Skaiba Private Limited v 1. ) Kct United Sdn. Bhd. (WA-22NCC-310-07/2021)

KCT UNITED SDN BHD [Company No. 201801031153 (1293179-M)]

HEONG POH WAH (NRIC No. 680801-08-5588)

TEOH HOCK PENG (NRIC No. 690110-08-5537)

YAP ROU ZHI (NRIC No. 991225-14-6036)

LENG WIE MUN … DEFENDANTS JUDGMENT S/N QUbdgqtVzUOdnrKBQGunhw Introduction [1] In the suit herein, the Plaintiff is seeking from this Court, inter alia, the following reliefs: - a) the Defendants, jointly and severally, refund to the Plaintiff a sum of USD1,554,095.00 or such other amount as this Court thinks fit; b) the Defendants, jointly and severally, pay damages and or compensation for the breaches and or non-performance of an agreement signed on 1.10.2020 to be assessed and determined by this Court; c) Interest on the sum in paragraphs above at the rate of 5% per annum calculated from 8.10.2020 until the date of the full settlement; d) Costs. [2] Whilst the Plaintiff’s cause of action against the Defendants based on the reliefs sought appear to be based on contract, in the Plaintiff’s Statement of Claim, the Plaintiff has pleaded as against the 2nd, 3rd, 4th and 5th Defendants a claim based on the tort of fraudulent misrepresentation and or deceit. [3] By the time the action came before this Court for trial, the Plaintiff had discontinued its action against the 3rd Defendant. S/N QUbdgqtVzUOdnrKBQGunhw [4] After the trial had concluded and after perusal of the parties’ written submissions and hearing learned counsel’s oral submissions, I allowed the Plaintiff’s claims against the 1st Defendant but dismissed the Plaintiff’s claims against the 2nd, 4th and 5th Defendants. I also dismissed the 1st Defendant’s Counterclaim against the Plaintiff for expenses incurred in shipping 7,200 boxes of gloves. Background Facts [5] The 5th Defendant is an advocate and solicitor and a partner at Messrs. Kevin & Co. [6] Sometime on late September 2020, the 5th Defendant met one Ms. Neta (PW2) while having lunch at Ms Neta`s husband restaurant in Hartamas, Kuala Lumpur. Dato’ Kevin (who is the managing partner of the Messrs. Kevin & Co) and Ms. Neta`s husband were friends. [7] During the casual meeting, the 5th Defendant came to know that Ms. Neta`s client was looking for nitrile gloves. The 5th Defendant then informed Ms. Neta that her client, the 1st Defendant, was in the glove industry and that she could make an introduction to Ms. Neta. [8] Following the aforesaid meeting, the 5th Defendant then forwarded Ms Neta’s contact details to the 2nd Defendant (DW3) who was at the material times the personal assistant to one Mr. Kenny Yap (DW2). The 4th Defendant (DW1), who is a director of the 1st Defendant is Mr Kenny Yap’s daughter. Mr Kenny Yap was at the material times a bankrupt. S/N QUbdgqtVzUOdnrKBQGunhw [9] Ms Neta then introduced the 2nd Defendant and the 1st Defendant to one Mr Nagendra (PW1) of the Plaintiff. [10] Ms Neta, on behalf of Mr. Nagendra then negotiated the key terms including the type of gloves, price of gloves, the fixed price term, gloves allocation, payment and shipment terms including payment by escrow, with the 1st Defendant. [11] The 5th Defendant was not involved in the business negotiations between Ms. Neta and the 1st Defendant. At all material times, the 5th Defendant represented the 1st Defendant as its solicitors and also acted as the seller escrow bank account holder for the Plaintiff’s payments to the 1st Defendant. [12] Acting on the 1st Defendant’s instructions, and after reviewing the final drafts of the Full Corporate Offer (FCO) and the sale and purchase agreement for the purchase of the nitrile gloves, the 5th Defendant then conveyed the contract documents and the matters stated in the email to Nagendra on 30.9.2020 at 09:59 (Malaysian time). [13] The Plaintiff’s identity as the buyer first emerged when Mr. Nagendra returned the signed FCO and Glove SPA by email on 1.10.2020 at 18:07 (Malaysian time). Thus, the Glove SPA was concluded on 1.10.2020 (“the Glove SPA”). [14] The 4th Defendant was a signatory to the Glove SPA in her capacity as the sole director of the 1st Defendant. S/N QUbdgqtVzUOdnrKBQGunhw [15] The Glove SPA was for the Plaintiff to purchase of 5,000,000 boxes of medical gloves at a price of USD7.10 per box. The agreed total amount for Glove SPA was USD35,500,000.00. [16] For the purpose of the Glove SPA, the 1st Defendant would obtain the supply of the gloves from one Rakan Niaga (Cambodia) Co. Ltd. (“Rakan Niaga”) who was the gloves supplier of the 1st Defendant based in Vietnam and Cambodia. [17] The 1st Defendant had entered into an agreement with Rakan Niaga dated 28.08.2020 where the terms are the same and or materially the same as the Glove SPA (“the Rakan Niaga agreement”). At all material times, Rakan Niaga’s company was based in Cambodia with its factory was located in Vietnam and according to the 1st Defendant was able to supply the type, quality and amount of goods ordered by the Plaintiff. [18] The first batch of shipment was for 500,000 boxes (100 pieces of the said medical grade gloves in 1 box at a price of USD7.10 per box) (“the 1st Shipment”). The total price for the first shipment was USD3,550,000.00 (“the 1st Shipment Sum”). The first batch of the 1st Shipment was to be shipped within 7 working days from the receipt of 50% of the 1st Shipment Sum (equivalent to USD1,775,000.00) by the 1st Defendant (“1st Payment”). The balance 50% of the 1st Shipment Price (equivalent to USD1,775,000.00) shall be paid and or released to the 1st Defendant upon completion of the SGS test/ inspection in Vietnam (“2nd Payment”). S/N QUbdgqtVzUOdnrKBQGunhw [19] Following the Glove SPA, on or about 2.10.2020, the Plaintiff made a transfer of USD1,774,995.00 in the escrow account of Messrs Kevin & Co (“the Escrow Account”) as the 1st Payment. [20] Subsequently, on or around 5.10.2020, after the 1st Payment was made by the Plaintiff and credited into the Escrow Account, the 1st Defendant directed Messrs. Kevin & Co. to make a payment of USD1.6 million from the Escrow Account to Rakan Niaga, being booking payment for the gloves. This was with the knowledge and or consent of the Plaintiff. [21] On 13.10.2020, the Plaintiff transferred the balance payment of the 1st Shipment Sum, namely the 