TP3 Resources Sdn. Bhd. v 1. ) Hau Mun Meng (BA-22NCvC-223-06/2022)

TP3 RESOURCES SDN BHD

RAJA SHAZREEN PETRA BINTI RAJA

RAJA IMAN PETRA BIN RAJA AZMAN SHAH 21/05/2025 15:11:56 BA-22NCvC-223-06/2022 Kand. 111

ASIA SEAGATE SDN BHD (NO. SYARIKAT : 1147111-T) …DEFENDAN-DEFENDAN (Dalam Tuntutan Balas) GROUNDS OF JUDGMENT Introduction [1] The Plaintiff in this case, TP3 Resources Sdn Bhd (“TP3”), sued the Defendant, one Hau Mun Meng (“Hau”), for breach of a contract by which they had agreed to collaborate in the fulfilment of a service contract that the Plaintiff had secured with TSR Capital Berhad. TP3 claimed that Hau’s breaches caused TP3 to lose the contract as it was terminated by TSR Capital Berhad on 6-7-2018. [2] The contract between TP3 and TSR Capital Berhad was evidenced in writing by a letter on “Collaboration on Limo-For-Hire Services Business Venture between TSR Capital and TP3 Resources Sdn Bhd on Debenture Scheme” dated 23-11-2017 (“TSR Contract”). As the name suggested, the TSR Contract was a contract to provide TSR Capital Berhad with a limousine car service. It was valued at RM80,640,000.00 and slated to commence on 1-1-2018 with 80 vehicles and personal drivers. [3] The contract between TP3 and Hau was evidenced in writing by a Joint Venture agreement dated 24-11-2017 (“JVA”). Asia Seagate Sdn Bhd (“ASSB”) was described as an agent in the JVA whose role was to supply vehicles to be purchased for the business. Competing Contentions [4] TP3 claimed that Hau breached the JVA in the following respects:

Failure to incorporate the joint venture company (“JV Co”) within 7 days from the JVA (Clause 2.1-2.4) of which 5% of shares was to have been allotted to TP3 (Clause 3.1, 3.4)

Failure to advance RM1.5 million to the JV Co within 7 days from the date of the JVA (Clause 4.2-4.3) as shareholder funds to purchase vehicles [5] Hau contended that on or around 15-10-2017, he had been introduced to one Raja Azman Shah bin Raja Alang Petra (“Raja Azman”) with whom he dealt primarily through the agency of one Ahmad Suhaimi bin Abdul Halim (“Suhaimi”) in connection with what understood to be a profitable business/investment opportunity that led to the JVA. In the performance the JVA, Hau contended that with TP3’s acquiescence, he had complied with its terms when he:

used an existing company named Shyf Eco-Tech Sdn Bhd that he owned with his wife as the JV Co; and

deposited RM1.5 million directly to the bank account of ASSB in 5 instalments [6] Hau counterclaimed against TP3 for breach of the JVA and the 2 shareholders of TP3 on their guarantee, loss of the promised bargain (RM1,080,000 return or RM6 million gross profits) and liquidated damages he claims to be owed according to clause 15 of the JVA for the following breaches of the JVA:

Failure to procure any purchase vehicles with the RM1.5 million advanced by him to ASSB for that purpose (Clause 4);

Failure to pay the promised annual return on investment (Clause 5) [7] Incidentally, both Raja Azman and Suhaimi are undischarged bankrupts, although Suhaimi remained in the records of CCM as a director of TP3. They were respectively adjudicated bankrupt on 10-3-2011 and 19-10-2018. The shareholders of TP3 are 2 children of Raja Azman, namely Raja Iman Petra bin Raja Azman Shah (“Raja Iman”) and Raja Shazreen Petra binti Raja Azman Shah who were 20 and 23 years of age at the time of the JVA. [8] Hau alleged that he had been cheated out of RM1.5 million and that Raja Azman and Raja Iman had used TP3 and ASSB as mediums to siphon the money. There is a pending criminal prosecution against Raja Azman and Raja Iman for cheating under section 420 of the Penal Code in Petaling Jaya Magistrates Court No: BB-83-619-02/2022. [9] Both Raja Iman and his sister claimed ignorance of all matters relating to TP3 and the JVA. The Defendants (bycounterclaim) all denied that Raja Azman was the principal behind TP3 but admitted that he was involved in the TSR Contract in the following manner (as pleaded in the Reply and Defence to Counterclaim): [10] Hau had also counterclaimed against ASSB for restitution of the RM1.5 million from ASSB on grounds of unjust enrichment. However, this Court was informed prior to the commencement of trial that ASSB had been struck off and ceased to exist as a corporate entity since 16-9-2022. Accordingly, leave was given for Hau to withdraw the counterclaim against ASSB. Analysis and Findings [11] The distinct impression of this Court in reviewing the pleadings and hearing the evidence adduced at trial is that it was focussed on posturing and eliciting responses for the pending criminal proceedings against Raja Azman and Raja Iman. In fact, this is a straightforward contractual claim based on the JVA where the issues to be determined are whether it was Hau or TP3 who had breached the JVA. [12] It is convenient to set out the material terms of the JVA here.

