledger are available and kept in the 22 custody of the Plaintiff company all this while. 23 24

PW 1 in her capacity as the human face of the Plaintiff company 25 was not a director of the Plaintiff at the time of the transactions and the 26 Assignment. Thus, it would be fair to say that she has no personal 27 knowledge of what transpired during the time the transaction was 28 undertaken. In the course of cross-examination, her evidence was as 1 follows : 2 3 DC: Okay. Let’s test that. The reason why I am saying we are taking 4 your word for it, let me test that. You were not there at that time, were 5 you? 6 PW 1: No, I was not. 7 8 DC: So, you cannot say can’t you, whether any of these directors or all 9 of them had an informal discussion and approved this. Can you say that 10 didn’t happen? 11 PW 1: There’s no approved board resolution in our company. 12 13 DC: Can you say that did not happen? 14 PW 1: Well, I cannot say that did not happen. 15 16

Counsel for Defendant emphasized the point that two of the 17 directors who have personal knowledge and can throw light on the matter 18 are still alive and could have been called as witnesses to enlighten the 19 court as to the truth of the manner of those transactions. They may well 20 be the only ones alive today who could give direct evidence of the events 21 but quite significantly they were not called to give evidence. I agree with 22 defence counsel’s suggestion that these directors if called to give 23 evidence could have given insightful evidence as to whether the 24 transactions were done with consent or fraudulently. 25 26

It is the duty of the Plaintiff to prove the alleged fraud and dishonesty 27 with clear and convincing evidence such that the court can draw no other 28 conclusion than to find that it has been proven on the standard of a 29 balance of probabilities. 30

In Norshuime binti Baharudin v Leong Yee Heng [2019] 5 MLJ 1 62 the Court of Appeal explained as follows : 2 3 “…the elements of fraud and/or conspiracy must be proved by clear, 4 cogent and convincing evidence. There must be something more than 5 mere failure for an omission on the part of the third defendant. There 6 can never be fraud and/or conspiracy cannot exist, where the intend to 7 deceive does not exist.” 8 9 And what one might ask are the requisite elements to prove fraud? 10 11

The Federal Court in Letchumanan Chettiar Alagappan @ L 12 Allagappan (as executor to SL Alameloo Achi alias Sona Lena 13 Alamelo Acho, deceased) & Anor v. Secure Plantation Sdn Bhd 14 [2017] 5 CLJ 418 refrained from giving a constrained definition to the 15 elements that would constitute fraud on the basis of the following : 16 17 "It is not easy to give a definition of what constitutes fraud in the 18 extensive signification in which the term is understood by Civil Courts of 19 Justice. The courts have always avoided hampering themselves by 20 defining or laying down as a general proposition what shall constitute 21 fraud. Fraud is infinite in variety (Reddaway & Co and Another v. 22 Banham & Co and Another [1896] AC 199 at p 221). The fertility of man's 23 invention in devising new schemes of fraud is so great, that the courts 24 have always declined to define it, or to define undue influence, which is 25 one of the many varieties, reserving to themselves the liberty to deal 26 with it under whatever form it may present itself (Allcard v. Skinner 27 [1887] 36 Ch D 145 at p 183). Fraud, in the contemplation of a Civil Court 28 of Justice, may be said to include properly all acts, omissions, and 29 concealments which involve a breach of a legal or equitable duty, trust 30 or confidence, justly reposed, and are injurious to another, or by which 31 an undue or unconscientious advantage is taken of another (Story, Eq 32 Jur 187). All surprise, trick, cunning, dissembling and other unfair way 1 that is used to cheat any one is considered fraud (Finch 439). Fraud in 2 all cases implies a wilful act on the part of any one, whereby another is 3 sought to be deprived, by illegal or inequitable means, of what he is 4 entitled to (Green v. Nixon [1857] 23 Beav 530 at p 535)' (Kerr on Fraud 5 and Mistake (7th Ed) at p 1). 'The concept of fraud is notoriously difficult 6 to define' (Cavell USA Inc and another v. Seaton Insurance Company 7 and another [2009] EWCA Civ 1363 per Longmore LJ, Mummery and 8 Toulson LJJ in agreement." 9 10

From the body of evidence before this Court, having perused the 11 supporting documentation in regard to the transactions that were carried 12 out, did not in my view show that Dato Tai acted fraudulently in the 13 transaction of the said sums of money or the subsequent assignment of 14 the balance sum. I find that the documentary evidence does not support 15 the Plaintiff’s assertions. As an example, I refer to the audited financial 16 statements of the Plaintiff company which contain records of 17 intercompany transactions. Note 5 of the Notes to the Plaintiff’s audited 18 financial statements for the years 2002, 2003 and 2004 refer to 19 transactions under the heading “Investment monies in related 20 companies”. In this column there are records of both payments to and 21 refunds from related companies. 22 23

Based on my observations earlier, I am not inclined to accept as a 24 matter of course that the transactions were made fraudulently. They do 25 not bear the recognized hallmarks of fraud and dishonesty on the part of 26 Dato Tai. 27 28

In the case of Portland Stone Firms Limited & Ors v Barclays 29 Bank PLC & Ors [2018] EWHC 2341 (QB) it was observed that fraudulent 30 transactions can be easily recognized by an attempt to conceal the 1 engagement of the act. The court mentioned that : 2 3 “….One of the features of claims involving fraud or deceit is the prospect 4 that the Defendant will, if the underlying allegation is true, have tried to 5 shroud his conduct in secrecy….” 6 7

