Tan Zu Yan v Tan Chor Eeow (WA-24NCC-409-08/2024)

TAN CHOR EEOW

TAN LIONG HUAT @ TAN SWEE HUAT

TAN CHEON HUAT

TAN CHOR HAN

P M MAHSURI SDN BHD (COMPANY NO.: 201201007728 (981248-A)) …DEFENDANTS GROUNDS OF JUDGEMENT INTRODUCTION [1] This is a judgement of the court in respect of two minority oppression suits, comprising 4 interlocutory applications concerning consent judgements recorded by parties in two different suits. These proceedings arise from a buyout of very large family owned and shared business as rice traders since 1981, between two companies namely Ninamaju Sdn Bhd and PM Mashuri Sdn Bhd. [2] In an attempt to settle the matter amicably, parties entered into a Consent Order to pursue a valuation of the relevant companies for resolving the buy‑out of minority shares. Subsequently disputes arose between two groups of shareholders which ultimately resulted in the filing of Enclosures 1 before this court. S/N Xhn65z5IB0mrso9hy31twA [3] Suit WA-24NCC-409-08/2024 relates to the purchase of PM Mahsuri Sdn Bhd (Suit 409) and Suit WA-24NCC-268-05/2025 relates to the purchase of Ninamaju Sdn Bhd (Suit 268). Both suits have escalated from the same factual background and parties, namely the Plaintiffs in Suit 268 are also the Defendants in Suit 409 and vice versa. Therefore, this ground of judgement will incorporate all 4 interlocutory applications, filed by the respective parties in each suit as follows: - Interlocutory Applications SUIT 268 Consent Order dated 13.03.2025 Enclosure 78 SUIT 409 Consent Order dated 19.03.2025

Enclosure 88 Application for the variation of the terms in the

Dismissed Application for a Consequential order not agreed upon in when the Consent Judgement was recorded. Enclosure 84 Allowed Enclosure 93 Allowed S/N Xhn65z5IB0mrso9hy31twA BRIEF BACKGROUND [4] On 13.3.2025, at the Alor Setar High Court both parties recorded a Consent Order which, inter alia, contained an Order for the matter to be transferred to this court. A further Consent Order, containing similar terms was recorded on 19.03.2025 through Originating Summons in Suit 409. [5] The Consent Orders recorded in court was to enable a valuation process leading to a buy‑out. Its terms require each party to appoint an independent valuer and contemplate reasonable access to the company’s books and records for valuation purposes. The Consent Orders expressly expects cooperation between the parties so that valuation can proceed appropriately. For easy reference, names of parties, abbreviations and the approximated Shareholding Percentage in Ninamaju Sdn Bhd are as below: - NINAMAJU SDN BHD PARTIES IN SUIT 268 Approximated Percentage of shareholding in Ninamaju Sdn Bhd Abbreviation’s Plaintiff Tan Liong Huat 50% (whom are aligned with the Plaintiff) Group TLH S/N Xhn65z5IB0mrso9hy31twA Defendants 1.Tan Huat Hoe 2.Tan Zu Yan 3.Ong See Fong 4.Ninamaju SB 50% (whom are aligned with the Defendants) Group TZY PM MAHSHURI SDN BHD PARTIES IN SUIT 409 Approximated Percentage of shareholding in PM Mashuri Sdn Bhd Abbreviation’s Plaintiff Tan Zu Yan 25%

Defendants 1.Tan Chor Eeow 2.Tan Liong Huat 3.Tan Cheon Huat 4.Tan Chor Han PM Mahshuri SB 75% (parties whom are aligned with the Defendants) Group TLH [6] Attached below are the similar and disputed clauses in their respective suits, pertaining to the Consent Judgements, summarised briefly for the courts review: -

Clause 3: parties are to appoint their own respective independent valuers for the valuation of Ninamaju. The valuer must be a certified practicing accountant;

Clause 6: parties are to agree on a fixed cut-off date and number of financial years for the valuation of Ninamaju; and

