Wong Wai Hong v Mohamed Ariff s/o Kader Mohiadeen (12BNCC-45-10/2016)

The Defendant accepted the following as consideration for the handing over of the Defendant’s Share to the Plaintiff:

a sum of RM337,000 as the purchase price of the

(ii) any redemption on the property tax (Redemption Sum); and

(iii) the invoice amount from M/s Gunaseelan & Associates (Invoice Amount) The above three components are collectively referred to as the “Consideration Sum”

A deposit of RM70,000 will be paid upon signing the agreement and the remaining amount will be settled by 31 December 2012 or when the property at 36, Jalan SS22/25, Damansara Jaya, 47000 Petaling, (Property No. 36) belonging to Kopitime Cafe Sdn Bhd is sold, whichever is earlier. 5 [9] For ease of reference the MoU is reproduced verbatim – Director, KOPITIME CAFE (PJ) SDN BHD. 33, Jalan Bulat, Taman Century, 80300 Johor Bahru, Johor. Malaysia Dear Mr Wong, Memorandum of Understanding Settlement of Mohamed Ariff’s share in Kopitime Cafe (PJ) Sdn Bhd Please note that pursuant to the Minutes of Directors’ meeting dated 1st June, 2012 on the resolution being passed on the subject of “Renounceable rights issue of 99,998 ordinary shares”, this is to confirm that on 17th May, 2012 a sum of RM337,000.00 (Ringgit Malaysia Three Hundred Thirty Thousand), plus any redemption on the property tax and the invoice amount from M/s Gunaseelan & Associates (all 3 combined and known as a “consideration sum”) was offered to Mohamed Ariff s/o Kader Mohiadeen by Mr Wong Hai Hong as consideration for handing over his (Mohamed Ariff’s) shares in KOPITIME CAFE (PJ) Sdn Bhd. Mr Ariff has accepted this offer. As spoken, it is noted that a deposit of RM70,000.00 (Ringgit Malaysia Seventy Thousand) will be given upon signing this agreement and the remaining amount of the “consideration sum” will be settled by December 31, 2012 or when the property at 36, Jalan SS22/25, Damansara Jaya, 47400 Petaling Jaya, belonging to Kopitime Cafe Sdn Bhd is sold, whichever is earlier. 6 Best regards, sgd _________________ Mohamed Ariff s/o Kader Mohiadeen Dated: 1 June, 2012 Witnessed By: sgd __________________ Name: Wong Wai Mun Agreed & Accepted By: sgd _____________________ Wong Wai Hong Dated: 1 June, 2012 [10] On the same day the MOU was executed, a Members’ Resolution and Directors’ Resolution was passed where it was resolved that the issue and paid up capital of Kopitime Café be increased from RM2.00 to RM200,000.00 by way of a renounceable rights issue of 99,998 ordinary shares. [11] The Plaintiff accepted the 49,999 new shares provisionally allotted to him and also applied for new 49,999 additional shares which were allocated to and rejected by the Defendant. On 6 June 2012 the Board then resolved to allocate 99,998 new ordinary shares of RM1.00 each to the Plaintiff. Pursuant thereto, Plaintiff became the majority shareholder after the acquisition and subscription of new issuance of ordinary 7 shares. This took place well before the Plaintiff paid the deposit of RM70,000.00. [12] As at the date hereof, the shareholder of the company are Plaintiff, Defendant, Wong Jian Hao (WJH) and Siew Koy Fong (SKF), each holding 98997, 1, 2 and 1000 shares respectively. [13] Plaintiff paid RM70,000 via CIMB Cheque No 029050 on 13 June

However the Defendant failed to transfer the Defendant’s Share to the Plaintiff. Through his solicitor, the Plaintiff sent a letter dated 18 March 2015 declaring the MoU as null and void due to total failure of consideration on the part of the Defendant and demanded for the refund of the deposit RM70,000.00. [14] In his defence, the Defendant alleged that the agreement was that the share will be transferred to Plaintiff if the full payment of RM337,000.00 is made to the Defendant. Plaintiff failed to pay the deposit within the stipulated time stated in the MoU, namely, at the signing of the MoU. The payment was only made on 13 June 2012 after the ratio of the shareholding had changed from 50:50 to 99,999:1. Even so, the Defendant had dully executed the share sale transfer forms and 8 handed to the Plaintiff for submission to the company secretary of Kopitime Cafe (the Company Secretary). [15] Even though the property stated in the MoU was sold and the payment of the balance lapsed on 31 December 2012, Plaintiff failed to pay the said balance. [16] Hence, Defendant through his solicitor sent a letter of demand dated 4 November 2015 to the Plaintiff for the balance of the purchase price RM267,000.00 (Balance Purchase Price), the Redemption Sum and the Invoice Amount. With regards to the Redemption Sum and the Invoice Amount the Defendant is unable to state the actual amount in the counter claim as the Plaintiff failed to provide the relevant particulars despite the Defendant’s repeated requests. Plaintiff’s witness [17] The Plaintiff, Wong Wai Hong (PW1) was the only sole witness. The Plaintiff’s testimony may be summarised as follows –

Plaintiff denied that Property No 36 stated in the MOU belongs to Kopitime Cafe as Kopitime Cafe was only a 9 tenant as shown in the tenancy agreement dated 2 June

PW1 denied that the property was sold.