I have every reason to agree with defence counsel’s statement that 8 if there really was fraud, the natural thing would be for the Defendant to 9 hold on to the entire RM44,626,000.00. The Defendant would not have 10 made any repayment of RM33,944,000.00 back to the Plaintiff. I find this 11 conduct quite consistent with the contention that inter company transfers 12 of money was the common practice. Thus far I am not convinced there 13 were clear, cogent and convincing evidence adduced of any fraudulent 14 intent. I can only conclude that this is not consistent with fraudulent 15 practice on the part of Dato Tai but instead all the events narrated above 16 seems to show it is entirely consistent with transparency and honesty. My 17 considered opinion is such that I am not ready to hold that there was fraud 18 perpetrated upon the Plaintiff. 19 20

I would also hold the view that the Plaintiff has not established that 21 Dato Tai had knowledge or knew as a matter of fact that the transaction 22 and the Assignment was fraudulent. Just because Dato Tai was a director 23 of both the Plaintiff and the Defendant at the material time would not 24 necessarily mean that the knowledge if any can be imputed to the 25 Defendant as a company. Reference is made to the case of Citec 26 International Sdn Bhd v Yeam Sai Meng [2008] 8 MLJ 640 where the 27 High Court observed as follows : 28 29 “[25] I am also of the view that even though Terrence Lee had knowledge 1 being the director of the plaintiff company, this cannot be imputed to the 2 plaintiff. 3 [26] My view is in line with the two cases brought by the plaintiff to my 4 attention whereby the said cases held that the knowledge of a fellow 5 director cannot be imputed to the company as in the case of Rex v Tay 6 Thye Joo [1933] MLJ 35 it was held that : 7 I will go further and say that even if Mr Van der Lee had been a 8 party to the frauds, so far from exonerating the accused, it would 9 have made his crime worse as involving a conspiracy to 10 defraud…The knowledge even of a director is not in law in the 11 knowledge of the corporation even when his co-directors have 12 remained in ignorance through their own negligence…For this 13 purpose therefore of the charges against the accused the 14 knowledge of Mr Van der Lee is quite immaterial. 15 [27] Similarly it was held in Belmont Finance Corp Ltd v William Furniture 16 Ltd [1979] 1 All ER 119, that : 17 Belmont Finance Corporation Ltd was a victim of the alleged 18 conspiracy and since the essence of the agreement of 3 October 19 was to deprive it of a large part of its assets, the seventh and 20 eight defendants’ knowledge that the agreement was illegal was 21 not to be imputed to Belmont merely because those defendants were 22 directors of Belmont. Accordingly, because Belmont did not have 23 the necessary knowledge of the agreement’s illegality, 24 it was not a party to the conspiracy.” 25 26

I am inclined to agree and I accept that merely because of the 27 presence of Dato Tai on the Board of Directors in the Defendant company 28 could not in itself impute knowledge of the misfeasance in the Plaintiff on 29 the Defendant. 30 31 32

There is yet another reason why the claim by the Plaintiff is difficult 1 to sustain. In this instance it is disquieting that the Plaintiff has chosen not 2 to implead Dato Tai as a party to this action. Counsel for the Defendant 3 has contended that the failure to implead Dato Tai as a party to this action 4 is fatal to the Plaintiff’s claim. I cannot find any reason to disagree with 5 that contention. This is especially so when a perusal of the Statement of 6 Claim will reveal that all the causes of action against the Defendant arise 7 from alleged acts of fraud or illegality said to be carried out by Dato Tai. 8 9

In my judgement the failure to add Dato Tai as a party to the action 10 is fatal to the success of the Plaintiff’s case. I rely on the Court of Appeal 11 case of Abdul Rahim b Aki v Krubong Industrial Park (Melaka) Sdn 12 Bhd [1995] 3 MLJ 417 to support this view. In that case, the court held 13 that the Plaintiff’s failure to add a particular director who the Plaintiff 14 claimed had breached the trust and confidence reposed in him as a 15 fiduciary was fatal to the success of the Plaintiff’s case, as the Plaintiff’s 16 case depended very much on whether he could make out the allegations 17 made against that director. 18 19

Since it is humanly impossible to have Dato Tai as a party, the least 20 that could have been done would have been to bring in the estate as a 21 party to the action thus ensuring there would be no accusation levelled of 22 having breached the ingrained rule of natural justice. At the time of his 23 demise Dato Tai was a bankrupt. His estate and assets therein are vested 24 in the Director General of Insolvency. There is no evidence before this 25 court that the Insolvency Department was aware of this action. 26 27

From the facts I note that the Plaintiff was incorporated in 1955 and 28 Dato Tai was instrumental in its incorporation. It was also Dato Tai who 29 founded the Group which included the Plaintiff and the Defendant as part 1 of a family group of companies in the Soon Seng Group. Dato Tai and the 2 other members of the family were shareholders through the holding 3 company, Soon Seng Company Sdn Bhd. The family members and Dato 4 Tai were on the Board of Directors of both companies. Therefore, in 5 consideration of those cardinal features I am readily of the view that it is 6 more than probable that the Defendant’s contention is correct i.e. that the 7 transactions were nothing more than advances and repayments between 8 the companies for working capital purposes. 9 10

There is available supporting documentary evidence which show 11 that on 31.5.2004, the balance in the account between the Plaintiff and 12 the Defendant had been assigned by the Plaintiff to Soon Seng Selangor 13 which is another company in the Group. The transactions and the 14 Assignment were recorded and reflected in the Plaintiff’s General Ledger. 15 The details were recorded by the clerks and finance officers. Every single 16 transaction had been particularized, set out and recorded. Nothing was 17 left out. These documents were available and kept in the Plaintiff’s office. 18 The documents were always there and disclosure could have been sought 19 and obtained at any point of time. This to me did not connote the element 20 of fraud at all. 21 22

