XXXX v XXXX (BA-23NCVC-9-04/2016)

The Plaintiffs commenced this proceedings against the Defendant 20 seeking for inter alia a declaration that the consent judgment they entered 21 into with the Defendant arising from civil suit No: 22NCVC-290-03/2013 is 22 null and void and for the said consent judgement dated 17.10.2013 to be 23 set aside. 24 25

The Plaintiffs are seeking to set aside the consent judgement on the 26 ground of misrepresentation. 27 28

The terms of the Consent Judgement that is the subject matter of 29 this suit is as follows : 30 S/N GCjvtrf2rECoziQARjNPuw 1 2 3 S/N GCjvtrf2rECoziQARjNPuw 1 2

After a full trial spanning seven days conducted physically at first 3 and thereafter via zoom and after considering the oral and documentary 4 evidence, written submissions and oral clarification of counsels 5 representing the parties, this Court was satisfied that the Plaintiffs had 6 succeeded in proving their case against the Defendant on a balance of 7 probabilities. 8 9 S/N GCjvtrf2rECoziQARjNPuw

The Court allowed the Plaintiffs’ claim and set aside the Consent 1 Judgment dated 17.10.2013 and ordered damages to be assessed. 2 3

The Defendant is aggrieved with that decision and has appealed to 4 the Court of Appeal. The reasons for my decision are set out below. 5 6 The trial 7

The trial of this action took 7 days to complete due in part to the 8 placement of the Movement Control Order throughout the country. 9 10

The Plaintiffs called the following witnesses :

Jonathan Cheah Pe-Howe (PW 1); and 12

Dato Ir Cheah Lai Shin (PW 2) 13 14

The Defendant called its director Mr Liew Hau Seng (DW 1) as its 15 sole witness. 16 17

All gave sworn evidence. 18 19

The trial documents were marked as bundles A to G and they 20 carried status A or B as designated therein. In the course of the trial 21 exhibits P1 up to P11 were admitted in evidence. 22 23 Background Facts 24

As to the facts and chronology of the case, I can do no better than 25 adopt the facts as narrated by counsel in their respective written 26 submissions filed herein. 27 28

The background facts leading to the filing of this action are largely 29 documented and not in dispute. 30 S/N GCjvtrf2rECoziQARjNPuw

The 1st Plaintiff entered into a Concession Agreement dated 1 28.4.1997 with the Government of Malaysia in respect of the building of a 2 highway on mainland Penang known as the Butterworth Outer Ring Road 3 Project (the Project). Some sections of the construction works were 4 awarded to the Defendant and eventually the Defendant assisted the 1st 5 Plaintiff to complete some other stages of the project. In November 2000, 6 Packages 1A and 2 were awarded to the Defendant. In 2003, Packages 7 3 and 4 were given to the Defendant to complete the unfinished works by 8 other contractors. Finally, the Defendant took over Package 1B and 9 completed it. To summarize the Defendant completed packages 1A, 1B, 10 2, 3 and 4 of the Project for the Plaintiffs. 11 12

There is quite a long history to this litigation. The dispute can be 13 traced back to 14.5.2002 when the Defendant and the 1st Plaintiff entered 14 into a subscription agreement whereby the Defendant had subscribed to 15 13,500,000 redeemable preference shares (RPS) in the 1st Plaintiff and 16 the Defendant paid RM13,500,000.00 to the 1st Plaintiff. This is what is 17 termed as the 1st Subscription Agreement. 18 19

Also on the same date, the 2nd Plaintiff and the Defendant had 20 entered into an option agreement whereby :

the Defendant shall be entitled to put a total of 13,500,000 22 RPS in the 1st Plaintiff for sale to the 2nd Plaintiff and the 2nd 23 Plaintiff shall purchase the same; and 24

(ii) the 2nd Plaintiff shall be entitled to call upon the Defendant to 25 sell 13,500,000 RPS to the 2nd Plaintiff and the Defendant 26 shall sett the RPS to the 2nd Plaintiff. This is the 1st Option 27 Agreement. 28 29 S/N GCjvtrf2rECoziQARjNPuw

On 8.9.2003, the Defendant and the 1st Plaintiff entered into another 1 subscription agreement whereby the Defendant subscribed to 15,500,000 2 RPS in the 1st Plaintiff. In this second subscription agreement (2nd 3 Subscription Agreement) the Defendant paid RM15,500,000.00 to the 1st 4 Plaintiff. 5 6

The 2nd Plaintiff and the Defendant did on the same day 7 simultaneously entered into an option agreement whereby :

the Defendant shall be entitled to put a total of 15,500,000 9 RPS in the 1st Plaintiff for sale to the 2nd Plaintiff and the 2nd 10 Plaintiff shall purchase the same; and 11

(ii) the 2nd Plaintiff shall be entitled to call upon the Defendant to 12 sell 15,500,000 RPS to the 2nd Plaintiff and the Defendant 13 shall sett the RPS to the 2nd Plaintiff. This is the 1st Option 14 Agreement. 15 16

