Wynn Resorts (Macau) S.A. v Poh Yang Hong (WA-24NCC-120-03/2024)

POH YANG HONG (No. K/P.: 730428-07-5527)

TAN HOCK CHAI (No. K/P.: 660402-10-7657)

CHICO DEVELOPMENT SDN. BHD. [No. Syarikat.: 814508-X]

SURUHANJAYA SYARIKAT MALAYSIA …DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] The Plaintiff applied to the Court pursuant to s. 103 of the Companies Act 2016 (CA2016) seeking to rectify the Register of Members so as to reflect the “Chico Shares” to be in the name of the Plaintiff. The rectification arose as a result of the transfer of the Chico Shares to the 2nd Defendant who was not entitled to the same as a result of a Charging Order obtained in favour of the Plaintiff. 2! ! [2] The Plaintiff in Enclosure 1, prayed for the following orders:

A declaration that the transfer of 1,250,000 shares in the Third Defendant by the First Defendant to the Second Defendant on 30.9.2020 is an invalid transfer and is null and void;

An Order that the Second Defendant forthwith transfer 1,250,000 shares of the Third Defendant registered in his name to the First Defendant;

An Order that the Third Defendant is required to, within 14 days from the date of this Order, rectify the register of members of the Third Defendant by striking out the name of the Second Defendant as the holder of the 1,250,000 shares in the Third Defendant and substituting in lieu thereof the name of the First Defendant as the holder of those 1,250,000 shares;

An Order that the Third Defendant is required to complete all necessary steps to legitimise the cancellation of the 1,250,000 shares of the Second Defendant within 14 days from the date of this Order; and

An Order that the Fourth Defendant to cancel the transfer of 1,250,000 shares in the Third Defendant by the First Defendant to the Second Defendant on 30.9.2020.” 3! ! [3] At the conclusion of the hearing, this Court allowed Enclosure

Background facts ! [4] On 26.2.2019, the Plaintiff filed an Ex-Parte Notice of Application for an order imposing charge over the shares of the 2nd Defendant in 12 companies which includes amongst others, the 3rd Defendant for the recovery of a judgment sum obtained by the Plaintiff against the 1st Defendant vide Suit No.: WA-22NCC-507-12/2017 at Kuala Lumpur High Court (“Main Suit”). [5] The Plaintiff subsequently obtained an Order to Show Cause (“Charging Order Nisi”) in respect of the shares of the 1st Defendant in 12 companies on 12.3.2019. [6] On 30.4.2021, an Order Absolute Imposing Charge on Securities (“Charging Order Absolute”) was made in respect of the interest of the 1st Defendant in the shares in the 10 companies, save and except for the interest of the 1st Defendant in the 20 shares in Ace Trace Sdn Bhd and the 1,250,000 shares in the 3rd Defendant (“the Chico shares”). [7] On 27.5.2021, the Plaintiff appealed to the Court of Appeal against the decision of the Kuala Lumpur High Court, amongst other, in not granting a charging order absolute in respect of the Chico shares. The said appeal was allowed by the Court of Appeal on 20.1.2022. 4! ! [8] On 15.2.2022, the 1st Defendant filed a Notice of Motion for inter alia leave to appeal to the Federal Court against the Court of Appeal’s decision dated 20.1.2022 in respect of the Chico shares, but the said Notice of Motion was subsequently withdrawn by the First Defendant on 27.6.2022. [9] On or around June 2022, the Plaintiff conducted a SSM search against the 3rd Defendant and the search reflected that the 1st Defendant had transferred the Chico shares to the 2nd Defendant who is the director of the 3rd Defendant on 30.9.2020. [10] On 11.3.2024, the Plaintiff filed Enclosure 1 herein claiming that the disposition of the Chico shares was contrary to the Charging Order Nisi dated 12.3.2019 (made absolute on 30.4.2021), which was partly revised by the Court of Appeal order dated 20.1.2022. [11] The 2nd and 3rd Defendant raised a counterclaim by way of an affidavit in reply, inter alia, for the following orders:- i. A declaration that the filing of Enclosure 1 amounts to an action upon judgment; ii. A declaration that Enclosure 1 is an action upon a judgment for the recovery of a sum alleged to be a gaming debt and/or won upon a wager; iii. A declaration that the Plaintiff shall not bring and/or maintain Enclosure 1 in the Court of Malaysia; and 5! ! iv. A declaration that the Plaintiff shall be precluded from taking any further steps, actions and/or proceedings premised upon the judgment in Main Suit. Parties’ contention [12] The 2nd and 3rd Defendants’ argued that an action based upon a judgment obtained in Civil Suit No. WA-22NCC-507-12/2017 (“Main Suit”) which cannot be brought or maintained pursuant to Section 26(2) of the Civil Law Act 1956. The 2nd and 3rd Defendants also relied on the other admissions made by the Plaintiff in their 2017 to 2023 audited financial statements that it derives its revenue from gambling wins. [13] The Plaintiff submitted that the 2nd and 3rd Defendants are barred from raising the same issue concerning S26(2) of the CLA 1956 which had been adjudicated by the High Court. Analysis The law under s.103 CA2016 Section 103 of the Companies Act 2016 provides as follows: - “103 Rectification