PW 1 in her evidence came up with the bare averment that nothing 23 had precipitated her search for the documents until prior to the filing of this 24 suit. She had not called for disclosure of the transactions since her 25 appointment in the company until recently. She had not done anything to 26 question the transaction for all those intervening years. Bearing in mind 27 her authority as Managing Director she was in possession of the 28 documents at her disposal, I cannot at all appreciate her insistence that 1 the transaction was an act of fraud carried out against the Plaintiff. 2 3

When PW 1 was appointed as General Manager in the Plaintiff 4 company in 2011, she instructed that the financial statements for the years 5 2002 to 2004 be audited. The auditors appointed to the task carried out 6 that duty and did not find any red flags with regard to the transactions. In 7 consequence of that the auditors issued an unqualified report for the 8 financial statements for the years 2002 to 2004. 9 10

Furthermore the audited financial statements were seen and signed 11 by PW 1 and DW 1 as the directors authorized to do so by the Plaintiff’s 12 board of directors. PW 1 also affirmed statutory declarations declaring 13 herself to be the director primarily responsible for the financial 14 management of the Plaintiff and attesting to the fact that the 15 accompanying financial statements were correct and in order. 16 17

It is my considered view that by affirming and signing the statutory 18 declarations, PW 1 had unreservedly and without qualification declared 19 and accepted that the accounts were accurate and reflected the true state 20 of accounts. I have not neglected to take into consideration the 21 impeccable financial experience and background of PW 1 in coming to my 22 finding. She is not a novice who is ignorant of company accounts and audit 23 and their connotations. With her financial experience and background it 24 would be in order to conclude that PW 1 was satisfied with the audited 25 financial statements that were prepared before she put her signatures to 26 those documents. 27 28 29

I further take note that PW 1 who is the complainant here took over 1 as Managing Director of the Plaintiff company since 2010. In her role as 2 Managing Director she is in charge of the management and finances of 3 the company and would have personal and direct access to all the books 4 and accounts of the company. Her evidence in court is at odds with the 5 documentary evidence that has been adduced. She has alleged that the 6 financial statements are inaccurate and contain fraudulent transactions. 7 Bearing in mind that PW 1 has been in charge of the management and 8 finances of the company for a good many numbers of years and had never 9 raised any complains with regard to the transactions, I find it inconceivable 10 that it is raised now. I find it hard to believe PW 1 when she said she only 11 came to know about the discrepancy in 2019. I would reject that evidence 12 as being highly improbable and not credible. 13 14

This brings me to a rather pertinent issue where my attention was 15 drawn which is whether as a matter of pleading the Plaintiff’s Statement 16 of Claim was maintainable. Here the Plaintiff has pleaded that Dato Tai 17 had acted fraudulently and dishonestly. The law is settled in this area. It 18 is established law that particulars of fraud must not only be pleaded but 19 must be specifically pleaded. Fraud must be distinctly set out and details 20 of the fraud must be specified. Merely averring fraud in general and vague 21 terms however strong are insufficient. 22 23

In Wong Yew Kwan v Wong Yu Ke & Anor [2010] 2 CLJ 703, the 24 Court of Appeal held that mere allegations of fraud are insufficient to 25 constitute a pleaded case of fraud. The Court said (at pg 677) 26 27 “There is the question of fraud upon which I said I should touch in one 28 moment. Now I take it to be as settled as anything well can be by 29 repeated decisions, that the mere averment of fraud, in general 1 terms, is not sufficient for any practical purpose in the defence of a 2 suit. Fraud may be alleged in the largest and most sweeping terms 3 imaginable. What you have to do is, if it be matter of account, to point 4 out a specific error, and bring evidence of that error, and establish it by 5 that evidence. Nobody can be expected to meet a case, and still less to 6 dispose of a case, summarily upon mere allegations of fraud without any 7 definite character being given to those charges by stating the facts upon 8 which they rest." 9 10

In the SOC the Plaintiff has pleaded that the transactions were 11 fraudulently, dishonestly and illegally caused by Dato Tai. It was pleaded 12 that the transactions were carried out fraudulently, dishonestly and 13 illegally in breach of his fiduciary and statutory duties. But what were those 14 particulars? These were not stated. What was the modus operandi that 15 made it fraudulent? There was no clarity pleaded. No further evidence was 16 adduced to establish fraud apart from the argument that there were no 17 resolutions to support the transactions and assignments. 18 19

It is my considered opinion that the SOC alleges fraud in a broad 20 manner and thus it failed to measure up to the test of particularization of 21 the fraud against Dato Tai. Bearing that in mind as well as the defence set 22 forth in the Statement of Defence, I would agree that the Plaintiff’s claim 23 is found wanting. 24 25 Family Companies 26

It would also be pertinent here to discuss whether the Plaintiff and 27 the Defendant were a family group of companies and that both were 28 treated as part of the Soon Seng Group. Defence counsel argued at length 29 on this issue emphasizing the point that intercompany advances being a 30 regular practice was never challenged. Counsel for the Plaintiff in turn 1 while admitting that inter company transfers may not necessarily be 2 unusual argued that those transfers must be subject to board resolutions 3 and authorizations of the same and this was never carried out. 4 5

The Defendant has pleaded that the Plaintiff and the Defendant are 6 related companies having common shareholders. Would that have meant 7 they are family companies? DW 1 in his evidence had observed the 8 normal practice in the Soon Seng Group to provide advances to each 9 other for additional/temporary working capital. 10 11