After payment was made on 13 June 2012, the Plaintiff had sent an email dated 31 October 2012 to inform the Defendant that Plaintiff will settle the balance after the Defendant had signed all relevant documents under the Companies Act 1965 which includes Kopitime Cafe resolution approving the transfer, transfer form (Form 32A) for the sale and transfer of the Defendant’s Share, deposit of the Defendant’s Share certificate and the Defendant’s letter of resignation.

However, Defendant had directed the Company Secretary through email dated 24 November 2011 not to process the transfer of the Defendant’s Share until further notice. The Plaintiff denied the Defendant’s allegations that the share sale transfer forms were handed to him.

PW1 submit the Defendant ought to return the deposit to the Plaintiff and Defendant is not entitled to the Balance 10 Purchase Price considering that Defendant is still the owner of the Defendant’s Share as to date.

PW1 terminated the MOU due to Defendant’s failure to transfer the share. However, PW1 offered to purchase the Defendant’s Share subject to valuation. Defendant’s witness [18] The Defendant, Mohamed Ariff s/o Kader Mohiadeen (DW1) was the only sole witness. The Defendant’s testimony is as follows –

DW1 confirmed that the Plaintiff had paid the deposit RM70,000.00. However the payment was only made on 13 June 2012 after the stipulated date stated in the MoU which was supposed to be on the date of signing of the MoU on 1 June 2012.

DW1 admitted that the Property No 36 stated in MOU is a property rented by Kopitime Cafe. The Property No 36 was mistakenly stated in the MoU and the property which is 11 supposed to be stated in the MoU is Property No 109, Damansara Jaya which belongs to Kopitime Cafe Sdn Bhd.

The Plaintiff failed to settle the balance of the consideration sum even though the Property 109 was sold and the proceed was paid into Kopitime Cafe Sdn Bhd another company where the Plaintiff and Defendant are the directors and shareholders.

The Defendant did not amend the address of Property 36 to Property 109 because Defendant has another option to receive money from Plaintiff, ie, payment made by 31 December 2012.

The Defendant had requested numerous times via emails for the Balance Purchase Price, Redemption Sum and the Invoice Amount. As the Plaintiff failed to make the payment the Defendant instructed the Company Secretary not to proceed with the transfer of the Defendant’s Share.

The Defendant had signed the transfer forms and gave the said form to the Plaintiff on 21 November 2012. 12

The Defendant is not agreeable with the Plaintiff’s proposal for the Defendant’s Share to be evaluated as parties has already agreed with the purchase price of the said share as stated in the MoU. Findings of Sessions Court [19] The findings of the Session Court may be summarise as follows:

The MoU is valid and enforceable as the MoU satisfies all contractual elements required under the law.

The mistake of the property stated in the MoU does not affect the enforceability of the MoU.

The terms provided in the MoU define the duration for the payment of the balance Consideration Sum.

The MoU provides two duration options for the payment of the consideration sum.

The notice dated 18 March 2015 sent by the Plaintiff’ solicitor to unilaterally terminate the MoU was unlawful.

Defendant had signed the transfer forms which shows that the Defendant had partly perform his obligation under the MoU. 13

Plaintiff had breached the MoU and Plaintiff is not entitled for the refund of the deposit.

Plaintiff is liable to satisfy the Balance Purchase Price as the Plaintiff failed to prove that the Defendant failed to perform his obligations under the MoU.

The Defendant failed to prove his counter claim for the Redemption Sum and the Invoice Amount. Hence, both claims was dismissed. Plaintiff’s case [20] The Plaintiff’s grounds of appeal may be summarised as follows –

SCJ erred in law and in fact when she held the Plaintiff had unilaterally terminated the MoU and that the Defendant is entitled to the balance consideration on the following grounds –

since SCJ found the deadline to pay the balance of the Consideration Sum was 31 December 2012, the Defendant had breached the MoU well before the 14 deadline when he instructed the Company Secretary not to proceed with the transfer of the Defendant’s Share via email dated 24 November 2012. Therefore there was no obligation on the Plaintiff to pay the balance of the Consideration Sum.

(ii) The Defendant was not in the position to effect the transfer of Defendant’s Share to the Plaintiff as the Defendant failed to comply with the legal requirements under the Companies Act 1965.