Clause 7: the independent valuers shall have reasonable access to all the books, records and financial information of Ninamaju upon request. CONSENT JUDGEMENT FOR SUIT 409 ON 19.03.2025

Clause 2: parties are to appoint their own respective independent valuers for the valuation of PM Mahsuri. The valuer must be a certified practicing accountant;

Clause 5: parties are to agree on a fixed cut-off date and number of financial years for the valuation of PM Mahsuri; and

Clause 6: the independent valuers shall have reasonable access to all the books, records and financial information of PM Mahsuri upon request. [7] It was embedded in the Consent Orders, that each party would appoint its own independent valuer, agreed for access to company records and remaining unresolved detailed matters like the cut‑off date, valuation period, and the precise qualifications of valuers to be mutually agreed or determined by both parties. [8] After the Consent Orders were recorded, the parties now could not agree on the terms above and seek this courts express directions to secure document access, an independent audit of company accounts and other consequential directions to give effect to the valuation process. S/N Xhn65z5IB0mrso9hy31twA [9] To summarise the issues before this court, my judgment will focus on two main relevant issues: - i. Application for variation orders concerning the Consent Judgements in Enclosures 81 and 90 by Group TZY ii. Application for consequential orders pursuant to terms that was not specifically agreed upon by the parties within the Consent Judgements in Enclosures 84 and 93 by Group TLH. THE FIRST ISSUE BEFORE THIS COURT Application for variation orders concerning the Consent Judgements in Enclosures 81 and 90. [10] Group TZY is now seeking the following orders to vary the Consent Judgements as follows:

that the requirement of the professional independent valuer being a certified practicing accountant in the Consent Judgement be removed;

that be allowed to appoint Mr. Elvin a/l Betty Luke Fernandez (“Elvin”) and Ms. Jowis Ng Siew Hui (“Jowis”) from Khong & Jaafar (Corporate Services) Sdn Bhd (“K&J”) as his independent valuers under the CJ; S/N Xhn65z5IB0mrso9hy31twA

that the Consent Judgement be varied to include any request made by the parties’ solicitors and to incorporate a timeline for the provision of the documents.

that parties be allowed to appoint a certified accountant to audit financial records of both the companies and to produce a financial report. In this respect,

the independent valuers appointed by the parties shall be allowed to refer to the said report for the purpose of the valuation;

the valuation to commence on the date of the Consent Judgement and the period of valuation for: - i. PM Mahsuri to be from 2012 to the end of February 2025; and ii. Ninamaju from 2010 to the end of February 2025.