There certainly is evidence to support the claim that they functioned 12 and operated as part of family companies. Of some significance was the 13 distinctive feature that the Plaintiff’s board and members at the time 14 comprised of Dato Tai and family members. From the evidence of 15 witnesses called by both Plaintiff and Defendant it showed that the family 16 members were close knit and depended on Dato Tai for stewardship of 17 the group of companies. Even if there were differences of opinion and 18 objections, at the end of the day the family members realigned and 19 accepted the decision of the majority of the members. 20 21

There was evidence to show that the practice of the companies 22 within the Group to make inter-company advances whenever funds were 23 needed for working capital. DW 2, Lau Yoke Leong had given examples 24 such as that found in Item 13 at pg 23 of the Plaintiff’s Financial 25 Statements for the year ending 31.12.2004 (p 155 B2) which showed a 26 purchase of goods by Plaintiff from Soon Seng (Selangor). 27 28

As for the disputed sum DW 2 testified as follows : 29 “It was the practice of Dato Tai E King to periodically set-off the 1 intercompany debts between the companies in the Soon Seng Group. It 2 was also common for companies in the Soon Seng Group to provide 3 financial assistance in the form of advances to the other companies 4 within the Group as additional/temporary working capital. The 5 assignment was likely done for either or both these reasons.” 6 7

PW 1 herself was constrained to admit this could have very likely 8 been what had transpired at that particular time : 9 10 DC : My question to you is, this company was peopled by, as you 11 project, members of your family, correct? 12 PW 1: Yes. 13 14 DC: Both at directors and shareholders level? 15 PW 1: Yes. 16 17 DC: So, you cannot say can’t you, whether any of these directors or all 18 of them had an informal discussion and approved this, can you say that 19 didn’t happen? 20 PW 1: There’s no approved board resolution in our company. 21 22 DC: Can you say that did not happen? 23 PW 1: Well, I cannot say that did not happen. 24 25

It is my considered view that the evidence adduced proved on a 26 balance of probabilities that the decisions pertaining to intercompany 27 matters were made without strictly observing formalities. I recognize that 28 the dynamics in family companies differ from that of commercial ones. I 29 accept that Dato Tai and the other members of the Board of Directors 30 treated themselves as an extension of their principal shareholders and 31 they routinely adhered to loose or informal management practices. The 32 companies did not strictly observe formalities. This is what is known as 1 the principle of informal consent. In Yap Keat Choon v Ever-Yield Sdn 2 Bhd [2020] MLJU 1226 the Court explained it very neatly as follows : 3 4 “[11] ….The facts showed the defendant companies were run by 5 families’ members; this is what we called a family business and what 6 comes into mind are the 2 classic case of Re Duomatic Limited [1969] 2 7 Ch 365 and Ibrahami v Westbourne Galleries Ltd [1973] A.C 360. The 2 8 cases gave birth to the “Duomatic Principle” and “Ebrahami Principle”. 9 [12] The “Duomatic Principle” particularly applies to companies with few 10 directors or shareholders, or family companies where the affairs of the 11 company are frequently conducted on an informal basis. That is, in 12 disregard of formalities which are required to be served either under the 13 article of Associations or the Companies Act 2016 to make a decision or 14 transaction valid. It takes root in the equitable principle maxim that equity 15 will look at the substance and not the form of things such that if a matter 16 has in substance been done, but not in the required form, the matter so 17 done shall be upheld (see: page 504 & 505, Chapter 18 Corporate 18 Powers by Loh Siew Cheang and see also Amer Singh Bhatt v Kelana 19 Resorts Sdn Bhd [2007] 4 CLJ 557….” 20 21

This view is further substantiated by the fact that none of the 22 Plaintiff’s directors took issue with the transactions and the assignment for 23 all the years that went by. It was only until PW 1 brought this civil suit in 24 2019 when the issue came about. 25 26

What is most significant is that the auditors who prepared the 27 Plaintiff’s audited financial statements from 2002 to 2004 and even after 28 that period had never found any reason to question the transactions or the 29 assignment. It was never a point of contention or a matter needing further 30 queries or investigations by the auditors. All the above are clear 31 indications that there were never any suspicious circumstances 1 surrounding the impugned transactions. 2 3

As a matter of law audited accounts have always been treated as 4 an acknowledgement of fact (see Kumpulan YL Enterprise v Hamidah 5 Abdul Razak [2014] 1 LNS 1460). 6 7

To recapitulate the circumstances in the instant case is more 8 prominent in that PW 1 approved the Plaintiff’s 2002 to 2004 audited 9 financial statements and affirmed the statutory declarations 10 accompanying the financial statements which incorporated and reflected 11 the transactions and the assignment. Her explanation as to why she 12 signed off the audited accounts and the Statutory Declaration was in my 13 view difficult to believe and I was not convinced of her answers. 14 15

I am of the opinion significant weight must be attached to the fact 16 that PW 1 approved and signed the Plaintiff’s 2002 to 2004 audited 17 financial statements and affirmed the statutory declarations 18 accompanying the financial statements which incorporated and reflected 19 the transactions and the assignment. PW 1 cannot be allowed to disclaim 20 the consequences of signing those documents. Simply brushing it off by 21 stating that she assumed them to be fair and accurate, without inspecting 22 all source documents is untenable, especially so when the surrounding 23 contemporaneous evidence shows that disclosure could have been 24 sought and obtained at any point of time. All the documents were there 25 and not concealed. I am of the view that it is not sufficient for PW 1 to 26 claim that she had no knowledge of the accounts until PW 2 found the 27 ledger and showed it to her. There must be something considerably more 28 significant to show there was a scheme to defraud. 29 Proof of Defendant’s knowledge/Assistance 1