The above is the 2nd Option Agreement signed by the parties. 17 18

By a letter dated 2.11.2007, the Defendant issued two (2) put option 19 notices to the 2nd Plaintiff to sell 13,500,000 RPS to the 2nd Plaintiff 20

In a separate letter also dated 2.11.2007 the Defendant issued 2 put 23 option notices to the 2nd Plaintiff to sell 15,500,000 RPS to the 2nd Plaintiff 24

On 3.12.2007 the Defendant wrote 2 separate letters to the 2nd 27 Plaintiff to enquire when parties could complete the put option 28 transactions. 29 30 S/N GCjvtrf2rECoziQARjNPuw

Having not received any response, the Defendant through its 1 solicitors wrote to the 2nd Plaintiff via letter dated 21.4.2008 demanding 2 that the 2nd Plaintiff comply with its obligations under the 1st and 2nd Option 3 Agreements. 4 5

By way of a separate letter also dated 21.4.2008, the Defendant’s 6 solicitor wrote to the 1st Plaintiff alleging that the 1st Plaintiff had refused, 7 neglected and/or failed to redeem the RPS under the 1st and 2nd 8 Subscription Agreements and that the Defendant had exercised their 9 rights and had put the RPS to the 2nd Plaintiff as was provided for under 10 the 1st and 2nd Option Agreements. 11 12

The 1st Plaintiff replied on 25.4.2008, via its former solicitors seeking 13 the Defendant’s indulgence to grant the 1st Plaintiff an extension of time 14 to resolve its own issues with the Government of Malaysia and its 15 financiers. In the same letter the 1st Plaintiff assured the Defendant that it 16 was sincere in wanting to resolve the matter that was in issue between 17 them. 18 19

By way of a separate letter dated 25.4.2008, the 2nd Plaintiff’s former 20 solicitors wrote to the Defendant’s solicitors requesting the Defendant to 21 grant indulgence to the 2nd Plaintiff for the payment of the RPS and stating 22 that the issue with the 1st Plaintiff ought to be addressed and resolved first 23 given that the exercise of the put option arose from the inability of the 1st 24 Plaintiff to redeem the RPS. 25 26

In its reply dated 20.6.2008 the Defendant’s solicitors sought an 27 update of the status of the Plaintiffs’ negotiations with the Government of 28 Malaysia. The Plaintiffs’ former solicitors wrote back on 27.6.2008 and 29 S/N GCjvtrf2rECoziQARjNPuw provided an update of the Plaintiffs’ negotiations with the Government of 1 Malaysia. 2 3

Almost 2 years later the 1st Plaintiff wrote to the Defendant via letter 4 dated 4.2.2010 informing that the 1st Plaintiff would like to settle the 5 outstanding contracts amicably and commercially. They informed the 6 Defendant that they had appointed PW 2 to act on behalf of the 1st Plaintiff 7 to liaise with the Defendant. 8 9

The next day, 5.2.2010 the Defendant reciprocated informing that 10 one Dato Goh Chye Koon (DCK) would represent the Defendant in liaising 11 with PW 2 to prepare a time frame and proposal for the outstanding 12 contracts with the ultimate aim of reaching an amicable commercial 13 settlement. 14 15

On 19.2.2013 the Defendant’s solicitors wrote to the 2nd Plaintiff 16 stating that the ongoing negotiations over the last few years had not 17 neared any amicable resolution and as such, the Defendant demanded 18 that the 2nd Plaintiff make payments in respect of the put options. 19 20

In a separate letter also dated 19.2.2013 the Defendant placed on 21 record to the 2nd Plaintiff that the Defendant wished to reserve its rights of 22 action against the 1st Plaintiff for damages. 23 24

On 25.3.2013, the Defendant filed a civil suit against the Plaintiff in 25 the Shah Alam High Court via Suit No. 22NCVC-290-03/2013 (Suit 290). 26 27

The Defendant followed that up with filing an application on 6.5.2013 28 for summary judgement. 29 30 S/N GCjvtrf2rECoziQARjNPuw

On 17.7.2013 the Shah Alam High Court dismissed the Defendant’s 1 summary judgment application. The learned High Court Judge, Prasad 2 Sandosam Abraham J (as he then was) found there was an issue to be 3 tried which was whether there was forbearance on the part of the 4 Defendant to sue the Plaintiff and if so, what were the terms thereof. 5 6

Thereafter there was an exchange of cordial correspondence 7 between the Plaintiffs and the Defendant both respectively reaching out 8 to each other willingly to agree in principle for the parties to come together 9 to find commercial solutions to settle the matters amicably without further 10 involvement of lawyers and the Courts. The Defendant did however 11 qualify that agreement to state that they will proceed with the filing of the 12 documents and pleadings and proceed to trial in the event the 13 negotiations could not be concluded into a settlement agreement by the 14 trial date. 15 16