(iii) At all material time the Defendant’s Share was never transferred to the Plaintiff and the Defendant is the registered owner of the said Share. As such the Defendant did not suffer any loss or damage.

SCJ erred in law and in fact when she held that the Plaintiff is not entitled to the refund of deposit RM70,000.00 in view of the fact that the Plaintiff had terminated the MoU due to the Defendant’s own conduct as stated in the Plaintiff’s letter dated 18 March 2015. 15 [21] The Plaintiff contends he is not questioning the validity of the MoU but the repudiation of MoU by the Defendant. The Defendant did not plead that the Plaintiff’s termination was null and void. The Defendant also did not claim for specific performance. Defendant’s case [22] The intention of signing the MoU is to allow Defendant to discharge his interest in Kopitime Cafe to the Plaintiff and exit from the said company. Defendant gave up his 50% shareholding. The intention of MoU in line with new allotments of shares and conduct of the Defendant who renounced his rights to the new shares issued by Kopitime Cafe. As a result of the resolution and renounceable rights issue, the ratio shareholding between Plaintiff and Defendant changed from 1:1 to 99,999:1. [23] Plaintiff had brought the transfer forms to the Defendant’s office in Singapore and persuaded the Defendant to sign it on 21 November

Defendant had signed the transfer forms in order to conclude the transfer of the Defendant’s Share but the Plaintiff chose not to submit the forms to the Company Secretary. The Defendant’s email dated 24 November 2012 could not be interpreted as direction from Defendant to 16 the Company Secretary who only follow directions from the Board of directors and not individual or director or shareholder. The words in the email dated 24 November 2012 shows the Defendant’s instruction was only temporary. [24] The MoU expressly stipulated the time for payment of the balance Consideration Sum must be made by 31 December 2012 or property No 36 is sold, whichever is earlier. The MoU did not stipulate when the share was to be transferred. The time for payment of the Consideration Sum may be of the essence but not the time for the transfer of the Defendant’s Share. [25] The MoU is valid and binding contract between the parties. The Plaintiff’s termination of the MoU via letter dated 18 March 2015 was unlawful as the Plaintiff failed to allow for reasonable time to the Defendant for the performance of the obligation under the contract. The Plaintiff’s allegation that the MoU failed due to total failure of consideration is baseless as the Defendant was willing to transfer the Defendant’s Share to the Plaintiff. 17 The law [26] In exercising appellate power of the court this court is guided by the principles established in respect of the duty and function of an appellate as follows –

In China Airlines Ltd. v Maltran Air Corp. Sdn. Bhd. & Another Appeal [1996] 3 CLJ 163 it was held – [2] It is a settled principle of law that in an appeal, where facts have to be reviewed, it is undesirable that the factual findings of the Court below be disturbed by the appellate Court unless it appears that those findings are clearly wrong; and it is even more undesirable to do so where the conclusions reached, to a large extent, depended on the credibility of the witnesses and the impression formed by the Court which has seen them and judged their honesty and accuracy. [3] However, there is clear authority that a distinction can be drawn between the finding of a specific fact which depends upon the credibility of witnesses, and a finding of fact which depends upon interferences drawn from other facts. In the latter case, an appellate Court will more readily interfere with the trial judge’s findings of fact and form an independent opinion. Thus, in cases where there is no question of the credibility or reliability of any witness, or where the point in dispute is the proper inference to be drawn from proved facts, an appeal Court is generally in as good a position to review and evaluate the evidence as the trial Judge… 18

Perembun (M) Sdn Bhd v Conlay Construction Sdn Bhd [2012] 1 LNS 1416 [4] Both parties began their submissions with the clear understanding that an appellate court will be slow to interfere with the findings of facts and judicial appreciation of the facts in the trial judge. They cited this court in Sivalingam Periasamy v Periasamy & Anor [1996] 4 CLJ 545; [1995] 3 MLJ 395 CA; [1996] 4 CLJ 545 CA. This general principle was adopted by this court in Lee Ing Chin & Ors v Gan Yook Chin & Anor [2003] 2 CLJ 19 and other cases. It is clear it is a general principle and that there are exceptions when appellate intervention is necessary to ensure justice is done. In the cases regularly cited, the terms “intervene” and “interfere” are used interchangeably. A more precise use of terminology would remove much unnecessary confusion and argument. It is more precise to say that an appellate court will intervene to correct an injustice when it is shown to have occurred in the trial court, but it would be an interference otherwise. [5] The following from the dissenting speech of Lord Pearce in Onnasis & Anor v Vergottis [1968] 2 Lloyds Rep 403, 430 was quoted in Sivalingam (supra) as containing a valuable reminder: The function of a Court of Appeal is to set aside a judgment that should not be allowed to stand because it occasions a substantial wrong or a miscarriage of justice. That wrong or miscarriage of justice may consist of a judgment in favour of the wrong party. It may also consist of a failure in the judicial process to which both parties are entitled as of right, namely, the weighing of their respective cases and contentions. Such failure may constitute a wrong or miscarriage of justice even though it may appear that the appellant may in the end fail to secure a judgment in his favour: But the fact that the 19 right party seems to have succeeded in the Court below will naturally make a Court of Appeal extremely reluctant to interfere, and it would only do so in the rarest cases. Such matters are questions of degree.