It was pleaded by the Plaintiff that the Defendant had knowledge of 2 and dishonestly assisted Dato Tai in carrying out the fraudulent 3 transaction. In doing so, the Defendant is thus liable to the Plaintiff. 4 5

Having raked the evidence, I did not find any evidence led of such 6 acts of fraud and dishonesty. 7 8 Did Dato Tai breach his duty as a director of the Plaintiff 9

The Plaintiff contended that Dato Tai being a director of the Plaintiff 10 had at all material times owed the Plaintiff a statutory and/or fiduciary duty 11 to act in good faith and in the best interest of the Plaintiff. The Plaintiff 12 referred to Section 213(1) of the Companies Act 2016 in supporting that 13 contention. S. 213(1) states that a director shall at all times exercise his 14 powers in accordance with this Act, for a proper purpose and in good faith 15 in the best interest of the company. 16 17

An objective test is to be applied when considering whether the 18 particular director had acted in the best interest of the company, the 19 objective element being whether an honest and intelligent man in the 20 position of a director of the company concerned could, in the whole of the 21 existing circumstances, have reasonably believed that the transaction 22 was for the benefit of the company (see Federal Court case of Tengku 23 Dato’ Ibrahim Petra Tengku Indra Petra v Petra Perdana Bhd & 24 Another [2018] 2 CLJ 641.) 25 26

In this case there were no resolutions from the Board of Directors’ 27 of the Plaintiff company that were passed to approve the transfer of the 28 funds from the Plaintiff to the Defendant. This Court’s attention was drawn 29 to s. 223 CA 2016 (formerly 132C of the CA 1965) which provides as 1 follows : 2 3 “(1) Notwithstanding anything in the constitution, the directors shall not 4 enter or carry into effect, any arrangement or transaction for- 5

the acquisition of an undertaking or property of a substantial 6 value; or 7 8

the disposal of a substantial portion of the company’s undertaking 9 or property; 10 11 unless- 12

(A) the entering into the arrangement or transaction is made subject 13 to the approval of the company by way of a resolution; or 14 15

(B) the carrying into effect of the arrangement or transaction has 16 been approved by the company by way of a resolution.” 17 18

The Plaintiff referred to the Minutes of the Meeting of the company 19 on 30.04.2010 to refute the Defendant’s contention that there was no 20 necessity to obtain a board resolution before carrying out the transaction 21 and assignment. The Plaintiff rests its case on a director’s meeting held 22 in the year 2010 which is way off the time when the transaction and 23 assignment took place between 2002 to 2004. I would not find that helpful 24 in advancing the Plaintiff’s case especially in the light of the following 25 evidence extracted at the trial : 26 - the Plaintiff’s accounts remained unaudited for a period of 9 27 years without any complaint by the directors and 28 shareholders; 29 - all the documentary records were kept accessibly in the 30 Plaintiff’s office; 31 - PW 1 was not there between 2002 to 2004 1 - The evidence of DW 1 that it may have been the case that 2 transactions were subject to board resolutions can be 3 disregarded as he was not there between 2002 to 2004. 4 5

More importantly the letter dated 31.5.2004 confirming the 6 Assignment was signed by Tai Swee Kian, one of the directors on the 7 Board of the Plaintiff at the material time. Why did the Plaintiff or PW 1 not 8 offer evidence of minutes of meetings during the entire period of 2002 to 9 2004? The Plaintiff has access to the entire company secretarial record 10 and could have produced it. The fact that there was none produced 11 speaks volumes in strengthening the Defendant’s argument that the 12 transaction and assignment were not subject to board resolutions. 13 14

In any event I would hold that the relevant version of s. 132C of the 15 CA 1965 would be the one that was operative in 2002 to 2004 and not the 16 one relied on by counsel for the Plaintiff. 17 18

The current s. 132C was inserted by the Companies (Amendment) 19 Act 2007 (Act A1299/07) which came into effect on 15.8.2007. Under the 20 provisions of s. 132C(1)(b) directors can only carry out disposal of 21 substantial portions of the companies property or undertaking when 22 approved by the company in general meeting. Any transactions that were 23 carried out in contravention of this subsection is invalid and void and the 24 directors subject to penal consequences. 25 26

One will immediately notice that the operative s. 132C in the years 27 2002 to 2004 was not so stringent. 28 29

The S. 132C version then was worded as follows : 1 2 “Approval of company required for disposal by directors of company’s 3 undertaking or property 4 132C. (1) Notwithstanding anything in a company’s memorandum or 5 articles, the directors shall not carry into effect any proposal or execute 6 any transaction for- 7

The acquisition of an undertaking or property of a substantial 8 value; or 9

The disposal of a substantial portion of the company’s 10 undertaking or property, which would materially and adversely affect the 11 performance or financial position of the company, unless the proposal 12 or transaction has been approved by the company in general meeting. 13 … 14

A transaction entered into in contravention of subsection (1) shall, in 15 favour of any person dealing with the company for valuable 16 consideration and without actual notice of the contravention, be as valid 17 as if that subsection has been complied with.” 18 19

It becomes immediately apparent that :

S. 132C (1) merely speaks of approval of the company at a 21 general meeting and not a written resolution; and 22

(ii) Approval is only required if the transaction materially and 23 adversely affects the financial position of the company. 24 25