The Defendant wrote to the Plaintiffs separately on 9.9.2013 17 expressing its hope that both parties could reach an amicable settlement 18 by 21.10.2013 and to proceed with the recording of a consent judgment. 19 20

A couple of meetings were held between PW 2 and DW 1 with PW 21 1 present. The first meeting was on 19.9.2013 and the second on 22 2.10.2013. Immediately after the second meeting, on the same day, the 23 Defendant’s solicitors wrote to the Plaintiffs’ solicitors stating that the 24 Plaintiffs had agreed to enter consent judgment and the Defendant would 25 provide the written terms upon which the Defendant would be amenable 26 to withhold execution. It was stated that the consent judgment should be 27 recorded no later than 14.10.2013. 28 29 S/N GCjvtrf2rECoziQARjNPuw

A third meeting was held between PW 2 and DW 1 with DCK on 1 11.10.2013. PW 1 was present in this meeting. After this meeting on 2 11.10.2013 both PW 2 and DW 1 signed a document entitled “Salient 3 Terms”. 4 5

On the same day i.e. on 11.10.2013 the Defendant’s solicitors wrote 6 to the Plaintiffs’ former solicitors informing that the Plaintiffs had agreed to 7 the terms of judgment in the draft as enclosed to be recorded on 8 14.10.2013. 9 10

On 17.10.2013, a consent judgment was recorded in Suit 290. 11 12

After the Consent Judgment was recorded, PW 2 and DW 1 met on 13 2 more occasions in 2013; once on 25.10.2013 and the other was on 14 8.11.2013. Both of them also held a few meetings in 2014. 15 16

On 15.12.2014, Bank Pembangunan Malaysia Berhad presented a 17 winding up petition against the 2nd Plaintiff. 18 19

Meanwhile on 23.2.2015 the Defendant’s solicitors wrote to the 20 Plaintiffs’ former solicitors stating that the ongoing negotiations to facilitate 21 an amicable resolution of the Plaintiffs’ obligations under the Consent 22 Judgement should not affect the Defendant’s rights of enforcement under 23 the Consent Judgement and the Plaintiffs’ existing legal obligations. 24 25

PW 2 and DW 1 continued to have further meetings in 2015 but 26 nothing positive emerged from those meetings. 27 28

Then on 23.6.2015, the Defendant’s solicitors wrote to the Plaintiffs’ 29 former solicitors stating that the ongoing negotiations had not materialised 30 S/N GCjvtrf2rECoziQARjNPuw into any resolution. They reminded the Plaintiffs that they remained bound 1 by their obligations under the Consent Judgement which the Defendant 2 would enforce. 3 4

The Defendant’s solicitor shot another letter to the Plaintiffs’ former 5 solicitor on 18.8.2015 stating that the Plaintiffs were obliged to comply with 6 the Consent Judgment no later than by 18.10.2015. This was followed 7 with a further letter dated 19.10.2015 giving the Plaintiffs notice to comply 8 with the Consent Judgment. A reminder was sent on 21.102015. 9 10

On 22.10.2015 the Defendant’s solicitors gave notice to the 11 Plaintiffs to comply with the Consent Judgment. 12 13

On 21.12.2015 the Defendant issued a statutory demand pursuant 14 to section 218 of the Companies Act 1965 to the 1st Plaintiff. 15 16

On 4.1.2016 the Plaintiffs’ former solicitors wrote to the Defendant 17 seeking an extension of 2 years or until the resolution of the dispute with 18 the Government of Malaysia, whichever was the later on the execution of 19 the Consent Judgement. 20 21

The Defendant ignored that request and instead filed a winding up 22 petition against the 1st Plaintiff on 29.2.2016 premised upon the Consent 23 Judgement. 24 25

The culmination of it all was the commencement of this Civil Suit 26 against the Defendant on 4.5.2016. 27 28 29 30 S/N GCjvtrf2rECoziQARjNPuw The Plaintiffs’ Claim 1

It is the Plaintiffs’ claim that they agreed to record the Consent 2 Judgement with the Defendant wholly due to misrepresentations made by 3 the Defendant to them. 4 5

It was the pleaded claim of the Plaintiff and in evidence by the 6 Plaintiffs’ main witness, PW 2 that the Defendant had made a number of 7 representations to the Plaintiffs prior to the recording of the Consent 8 Judgement dated 17.10.2013. The Plaintiffs through PW 2 in his evidence 9 stated that they would not have agreed to the recording to the Consent 10 Judgement had it not been for the following representations made and 11 given by the Defendant : 12 13

the Defendant would purchase shares in Rayston Consortium 14 (Butterworth) Sdn Bhd (RCBSB), a reclamation concession 15 company (proposed transaction); 16 17

the redemption sum of RM13,500,000.00 and 18 RM15,500,000.00 for the RPS including any interest on the 19 said sums would be set off from part of the purchase 20 consideration in the proposed transaction; 21 22

detailed negotiations concerning the proposed transaction 23 would only take place after the Plaintiffs agreed to the terms 24 of the Consent Judgement; and 25 26

the parties were given 2 years to complete the proposed 27 transaction. 28 29 S/N GCjvtrf2rECoziQARjNPuw