As such it is trite that the appellate court will not interfere with the findings of facts of the trial court unless the trial court had fundamentally misdirected itself in that no reasonable court which had properly directed itself and asked the correct questions would have arrived at the same conclusion (Sivalingam a/l Periasamy v Periasamy & Anor [1995] 3 MLJ 395). Issues and findings of the court [27] Based on the Plaintiff’s Memorandum of Appeal the issues which requires the court determination are as follows -

Whether the Defendant had repudiated the MoU and therefore the Plaintiff was right in terminating the MoU and is entitled to the refund of RM70,000.00; 20

Whether the Defendant is entitled to the payment of the following consideration as stated in the MoU –

RM267,000.00 being balance of the purchase price (Balance of Purchase Price) of the Defendant’s One

(ii) Redemption Sum; and

(iii) Invoice Amount. Whether the Defendant had repudiated the MoU which entitled the Plaintiff to terminate and be discharged of the obligations under the MoU and entitled to the refund of RM70,000.00; [28] The Plaintiff claims he is entitled to the refund of RM70,000.00 on the ground that the MoU is null and void for total failure of consideration on the part of the Defendant due to the Defendant’s conduct who had breached the MoU. It is the Plaintiff’s case that the Defendant had breached the term of the MoU when he had directed the Company Secretary not to proceed with the transfer of the Defendant’s Share and that the Defendant failed to comply with the necessary requirements and procedure under the Companies Act 1965. As such the Plaintiff alleged he is entitled to repudiate the MoU and for the refund of the RM70,000.000 deposit. 21 [29] The above contentions was among the factors which the SCJ had considered when determining the validity of the MoU. It was the SCJ finding that the MoU was valid as it had all the pre-requisite of a valid contract under the law and it was the Plaintiff who had unilaterally terminated the MoU and such termination was unlawful. Based on the Plaintiff’s letter dated 18 March 2015 and the testimony of the Plaintiff and Defendant, the SCJ found that the Plaintiff failed to allow reasonable time to the Defendant to perform his obligations under the MoU before terminating the MoU (Yeo Liong Ho v Loh Choon Hooi [2010] 1 MLJ 838 and Sundaresan Ramanathan Chettiar & Anor v Gopal Krishnan DN Samy [2013] 4 MLRH 628). [30] In the Plaintiff’s submission before this court, the Plaintiff submit it was the Defendant who had repudiated the MoU and that the Plaintiff accepted the repudiation by terminating the MoU. It is the Plaintiff’s position that the Defendant’s instruction on 24 November 2012 to the Company Secretary (not to process the transfer of the Defendant’s Share) was a breach of the MoU and thus the Defendant had repudiated the MoU. 22 [31] The issue here is whether the Defendant had in fact repudiated the MoU. In this respect reference is made to s. 40 of the Contracts Act 1950 (Contracts Act) which reads as follows –

Effect of refusal of party to perform promise wholly When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. [32] By the said provision, there are two situations under which a breach may entitle an innocent party to treat the contract as being discharged, that is, when the party in default –