The Plaintiff’s contentions on this issue is thus flawed. There was 26 no mandatory requirement at the period of time between 2002 to 2004 to 27 require the approval of shareholders in writing. In addition, the Plaintiff did 28 not plead that the transaction in question would “materially and adversely 29 affect the performance or financial position of the company.” They have 30 not shown nor have they led evidence of any adverse and material effects 31 as a result of the transaction and assignment. The fact that the company 1 is still standing today says very much of its solid financial standing. Hence 2 the lack of written resolutions relied on by the Plaintiff would in my 3 respectful opinion fall like a pack of cards. 4 5

I was initially averse to consider the motives of PW 1 in filing this 6 civil suit against the Defendant as a ground to reject the Defendant’s 7 averments that there was malice and mala fide. I am aware that the 8 Plaintiff is not PW 1 but a company in which she is a director and to which 9 she owes a fiduciary duty to act in the best interest of. 10 11

I was appraised of the litigatious history of PW 1 and her family 12 members. I weighed all that up and kept an objective and dispassionate 13 view of the proceedings. However, it cannot be ignored that PW 1 has 14 been in litigatious disharmony with her parents and family members for 15 quite a while. She also had been in litigation with the Defendant’s first 16 witness. Viewed in that context, it gave the court cause to believe that she 17 had enlisted PW 2 to look for source documents in order to find anything 18 to assist in her allegation of fraud and dishonesty against Dato Tai and to 19 completely disregard the Assignment. I am inclined to accept counsel for 20 the Defendant’s argument that taking into account the historical 21 background together with this stale claim has driven home the point that 22 the requisite standard of proof shouldered by the Plaintiff in a civil case 23 had not been made and that this claim is as what counsel for the 24 Defendant vividly describes “nothing but an expensive exercise in bluff”. 25 26

To bring this issue to a close I am satisfied and convinced in view of 27 the evidence adduced and documentary evidence exhibited that the 28 Plaintiff has failed to discharge the burden of proving that Dato Tai had 29 acted fraudulently or dishonestly in respect of the Transactions and the 1 Assignment. 2 3 Whether there was a valid assignment of the transaction sum 4

The Defendant has contended that there is credible and cogent 5 evidence to show that there was an assignment of the said sums to Soon 6 Seng Co (Selangor) Sdn Bhd and this Assignment has thereby 7 extinguished the Plaintiff’s rights to the sum. It was also contended that 8 having assigned the said sums, the Plaintiff accordingly has no locus 9 standi to bring this action against the Defendant. 10 11

There is no dearth of documentary evidence to support the 12 Defendant’s assertion. Chief of all is the letter by Soon Seng Co 13 (Selangor) Sdn Bhd dated 31.5.2004 to the Plaintiff acknowledging the 14 Assignment, which was signed by Tai Swee Kian who incidentally was 15 also a director of the Plaintiff at the time. The other one is a letter of even 16 date signed by Dato Tai. 17 18

The Plaintiff does not dispute these facts and certainly it cannot do 19 so in view of the contemporaneous documents showing the assignment 20 had taken place. The testimony of PW 1 is reproduced here : 21 22 “DC : Alright. We can begin to wrap up actually. My Lady, let me quickly 23 take you to the assignment which is at 224. You have the 24 acknowledgement by Soon Seng Co (Selangor) at page 444. Are you 25 with me Mdm Tai? 26 PW 1 : Yes. 27 28 DC : So, what we have are the two documents recording the 29 assignment. One from Safety Capital, signed by your late father. The 30 acknowledgement by Soon Seng Selangor at page 444 signed by your 1 late uncle. 2 PW 1 : Correct 3 … 4 DC : Well, that’s the legal positions let me tell you. So, on surface of it, 5 you would accept that two of them knew, isn’t it? On the surface of it. I 6 know you can’t go behind it had known what were in their minds. But on 7 the face of these two documents, they knew. 8 PW 1 : One is signed by my late father and he says that assign the 9 amount owing by Masteel of RM10,681,000 to Soon Seng Selangor. the 10 next one is I can see it says, the Soon Seng Selangor from Masteel.. 11 … 12 DC : So on the face of it, isn’t it obvious the two directors, tai E King 13 and Tai Swee Kian were directors of Safety Capital. 14 PW 1 : Yes 15 16 DC : So, in signing these documents, does it not follow that they knew 17 about the assignment? Its not very difficult. 18 PW 1 : It does appear on the face of it.” 19 20

The Defendant contends that the Assignment undertaken in this 21 instant case is an absolute one falling under section 4(3) of the Civil Law 22 act 1946 and that the only party who can sue on the Assignment is Soon 23 Seng Co Selangor Sdn Bhd (SSCS). The conditions for an assignment as 24 laid down in s. 4(3) of the Civil Law Act 1946 are that firstly the assignment 25 must be in writing under the hand of the assignor, secondly, that it must 26 be absolute and not by way of charge only and lastly express notice in 27 writing must have been given to the person liable to the assignor under 28 the assigned chose in question (see UMW Industries Sdn Bhd v Ah 29 Fook [1996] 1 MLJ 365). 30

The contents of the Letter of Assignment called into question are as 1 follows : 2 3 “Re: Assignment of Debts 4 We hereby assign the amount owing from Malaysia Steel Works (KL) 5 Bhd A/C (1) of RM10,681,000.00 as at 31 May 2004 to Soon Seng Co 6 (Selangor) Sdn Bhd A/C (3) and that this amount be repayable on 7 demand.” 8 9

In order to determine whether the assignment in question is indeed 10 an absolute assignment or otherwise, one must examine the four corners 11 of the instrument itself (see Nouvau Mont Dor (M) Sdn Bhd v Faber 12 Development Sdn Bhd [1985] CLJ Rep 231.) 13 14