PW 2 stated that the Plaintiffs were given the assurance of the 1 above and acting on the faith as well as the truth of those representations 2 the Plaintiffs were induced and influenced to give their consent and 3 agreed to enter into the Consent Judgment. 4 5

In his testimony PW 2 stated that after the Consent Judgment was 6 recorded the Defendant procrastinated on the negotiations relating to the 7 proposed transaction until the 2 years finally drew to a close and the 8 Consent Judgment took effect. When that happened, PW 2 stated that the 9 Defendant demanded the 1st Plaintiff to comply with the Consent 10 Judgment. It made matters worse that the 2nd Plaintiff had been ordered 11 to be wound up on 25.4.2015. 12 13

PW 2 claimed that the Defendant continued to pressure the 1st 14 Plaintiff and in the final straw the Defendant presented a winding up 15 petition against the 1st Plaintiff. PW 2 stated that he realised that the 16 Defendant’s representations were untrue and that the Defendant never 17 had the intention to complete the proposed transaction. 18 19

As a result of all of the above the Plaintiffs contended that they have 20 established on a balance of probabilities that the representations made by 21 the Defendant to the Plaintiffs were false statement of facts and those 22 representations had induced the Plaintiffs to give their consent and 23 agreement to enter the Consent Judgment. As a result of those fraudulent 24 misrepresentations, the Plaintiffs claim that they have suffered loss and 25 damage. 26 27 The Defendant’s Case 28

It is the Defendant’s stance that there was no misrepresentation by 29 them to the Plaintiffs. The Defendant’s claim that they had given more 30 S/N GCjvtrf2rECoziQARjNPuw than ample time to the Plaintiff to pay up on the amount due and owing to 1 the Defendant. From as early as 2010 when the Defendant was informed 2 that the Plaintiffs had appointed PW 2 to act for them to liaise with the 3 view of achieving settlement of the claim, the Defendant emphasized that 4 they had refrained from immediately filing legal action in respect of the 5 unredeemed RPS nor of the unpaid sum under the call option. Notably too 6 was the fact that the Defendant did not proceed with arbitration on the 7 contract claim. The Defendant was disappointed that although the 8 Plaintiffs appointed PW 2 to negotiate with them and despite the time 9 granted, no resolution could be reached to end the long standing dispute. 10 11

DW 1, the Defendant’s sole witness testified that unlike PW 2, he 12 was fully involved in the Project being Project Manager of the construction 13 works having direct supervision since 2005. He explained that time was 14 the enemy of the Defendant and since 5 years had passed with 2013 fast 15 approaching, he was concerned and apprehensive as no settlement 16 proposal was even on the horizon. He complained that the Plaintiffs 17 despite all their assurances had not made good their obligations under the 18 Subscription Agreements and Option Agreements. Hence DW 1 stated 19 that he had no alternative but to instruct solicitors to issue a final reminder 20 to the Plaintiffs and warn them of the consequences of their non- 21 compliance. 22 23

DW 1 stated he became exceedingly concerned that limitation 24 would set in if the Defendant did not take any steps to commence action 25 and therefore the decision was taken to file Suit 290 for the recovery of 26 the sums due to them. 27 28

As it happened the Defendant’s application for summary judgement 29 was dismissed and therefore the Defendant was determined to proceed 30 S/N GCjvtrf2rECoziQARjNPuw to trial. It was asserted by DW 1 that while the Defendant was amenable 1 to continue discussions, it was firm that the trial will be proceeded with in 2 the event that negotiations were not concluded into a settlement 3 agreement by the trial date. 4 5

At a meeting with PW 1 and PW 2 on 19.9.2013, DW 1 stated that 6 he agreed to a proposal for a 2 year extension to be given for settlement 7 by a holistic approach. DW 1 also stated that he was interested in the 8 proposal for land reclamation which included inter alia payment of the 9 RPS debt which was still owed and or direct land under Eco Intelek Sdn 10 Bhd. 11 12

In the next meeting on 2.10.2013, DW 1 conceded that the minutes 13 of meeting prepared by PW 1 showed that while no settlement agreement 14 was reached, “a consent order to acknowledge the existence of RM29 15 million to be payable in respect of the RPS. In respect of time, DSC shall 16 issue a side letter to LHS (DW 1) to state that the subject parties shall 17 have a 2 year moratorium…”. 18 19

DW 1 pointed to the fact that their solicitors confirmed the 20 agreement reached after the meeting : 21 22 “…agreed to enter consent judgment and our client will provide you the written terms 23 upon which they will be amenable to withhold execution…” 24 The minutes of meeting stated amongst others, for “how to arrive at a pricing 25 per square foot of the reclamation area and the amount payable by IJM for the 15% of 26 RC(B)SB…” 27 28