2nd Payment of USD1,775,000.00. [22] Notwithstanding the aforesaid, it is not disputed that the 1st Defendant failed to ship and deliver the 500,000 boxes of the medical grade gloves to the Plaintiff within 7 working days after payment of the 1st Payment. [23] In fact, the 1st Defendant was only prepared to deliver 26,000 boxes of the medical grade gloves to the Plaintiff after several reminders from the Plaintiff to the 1st Defendant. Even so, not only were the 26,000 boxes of the medical grade gloves far below the quantity supposed to be delivered to the Plaintiff under the 1st Shipment, the said medical grade gloves prepared to be delivered to the Plaintiff were mostly of inferior quality and or did not meet the specifications and or criteria stipulated pursuant to the Glove SPA. As a result, the Plaintiff rejected 18,800 boxes and only accepted 7,200 boxes. S/N QUbdgqtVzUOdnrKBQGunhw [24] As the 1st Defendant was unable to make the delivery and or supply of the medical grade gloves in the quantity, quality and timeline required by the Plaintiff and or in accordance with the Glove SPA, the 1st Defendant was in breach of the terms of Glove SPA. [25] The Plaintiff then conveyed to the 5th Defendant about the 1st Defendant’s breach of the Glove SPA. In response, by way of 2 emails dated 17.10.2020, the 5th Defendant informed the Plaintiff that her law firm, Messrs Kevin & Co was not involved in the logistics, negotiation and production aspect of the 1st Defendant’s business and that her role was limited to facilitating the documentation and acting as the holder of the monies in the Escrow Account. [26] On 28.10.2020, the Plaintiff sought refund of the 2nd Payment (the sum of USD1,775,000.00) which had been paid into the clients’ account held by the Messrs Kevin & Co. The 1st Defendant`s did not object to the refund requested by the Plaintiff and Messrs Kevin & Co duly refunded the same. [27] Thereafter, the Plaintiff requested the 1st Defendant to refund 1st Payment made less the cost of 7,200 boxes which the Plaintiff had accepted but the 1st Defendant failed to respond to the Plaintiff`s request. Subsequently, Messrs Kevin & Co refunded to the Plaintiff the sum of USD 156,625.00 and RM 13,160.00 on 2.4.2021 and 25.5.2021 respectively, totalling USD 169,785.00. This means that the total sum refunded were USD 1,994,785.00.

Amount (USD)

10.202 1,775,000.00 2.4.2021 156,625.00 25.5.2021 13,160.00 Total 1,994,785.00 [28] The aforesaid meant that there is still a sum of USD 1,554,095.00 still outstanding and due from the 1st Defendant to the Plaintiff comprising as follows: Description of Payment Amount (USD) Monies paid by Plaintiff to 1st Defendant (USD1,775,000 x 2) 3,550,000.00 Goods supplied by First Defendant to Plaintiff (7,200 boxes x USD7.10) -51,120.00 Monies refunded on behalf of 1st Defendant to Plaintiff (USD 1,775,000.00 + USD 156,625.00 + USD 13,160) -1,944,785.00 Balance monies to be refunded 1,554,095.00 [29] On 7.1.2021, the Plaintiff terminated the Glove SPA. [30] In this present action, the Plaintiff is claiming against the 1st Defendant for, inter alia, the sum of USD 1,554,095.00 for breach of the terms of the Glove SPA. S/N QUbdgqtVzUOdnrKBQGunhw [31] As regards the 2nd, 3rd and 5th Defendants, the Plaintiff’s claim against them is premised upon certain representations that were said to have been made by them ‘on their own behalf and on behalf of the 1st Defendant’ which had caused the Plaintiff to enter into the Glove SPA with the 1st Defendant. The Plaintiff claimed that the representations were false or at least were made by each of these Defendants without believing in the truth of the same. Accordingly, the Plaintiff claimed that the 2nd, 3rd and 5th Defendants are liable in the tort of deceit against the Plaintiff. [32] More specifically, with regards to the 5th Defendant, the Plaintiff claimed that the 5th Defendant, acting outside the scope of her duties as solicitors for the 1st Defendant, had represented that (a) the 1st Defendant was a “genuine” seller of gloves, (b) had acted as a commercial representative of the 1st Defendant, (c) that the 1st Defendant is experienced in the business or trade of supplying medical gloves whereby the 1st Defendant had previously completed numerous medical glove orders with other companies internationally and (d) that the 5th Defendant and or Messrs Kevin & Co had assisted the 1st Defendant in the past few months in entering into various agreements and deals with customers of other countries. Each of these was said to be untrue. [33] As regards the 4th Defendant, the Plaintiff claimed that the 4th Defendant as a director of the 1st Defendant knew at all material times that the 1st Defendant had no capability to perform the Glove SPA and by signing the Glove SPA, the 4th Defendant had fraudulently induced the Plaintiff to part with its monies. S/N QUbdgqtVzUOdnrKBQGunhw [34] As regards the 2nd Defendant, the Plaintiff claimed that she had made certain representations regarding the ability of the 1st Defendant to fulfil the terms of the Glove SPA. [35] The 1st Defendant, in turn, filed a Counterclaim against the Plaintiff for total sum of USD9,436.00 which the 1st Defendant had incurred in relation to the shipment of the 7,200 boxes of gloves from Vietnam to the Plaintiff and other related costs. The 1st Defendant contended that it was not obliged to incur such sums. The Legal Issues [36] In respect of the Plaintiff’s claims against the 1st Defendant and the 1st Defendant’s Counterclaim, the legal issues for consideration are: a) whether the 1st Defendant had breached the terms of the Global SPA; b) if there was a breach of the Global SPA, whether the 1st Defendant is entitled to rely on Articles 8 and or 15 to limit its liabilities to the Plaintiff; c) whether the Plaintiff had, by its conduct in dealing directly with Rakan Niaga after the breach of the Global SPA, waived and or altered the parties’ obligations under the Global SPA; d) whether the 1st Defendant’s Counterclaim relates to mitigation actions taken by the Plaintiff, and thus ought to be borne by the 1st Defendant; S/N QUbdgqtVzUOdnrKBQGunhw e) whether the 1st Defendant has, in any event, adduced any evidence in support of its Counterclaim. [37] In respect