If the name of a person is wrongly entered in, or omitted from, the register of members, the person aggrieved may apply to the Court for-

rectification of the register of members;

compensation for loss sustained; or 6! !

both rectification and compensation.

On an application under this section, the Court may order-

the rectification of the register of members by the company;

the payment of compensation by the company or an officer who has caused the error or omission for any loss sustained; or

the rectification and payment of compensation.” [14] The Plaintiff claims to be an “aggrieved person” within the meaning of Section 103(1) of the CA 2016 given that there was a wrongful and invalid transfer of the Chico shares from the First Defendant to the Second Defendant, in breach of the Charging Order Nisi. Further, it prejudices the Plaintiff as the Plaintiff is enforcing the High Court’s judgment by way of charging order and to enforce the charge by selling the said Chico shares. [15] Pursuant to Section 103(2) of the CA 2016, I find that this Court has the jurisdiction and powers to grant the prayers sought by the Plaintiff in the Enclosure 1 herein, and in particular, the rectification of the Register of Members of the Third Defendant company. Charging Order under Order 50 r 2 [16] It is perhaps useful to recap what charging orders are. A charging order is one of the mechanisms available to a judgment creditor to enforce a judgment.!! [17] Under Order 50 r 2, a judgment creditor may apply to Court for a charging order to impose a charge on securities such as shares, bonds or dividends owned by the judgment debtor. As such, a 7! ! judgment creditor can apply to the court to have a charge placed over shares if the cases may be. [18] The process is a two stage process. During the first stage, the Court will grant an order to prevent the transfer or disposition of the securities. This order issued by the court is the “Nisi Order”. During the second stage, the Court will make the order absolute unless there are sufficient reasons to the contrary. This is the “Absolute Order”. [19] The effect of the charging order is that when the shares are sold, the judgment creditor is paid out in priority to other creditors from the proceeds of sale. The transfer of the Chico Shares [20] It is undisputed that :- i. the First Defendant breached the Charging Order Nisi, Charging Order Absolute and the Court of Appeal Order by transferring the Chico shares to the Second Defendant. ii. there was an immediate charge imposed on the Chico shares when the First Defendant transferred the shares to the Third Defendant. iii. the Chico shares have yet to be retransferred back to the First Defendant by the Second Defendant. 8! ! [21] As such, when the 1st Defendant transferred the Chico Shares to the 2nd Defendant, he was in violating a valid order of a Court. [22] It is my finding that the Plaintiff is an “aggrieved person” within the meaning of s.103(1) of the CA 2016 given that there was a wrongful and invalid transfer of the Chico shares from the First Defendant to the 2nd Defendant, in breach of the Charging Order Nisi. Further, it prejudiced the Plaintiff as the Plaintiff was enforcing the High Court judgment by way of charging order and to enforce the charge by selling the said Chico shares. 2nd and 3rd Defendants’ arguments [23] It must be emphasised that the 1st Defendant supports the Plaintiff’s prayer 1 of Enclosure 1. It is also pertinent to note, it was only the First Defendant who is a party to the Main Suit. The 2nd and 3rd Defendants were not the party to the credit facility thus, no recovery action was taken against them. [24] The 2nd and 3rd Defendants’ submission is centred mainly on the applicability of Section 26(2) of the CLA 1956. In essence, Enclosure 1 is an “action” within the definition of the said s. 26(2) of the CLA. [25] I am of the firm view that the 2nd and 3rd Defendants’ misconstrued the meaning of “action” in s.26(2) of the CLA1956. S. 26(2) reads as follows: “(2) No action shall be brought or maintained in any court for recovering any sum of money or valuable thing alleged to be won 9! ! upon any wager or which has been deposited in the hands of any person to abide the event on which any wager has been made” [26] It clear to my mind that s.26(2) restricts any action in any court for recovering any sum of money alleged to be won upon any wager. [27] The word “action” in s. 26(2) of the CLA 1956 refers to the Writ action commenced in the Main Suit. [28] The current application is not the “action” envisaged in a rectification application in Enclosure 1 herein as the application is merely to rectify the wrongful transfer of the Chico shares from the First Defendant to the Second Defendant. [29] Enclosure 1 herein is merely to declare the transfer of the Chico shares was unlawful and to seek rectification of the wrongful transfer pursuant to s.103 of the CA 2016. [30] The 2nd and 3rd Defendants’ contention that Enclosure 1 is an action within the definition of the said s.26 of the CLA 1956 is accordingly rejected. [31] It is pertinent to note that the Main Suit was initiated by the Plaintiff against the First Defendant on 15.12.2017 for the recovery of debt arising under a credit facility and the 1st Defendant had pleaded, amongst other, that the Main suit was prohibited under s.26(2) of the CLA 1956. 10! ! [32] At the High Court Nantha Balan J (now JCA) dismissed the 1st Defendant’s contention and held that, amongst others, the enforcement of debt arising under a credit facility to enable gambling does not fall under the statutory prohibition under s.26 of the CLA