that the independent valuers appointed by the parties be granted an extension of time of 3 months to complete the valuation exercise. [11] As far as the orders for variation in clauses (7), the parties have reached a common ground and will be able to agree on the extension. However, the other request for variation in the Consent Judgement is in a standstill, as parties are unable to compromise and their arguments briefly are as the follows: - S/N Xhn65z5IB0mrso9hy31twA A. Prayer (1) and (2) to be removed which seeks the requirement for a certified accountant and allowing Mr Elvin as the appointed valuer for Group TZY. [12] As far as the appointment of the independent valuer, Group TLH agreed with the appointment of K&J as long as Miss. Jowis Ng would be the main representative who signs off the valuation report and be subject to cross-examination. However, the appointment of Mr. Elvin is still in dispute as he is not a certified accountant as per the requirement in the Consent Judgements. [13] Group TLH, states that the respective valuer must be a certified practicing accountant and this was specifically raised and agreed upon by both the counsels before putting it down in writing on the Consent Order duly, recorded in the Alor Setar High Court. A business valuer is completely irrelevant and based on Group TZY’s self-admission that Mr. Elvin is not a certified accountant in any way or form. B. Prayer (3) to include any request made by the parties’ solicitors and to incorporate a timeline for the provision of the documents. [14] There were arguments raised by Group TZY that when documents were requested by their solicitors, there was no prompt response and non-cooperation back in 2022 from the other party. There was also an issue for signing a Non-Disclosure Agreement (NDA) attached in the correspondences between the solicitors as a condition precedent for request of documents. S/N Xhn65z5IB0mrso9hy31twA [15] Group TLH denies that there was any refusal to cooperate with the valuers back in year 2022 and allegations are baseless. In any event, the Consent Orders, now provides for the parties to cooperate with any requests for documents and both parties to appoint their respective valuers to obtain the value for each company. [16] Furthermore, the NDA is not a condition precedent in the Consent Judgements and the common consensus requiring an NDA is to avoid any documents being shared between the parties from being distributed and/or misused by the party receiving the documents. In this case such a request is totally baseless and not appropriate. C. Prayer (4) & (5) the appointment of a certified accountant to audit financial records of both the companies and to produce a financial report to the independent valuers [17] Group TZY is now requesting for the appointment of an independent forensic audit for both the companies and to produce a financial report to assist in this valuation. They further stress that it’s a necessity to appoint an accountant as there are serious concerns surrounding the integrity and reliability of both the company’s financial records, as highlighted in Part E of OS AIR (Encl. 10). [18] These concerns were the alleged tampering and unauthorized cross border transactions like the incorporation of the Transfer Pricing Guidelines, which cast doubt on the accuracy of the underlying data used for the valuation exercise. Furthermore, it includes unauthorized S/N Xhn65z5IB0mrso9hy31twA subsidy given to PM Mahsuri using Ninamaju’s resources, the tempering of Ninamaju’s financial records and loss of business. [19] If left unaddressed, the valuation exercise may be conducted on an unreliable or distorted factual basis, and potentially resulting in an unfair or inaccurate outcome. A valuation, by its nature must rest upon a reliable financial foundation in the first place. [20] However, Group TLH disputed that this is an attempt to jeopardise the whole valuation exercise and parties should not use the valuation process to litigate the substantive allegations in the underlying oppression claim. These prayers sought by Group TZY, completely fall out of the scope of the Consent Order, wherein the Consent Orders are meant for parties to get the latest valuation of the companies. The valuation commencement timeline proposed by Group TLH is far more practical and sensible. D. Prayer (6) on the commencement date for the period of valuation for both companies. [21] Group TZY is requesting the valuation period to commence for PM Mahsuri ranging from the year 2012 to the end of February 2025 and for Ninamaju ranging from 2010 to the end of February 2025. Since both the companies maintain a complete SQL Accounting software system which can trace back accounting records as early as 2010 which should not be difficult. S/N Xhn65z5IB0mrso9hy31twA [22] The table below sets out the relevant cut-off date requested by both parties: - NINAMAJU PM MAHSURI GROUP TLH From 2018 to the cut-off date at 31.05.2022 (audited accounts) From 2020 to the cut-off date at 31.03.2024 (audited accounts) GROUP TZY From 2010 to the end of February 2025 From 2012 to the end of February 2025 [23] Group TLH however contends that a five‑year valuation period is more appropriate and sustainable, on the basis that company records beyond seven years are not available and a five‑year window will produce a proper and practicable solution for the valuation. Furthermore, the accounts are readily available and duly audited by both parties before the dispute escalated. THE RELEVANT LAW Liberty to apply on a Preliminary Note [24] It is apparent that both the Plaintiff and the Defendants are justifying their applications with regards to the Consent Order by referring to the S/N Xhn65z5IB0mrso9hy31twA law on “Liberty to Apply Rule” in the Federal Court’s case of Stone World Sdn Bhd v. Engareh (M) Sdn Bhd [2020] 9 CLJ 358. Nallini Pathmanathan FCJ held in para 40 that: - [13] It is settled law that once a court has prono unced a final order it does not possess the authority to re - open, alter, amend and supplement the final order and judgment relating to the dispute it has adjudicated upon. This rule, known as the doctrin e of functus officio, stems from the principle of finality in litigation. There would be great uncertainty and chaos if courts were permitted to review and reconsider final orders and judgments. [14] This doctrine has been described as “…..one of the mechanisms by means of which the law gives expression to the principle of finality.” (See ‘The Origins of the Functus Officio Doctrine, with Specific Reference to its application in Administrative Law ‘ 122 S. African L.J. 832 (2005) by Daniel Malan Pretorius). [16] In Tenaga Nasional v Prorak Sdn Bhd & Anor [2000] 1 CLJ 553, Gopal Sri Ram JCA (as he the n was) affirmed the position in law that the rule of functus officio is a part of the broader doctrine of res judicata. This body of law in turn comprises the basis for the principle of finality, which is an essential aspect S/N Xhn65z5IB0mrso9hy31twA of adjudication, and contributes to the rule of law. As with all general rules there are exceptions to the functus officio doctrine. [17] There are limited and discrete situations where the court may make a further order subsequent to its previous sealed order. These situations include:

An amendment of a previous order to reflect the original intention of the court which is evident from the previous and original order, or the body of the judgment of the original order;

(ii) Under the slip r ule Order 20 Rule 11 of the Rules of Court 2012 (‘the Rules’) to correct a clerical error or a similar form of slip;

(iii) The clarification, supplementing of or amendment of a previous order so as to give effect to the original order under the ‘liberty to apply’ provisions;

(iv) If there is provision in the Rules to amend an original order so as to enlarge time specified. [25] This court has the inherent jurisdiction to make the necessary orders to give effect to the Consent Judgements, however the grounds to do would very much depend on the specific circumstances of each case. S/N Xhn65z5IB0mrso9hy31twA I would refer the case of Koh Ewe Chee v Koh Hua Leong & Anor, [2002] 3 SLR 643 where learned Choo Han Teck JC in dismissing the application held that: -

The ‘liberty to apply’ order is a judicial device intended to supplement the main orders in form and convenience only so that the main orders may be carried out. Within its ambit, errors and omissions which do not affect the substance of the main orders may be corrected or augmented, but nothing must be done to vary or change the nature or substance of the main orders. The variation of orders is governed by other rules. What amounts to a variation depends on the context of the individual case. Even if parties apply by consent to vary the original order under a ‘liberty to apply’ order, where substantial changes are made to the original or main orders, the proper mode and procedure must be adopted; Cristel v Cristel [1951] 2 KB 725; [1951] 2 All ER 574 followed. [26] Following the above paragraph, as the English case of Cristel v. Cristel [1951] 2 All ER 574, the Court of Appeal, SOMERVELL, DENNING AND HODSON LJJ held that: - “Prima facie, the words “liberty to apply” in an order meant that when the order was drawn up its working out might involve matters on which it might be S/N Xhn65z5IB0mrso9hy31twA necessary to obtain a decision of the court; they did not confer any right to ask the court to vary the order; and, therefore, the summons must be dismissed….” [27] Applying the above principles, it is my view that, the application by Group TZY, seeking to vary / amend the Consent Order is in fact altering the course of the original and agreed terms in the Consent Judgement when it was recorded in Alor Setar. To remove the word “certified accountant” as well as introducing a time-line provision to produce documents is certainly not within the essence of this Consent Judgements. [28] Furthermore, the current Consent Judgements have left out practical details to be agreed upon or determined by both parties, and where the order expressly reserves liberty to apply, the court retains jurisdiction to make such consequential orders deem fit or enabling directions that are necessary to give effect towards proceeding with the valuation exercise. [29] The court’s task is to ensure a fair process and reliable valuation result to be produced at the end of the day. Even if Clause 3 and or 4 of the Consent Orders approves the testing of valuers’ competence by cross‑examination, it is in my opinion that the valuers still have to be a professional independent valuer being a certified practicing accountant as initially agreed upon. The court’s task here is to ensure a fair process and reliable valuation results. S/N Xhn65z5IB0mrso9hy31twA [30] Since the parties have reached a deadlock, the court is only prepared to give a consequential order to sheer the parties forward in reaching a reasonable valuation of the companies. A consequential order is ancillary to the terms not so specified in this Consent Judgements and to vary or amend it, would be contrary to the original intentions of the parties. Independent audit / forensic accounting [31] With regards to misconduct and misappropriation of funds alleged by Group TZY, these allegations have been specifically addressed clearly and elaborated in the affidavits filed by Group TLH. From my understanding, the main purpose of a forensic audit is to