of the Plaintiff’s claims against the 2nd, 4th and 5th Defendants for fraudulent misrepresentations and or deceit: a) whether the Plaintiff has established that the 2nd, 4th and 5th Defendants had in fact made the representations alleged; b) whether the Plaintiff has established dishonesty and or an intention to defraud the Plaintiff on the part of the 2nd, 4th and 5th Defendants; c) whether the Plaintiff has established that it had relied on the representations allegedly made by the 2nd, 4th and 5th Defendants and was induced to enter into the Global SPA by reason of the representations. Also, whether the Plaintiff’s reliance, if any, was reasonable in the circumstances. Court’s Considerations [38] The 1st Defendant does not dispute the fact that the 1st Shipment was not delivered to the Plaintiff as agreed. However, the 1st Defendant contended that the Plaintiff at all material times was aware that the 1st Defendant was only acting as an intermediary supplier to the Plaintiff where the gloves under Glove SPA would be manufactured and or supplied by a 3rd Party, in this case Rakan Niaga. S/N QUbdgqtVzUOdnrKBQGunhw [39] In fact, there is clear evidence that the Plaintiff was aware and had knowledge that the supply of the gloves by the 1st Defendant to the Plaintiff was dependent upon the 1st Defendant’s supplier. In other words, the 1st Defendant had back-to-back arrangement with its 3rd Party supplier to manufacture the gloves to fulfill the Plaintiff’s purchase. The Plaintiff was provided with a copy of the Rakan Niaga Agreement (appropriately redacted to protect the 1st Defendant’s interest) by the 5th Defendant through her email dated 1.10.2020. [40] It was because of this back-to-back arrangement that the Plaintiff and the 1st Defendant had agreed between themselves on the extent of the rights of the parties in the event the 1st Defendant were unable to perform the delivery of the gloves under the Glove SPA. In this regard, the following express terms of the Glove SPA are material: “Article 8: Non-performance clause: The Buyer and Seller agreed to be liable and pay a penalty per Article 16, if the buyer or the Seller does not perform as per to this Contract terms, and transaction. Seller will not be liable to Buyer for any delay, non-delivery or default of this Agreement due to labor disputes, transportation shortage, delay or shortage of materials to produce the Goods, fires, accidents, Acts of God or any other causes outside of Seller’s control. Seller shall notify buyer immediately upon realization that it will not be able to deliver the Goods as promised. Either party may terminate this Agreement upon such notice. Any payments that have been released will be refunded back to the buyer based on the amount of undelivered goods.” S/N QUbdgqtVzUOdnrKBQGunhw “Article 15: Responsibility of Parties: Limitation of Liability UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR ANY DAMAGES RESULTING FROM ANY PART OF THIS AGREEMENT SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFIT OR LOST BUSINESS, COSTS OF DELAY OR FAILURE OF DELIVERY, WHICH ARE NOT RELATED TO OR THE DIRECT RESULT OF A PARTY’S NEGLIGENCE OR BREACH” [41] Although Article 8 refers to Article 16, Article 16 of the Glove SPA, however, does not provide for any terms relating to penalty in the event that any party fails to fulfil their obligations. Instead Article 16 of the Glove SPA merely provides the bank details of the parties. What this means is that in the case where Article 8 is applicable, the parties had agreed that the compensation in the case of any breach of the Glove SPA would be limited to the refund of an amount equivalent to the undelivered goods under Article 8 without any penalty. [42] In this regard, I do not share the view of counsel for the 1st Defendant that under Article 8, the 1st Defendant shall not be liable at all in the event the delay, non-delivery or breach of the Glove SPA is due to causes outside the 1st Defendant’s control. Article 8 must be read in its entirety and must be understood to mean that the 1st Defendant is entitled to limit its liability to just the refund of ‘the amount of undelivered goods’ if the 1st Defendant can bring itself within the S/N QUbdgqtVzUOdnrKBQGunhw conditions stated thereto. It is a limitation of liability and not an exclusion of liability. [43] This brings us to the question as to whether the 1st Defendant’s failure to deliver or perform the Glove SPA was due to ‘causes outside of the Seller’s control’. [44] As alluded to above, the terms of the Glove SPA provided for the first batch of the 1st Shipment to be shipped within 7 working days from the 1st Payment, namely, the receipt of 50% of the 1st Shipment Sum by the 1st Defendant. The 1st Payment was received on 5.10.2020. This means that the 1st Shipment ought to have been made by 12.10.2020. [45] The Glove SPA also stipulated that the 2nd Payment, being the balance 50% of the 1st Shipment Price (equivalent to USD1,775,000.00) shall be paid and or released to the 1st Defendant upon completion of the SGS test and inspection. Since the gloves could only be shipped after the completion of the SGS test or inspection, this must mean that the SGS test or inspection ought to be completed within the 7-day period from the time the 1st Defendant had received the 1st Payment. [46] The 1st Defendant submitted that it had no control over the quality testing, inspection and certification of gloves from SGS in Vietnam. In fact, under the Glove SPA, the gloves were expressly subject to compliance and approval of quality testing, inspection and certification from SGS, Vietnam. S/N QUbdgqtVzUOdnrKBQGunhw [47] The requirement for the approval of the gloves by SGS, Vietnam was an agreed term of the Glove SPA to ensure that the quality of the gloves would meet the Plaintiff’s requirements. [48] It is not disputed that Rakan Niaga did not ship the gloves by 12.10.2020 at all. Neither was the SGS test or inspection done. [49] From the evidence disclosed at the trial, it is an uncontroverted fact that the inspection by SGS Vietnam was delayed and or could not be obtained due to both logistic issues and intervention from the Vietnamese government. That these issues were due the constraints resulting from the Covid-19 