refuse to perform; and

disable to perform the contract in its entirety. [33] In Berjaya Times Square Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] the Federal Court dealt with the question pertaining to the rights of an innocent party where there is a breach of contract. The court dealt with the applicability of s. 23 40 of the Contracts Act read with s. 56(1) of the same. Gopal Sri Ram FCJ said this in his lordship’s judgment – [12] The starting point is to recognise that in an action for breach of contract it is the court that determines who is the innocent party and who is the guilty party. That problem does not arise in the present case because the appellant has freely admitted throughout the proceedings that it is the party that is guilty of having breached the contract. The only issue that remains is whether -- as held by the learned trial judge -- the respondent as the innocent party is entitled to rescind the contract, that is to say, to have the parties restored to a position where they will stand as if the contract had never been made. [13] The doctrine of repudiation is based on the proposition that where a promisor wrongfully repudiates (P said D repudiated) a contract in its entirety, the promisee has a choice. He or she may elect to accept the repudiation, treat the contract as at an end and sue for damages. The rationale is that the primary obligation to perform the promise made is substituted with a secondary obligation to compensate the promisee for the breach. See Moschi v Lep Air Services Ltd & Anor [1973] AC 331. Alternatively, he or she may elect to reject the repudiation and treat the contract as subsisting. Whether the one or the other course was adopted by the promisee -- the innocent party -- is a fact that is to be inferred by the court from the objective facts, including the words and conduct of the parties. An election once made is irreversible. See Sargent v ASL Developments Ltd (1974) 131 CLR 634 at p 655. But it is the essence of the doctrine of repudiation that the breach must go to the root of the contract. See Mayson v Clouet [1924] AC 980; Bowes v Chaleyer (1923) 32 CLR 159; Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. In the absence of an express refusal to perform, the test is whether the conduct of the contract-breaker is such that a reasonable person would say of it that he has breached his promise in 24 its entirety. See Freeth & Anor v Burr (1874) LR 9 CP 208; Rasiah Munusamy v Lim Tan & Sons Sdn Bhd [1985] 2 MLJ 291. …when deciding whether there is in a given case total failure of consideration, the court must first interpret the promise as a whole and next view the performance of the promise from the point of view of the party in default. The test is not whether the innocent party received anything under the contract. The test is whether the party in default has failed to perform his promise in its entirety. (emphasis added) [34] Thus the first issue to be determined here is whether the Defendant had breached the terms of the MoU by failing to perform his contractual obligation. In other words the burden is on the Plaintiff to prove that the Defendant has refused to perform or disabled himself from performing his promise in its entirety which is essentially a question of facts. [35] In Rasiah Munusamy v Lim Tan & Sons Bhd [1985] 2 MLJ 291 SC, the court made the following observations - ... Even a deliberate breach will not necessarily entitle the innocent party to treat himself as discharged, since it may sometime be that such a breach can appropriately be sanctioned by damages (see Suisse Atlantique Societe v NV Rotterdamsche Kolen Centrale [1967] 1 AC 367, 435). It is not a mere refusal or omission of one of the contracting parties to do something which he ought to do that will justify the other in 25 repudiating the contract, but there must be an absolute refusal to perform his part of the contract (see Freeth v Burr 1874 LR 9 CP 208, 214). If there is an absolute refusal to perform, the other party may treat himself as discharged. Short of an express refusal, however, the test is to ascertain whether the action or actions of the party in default are such as to lead a reasonable person to conclude that he no longer intends to be bound by its provisions. Where such an inference cannot be drawn, the innocent party will be entitled to claim damages for breach, but not to treat himself as discharged. [36] In the instant case, the Plaintiff alleges the Defendant repudiated the MoU when, on 24 November 2012 via an email to the Company Secretary, he instructed the Company Secretary not to process the transfer of his share to the Plaintiff. By such conduct the Plaintiff claims the Defendant had repudiated the MoU and the Plaintiff accepted the Defendant’s repudiation and terminated the MoU via a letter dated 18 March 2015 issued by the Plaintiff’s solicitor to the Defendant’s solicitor. The Defendant’s email dated 24 November 2012 reads as follows – Dear Mr Wong Good Morning Could you please email to me copies of the forms I signed for the transfer of Kopitime (PJ) Cafe shares to Mr Wong Wai Hong. I have not received them yet. Have they been processed? I understand that there is still a transfer of a Single share which I wish to hold at this stage. However Mr Wong has taken my signature on the transfer forms a few days ago. 26 Should you receive it, please do not process it until further notice. For further clarification of this matter, please email or contact me. Best Regards, Reply To: shaik.dragon@gmail.com MOHAMED ARIFF Director, KOPITIME (PJ) CAFE SDN Bhd Malaysia. [37] The SCJ found that the Defendant was justified in requesting the Company Secretary not to process the transfer of the Defendant’s Share to the Plaintiff. The SCJ made the following findings – [113] SP1 dalam keterangannya mengatakan Defendan telah memungkiri obligasinya dalam MOU tersebut kerana telah mengarahkan Setiausaha Syarikat supaya tidak memproses borang pindah milik saham yang telah diberikan kepada Plaintif melalui e-mel bertarikh 24.11.2012 seperti di muka surat 101, Ikatan B. [114] SD1 dalam keterangannya mengatakan Defendan telah menghantar e-mel tersebut kepada Setiausaha Syarikat supaya tidak memproses borang pindah milik saham tersebut disebabkan Plaintif telah gagal menjelaskan baki consideration sum walaupun Syarikat tersebut telah menerima hasil jualan bagi Hartanah No. 109, Damansara Jaya pada 11.10.2012. [115] Mahkamah bersetuju dengan keterangan SD1 bahawa e-mel tersebut dihantar oleh Defendan kepada Setiausaha Syarikat disebabkan rasa 27 ketidakpuasan hati Defendan dengan tindakan Plaintif yang telah gagal menjelaskan baki consideration sum seperti yang telah dijanjikan. [116] Oleh itu, Mahkamah berpendapat arahan yang diberikan kepada Setiausaha Syarikat pada 24.11.2012 supaya tidak memperoses borang pindah milik saham tersebut adalah berasas. [38] Having considered the oral testimony of the witnesses and the documentary evidence I am of the view the said findings of the SCJ is consistent with the weight of evidence adduced. The Defendant’s email dated 24 November 2012 was actually part of the Defendant’s effort in trying to get the Plaintiff to pay the Balance Purchase Price for the Defendant’s Share, which was to be paid by 31 December 2012 or when the property stated in the MoU was sold. [39] With regards to the Property No. 36 stated in the MoU, it is undisputed that the said property was a mistake as the said property did not belong to Kopitime Cafe. The property which was intended to be sold was No. 109 Jalan SS 2A/2 Damansara Jaya (Property No. 109) which was owned by another company Kopitime Cafe Sdn Bhd where both the Plaintiff and Defendant are the shareholders and directors. It was the Defendant’s testimony that the Property No. 109 was sold and the proceeds were received by Kopitime Cafe on or about 11 October