In the next meeting on 11.10.2013, DW 1 recollected that he and 29 Dato Goh Chye Kuan met with PW 1 and PW 2. According to DW 1 and 30 S/N GCjvtrf2rECoziQARjNPuw to his understanding the minutes of the meeting and salient terms 1 prepared by PW 1 showed that there was no concluded settlement 2 agreement reached. He referred to the minutes recorded which he said 3 supported his stand that there was no concluded settlement agreement 4 reached. The minutes of the meeting recorded the following : 5 6 “…parties enter into an agreement for the resolution of amounts owing 7 to IJMC pursuant to the following….the above amounts are indicative 8 only and are subject to further negotiations…” and also “…the 9 computation is as follows…the above amounts are indicative only and 10 are subject to further negotiations…IJMC is requesting for a 11 discount…And the parties have agreed to consider the same…” 12 13

According to DW 1 all the above points which he raised were clear 14 indications that there was no finalised amounts discussed showing that 15 these were merely indicative and furthermore the minutes of the meeting 16 recorded that there would be detailed negotiations after the consent order 17 was recorded. Thus, in his view this could only mean that there was 18 already an agreement reached between parties to enter into a consent 19 order. 20 21

In regard to the salient terms, DW 1 explained that it required further 22 discussion but it did not detract from the fact that the Plaintiffs and the 23 Defendant had reached an agreement to enter into consent judgement. 24 DW 1 referred this Court to the Defendant solicitor’s letter dated 25 11.10.2013 which confirmed the agreement to enter into the consent 26 judgement order was never in doubt. DW 1 stated that if there was any 27 issue related to this agreement than the Plaintiffs’ previous solicitors 28 would logically have brought it up before the Consent Judgment was 29 recorded on 17.10.2013. 30 31 S/N GCjvtrf2rECoziQARjNPuw

DW 1 justified the Defendant’s stand on the matter by asking the 1 Court to take into consideration the fact that he met up again with PW 1 2 and PW 2 on 25.10.2013 to discuss and review matters relating to the 3 Salient Terms referred to in the Consent Judgement. Following that on 4 28.10.2013 DW 1 sent an email to PW 1 informing him as follows : 5 “some of the salient points were not discussed in our last meeting with 6 DSC…..I shall revert.” 7 8

According to DW 1, all the previous discussions carried out in the 9 meetings had given him the impression that the Salient Terms were in 10 draft status and nothing more. There still many issues yet to be finalized, 11 particularly the purchase price and amount of contractual claims. 12 13

Thereafter DW 1, PW 1 and PW 2 attended other meetings but 14 these did not amount to anything significant and slowly the meetings 15 petered out. When the year 2015 rolled in, DW 1 realised that 10 years 16 had passed since the issue came about and parties were no nearer a 17 solution than they were in 2013. Upon hearing that the 1st Plaintiff had 18 been wound up, it made matters more urgent for the Defendant to enforce 19 the Consent Judgement. DW 1 reasoned that it was the Plaintiffs who did 20 nothing else over the 2 years following from the Consent Judgment, that 21 it was the Defendant who had consistently issued reminders after 22 reminders but the Plaintiffs neither responded nor raise any objections to 23 the contentions which the Defendant raised on the need to conclude the 24 settlement negotiations. On those grounds, DW 1 felt the Defendant was 25 justified to file a winding up petition against the 1st Plaintiff. Hence the 26 Defendant were ‘gobsmacked’ when the Plaintiffs challenged the Consent 27 Judgement and filed this action instead. 28 29 S/N GCjvtrf2rECoziQARjNPuw

It was argued that the Consent Judgement was duly and properly 1 entered and the allegations of misrepresentation are nothing but baseless 2 allegations and mere afterthoughts. 3 4

The Defendant contended that it was clear from their conduct that 5 the Plaintiffs accepted the consent judgement and never questioned it nor 6 did they try to set it aside until they realised that the 2 years given to them 7 had expired. 8 9 Issues to be Tried 10

Issues arising from the facts set out above can be compiled and 11 compressed to the following :

whether the Defendant made the Defendant’s 13 representations;

(ii) whether the representations made by the Defendant were not 15 true and the Defendant never had any intention to complete 16 the proposed transaction when the Defendant took steps to 17 enforce the Consent Judgement;

(iii) whether the Defendant made the representations fraudulently, 19 with full knowledge that it was not true and/or without caring 20 whether they were true or false;

(iv) whether the Plaintiffs were induced and influenced to give 22 their consent and agreement to enter into the Consent 23 Judgement;

whether the Plaintiffs agreed to enter into the Consent 25 Judgement fully aware of and had knowledge of their existing 26 obligations and the implications of any breaches of the 27 Consent Judgment. 28 29

As the issues are intertwined, it is convenient to deal with them all 1 at once. 2 3 Decision of the Court 4