pandemic that engulfed the world at that time was not disputed by the Plaintiff. [50] The delay was informed to the Plaintiff via the WhatsApp conversations on 14.10.2020 and 16.10.2020. Significantly, via a telephone call between the Plaintiff and the 1st Defendant on 8.11.2020, the Plaintiff itself stated to the 1st Defendant, among others, that the Plaintiff understood that the delay was not due to the 1st Defendant. [51] On the 1st Defendant’s part, in order to ensure that Rakan Niaga performed its obligations to make delivery of the gloves on immediate basis, the 1st Defendant had informed the Plaintiff that the 1st Defendant would lodge a police report against Rakan Niaga. However, Mr Nagendra via his WhatsApp message on 11.12.2020 had instructed the 1st Defendant to refrain from making any police report against Rakan Niaga. S/N QUbdgqtVzUOdnrKBQGunhw [52] It is also not a disputed fact that Mr Nagendra, on behalf of the Plaintiff, had taken it upon himself to deal directly with Rakan Niaga on the 1st Shipment and in this regard, had granted numerous extensions to Rakan Niaga to make the shipment of at least 23,600 cartons of gloves to the Plaintiff. [53] In fact, even though the 1st Defendant itself had repeatedly wanted to compel Rakan Niaga to make delivery of the gloves to the Plaintiff on an immediate basis and failing which to force a refund of the monies, Mr Nagendra had intervened and instructed the 1st Defendant to give indulgence to Rakan Niaga including getting the 1st Defendant to withdraw the police report filed against Rakan Niaga as requested by Rakan Niaga. [54] Based on the aforesaid, the 1st Defendant contended that the Plaintiff had unilaterally altered and or waived the terms of the Glove SPA and as a result releasing the 1st Defendant from all its obligations under the same. [55] With respect to learned counsel for the 1st Defendant, I cannot agree. [56] Whilst it is true that the 1st Defendant had no control over the SGS testing or inspection, the logistic issues and the intervention by the Vietnamese government at the material times, there is really no evidence before this Court that Rakan Niaga was in any position to deliver the gloves as ordered by the Plaintiff for which the 1st Defendant had agreed with the Plaintiff to supply. To put it differently, the delay or even the omission to procure the SGS Vietnam test S/N QUbdgqtVzUOdnrKBQGunhw report was not the cause for the 1st Defendant’s breach of the Glove SPA. The Glove SPA could not be performed because Rakan Niaga could not produced the gloves in accordance with the specifications and quantities stipulated therein. [57] It is also my judgment that the 1st Defendant cannot avail itself of the failure by Rakan Niaga to deliver and ship the gloves as ‘any other causes outside of the Seller’s control’. To my mind, this phrase must be read and construed ejusdem generis with the other conditions stated in Article 8, namely ‘… labor disputes, transportation shortage, delay or shortage of materials to produce the Goods, fires, accidents, Acts of God’. In other words, the ‘causes outside of Seller’s control’ are confined only to causes not within the control of the 1st Defendant. In this regard, the non-performance by Rakan Niaga cannot be said to be outside the control of the 1st Defendant. This is so because the performance of the Rakan Niaga Agreement is a matter within the control of the 1st Defendant who could impose conditions on Rakan Niaga. [58] Furthermore, whilst it is true that the Plaintiff had unilaterally taken upon itself to deal directly with Rakan Niaga, nevertheless, it must be noted that the Plaintiff had only done so after the 1st Defendant had breached the terms of the Glove SPA in failing to deliver the 1st Shipment within the stipulated time line. [59] The Plaintiff was anxious to have the 1st Shipment delivered by Rakan Niaga and had taken the commercial view that it would properly be more effective to grant indulgences and time to Rakan S/N QUbdgqtVzUOdnrKBQGunhw Niaga to perform as opposed to the 1st Defendant’s proposed steps of lodging police reports and making threats against Rakan Niaga. [60] Indeed, there is no evidence adduced by the 1st Defendant that a different result would be achieved had the Plaintiff not granted the indulgences to Rakan Niaga and permitted the 1st Defendant to proceed with the police report against it and to pursue the matters with the relevant embassies. [61] I cannot see how by the Plaintiff’s aforesaid actions, it can be said that the Plaintiff had altered or waived its rights against the 1st Defendant under the Glove SPA. Similarly, the fact that the Plaintiff had voluntarily and without compulsion made the 2nd Payment i.e the remaining 50% payment of the 1st Shipment Sum, into the Escrow Account on or around 13.10.2020 although the Plaintiff was only required to do so only after the SGS Vietnam test was completed as provided under Article 1 of the Glove SPA, is to my mind, of no moment. This is because the 2nd Payment was never released by the 1st Defendant and was subsequently refunded to the Plaintiff. [62] Although Article 8 is not applicable in the present case, Article 15 of the Glove SPA is another limitation of liability clause agreed to by the parties. Can the 1st Defendant rely on this clause to limit its liability to the Plaintiff, instead? [63] In the High Court case of Wee Lian Construction Sdn Bhd v Ingersoll Jati Malaysia Sdn Bhd [2005] 1 MLJ 162, Kamalanathan Ratnam J (as he then was) held that: S/N QUbdgqtVzUOdnrKBQGunhw “It is trite law that where an exclusion clause or a limitation of liability clause is incorporated in a document signed by the person sought to be held bound by it, he or she is bound by what he signs whether he has read it or not unless its effect has been misrepresented (See L'Estrange v F Graucob Ltd [1934] 2 KB 394). Since there was no misrepresentation on the part of the defendant, the said cl 11 would be effective to exclude the defendant from any liability arising thereof of any breach of condition/warranty and the defendant is thus not liable for any loss or damage suffered by the plaintiff as claimed. (See Green Ltd v Cade Bros [1978] Vol 1 QB 602). .... In any event, the law on the effect of. a