In fact the Plaintiff during cross-examination (see notes of 28 proceedings at pages 128 – 133 of the Rekod Rayuan) admitted that he was in charge of the sale of Property No 109 and that the proceeds from the sale was credited into Kopitime Café Sdn Bhd around 3 to 4 months after signing of the MoU. [40] The SCJ ruled the mistake in respect of the property to be sold does not affect the validity of the MoU as it contains all the legal requirement of a binding contract. In his Memorandum of Appeal the Plaintiff did not pursue the issue regarding the validity of the MoU. Rather, the Plaintiff insist that it was the Defendant who had repudiated the MoU and that the Plaintiff elected to end the MoU and claim the moneys paid (RM70,000.00). [41] The Plaintiff admitted, in cross-examination (page 132 Rekod Rayuan), having received emails from the Defendant on 31 October 2012 which reads as follows – Dear Wong, Before signing the Resolution and my Resignation, I would like to see the following: a) that the amount of RM267,000.00 (RM337,000.00 – RM70,000.00 which you have already settled) together with the Property Tax amount is credited in my account which I have given to you earlier. Do send me the bank-in-slip. 29 b) Please send me the audited accounts for the period till Sep 2011. c) How are we going to settle 109 DJ house funds? Regards, Ariff The Plaintiff also admitted (page 133 of Rekod Rayuan) having received another email on the same day which reads as follows – Dear Wong Please deposit the cheque first as it will take some days to clear. Also let me have the audited accounts I want the major portion of the DJ house funds to be placed in a Fixed Deposit. We can keep maybe 100k for incidentals. Regards, Ariff [42] However despite the Defendant’s email to the Plaintiff dated 31 October 2012 requesting for the payment of RM267,000.00 and the blank transfer forms signed by the Defendant and submitted to the Plaintiff, the Plaintiff did not make the payment to the Plaintiff. Thus taking into account the circumstances which led to the issuance of the Defendant’s instruction via email dated 24 November 2012, such instruction cannot be construed as a deliberate refusal on the part of the Defendant to perform his obligations under the MoU. The email dated 30 24 November 2012 issued by the Defendant is not a stand alone and cannot be read in isolation as the Defendant had testified that the issuance of such email was part of the Defendant’s follow-up effort (via various emails sent to the Plaintiff) to get the sum RM227,000.00 being the Balance Purchase Price of the Defendant’s Share. [43] This is especially so when the SCJ found, at paragraph 111 of the Alasan Penghakiman, there is contemporaneous evidence to support the Defendant’s claim that he had submitted to the Plaintiff on 21 November 2012 blank transfer forms in respect of the Defendant’s Share (which the Plaintiff denies). [44] The contemporaneous evidence was the email dated 24 November 2012 which was sent two days after the Defendant signed the transfer forms. In the said email the Defendant had informed the Company Secretary that the Plaintiff has taken his signature on the transfer forms a few days earlier. The fact that the Defendant had submitted signed transfer forms in respect of the Defendant’s Share shows the Defendant had taken steps towards effecting the transfer of the Defendant’s Share to the Plaintiff. 31 [45] Based on the evidence, the instruction of the Defendant to the Company Secretary not to process the transfer of the Defendant’s Share cannot be construed as the Defendant’s breach. Such instruction was meant to be an interim measure pending payment of the sum RM267,000.00. I agree with the SCJ findings that such instruction was justified in light of the fact that the property belonging to Kopitime Cafe Sdn Bhd had been sold and the proceeds paid to the same. Thus there is no sufficient cogent evidence to show that the Defendant had deliberately refused to perform his entire obligation under the MoU which tantamount to a total failure of consideration on the part of the Defendant. Accordingly there is no valid ground for the Plaintiff to terminate the MoU and claim for the refund of the deposit RM70,000.00. Under the circumstances there is no reason for this court to interfere with the decision of the SCJ dismissing the Plaintiff’s claim. [46] The Plaintiff argue that the SCJ erred in law and in fact when she ruled that the termination by the Plaintiff was unlawful because the Defendant did not seek for a declaration that the Plaintiff’s termination via letter dated 18 March 2015 was unlawful and void. It is undisputed that the Defendant’s counter claim did not seek for declaratory relief as such. However in so far as the Plaintiff’s case is concerned, the burden 32 is on the Plaintiff to prove that the Defendant had repudiated the MoU which entitled the Plaintiff to terminate the MoU. [47] In analysing the factual matrix to determine whether there is indeed a repudiation of the MoU on the part of the Defendant, this will inevitably determine one closely inter-related issue, namely, whether the Plaintiff’s termination of the MoU is legally right. As such it is immaterial that the Defendant did not seek for a declaration that the Plaintiff’s termination is unlawful. whether the Defendant is entitled to the following claim –