4.2 It is specifically agreed between the Parties that the JV Company shall purchase ten

vehicles or vehicles of par value of Shareholder Funds based on* vehicles of the Client’s choice but which must be at the aggregate value (OTR inclusive of insurance, road tax and license fees) of Ringgit Malaysia One Million and Five Hundred Thousand (RM1,500,000.00) or equivalent to an average value of Ringgit Malaysia One Hundred and Fifty Thousand (RM150,000.00) per vehicle, from Asia Seagate Sdn. Bhd. (hereinafter referred to as “the Agent”) for purposes of fulfilment of TP3R’s responsibility under the Contract. TP3R further guarantees that all the vehicles purchased from Asia Seagate Sdn. Bhd. are legal in accordance with Malaysian Law for the importation of cars with AP certified by PEKEMA.

4.3 Second Party shall advance the required amount of RM1,500,000.00 to or on behalf of the JV Company to fund the JV Company’s purchase of the vehicles from the Agent within Seven (7) days from signing this Agreement (hereinafter referred to as “the

5.2 TP3R and or their Directors and Shareholders guarantees that the proceeds of the Contract payable by the JV Company shall be as per Schedule A hereto. In the event that the proceeds of the Contract shall be less than as stated in Schedule A and clause 4.1 above in any year during the operation of the Contract, then TP3R shall make good the shortfall to the JV Company. [13] Based on the terms of the JVA, the role of the JV Co was principally to procure just 10 vehicles for TP3’s performance of the TSR Contract. There was no assignment or sub-contract of the TSR Contract to the JV Co. The JV Co was to pay TP3 RM1.2 million a year as operating expenses from the proceeds of the TSR Contract which was guaranteed at RM3 million a year in 2018-2020 and RM2.4 million a year in 2021-

[14] The proceeds of the TSR Contract were payable to a project account of the JV Co maintained solely by Hau. In fact, it was envisaged that the Board and management of the JV Co were to be controlled wholly by Hau. The financial arrangement between the parties was independent of the proportion of equity held in the JV Co and were set out as follows: [15] The commercial rationale and profitability of the TSR Contract are questionable, but not of any concern to this Court. Hau claimed that he was not privy to the details of the TSR Contract, but the parties were persuaded that the RM1.5 million capital injection and 10 vehicles would generate the minimum revenue and profits as set out above, leaving an excess of profits for TP3. Incorporation of JV Co and shareholding structure [16] The JVA provides as follows:

2.2 The Parties will proceed to incorporate or change the name of the JV Company, as the case may be, to “SHYF ECO-TECH SDN BHD (Company No. 220830-K)” or such other name acceptable to both Parties and the Companies Commission of Malaysia. [17] It is not disputed that the JV Co was an existing company with shares held by Hau and his wife. The JV Co was named Shyf Eco-Tech Sdn Bhd as envisaged in the JVA. However, it is also not disputed that TP3 was not allotted the 5% shareholding as also envisaged by the JVA. TP3 regarded the failure to restructure the shareholding of the JV Co as a breach of the JVA by Hau. [18] Hau’s defence to this was that Clause 2.1 of the JVA only called for the incorporation of the JV Co. The shareholding of the JV Co and whether it met the requirements of Clause 3.4 of the JVA were secondary. Objectively speaking, this Court must disagree with Hau’s interpretation of the JVA. [19] It is more reasonable to construe both the constitution and capitalisation of the JV Co as important details of the JV Co under Clause 2.1 of the JVA without which, there was no operative JV Co to speak of. The equity structure of the JV Co was agreed upon and must necessarily be implemented within 7 days of the JVA per Clause 2.1 of the JVA. As such, this Court finds that there was a delay and breach of Clause 2.1 of the JVA by Hau in the set-up of the JV Co. [20] However, this Court also finds that the breach of Clause 2.1 of the JVA was not repudiatory in nature for the following reasons:

According to the terms of the JVA, Hau was always intended to be a supermajority shareholder with control over the Board and management of the JV Co. As such, the delay in allotting 5% of the shareholding to TP3 did not go to the root of the JVA as all the contractual rights of TP3 were intact and enforceable.