cl excluding and/or limiting liability is clear and would depend on the construction of the contract as a whole. As there was an agreed limitation clause, this should be given effect to. By reason of the aforesaid, the defendant cannot be made liable for the losses allegedly sustained by the plaintiff.” [64] In the instant case, there is no suggestion by the Plaintiff that Article 15 is not valid and or unenforceable between the parties. This means that unless the Plaintiff can show that the losses which it suffered is either related to or is a direct result of the 1st Defendant’s negligence or breach, the 1st Defendant can limit its liability to the Plaintiff against such losses as loss of revenue or anticipated profit or lost business, cost of delay or failure of delivery. In other words, if the losses are directly related to or a direct result of the 1st Defendant’s breach, the 1st Defendant is not entitled to the limitation in Article 15 and the Plaintiff is entitled to its claims, including the claim for loss of profits, if any. S/N QUbdgqtVzUOdnrKBQGunhw [65] Whilst there is no allegation made that the 1st Defendant had been negligence in the performance of the Glove SPA, the Plaintiff has clearly demonstrated and proven that the 1st Defendant had indeed breached the terms of the Glove SPA. [66] Thus, it is my judgment, the Plaintiff is entitled to claim damages against the 1st Defendant for all its losses that can be shown to be a direct result of the 1st Defendant’s breach of the Glove SPA. This must include the refund of ‘the amount of undelivered goods’, which has been computed to amount to USD 1,554,095.00 and also any loss of profits which the Plaintiff would otherwise have enjoyed had the 1st Defendant performed the Glove SPA. 1st Defendant’s Counterclaim [67] The 1st Defendant has raised a counterclaim against the Plaintiff. The counterclaim is premised on the fact that sometime on or about 20.10.2020, the 1st Defendant found out that the Plaintiff, without the knowledge or confirmation of the 1st Defendant, had arranged the booking of containers through the Plaintiff’s own employee and or representative named Dante. [68] When the gloves could not be supplied by Rakan Niaga, the Plaintiff had instructed the 1st Defendant to bear all costs and fees for the cancellation of the containers ordered by the Plaintiff notwithstanding that: a) the Plaintiff had placed orders for the containers without the 1st Defendant’s prior knowledge and/or confirmation; and S/N QUbdgqtVzUOdnrKBQGunhw b) the Plaintiff had full knowledge that containers should only be ordered when all gloves had obtained approval from SGS Vietnam. [69] Initially, on a goodwill basis, the 1st Defendant expended and incurred additional costs despite the fact that those expenditures were caused and or incurred by the Plaintiff’s own doing, as follows: a) the costs of delivery of gloves to the Plaintiff in respect of 7,200 boxes of Superieur Black Nitrile gloves on 12.11.2020 including the cancellation of the container costs; b) the costs of delivery of gloves to the Plaintiff in respect of 50 boxes of Ezcare Blue Nitrile gloves on 03.02.2021 by air freight despite the fact that the Glove SPA only provided for delivery by sea; c) subsequently, on 03.03.2021, the Plaintiff had unilaterally appointed a logistic company to rent a warehouse for storing gloves and appointed and independent testing and inspection company named TUV SUD Vietnam Co. Ltd (“TUV”) to test as well as inspect the gloves that would be supplied pursuant to the Glove SPA; d) the Plaintiff further instructed the 1st Defendant to bear all costs such as storage costs, warehouse management costs, transportation truck costs, palletize fees and fees to TUV to perform the tests and inspections on the gloves; S/N QUbdgqtVzUOdnrKBQGunhw [70] The 1st Defendant contended that it had borne all costs as instructed by the Plaintiff even though such costs were not the 1st Defendant’s responsibility under the said Agreement. The losses suffered are as follows: a) costs of delivery of gloves to the Plaintiff in respect of 7,200 boxes of Superier Black Nitrile gloves on 12.11.2020 amounting to USD4,500.00; b) costs of delivery of gloves to the Plaintiff in respect of 50 boxes of Ezcare Blue Nitrile gloves on 03.02.2021 by air freight amounting to USD200.00; c) storage and warehouse management costs amounting to USD1,650.00; d) transportation truck costs amounting to USD750.00; e) palletize fees amounting to USD285.00; and f) fees to TUV for performing tests and inspections on gloves amounting to USD2,051.00. [71] Based on the aforesaid, the 1st Defendant’s Counterclaim is for the payment of a total sum of USD9,436.00 from the Plaintiff with interest. [72] With respect, the expenses that were incurred above were in fact expenses towards the Plaintiff’s action in seeking to mitigate its S/N QUbdgqtVzUOdnrKBQGunhw losses arising from the 1st Defendant’s breach of the Glove SPA. These expenses would not have been incurred had the 1st Defendant performed its obligations under the Glove SPA. In any case, if these expenses had not been incurred, the losses suffered by the Plaintiff would have been more. [73] Further, the 1st Defendant also could not adduce any evidence in Court in supporting the Counterclaim. The burden is on the 1st Defendant to prove that the expenses were in fact actually incurred. Yet no documentary evidence was adduced in support of the same. [74] For the aforesaid reasons, the 1st Defendant’s Counterclaim has no merits and is dismissed. Claims against 2nd, 4th and 5th Defendants for deceit and fraudulent misrepresentation [75] The Plaintiff claimed that the 2nd, 4th and 5th Defendants had fraudulently represented to Plaintiff through Mr. Nagendra and Ms. Neta prior to the execution of the Glove SPA as follows: a) the 1st Defendant could and or was able to supply the said medical grade gloves of good quality in such large quantities to the Plaintiff as required by the Plaintiff at that time; b) the 1st Defendant could and or was able to meet the Plaintiff's requirements regarding the quantity and quality of the said medical grade gloves in accordance with the Plaintiff's delivery timeline for the said medical grade gloves; S/N QUbdgqtVzUOdnrKBQGunhw