Hence, a judgment was entered against the 1st Defendant and was subsequently upheld by the Court of Appeal. [33] The Main suit which is reported as Wynn Resorts (Macau) S.A. v. Poh Yang Hong [2019] MLJU 2003 is referred to. The relevant parts of the judgment at pages 26, 35 & 37 are as follows:- “[114] Hence, I agree with counsel’s submission that credit-whether it is called gaming credit or otherwise makes no difference - is given in the nature of a loan which has been drawn down and has to be repaid whether or not the borrower has won or lost at the gaming table. Indeed, there is no wager or bet at any time prior to the placing of chips on the gaming table. [135] In my view, based on cases such as Harrah, Marina Bay Sands and Lee Chao Yong the enforcement of a debt which arises under a credit facility such as (in the present case) the Credit Agreement to enable the defendant to gamble at the plaintiff’s casino is not contrary to Malaysian public policy. As such, the claim is not precluded by virtue of Section 24(e) of the Contracts Act 1950. [145] In the circumstances, having regard to the discussion as per the cases referred to above, it is my view that gaming credit is a concession of credit and it takes the form of a sale of casino chips without the need for immediate payment i.e. a sale of casino chips on credit or on deferred payment basis. Thus, it is incorrect to say that when a casino sues to recover a gaming 11! ! credit, it does so to recover gambling winnings or to enforce a wagering or gaming agreement/contract. [147] I am impelled to the view that Section 26(1), (2) of the Civil Law Act 1956 and Section 31(1) of the Contracts Act 1950 do not apply to the facts of the present case. The defendant’s argument (per Section 24 (e) of the Contracts Act 1950) that it would be contrary to Malaysian public policy to allow the casino to enforce an action to recover a gaming credit debt is of no moment….” [34] I therefore cannot accept the 2nd and 3rd Defendants submissions on the applicability on s.26(2) of the CLA 1956. To now raise the same issue to thwart Enclosure 1 is a non-starter. As such I agree with the Plaintiffs argument that this issue is caught by res judicata. Other issues raised [35] The Defendants also raised an argument that there was an admission that the Plaintiff accepts that they were involved in gambling. It is my view that the very fact that there was a statement in the 2022/2023 Audited Financial Statement of the Plaintiff on their policy on enforcing gambling debts does not in any manner vitiate the original finding by the High Court. [36] At the risk of repetition, it must be reiterated that the High Court in the Main Suit ruled that the plaintiff had the right to pursue the claim against the 1st Defendant as a rest of the credit facility granted to him. 12! ! [37] At best, the Audited Financial Statement is an announcement to the world at large of the Plaintiff’s position with regards to gambling debts. This per se cannot dislodge the finding in the Main Suit. Conclusion [38] In conclusion, I allow Enclosure 1 with cost of RM5,000 awarded to the Plaintiff and is to be borne by the 3rd Defendant. [39] The counterclaim has no merits as the foundation of the said counterclaim falls on the same reasons why Enclosure 1 was allowed. [40] The 4th Defendant being a nominal Defendant is to effect the order of this Court. -Sgd- (AHMAD FAIRUZ BIN ZAINOL ABIDIN) Judge High Court of Malaya Kuala Lumpur Dated: 31st January 2025 13! ! Counsel Lai Wing Ee for the Plaintiff Messrs. Jeff Leong, Poon & Wong Raiza Binti Zakaria for the 1st Defendant Messrs. Albar & Partners Aw Kai Xiang for 2nd and 3rd Defendants Messrs. Tuang, Chu & Co. Rudaini bt Abdullah for SSM