investigate financial records for evidence of fraud, embezzlement, or misconduct. [32] Conducting forensic audits are highly detailed, requiring examination of transactions, interviews, evidence gathering and also most significantly involves cost. At this juncture of the proceedings, time is of the essence and it’s very highly unlikely that forensic audits can be completed within a quick time-frame. Furthermore, evidence must be admissible in court and rushing increases the chance of errors, incomplete documentation, inadmissible evidence or even subject to disagreements between the auditors. [33] On a more practical note, there was also a contention of conducting Transfer Pricing (TP) exercise to determine some misdemeanors on cross border transactions using the latest TP guidelines, since the S/N Xhn65z5IB0mrso9hy31twA commodity here is rice. One must note that getting comparables and the right formula / methods for TP transactions is a long-haul process and sometimes take years to complete. [34] In any event, all allegations from Group TZY have been specifically addressed pertaining to the instance of misconduct in the Affidavits of Tan Liong Huat @ Tan Swee Huat on 4.8.2025 form Group TLH. [35] Therefore, this court is in the view that the intention of the parties when the Consent Orders were recorded in Alor Setar High Court, it was the temperament of parties to obtain the valuation of the companies, if the prayer for a forensic audit is allowed it will totally fall out of scope and changing the entire course of Enclosure 1. Commencement date for the period of valuation for both companies. [36] The court notes that Enclosure 84 / 93, have the same arguments to determine the period of valuation put forward by both parties in their respective submissions. Nevertheless, this court will look into this issue now. [37] Group TZY submits that the longer proposed valuation period is necessary to ensure the valuation exercise is comprehensive and reflective of the state of companies’ affairs. Distinctively, they argued that the proposal by Group TLH, is arbitrarily narrow and would result in an inaccurate and undervaluation of the shares. S/N Xhn65z5IB0mrso9hy31twA [38] Group TZY solicitors are relying on the guiding principles on share valuation set out by His Lordship Mohamad Ariff Md Yusof J in the High Court case of Karen Thomas v. Santhi Shanmugam & Anor [2010] CLJU 1282 which reads as follows: “(c) The overriding consideration is for the court to order the compulsory purchase at a "fair value".

The court has a wide discretion to determine the terms on which the shares are to be valued.

There are no hard and fast rules to determine "fair value", the exercise not being an exact science.

The court has to achieve a fair bargain between the parties in such a way as not to allow the Petitioner to obtain a "windfall" by overvaluing the shares when the Petitioner is the oppressed minority and the order is for the oppressor to purchase the shares of the oppressed minority. Conversely, the process should not result in undervaluation so as to confer a gain on the oppressor. ……….

In appropriate cases however the adverse effects of the oppressive or prejudicial conduct complained of can be taken into account to arrive at the "fair price".

There are no firm rules on the proper valuation date, but the "starting point" has in general to be the date of the order of the court, unless there are countervailing factors.” S/N Xhn65z5IB0mrso9hy31twA [39] On the other hand, Group TLH argues that, a company, is only mandated by law to keep seven (7) years’ worth of accounting records as provided in Section 245 of the Companies Act 2016 which provides as follows: “245 Accounts to be kept

A company, the directors and managers of a company shall –

cause to be kept the accounting and other records to sufficiently explain the transactions and financial position of the company and enable true and fair profit and loss accounts and balance sheets and any documents required to be attached thereto to be prepared; and

cause the accounting and other records to be kept in a manner as to enable the accounting and other records to be conveniently and properly audited. …