c) the 1st Defendant was experienced in the business and or trade of the said medical grade gloves where the 1st Defendant had previously completed numerous medical grade glove orders with other companies internationally; d) the 5th Defendant and or Messrs. Kevin & Co. had assisted the 1st Defendant in the past few months in entering into various agreements and deals legally with clients from other countries; e) the payment methods specified in the glove agreement are fixed and not open for any negotiation in view of the various purchase orders made from various countries. Therefore, the 1st Defendant practised "first come first serve" basis and the Plaintiff must provide confirmation in relation to the purchase quantity and payment method promptly and or swiftly. (collectively referred as “the Representations”) [76] However, at the trial of the Plaintiff’s action, the Plaintiff has not adduced any evidence at all that the 2nd, 4th and 5th Defendants had acted fraudulently in the making of the Representations, if at all to the Plaintiff. [77] In the case of the 2nd Defendant, at the trial, the 2nd Defendant testified that on or about 27.9.2020, she had informed Miss Neta that she was merely assisting the 1st Defendant’s CEO, Mr. Kenny Yap in the 1st Defendant’s business transactions. In particular, the 2nd Defendant attached her business card of her company i.e. S/N QUbdgqtVzUOdnrKBQGunhw Iceberg Consulting Services to show that she was not even an employee of the 1st Defendant. [78] Accordingly, as a non-employee of the 1st Defendant, the 2nd Defendant had no authority to make any representation on behalf of the 1st Defendant. Indeed, the Plaintiff has not been able to show any evidence that the 2nd Defendant had made any of the Representations as claimed. [79] Significantly, during cross examination, Mr Nagendra admitted that he had never spoken to the 2nd Defendant at all prior to the signing of the Glove SPA. This piece of evidence is directly contradictory to Miss Neta’s testimony. [80] The claim by the Plaintiff that the 2nd Defendant had “convinced the Plaintiff`s representatives to sign the Glove SPA without ensuring that they have the capacity to supply according the demand made by the Plaintiff” is a bare statement without any empirical evidence in support of the same. [81] Accordingly, the Plaintiff’s claims against the 2nd Defendant simply cannot succeed. [82] As regards the claims against the 4th Defendant, the Plaintiff premised its claims on the basis that the 4th Defendant is the shareholder cum director of the 1st Defendant. The 4th Defendant also admitted to signing the Glove SPA and had left all negotiations and decisions regarding the Glove SPA in the good hands of her father, Mr Kenny Yap. S/N QUbdgqtVzUOdnrKBQGunhw [83] In fact, save for the fact that the 4th Defendant had signed the Glove SPA as a director of the 1st Defendant, the 4th Defendant’s involvement in the transaction between the 1st Defendant and the Plaintiff was minimal. Indeed, the Plaintiff could not support its claims that the 4th Defendant had made the Representations at all. [84] Instead, what the Plaintiff had sought to do was to claim that Mr. Kenny Yap was the agent of the 2nd Defendant to run the business of the 1st Defendant. Based on the aforesaid, the Plaintiff contended that all acts of Mr. Kenny Yap or his subordinate would be deemed as the acts of the principal i.e the 4th Defendant. [85] With respect, the Plaintiff’s aforesaid contention is completely untenable in law and in fact. Mr Kenny Yap was never an agent of the 4th Defendant at all. If at all, Mr Kenny Yap had purported to act as an agent of the 1st Defendant. This is because the Plaintiff was at all material times negotiating with the 1st Defendant on the terms of the Glove SPA. The Plaintiff was never dealing with the 4th Defendant. [86] The fact that the 4th Defendant had signed the Glove SPA in her capacity as a director of the 1st Defendant does not mean that she had personally warranted to the Plaintiff that the terms of the Glove SPA would be complied with by the 1st Defendant. In fact, there is no evidence that the 4th Defendant did not bona fide believe that the 1st Defendant would indeed perform its obligations under the Glove SPA to the Plaintiff through Rakan Niaga. S/N QUbdgqtVzUOdnrKBQGunhw [87] For the above reasons, it is also my judgment that the Plaintiff’s claims against the 4th Defendant is simply unsustainable. [88] As regards the Plaintiff’s claims against the 5th Defendant, the Plaintiff is relying on the following facts: a) it was the 5th Defendant who had introduced the 1st Defendant to the Plaintiff. The 5th Defendant had put the 2nd Defendant in contact with Miss Neta, who was the Plaintiff’s representative at the material times; b) whilst the 5th Defendant was not involved in the discussions and negotiations of the terms leading to the execution of the Glove SPA, the 5th Defendant was the solicitor in the firm of Messrs Kevin & Co, who had assisted the 1st Defendant in the drafting of the contract documents for the 1st Defendant’s transaction with the Plaintiff; c) the 5th Defendant`s firm, Messrs Kevin & Co was also acting as an escrow agent or stakeholder for both the Plaintiff and the 1st Defendant in the Glove SPA; d) in an email dated 30.9.2020, the 5th Defendant had stated to the Plaintiff that she and her Law Firm “ We are pleased to inform you that we have been assisting [the 1st Defendant] in the past months to conclude various agreements and deals legally from different countries …” which according to the Plaintiff means that the 1st Defendant had successfully S/N QUbdgqtVzUOdnrKBQGunhw transacted deals similar to the transaction contemplated in the Glove SPA with the Plaintiff; e) that unbeknown to the Plaintiff at the material times, both the 5th Defendant and her partner had some commercial interests in the Glove SPA, which was the reason for the 5th Defendant ‘pushing’ for the Glove SPA to be concluded. The Plaintiff claimed that the 5th Defendant`s dual role in this transaction had led the Plaintiff to pursue the deal on a rush without much time for the Plaintiff to ascertain the capacity of the 1st Defendant to supply to gloves. [89] In evaluating the Plaintiff’s claims