The Letter of Assignment contains the phrase “that this amount be 15 repayable on demand”. This of course means that the sum of 16 RM10,681,000.00 is repayable when SSCS makes a demand to the 17 Defendant. 18 19

The test to determine whether an assignment is absolute or 20 otherwise was laid out in the case of Bank of Commerce (M) Bhd v 21 Mahajaya Property Sdn Bhd [1997] 5 MLJ 620 quoting Chitty on 22 Contracts in the following terms : 23 24 “the test seems to be, has the assignor unconditionally transferred to the 25 assignee for the time being the sole right to the debt in question as 26 against the debtor? IF so, the assignment will be absolute: but if the 27 debtor cannot tell whether to pay the assignor or the assignee without 28 examining the state of accounts between them, it will be held to be by 29 way of charge only. Much may depend on the language of the particular 30 instrument; in construing it, the court will look at the whole of its 1 language. The words italicized above are of crucial importance, for it is 2 no concern of the debtor whether the assignor and assignee have some 3 private arrangement for the disposal of the debt after it has been paid by 4 the debtor.” 5 6

Applying the above to the facts of the instant case, it will be seen 7 that the Defendant is not required to check the state of accounts whether 8 the Plaintiff is indebted to SSCS or otherwise. The Plaintiff here has no 9 right to the said sum of money. The entire interest of the Plaintiff in the 10 sum is handed over to SSCS. Express notice of the assignment has been 11 given to the Defendant. SSCS has acknowledged the Assignment via its 12 letter dated 31.5.2004. The Ledger contains the record of the assignment 13 to SSCS. I am compelled to conclude that the Plaintiff’s dispute of the 14 Assignment is untenable. Having considered the contemporaneous 15 documentary evidence and the surrounding factual circumstances in its 16 totality I find that the Assignment has fulfilled the test for its classification 17 as being an absolute assignment. 18 19

Aside from the above, it is incumbent that the Plaintiff must enjoin 20 the assignee, SSCS as a party to the action if it is seeking to set aside or 21 invalidate the Assignment. It is well settled that both the assignor and 22 assignee should be made parties to the proceedings. All parties with an 23 interest in the Assignment must be brought before the court. In Chan Min 24 Swee v Melawangi Sdn Bhd [2000] 7 MLJ 111, it was held by Abdul 25 Malik Ishak J as follows : 26 27 “It must be recalled that in Durham Brothers v Robertson the assignees 28 sued the debtor without joining the assignor. The English Court of 29 Appeal held that the assignment was not absolute and therefore the 30 assignor must be made a party to the legal action because any order 1 made by the court would otherwise not be binding on the assignor and 2 the upshot of it was that the action was dismissed.” 3 4

Having considered all of the above it is the view of this court that the 5 Assignment is an absolute one and hence section 4(3) of the Civil Law 6 Act 1956 comes into force. It followed that the proper party to sue on the 7 debt is SCCS and the Plaintiff has no locus standi to claim the return of 8 the said sum from the Defendant. 9 10 Whether the Defendant was unjustly enriched 11

In light of my findings in the preceding paragraphs above especially 12 where the Plaintiff has no right to the sum after the assignment the short 13 answer to this issue would have to be in the negative. The Plaintiff is 14 unable to prove the benefit gained by the Defendant is at the expense of 15 the Plaintiff. The Plaintiff disputes the assignment stating that there was 16 never any assignment to SSCS, that it made no commercial sense and 17 questioned why would the Plaintiff assign debts in that large sum to SSCS 18 who had no business dealings whatsoever with the Plaintiff. The Plaintiff 19 also stated if there was such an assignment it did not receive approval of 20 the Board of Directors. Those questions could have been answered if the 21 Plaintiff had subpoenaed the liquidator of SSCS, after all it is the duty of 22 the Plaintiff to prove that the sum was never assigned. I respectfully make 23 the finding that it has not been shown on a balance of probabilities that 24 there was unjust enrichment on the part of the Defendant. 25 26 Limitation 27

Is the Plaintiff’s claim defeated by Limitation? 28

The Defendant is relying on Sections 6 and 22 of the Limitation Act 1 1953(LA 1953) to oppose the Plaintiff’s claim. 2 3

The earliest chronology of the transactions show that it began on 4 3.10.2002 and culminated in the Assignment on 31.5.2004. The instant 5 civil suit was instituted on 17.7.2019. More than 15 years have since 6 passed. 7 8

Section 6(1)(a) of the Limitation Act provides that actions founded 9 on contract and tort shall not be brought after the expiration of 6 years 10 from the date on which the cause of action accrued. The cause of action 11 is said to have accrued regardless of whether the Plaintiff discovers the 12 damage. 13 14

The Plaintiff argues there is no period of limitation to be ascribed to 15 this case as the Plaintiff’s claim is premised on a Constructive Trust Sum. 16 The Plaintiff alleges that the Defendant is a constructive trustee of the said 17 sum as a result of the alleged fraud of Dato Tai who had no right to transfer 18 the said sum to the Defendant. 19 20

In an action for recovery of trust property s. 22(1)(b) of the LA 1953 21 provides :- 22 23 “1) No period of limitation prescribed by this Act shall apply to an action 24 by a beneficiary under a trust, being an action- 25

… 26

To recover from the trustee trust property or the proceeds thereof 27 in the possession of the trustee, or previously received by the trustee 28 and converted to his use.” 29 30