The cardinal rule in any civil claim is that he who asserts facts must 5 prove that those facts exists. The burden of proof lies on the Plaintiff who 6 asserts the existence of facts upon which his claim is dependent on. (see 7 section 101 Evidence Act 1950). 8 9

The state of the law is settled where a consent judgement is 10 concerned and it is that it can be set aside on the same grounds as those 11 on which an agreement may be set aside. Section 10 of the Contracts Act 12 1950 provides inter alia all agreements are contracts if they are made by 13 the free consent of parties competent to contract. 14 15

In as early as 1895 the English courts have held that a consent order 16 can be impeached, not only on the ground of fraud, but upon any grounds 17 which invalidate the agreement it expresses in a more formal way than 18 usual and set the principle that a consent order may be set aside for the 19 same reasons as those which an agreement may be set aside. 20 21

That rationale was restated on Malaysian shores in the Federal 22 Court case of Badiaddin b Mohd Mahidin v Arab Malaysian Finance 23 Bhd [1998] 1 MLJ 393. Speaking for the Federal Court Peh Swee Chin 24 FCJ held at p 418 : 25 26 “The grounds referred to for setting aside a consent order or a 27 judgement by consent are grounds which basically relate to consensus 28 ad idem or the free consent of parties to a binding agreement or contract. 29 It is elementary that if it is proved that there are grounds which vitiate 30 such free consent, the agreement is not binding. Now a consent order 31 S/N GCjvtrf2rECoziQARjNPuw or a judgment by consent is undoubtedly based on an agreement 1 of both parties where consent to the agreement must or should 2 have been free in the first place. If the agreement upon which a 3 consent order or judgment by consent is based is vitiated by any 4 ground recognized in equity as vitiating such free consent, such 5 as fraud, mistake, total failure of consideration (see Huddersfield 6 Banking Co Ltd v Henry Lister & Sons [1895] 2 Ch 273 and the cases 7 cited therein), then such a perfected consent order or judgment by 8 consent could be set aside in a fresh action filed for the purpose. 9 Grounds which would vitiate such free consent should also include 10 misrepresentation, coercion, and undue influence and other 11 grounds in equity.” (emphasis added) 12 13

As I have mentioned earlier, the Plaintiff has premised its cause of 14 action in seeking to set aside the Consent Judgement on the ground of 15 misrepresentation. 16 17

Fortunately, in the present claim there are undisputed documentary 18 contemporaneous evidence of the agreement that PW 2 on behalf of the 19 Plaintiffs and DW 1 on behalf of the Defendant had hammered out 20 throughout the meetings held between them between Oct 2013 to 21 sometime in or around 2015. The documentary evidence I am referring to 22 are essentially the minutes of meetings between the two parties, the 23 minutes recorded by PW 1 in his diary and last but not the least of all is 24 the Salient Terms that was signed by DW

25 26

Firstly I will venture to say outright that when a party signs a contract 27 knowing it to be a contract which will have the effect of governing the 28 relationship between them, then, to quote the words of Denning J (as he 29 then was) in Curtis v Chemical Cleaning & Dyeing Co Ltd [1951] All 30 ER 631, his signature is irrefragable evidence of his assent to the whole 31 S/N GCjvtrf2rECoziQARjNPuw contract, including the exempting clauses, unless the signature is shown 1 to be obtained by fraud or misrepresentation. 2 3

This Court is guided by the decision of the case of L’Estrange v F 4 Graucob Ltd [1934] 2 KB 394 where Scrutton LJ said that ‘when a 5 document containing contractual terms is signed, then, in the absence of 6 fraud, I will add, misrepresentation, the party signing it is bound, and it is 7 wholly immaterial whether he has read the document or not.’ 8 9

Reverting back to the case at hand, it is my view that the contents 10 of the Salient Terms that were signed by the parties are extremely 11 important and would navigate the relationship of the parties. 12 13

Given its significance the Salient Terms is reproduced here below : 14 15 “IJM SETTLEMENT/RC(B)SB LAND RECLAMATION 16

Contractual claims (construction) LLB 26,000,000 2. Certified claims outstanding LLB 10,000,000 3. Redeemable Preference Shares “put option” LLB/RCSB 29,000,000 4. Interest component on “put option” @ 2% above the Malayan Banking base lending rate per annum from 3 January 2008 LLB/RCSB 13,800,000 TOTAL 78,800.000 S/N GCjvtrf2rECoziQARjNPuw 1 The above amounts are indicative only and are subject to further negotiation. 2 IJMC shall purchase a 15% stake in the reclamation concession company, known as 3 Rayston Consortium (Butterworth) Sdn Bhd (“RC(B)SB”) from ECO. The purchase 4 price is derived from the reclamation rights currently entitled to ECO by virtue of ECO’s 5 shareholding in RC(B)SB. The computation is as follows :- 6 7 No.

1.

2.