against the 5th Defendant, it is important to keep in mind the following undisputed facts: a) there is no evidence that the transaction that the 1st Defendant had entered into with the Plaintiff vide the Glove SPA was anything otherwise than a genuine transaction; b) indeed, there is not an iota of evidence to suggest that at the time the 1st Defendant signed the Glove SPA, it was known to any of the Defendant that Rakan Niaga would not be in any position to supply the Plaintiff with the gloves as specified in the quantities as agreed. There is also no evidence that Rakan Niaga was incapable of shipping the gloves within the timeline as agreed at the time of the Glove SPA. In fact, even it was the case that Rakan Niaga had known when it entered into the Rakan Niaga Agreement with the 1st Defendant that it was incapable of supplying the gloves to the 1st Defendant, the S/N QUbdgqtVzUOdnrKBQGunhw Plaintiff must be able to show that the 1st Defendant was in fact aware of the said fact at the time the Glove SPA was executed. No such evidence was adduced; c) certainly, there is no evidence to show that the 5th Defendant knew that Rakan Niaga and or the 1st Defendant would not or could not have performed its obligations under the Glove SPA to the Plaintiff at the time the Glove SPA was executed. [90] Although the 5th Defendant was not involved in the negotiations on the terms of the Glove SPA, the Plaintiff contended that it had placed heavy reliance on the 5th Defendant’s email of 30.9.2020 where she had represented to the Plaintiff that “[W]e are pleased to inform you that we have been assisting our Client in the past few months to conclude various agreements and deals legally from different countries”. [91] By the aforesaid, the Plaintiff contended that the 5th Defendant had represented to the Plaintiff that the 1st Defendant was experienced in the business or trade of medical grade gloves, that the 1st Defendant had previously entered onto similar transactions with other clients and that the 5th Defendant had drafted many contract documents for the 1st Defendant involving sales of medical gloves. The Plaintiff contended that it had in reliance on the said representations by the 5th Defendant proceeded to enter into the Glove SPA on 1.10.2020. Is there any merit at all to this claim? [92] In an action for fraudulent misrepresentation and or deceit, the Plaintiff must prove actual fraud in that a false representation had S/N QUbdgqtVzUOdnrKBQGunhw been made knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false. [See: ALW Car Workshop Sdn Bhd v. AXA Affin General Insurance Bhd [2019] 7 CLJ 667 (FC) at para [46]]. [93] The Plaintiff must also prove that it was, in the circumstances of this case, reasonable to rely on the representation made by the 5th Defendant, if any. [94] In this case, the 5th Defendant in her testimony had maintained that what she had stated in the email dated 30.9.2020 were not untrue. In particular, the 5th Defendant testified that she had indeed assisted the 1st Defendant in concluding various agreements and deals prior to the Glove SPA. Notably, the 5th Defendant referred to the Rakan Niaga Agreement as an example of an agreement and a deal that she had assisted the 1st Defendant in concluding. She also stated that they were other agreements which she had drafted for the 1st Defendant although no such documents were adduced before this Court. [95] The 5th Defendant in her evidence in chief explained that by the email dated 30.9.2020, all that she had done was to convey to Mr Nagendra that she had assisted the 1st Defendant to conclude various agreements and deals that “will happen in the future”. By this she meant that she had drafted agreements for the 1st Defendant for the 1st Defendant to use in its future dealings with its customers or suppliers. S/N QUbdgqtVzUOdnrKBQGunhw [96] With respect, it is difficult to read the sentence “[W]e are also pleased to inform you that we have been assisting our Client in the past months to conclude various agreements and deals legally from different countries…” (emphasis mine) to mean that the 5th Defendant was referring to “agreements and deals that will happen in the future’ as contended. [97] However, notwithstanding the aforesaid, it is my judgment that the aforesaid sentence does not at all give rise to the representations as contended by the Plaintiff. Given the role of the 5th Defendant as the legal counsel for the 1st Defendant, surely the focus of the aforesaid sentence cannot be on the successful conclusions of any commercial agreements or deals by the 1st Defendant but rather on the legality of the agreements and deals entered into by the 1st Defendant? [98] As the legal counsel for the 1st Defendant, it was not the 5th Defendant’s role to make any representations touching on the commercial aspects of the 1st Defendant’s business. As such, to my mind, by the aforesaid statement, the 5th Defendant was stating to the Plaintiff that it had assisted the 1st Defendant to conclude various agreements and deals which were legally enforceable and compliance with clients from different countries. [99] In any case, even if the aforesaid sentence can be taken to mean that the 1st Defendant had concluded various agreements and deals with customers from different countries, the Plaintiff has the burden of proving that the 5th Defendant had acted dishonestly and or had S/N QUbdgqtVzUOdnrKBQGunhw the intention of inducing the Plaintiff to enter into the Global SPA with the 1st Defendant by the aforesaid statement. [100] In this regard, the Plaintiff has not established during the cross examination of the 5th Defendant that the 5th Defendant had any such dishonest and or fraudulent intent at all. [101] Furthermore and not without significant, is that there is also no evidence that the Plaintiff had in fact relied on the said representation or was induced by the same to enter into the Glove SPA with the 1st Defendant. In other words, the Plaintiff has not discharged its burden on the balance of probabilities that but for the aforesaid representation, the Plaintiff would not have entered into the Global SPA with the 1st Defendant. [102] As a start, the aforesaid statement was not issued by the 5th Defendant in respond to