The company shall retain the records referred to in subsection (1) for seven years after the completion of the transactions or operations to which the entries relate.” S/N Xhn65z5IB0mrso9hy31twA [40] On a more persuasive note, this court looked into to the Income Tax Act 1967, Section 82 on the Duty to keep records and give receipts are as follows: -

Subject to this section, every person carrying on a business-

shall keep and retain in safe custody sufficient records for a period of seven years from the end of the year to which any income from that business relates to enable that income from that business for each year of assessment or the adjusted loss from that business for the basis period for any year of assessment to be readily ascertained by the Director General or an authorized officer; and [41] It would therefore be unfair to suddenly expect to produce twelve (12) years’ worth of accounting records without any prior notice just because objections were raised by members of the company. This Court has to balance fairness and if the law only requires 7 years, the demand for older records is unfair, not appropriate and not practical. [42] Furthermore, in the courts view, the parties would have been fully aware of the company’s audited accounts during any previous Annual General Meetings held by the relevant parties. It is common sense that any objections should have been raised during the material time. S/N Xhn65z5IB0mrso9hy31twA [43] These new allegations of impropriety with regards to the contents of the audited accounts are merely afterthoughts created at this juncture, where there is a deadlock in the management. Therefore, the request for the commencement of the valuation period for the respective companies starting from 2012 and 2010 is refused by this court. THE SECOND ISSUE BEFORE THIS COURT Application for a Consequential order not agreed upon in when the Consent Judgement was recorded in Enclosures 84 and 93. [44] As mentioned in the above, in paragraphs [28],[29] and [30], the proper approach to deal with the disagreements raised in this case, is by way of a consequential order filed in Enclosures 84 and 93. Group TLH is requesting for further directions and ancillary terms to aid with the practical solution in enforcing the Consent Judgements. Every now and then a judgment resolves the main dispute but leaves practical issues that may turn into disputes between parties later. In this instance, the “Liberty to apply” rule, allows parties to come back without needing to start a fresh case. [45] As regards to the second issue, Group TLH seeks a consequential order, amongst others, from this court as follows: - a. to fix the cut-off date for the valuation ending in the Financial Year for Ninamaju as at 31.05.2025 and PM Mahshuri as at 31.03.2024. S/N Xhn65z5IB0mrso9hy31twA b. to fix the valuation period of both companies based on their available audited financial accounts for the latest 5 years for Ninamaju from 2018 until 2022 and for PM Mahshuri from 2020 until 2024. c. direction that this Court determine the fair value on the competing valuers’ reports after cross‑examination if necessary, and d. a three (3) month extension for valuers to complete their work. [46] As mentioned above, The Court notes that both parties were signatories to the audited statements of the companies and Group TZY did not, in the course of the company’s annual cycles, object in a manner provided in the rules and regulations for companies and shareholders to address the alleged irregularities or misconduct. [47] In my opinion, the five‑year period requested in these consequential orders, are proportional and based on the availability of audited accounts conforming statutory retention rules. The assertions of misconduct may remain relevant at the valuation hearing in Enclosure 1. [48] Group TZY can produce a more focused and reliable evidence showing materials that may affect the valuation through their respective appointed valuers. The court feels that such claims do not, on their present face, justify a broad extension of the valuation period requested without specific demonstration. S/N Xhn65z5IB0mrso9hy31twA [49] Accordingly the court allows Enclosure 84 and 93 with cost in the cause and dismisses Enclosure 81 and 90 with cost RM4,000.00 according to the respective Suit 268 and Suit 409. The court also allowed an extension of time for 3 months to complete the valuation exercise. 22 December 2025 SHOBA DORAI RAJAH Judicial Commissioner Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Kelvin Ng Chun Yee with Lee Szee Ying and Gury Wong Kin Wai (Messrs Liz Yap & Ng Chambers) For the Defendant: Dato Manpal Singh with Gary Au (Messrs Manjit Singh Sachdev Mohammad