Reclamation rights entitlement for 15% stake or RC(B)SB calculated @15% OF 1,005 acres Purchase price Set off amounts owing to IJMC by LLB and RCSB 150 acres or 6,534,000 sq. ft RM21 p.s.f. As above N.A. 137,214,000.00 (78,800,000.00) Total Purchase Price payable by IJM 15% of RC(B)SB 58,414,000.00 8 The above amounts are indicative only and are subject to further negotiation. 9 Notwithstanding IJMC is purchasing 15% of RC(B)SB, ECO shall deposit their entire 10 30% stake in RC(B)SB with the agreed nominated stakeholders to be held on trust for 11 IJMC. IJMC shall be given the option to purchase the balance 15% stake in RC(B)SB 12 at a later date to be determined. The timeframe for IJMC to be taken up the market 13 value of the reclaimed land at the date of acquisition shall be agreed between the 14 parties upon IJMC giving notice of their intention to execute their right for the option. 15 The premium payable for IJMC’s entry into RC(B)SB shall be entirely set off against 16 the NPV discount on the price payable for the 15% stake. In the event the NPV is 17 determined to be higher than the existing market rate, the difference between the NPV 18 price payable and the above calculated Purchase Price shall be determined to be the 19 premium for entry into RC(B)SB. 20 IJMC is requesting for discount on the abovementioned market rate for reclaimed land 21 of RM21 p.s.f. and the Parties have agreed to consider the same. IJMC shall also 22 conduct a due diligence on RC(B)SB at the mutual convenience of the Parties. 23 S/N GCjvtrf2rECoziQARjNPuw IJMC has requested that the initial outlay shall not be of any significant amount and 1 the payment of the Purchase Price shall be paid in staggered tranches tied to the 2 reclamation of the land. 3 IJMC shall arrange for this exercise to be conducted without any announcement. 4 The above salient terms have been agreed in principle with detailed negotiations to 5 follow after the finalisation of the consent order between the Parties”. 6 7

My scrutiny of the terms clearly stated in the Salient Terms would 8 establish on a balance of probabilities that the Defendant had decisively 9 agreed to purchase shares in RCBSB. This can be seen from the 2nd 10 paragraph of the Salient Terms. 11 12

Secondly it is an agreed term that the redemption sum of 13 RM13,500,000.00 and RM15,500,000.00 for the RPS including any 14 interest on the said sums would be set off from part of the purchase 15 consideration in the proposed transaction. This can be seen from the 2nd 16 paragraph of the 1st Table and 2nd Table of the Salient Terms. 17 18

What DW 1 referred to as detailed negotiations concerning the 19 proposed transaction would only take place after the Plaintiffs agreed to 20 the terms of the Consent Judgment. This is seen at paragraphs 8 of the 21 Salient terms. 22 23

Lastly, if we are to peruse the terms of the Consent Judgment dated 24 17.10.2013, the Consent Judgement would only take effect beginning 25 from 18.10.2015. That would be 2 years from 17.10.2013 when the 26 Consent Judgement was recorded. 27 28

Those are the terms agreed to by the Defendant and thus they 29 become a representation. ‘What is in form a promise may be in another 30 aspect a representation’ (see Clydesdale Bank v Paton [1896] AC 381). 31 S/N GCjvtrf2rECoziQARjNPuw

Having critically considered the clauses and provisions of the 1 Salient Terms thereto, I am in complete agreement with the contention of 2 the Plaintiff that when the Salient Terms are read as a whole, the 3 Defendant’s representations are statements of fact even though they were 4 worded in the form of a promise. It would be correct to hold that those are 5 statements of the Defendant’s existing intention at the material time. 6 7

The Plaintiffs argue that the Defendant’s representations are false 8 because the Defendant never had any intention of proceeding further with 9 the proposed transaction after the Consent Judgement was recorded. The 10 Plaintiffs’ complaints are not baseless or unsubstantiated because it has 11 been proven and established through the evidence of the Defendant’s 12 only witness who is the voice and mind of the Defendant itself and he has 13 admitted that the Defendant’s Board of Directors did not pass any 14 resolution authorising DW 1 to sign the Salient Terms. Made worse is 15 when DW 1 revealed that the Defendant’s board of directors and the 16 Defendant’s holding company, IJM Corporation Bhd had no knowledge of 17 the Salient Terms that was agreed to and entered into by DW 1. Hence in 18 so far as the Defendant is concerned, there was never any terms agreed 19 upon between the Plaintiffs and the Defendant. Flowing forth from there, 20 as far as the Defendant was concerned the Salient Terms did not have 21 any legal effect and did not bind them. 22 23

As for the Plaintiffs, they relied on the representations given to them 24 by DW 1. This will be seen in the action taken by PW 1 where he sent an 25 email to DW 1 on 20.6.2014 enquiring : 26 27 “Regarding the Butterworth reclamation project at the last meeting with 28 Dato’, just wondering when your finance lady will be paying us a visit to 29 go through the proposal. 30 S/N GCjvtrf2rECoziQARjNPuw Do let us know in advance so we can prepare any documents she wants 1 to review.” 2 3