RM267,000.00 being Balance Purchase Price

Redemption Sum; and

Invoice Amount [48] With regards to the Redemption Sum and the Invoice Amount, the SCJ dismissed the Defendant’s claim as the Defendant failed to prove the said claim. There was no appeal filed by the Defendant against the said dismissal. [49] In respect of the Balance Purchase Price the Plaintiff contends that the Defendant did not plead specific performance for the transfer of the Defendant’s Share and the payment of the balance RM267,000.00. The 33 SCJ at paragraph 130 of the Alasan Penghakiman acknowledged the Defendant did not seek specific performance. However the SCJ allowed the Defendant’s claim for the sum RM267,000.00 on the ground that the Plaintiff had failed to prove that the Defendant failed to perform his obligation under the MoU. [50] The issue here is whether the lower court erred in allowing the claim by the Defendant for the sum RM267,000.00 when the Defendant did not specifically plead specific performance. [51] It is trite law the parties are bound by their pleading and it is obvious the Defendant failed to plead specific performance. In this respect reference is made to the case of Beaufort International Hotels Ltd v Tanjong Aru Hotel Sdn Bhd [1988] 2 MLJ 638 where the court dealt with the plaintiff’s writ which did not specifically pleaded declaratory relief and specific performance. The learned judge held as follows – It is settled and trite law that the Court can only decide on matter that are pleaded before it. It is basic that it is for the plaintiffs to spell out their cause of action so that the defendants will have notice of what is being alleged against them to have the issues to be defined and thus to enable them to defend. It is also settled law that the plaintiffs are to make suitable amendment, if necessary. It is not for the Court to formulate the plaintiffs' claim or infer from the pleadings. To my mind, the relief of the action, such as declaration and specific performance, must be pleaded 34 by the plaintiffs and it is also settled law that their omission can in no way be made good or supplied by affidavit evidence. (See S & F International v. Trans-con Engineering Sdn. Bhd. [1985] 2 MLJ 62). In Gold Ores Reduction [1892] 2 QBD 14 and National Company For Foreign Trade v. Kayu Raya [1984] 1 CLJ (Rep) 283 283, the Court held that the statement of claim must be complete. When judgment is given on matters that are not pleaded, it has been held to be cause for an order of retrial. The plaintiffs' writ without pleading the required reliefs in my view was in no better position than the applicant in Syarikat Tan Teow Poh Sdn. Bhd. v. Wah Bee Sdn. Bhd. (supra ) where no writ was filed. I find merit in the argument of the defendants' Counsel that the plaintiffs should have pleaded and prayed for a declaration that the notice of termination was invalid and also for specific performance and it is clearly settled that the interlocutory injunction is only given to maintain the status quo pending that determination. With respect to the learned Counsel for the plaintiffs, I find, in the absence of specific prayers for the said declaration that the notice of termination was invalid and the management agreement subsisting and for specific performance, there is therefore absence of issues to be determined at the trial, shortly there are no serious questions to be tried... [52] Accordingly the Defendant ought to have pleaded for specific performance as the basis of his counter claim against the Plaintiff. On this ground alone the Defendant’s claim for the balance of the purchase price ought to be dismissed. Assuming the Defendant had pleaded specific performance, it is incumbent on him to satisfy the court that he was able and willing to perform his obligation under the MoU (Leelavathi a/p K Govindamay v. Sivan a/l Subramaniam & Anor [2015] MLJU 13). 35 The fact that the Defendant had signed transfer forms for the transfer of the Defendant’s Share alone is not sufficient to demonstrate the Defendant’s readiness and willingness to perform his obligation. This is because, to achieve the objective of the MoU, there are other documents which requires the Defendant’s action, including the share certificate and the Defendant’s resignation as director of Kopitime Cafe. [53] The Defendant in his testimony (see page 221 of the Rekod Rayuan) said he is willing to transfer the Defendant’s Share anytime provided the Plaintiff settles the Balance Purchase Price. Despite such statement, for the court to grant the discretionary remedy of specific performance, the Defendant will have to provide cogent evidence to demonstrate his willingness such as depositing the share certificate and his letter of resignation as director of Kopitime Cafe with his solicitor as stakeholder. There is no such evidence or the like of it. [54] The SCJ ruling that the Plaintiff is obliged to pay the Balance Purchase Price was not premised on specific performance but on the basis that the Plaintiff had failed to prove that the Defendant failed to perform his obligations under the MoU (see paragraph 134 Alasan Penghakiman in Rekod Rayuan Tambahan). In this respect it must be noted that it was the Defendant who is claiming the Balance Purchase 36 Price and therefore it is incumbent on the Defendant to prove he is entitled to the said sum RM267,000.00. On this point I am of the view the SCJ erred in law when she imposed the burden on the Plaintiff to prove as such. Accordingly for the reasons stated above I am compel to intervene and set aside the SCJ decision allowing the Defendant’s counter claim. [55] One of the argument forwarded by the Defendant to justify his claim of the Balance Purchase Price is this – by the doctrine of “substantial performance” he is entitled to claim the said balance because the Defendant had substantially performed his obligation under the MoU. The Defendant cited the case KP Kunchi Raman v Goh Properties Sdn Bhd [1976] 1 MLJ 89 to support his counter claim. [56] The said doctrine is an exception to the general rule that parties to a contract is obliged to fully perform their respective obligations under the contract in the manner stipulated thereto, unless such performance has been dispensed with by any law. A related issue to the said exception is – whether a party who has failed to perform his obligations is entitled to payment. This in turn depends on the construction of the contract. In an entire or lump sum contract where payment is subject to complete performance whereas in a divisible contract the party is 37 entitled to payment for the works done. However in an entire contract where complete performance is prerequisite to payment the refusal of court to allow payment on a pro rata basis or on quantum meruit basis has led to injustice. Thus to overcome this the courts introduced certain exceptions to the general rule - the doctrine of “substantial performance” which was explained in Sinnadurai, Law of Contract Third Edition at page 642 as follows –