In this respect, counsel referred this court to the English case of 1 Paragon Finance v D B Thakerar & Co [1999] 1 All ER 400 where Millet 2 LJ distinguished between 2 categories of constructive trustees as follows: 3 4 “87.1. the 1st category comprises those constructive trustees who 5 assume the duties and obligations of a trustee by a lawful transaction, 6 preceding and independent of the breach of trust; 7 87.2. the 2nd category are constructive trustees who are not trustees at 8 all, but are described as such for the purpose of enabling equitable relief 9 to be granted against them. They are therefore called “constructive 10 trustees” as a direct consequence of the unlawful transaction impeached 11 by the plaintiff. They would not be trustees within the meaning of section 12 23 of the UK Limitation Act.” 13 14

Section 23 of the UK Limitation Act 1980 is in pari materia with s. 15 of the Malaysian Limitation Act 1953. Section 22 LA 1953 only applies to 16 the 1st category of constructive trust. There is no limitation period attached 17 to this 1st category. 18 19

The 6 year limitation applies to the 2nd category (see Koh Siew 20 Keng (P) & Anor v Koh Heng Jin [2008] 3 MLJ 822, Ho Hup 21 Construction Company Bhd v Zen Courts Sdn Bhd & Ors [2018] 1 22 LNS 340.) 23 24

In my judgement having considered the arguments and the 25 authorities submitted, the instant case falls neatly into the 2nd category. I 26 cannot agree with the Plaintiff’s contention that the Defendant is a 27 constructive trustee. 28 29

According to the Plaintiff’s pleaded case, the Defendant is alleged 1 to be the constructive trustee of the balance sums. A perusal of the 2 pleadings would show that the underlying action filed by the Plaintiff here 3 is for fraud and breach of fiduciary duty against Dato Tai. Another cause 4 of action is tied to unjust enrichment. For these two causes of action the 5 period of limitation is six years and s. 6 of LA 1953 applies. 6 7

The other cause of action relied on by the Plaintiff is found in 8 Paragraphs 6.3, 6.4, 9 and 15 of the Statement of Claim together with 9 Paragraph 9 of the Plaintiff’s Reply. These put together go to frame a case 10 against the Defendant as being one of knowledge and assistance when 11 the said sum of money was transferred by Dato Tai and is now unlawfully 12 being retained by the Defendant. That does not fall within the scope of s. 13 22(1)(b) of the LA 1953. The basis for this view is supported by the case 14 of Williams v Central Bank of Nigeria [2014] AC 1189 where the English 15 Court held that “the words “trust” and “trustee” in section 21(1)(a) of the 16 Limitation Act 1980 did not include a constructive trust of the kind alleged 17 against the bank and a “trustee” did not include a party who was liable to 18 account in equity simply because he was a dishonest assister in a breach 19 of trust and/or a knowing recipient of trust assets.” 20 21 It further held as follows: 22 23 “The second class of case is different. It arises when the defendant is 24 implicated in a fraud. Equity has always given relief against fraud by 25 making any person sufficiently implicated in the fraud accountable in 26 equity. In such a case he is traditionally though I think unfortunately 27 described as a constructive trustee and said t be ‘liable to account as 28 constructive trustee.’ Such a person is not in fact a trustee at all, even 29 though he may be liable to account as if he were. He never assumes the 30 position of a trustee, and if he receives the trust property at all it is 1 adversely to the plaintiff by an unlawful transaction which is impugned 2 by the plaintiff. In such a case the expressions ‘constructive trust’ and 3 ‘constructive trustee’ are misleading, for there is no trust and usually no 4 possibility of a proprietary remedy; they are ‘nothing more than a formula 5 for equitable relief’….” 6 7

I have no doubt in my mind that the Plaintiff cannot avail itself of s. 8 22(1)(b) LA 1953 because that section applies only in cases involving 9 “true trustee” and not constructive trustee like presently pleaded. The 10 species in this case is that of the remedial type of trust. The section does 11 not apply to a party only by virtue of their dishonest assistance in a breach 12 of trust. 13 14

In any event, I find favour with the submissions of learned counsel 15 for the Defendant that reliance on statutory provisions as a cause of action 16 is subject to the limitation period under s. 6(1)(d) of the LA Act (see 17 Mulpha International Berhad v Mula Holdings Sdn Bhd & Ors [2021] 18 1 LNS 2125). In the present case the Plaintiff had attempted to invalidate 19 the transactions for breach of s. 132C of the Companies Act 1965. Based 20 on the Plaintiff’s own Statement of Claim the transactions began on 21 3.10.2002 and culminated in the Assignment on 31.5.2004. This action 22 was filed 15 years later in 2019. The Plaintiff is therefore caught out by 23 the 6 year time limit to bring its action against the Defendant. I am of the 24 view that the defence of limitation is clearly available to the Defendant and 25 it must not be deprived of it. 26 27

The Plaintiff did not rely on the protection of s. 29 of the LA 1953. If 28 it had then that contention too would have failed because the onus to 29 establish it was not discharged having regard to the prevailing standard 1 of proof. 2 3

In view of the foregoing reasons laid out above, it is the firm finding 4 of this Court that the Plaintiff has failed to prove its case against the 5 Defendant on a balance of probabilities. 6 7

Accordingly, the Plaintiff’s claim against the Defendant is dismissed 8 with costs. 9 10 Dated 18 April 2022. 11 12 13 14 (JULIE LACK) 15 Judicial Commissioner 16 High Court of Malaya 17 Shah Alam, Selangor Darul Ehsan 18 19 20 Counsel 21 For the Plaintiff : 22 Ashok Kandiah with R.S Sodhi and Norvindran Sivarajah 23 (MESSRS. SODHI CHAMBERS) 24 25 For the Defendant : 26 Gopal Sreenevasan with Ravindran Shanmuganathan and Michelle 27 Chew 28 (MESSRS. SREENEVASAN YOUNG) 29