any direct enquiry by the Plaintiff on the 1st Defendant’s previous agreements and deals at all. The 5th Defendant was at all material times acting as the legal counsel for the 1st Defendant and there is no reason for the Plaintiff to rely on the 5th Defendant to establish the 1st Defendant’s capabilities to fulfil its obligations under the Glove SPA. [103] The Plaintiff was at all times legally represented and was expected from the nature of the transaction to conduct its own due diligence on the 1st Defendant. In this connection, the Plaintiff had engaged Miss Neta as the person in Malaysia to meet with the representatives of the 1st Defendant and to subsequently discuss S/N QUbdgqtVzUOdnrKBQGunhw and negotiate the terms of the Glove SPA. The 5th Defendant was never involved in any commercial aspects of the transaction. [104] Significantly, Mr Nagendra himself admitted during cross examination that the Plaintiff never conducted any due diligence on the 1st Defendant but had conducted some due diligence on Messrs Kevin & Co only. This suggests that the Plaintiff was more concern with the legality of the Glove SPA and the reliability of Messrs Kevin & Co as the Escrow Agent. The Plaintiff was not concerned with the track records of the 1st Defendant. Indeed, there is no evidence that the Plaintiff had sought from the 1st Defendant its past track records during the negotiation leading to the Glove SPA. On the contrary, the Plaintiff was quite content to rely on Miss Neta’s assessment of the 1st Defendant. [105] Further, at no time did the Plaintiff ever communicate to the 5th Defendant that it had relied on its statement made in her email dated 30.9.2020 to enter into the Global SPA with the 1st Defendant. Even after the 1st Defendant had breached the terms of the Global SPA in failing to deliver the 1st Shipment, the Plaintiff never stated to the 5th Defendant that it had relied on her aforesaid statement and or was induced by the same to enter into the Global SPA with the 1st Defendant. [106] On the contrary, the Plaintiff had even complimented the 5th Defendant on her professionalism in the handling of the Global SPA after the 1st Defendant had breached its obligations under the Global SPA. In particular, instead of making allegations of deceit and misrepresentation against the 5th Defendant, the Plaintiff had sent S/N QUbdgqtVzUOdnrKBQGunhw an email on 21.10.2020 acknowledging the 5th Defendant’s professionalism, that her Law Firm had acted in accordance with the law and that the Plaintiff was prepared to entrust and use the 5th Defendant’s legal services for future transactions. Such actions do not at all reflect the Plaintiff’s claims that it had relied upon the 5th Defendant’s representation that had turned out to be fraudulent. [107] Accordingly, for the reasons above, it is my judgment that the Plaintiff’s claims against the 5th Defendant has not been proven on the balance of probabilities and for this reason must be dismissed with costs. No reliefs against then 2nd, 4th and 5th Defendants based on tort [108] Before I conclude, I need to comment on the reliefs prayed for by the Plaintiff in its Amended Statement of Claim. [109] Prayers 28(i) and (ii) sought for the following reliefs:

That the Defendants, jointly and severally refund the Plaintiff for a sum of USD 1,554,095.00 or such amount as this Honourable Court thinks fit;

(ii) That the Defendants, jointly and severally, pay damages and/or compensation for the breaches and/or non-performance of the Glove SPA as may be assessed and determined by this Honourable Court. [110] The Plaintiff had deliberately deleted its prayer for ‘general damages to be assessed by this Honourable Court and shall be paid by the Defendants to the Plaintiff for misrepresentation and/or fraud and/or cheating by the Defendants’. S/N QUbdgqtVzUOdnrKBQGunhw [111] Quite clearly, the prayers in paragraphs 28(i) and (ii) are prayers for claims based on the Glove SPA. Indeed, the fact that the Plaintiff had deliberately deleted its relief based on misrepresentation only confirms this position. [112] However, it is not the Plaintiff’s case that the 2nd, 4th and 5th Defendants are parties to the Glove SPA at all. It is therefore curious and indeed incomprehensible how the Plaintiff is seeking to make the 2nd, 4th and 5th Defendants to be jointly and severally liable to the Plaintiff under the Glove SPA. [113] What this means is that even though the Plaintiff has pleaded a cause of action for misrepresentation against the 2nd, 4th and 5th Defendants, no reliefs pursuant to the said cause of action have been prayed for in the Amended Statement of Claim. [114] As it turns out, I had dismissed the Plaintiff’s claims against the 2nd, 4th and 5th Defendants for misrepresentation. Had it been allowed, the Plaintiff would have been left with no reliefs prayed in respect of the same. Conclusion [115] Based on the above, this Court makes the following orders: a) the 1st Defendant to pay the Plaintiff the sum of USD1,554,095.00 with interest fixed at 5% per annum from the date of the Writ to actualisation; S/N QUbdgqtVzUOdnrKBQGunhw b) the 1st Defendant to pay the Plaintiff damages to be assessed; c) the 1st Defendant’s Counterclaim against the Plaintiff is dismissed; d) the 1st Defendant to pay the Plaintiff costs fixed at RM 75,000.00 subject to the payment of allocator; e) the Plaintiff’s claims against the 2nd Defendant is dismissed with costs fixed at RM 50,000.00 subject to payment of allocator; f) the Plaintiff’s claims against the 4th Defendant is dismissed with costs fixed at RM 50,000.00 subject to payment of allocator; g) the Plaintiff’s claims against the 5th Defendant is dismissed with costs fixed at RM 75,000.00 subject to allocator. Dated the 15th day of July 2024 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 S/N QUbdgqtVzUOdnrKBQGunhw Counsel:

Mr. Bani Prakash A/L R. Lechumiah for Plaintiff

Mr. Alan Wong together with Mr. Mohd. Shahir bin Md. Tahir for 1st and 4th Defendants

Mr. Yap Yoon Jan for 2nd Defendant

Mr. Mark Lau together with Ms. Kristen Tan for 5th Defendant

Wee Lian Construction Sdn Bhd v Ingersoll Jati Malaysia Sdn Bhd [2005] 1 MLJ 162 2. ALW Car Workshop Sdn Bhd v. AXA Affin General Insurance Bhd [2019] 7 CLJ 667 (FC)