11.59 Exception: doctrine of substantial performance. One of the major exceptions recognised by the courts is the doctrine of substantial performance. By this doctrine, a party may be excused from complete performance if the failure to complete relates only to an unimportant part of his contractual obligations. In such a case, the law permits a claim to be made for the agreed price subject to a counterclaim for damages. On this point, the law is clearly stated in Carter and Harland, Contract Law in Australia, 3rd edition, paragraph 1831, at page 622, as follows: In cases where a promisee is held liable to pay the contract price by reason of the promisor’s substantial performance, the former will retain the right to claim compensation in respect of the latter’s failure to perform and this claim may, depending on the circumstances, be pursued as a cross-claim or counter-claim for damages or by the enforcement of a right of set-off. [57] Thus the party who failed to complete his obligations under a contract may be discharged from completing the contract if his failure relate to an unimportant part of the contract and that he has substantially 38 performed the contract and may sue for payment in respect of the substantial work done. In KP Kunchi Raman’s case the court concluded the contract for works executed by the parties was an entire contract and the plaintiff was not relieved of his contractual obligation to complete the works for the defendant. However in view of the fact that the plaintiff had substantially completed the works, he is entitled to claim for the works done but remain liable in damages for his partial failure to complete the works. [58] In the instant case the Defendant is seeking for the payment of the Balance Purchase Price from the Plaintiff. Essentially the Defendant is seeking for the court to order the Plaintiff to perform his contractual obligations under the MoU in order to give effect to the objective and intention of the parties, namely, the transfer of the Defendant’s Share which is still registered in the name of the Defendant. As such it is not open for the Defendant to rely on the doctrine of substantial performance to claim the said payment as the said doctrine would allow the Defendant to be discharged from performing his obligations under the MoU when transfer of the Defendant’s Share has yet to be effected. Moreover, it is the Defendant’s position (and as the evidence shows) that he did not breach the MoU. As such the issue of not performing an unimportant part of his contractual obligation does not arise. 39 Conclusion [59] Based on the aforesaid appeal against the decision of the SCJ dismissing the Plaintiff claim was dismissed and appealed against the decision of the SCJ allowing the Defendant’s counter claim is allowed. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 21 SEPTEMBER 2018 Counsel: Plaintiff : Ravin Woodhill with Wong Kee Them of Messrs Wong Tan & Co Defendant :