Furthermore, the set-up of the JV Co was not a condition precedent of the JVA nor was it necessary for the operation of other obligations found in the JVA. There were no obligations that could not be performed because TP3 had not yet been allotted 5% of the shares in the JV Co. [21] Of course, Hau’s breach could nonetheless sound in damages at the instance of TP3, but it was not demonstrated to any degree of persuasion that the failure to allot 5% of the shares in the JV Co to TP3 within 7 days of the JVA resulted in any loss or damage to TP3. The alleged termination of the TSR Contract was not demonstrably connected to this breach. [22] Based on a letter from TSR Capital Berhad dated 21-6-2018, it appeared that the TSR Contract was at all material times afoot with a revised commencement date of 1-7-2018 and a minimum requirement of 40 vehicles to start with according to its terms. However, there is no evidence that TP3 purchased or was ready to purchase a single vehicle, much less the 40 required under the TSR Contract at stage 1 of the contract. Payment of RM1.5 million for the purchase of vehicles [23] According to Clause 4.3 of the JVA, Hau was supposed to advance RM1.5 million within 7 days from the signing of the JVA (the JVA was dated 24-11-2017) to fund the JV Co’s purchase of 10 vehicles from ASSB according to TSR Capital Berhad’s requirements not later than 3 months from the date of the JVA. [24] It is not disputed that cheques for the RM1.5 million were not furnished in advance within 7 days of 24-11-2017. Instead, it was paid over 5 installments directly to ASSB: [25] TP3 contended that this was a breach of Clause 4.3 of the JVA which did not provide for payment by instalments. In response, Hau pleaded that there was a waiver of the 7-day timeline for the payment of the RM1.5 million because the 5 payments were received by Suhaimi of TP3 without any objections. [26] In Hau’s own letter dated 27-12-2017 to make the 2nd payment on 28-12-2017, he wrote to TP3: Hau was represented by solicitors and who prepared cover letters accompanying the 3rd payment on 3-1-2018. [27] TP3 alleged that it sent letters dated 13-12-2017, 15-12-2017, 30- 12-2017 and 25-1-2018 to give notice of Hau’s breach of the JVA (“TP3’s Notices”). This Court finds Hau’s evidence denying receipt of these letters to be credible, considering that:

Hau’s solicitors made no reference to any of TP3’s Notices;

Hau himself expressed surprised in an email message when referring to an Addendum to the JVA that Suhaimi had furnished on 30-1-2018 regarding the delay; and

the improbability that after TP3’s Notices, Hau would proceed to make further payments on 28-12-2017, 3-1-2018 and 19-1- 2018 to ASSB. Rather than notices of breach, it is reasonable to infer from the above facts that there was acquiescent conduct by TP3 that induced Hau to continue making the payments. [28] Incidentally, TP3’s Notices were signed by Suhaimi. According to section 198(1)(a) of the Companies Act 2016 however, Suhaimi was not qualified to hold office as a director of a company or whether directly or indirectly be concerned with or take part in the management of a company. Technically, he did not represent TP3 nor did he express TP3’s stand on the matter of the alleged breach of the JVA by Hau. [29] In any case, the correspondence produced by TP3 showed a disconnect between the parties and it was doubtful if TP3’s Notices were contemporaneous. In fact, letters between in late 2018 told an entirely different story from TP3’s narrative in this action: Letter from Hau dated 21-9-2018 Letter from TP3 dated 28-12-2018 [30] What is clear is that TP3 accepted all 5 instalment payments instead of treating the JVA as terminated and returning it. After accepting the payments, TP3 wrote to Hau in a letter dated 3-2-2018 and sought to re-write the JVA by treating the RM1.5 million paid by Hau as consideration for the 95% shares in the JV Co that Hau already owned. It was not open to TP3 to unilaterally change the purpose of the payments made. [31] Considering the totality of the evidence, Hau was the more credible and truthful witness. Accordingly, this Court finds that there was a waiver by TP3 of the alleged breach in the timing for payment of the RM1.5 million and according to section 56(3) of the Contracts Act 1950, acceptance of Hau’s delayed performance of that obligation. Proof of TP3’s alleged loss and damage [32] TP3 alleged that it lost the TSR Contract as a result of the delay in Hau’s breaches of the JVA because TP3 was disabled from commencing operations on 1-1-2018. Hau contended in response not only that there was no actionable breach by reason of the waiver as it related to the delayed payment of the RM1.5 million, but also that:

No notice was given under section 56(3) of the Contracts Act 1950 at the time of acceptance of the payments from Hau, of TP3’s intention to claim damages;

The RM1.5 million was paid in full within a reasonable time after the contractual deadline of 7 days from 24-11-2018 with no evidence that TP3’s performance of the TSR Contract being compromised;

Contrary to the pleaded case that TP3 was obliged to start operations on 1-1-2018, the evidence showed that TSR Capital Berhad had given it an extension of time to 1-7-2018; and

No evidence was led that TP3 was in any state of readiness to implement the TSR Contract. [33] It is also wholly misconceived for TP3 to have claimed the full value of the TSR Contract as damages when the JVA only dealt with 1/8th of the contractual obligations thereunder (10 vehicles out of 80) and without accounting for the cost of operations. [34] This Court finds that TP3 failed to discharge the burden of proving liability for breach of the JVA and any recoverable damages arising as a natural consequence of the pleaded breaches of the JVA by Hau. Accordingly, TP3’s claim is dismissed with costs. Failure of TP3 to utilise the RM1.5 million to purchase vehicles [35] There were reciprocal obligations in Clause 4.3 of the JVA for TP3 to procure the purchase of 10 vehicles from ASSB using the RM1.5 million advanced by Hau and to guarantee that the vehicles so purchased are legal in accordance with Malaysian law on the importation of cars and with AP certified by PEKEMA. [36] TP3’s defence appears to be that the RM1.5 million was supposed to be paid to the JV Co for Hau’s 95% equity and that Hau was the architect of his own loss for having paid the sum directly to ASSB. This defence was untenable on the facts and evidence. TP3 cannot blow hot and cold on the contractual obligations expressed in Clauses 4.2 and 4.3, namely that:

the RM1.5 million was a shareholder advance by Hau that was payable to or on behalf of the JV Co, to fund the purchase of 10 vehicles from ASSB. The funds were meant to be paid to ASSB;

the TSR Contract remained TP3’s obligation to perform and TP3 assumed responsibility for identifying TSR Capital Berhad’s vehicle choices and vouched for the legality of ASSB’s supply of such vehicles;

Hau’s cheques were delivered to ASSB via TP3 and they were clearly related parties, in that TP3’s substantial shareholder Raja Iman was also the sole authorized signatory of the ASSB bank account that received and disbursed the RM1.5 million. [37] For the above reasons, this Court finds that there was a breach of the JVA by TP3 in the utilization of the RM1.5 million paid by Hau, and that Hau is entitled to damages quantified in the sum of this wasted expense of RM1.5 million, interest at 5% per annum from the date of the counterclaim until full payment and costs. [38] However, this Court is not persuaded that Hau is entitled to the guaranteed profits payable to the JV Co by TP3, its directors and/or shareholders. The JV Co is not a party to this action. Further, the 2 shareholders of TP3 also have no privity of contract to be found liable under the JVA in the absence of any plea to lift the corporate veil. Conclusion [39] In conclusion, TP3’s claim is dismissed with costs; Hau’s counterclaim is allowed as against TP3 only and damages are assessed at RM1.5 million with interest at 5% per annum from the date of the counterclaim until full payment with costs of RM40,000.00 as against TP3. No orders for costs are made in the dismissal of the counterclaim against D2 and D3 by counterclaim. Bertarikh : 21 Mei 2025 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam Untuk Plaintif: Azwan Bin Ibrahim, Messrs Azwan & Nadzim Untuk Defendan: Hariharan Tara Singh (with Nuraini binti Selamat and Tan Eng Seng), Messrs Ali Kamaruddin & Ravi Untuk Defendan Kedua dan Ketiga dalam Tuntutan Balas: Azwan Bin Ibrahim, Messrs