There is no contemporaneous evidence documenting the 4 Defendant’s response to the above. DW 1 in his evidence attempted to 5 explain that the visit could not take place because PW 1 could not provide 6 the information the Defendant wanted. In the absence of any written reply 7 I am hesitant to believe and I cannot accept that bare assertion. The non 8 response to the email is in my opinion, significant. Being a person of 9 business the Defendant could not have been unaware of the implications 10 of not responding in writing back to the Plaintiffs. 11 12

DW 1 has asserted that the proposed transaction could never come 13 to completion because to him it was obvious that the reclamation works 14 by RCBCB had not taken off. He also knew that there were legal actions 15 involving shareholders of RCBSB. He agreed that he had already been 16 briefed about these issues when he attended the meeting on 2.10.2013. 17 18

Looking at the sequence of events, the trend of discussions carried 19 out at all the meetings attended by the two men and especially when 20 taking into consideration the case looked set for trial and time was not on 21 the side of the Defendant I find myself agreeing with the Plaintiffs that DW 22 1 was prepared to sign the Salient Terms even though he claimed to have 23 some concerns. His answers under cross-examination immediately 24 confirm that observation. When DW 1 signed the Salient Terms he already 25 had in his mind two concerns, one was the status of the reclamation issue 26 and the other was the legal actions involving RCBSB. Despite those 27 concerns DW 1 willingly signed the Salient Terms which in my view 28 contained no qualification, caveat or even a condition with reference to 29 those concerns he said he had. A very unusual step for a man like DW 1 30 S/N GCjvtrf2rECoziQARjNPuw to make. My impression of DW 1 was that he is a careful man, a person 1 who weighed very carefully the odds before taking any step or making any 2 important decision. Suffice to say DW 1 did not act on a whim and fancy. 3 This is borne out by the answers he gave in cross-examination : 4 5 “TCS So you have been briefed that planning had not been submitted or 6 approved by Dato' Sonny Cheah at this meeting on 2nd October? 7 8 9 TCS Was this the first time you were briefed about the fact that the 10 planning had not been submitted or approved? 11 12 13 TCS Now at para 6, Mr Liew, ‘DSC presented LHS,’ which is you, ‘with 14 a copy of the current corporate structure of RCBSB and its shareholders. 15 LHS was briefed on the current status of affairs and RCBSB's proposal 16 to move forward.’ So you agree with me, you were also briefed about 17 the legal actions or the legal suits involving RCBSB? 18 LIEW Ok, yes. 19 20 TCS Yes. Was this the first time you were briefed about these legal 21 actions? 22 23 24 TCS Would I be correct to say that you were concerned about these two 25 issues? 26 LIEW Yes.” 27 … 28 TCS Alright. Mr Liew, although you had concerns about the status of the 29 reclamation and the legal actions involving RCBSB, you were prepared 30 to sign the salient terms dated 11th October, agree? 31 LIEW Yes.” 32 33 S/N GCjvtrf2rECoziQARjNPuw

The above testimony is very revealing. It conveyed the belief that 1 DW 1 was prepared to sign the Salient Terms even though he had those 2 concerns. DW 1 confirmed that he did not make it known to PW 2 that for 3 him the proposed transaction was subject to the commencement of the 4 reclamation works, the extension of the rights of reclamation works or 5 even that the outcome of the legal actions involving RCBSB during the 6 period between when the Salient Terms were signed on 11.10.2013 to 7 when the Consent Judgment was recorded on 17.10.2013. In my view DW 8 1 did not lay his cards on the table. He kept to himself his thoughts that to 9 him the Salient Terms meant nothing to him. He certainly did not think that 10 it was binding on him because he rationalized that in so far as the 11 Defendant was concerned, the Salient Terms did not have any legal 12 effect. In my view that is the essence of misrepresentation committed by 13 DW 1. 14 15

In any event, considering all the circumstances of the instant case, 16 I was of the view that his reasons were not convincing nor could it 17 constitute good reasons to validate his actions. 18 19

In Sim Thong Realty Sdn Bhd v. Teh Kim Dar [2003] 3 CLJ 227; 20 [2003] 3 MLJ 460 the Court of Appeal dealt generally with the law on 21 misrepresentation in these terms at page 465 : 22 23 "Now the elements of an actionable misrepresentation are well settled. 24 They are set out as follows in Professor McKendrick's Contract Law 25 (3rd Ed), a leading work on the subject : 26 A misrepresentation may be defined as an unambiguous, false 27 statement of fact which is addressed to the party misled and which 28 materially induces the contract. This definition may be broken down into 29 three distinct elements. The first is that the representation must be an 30 unambiguous false statement of fact, the second is that it must be 31 S/N GCjvtrf2rECoziQARjNPuw addressed to the party misled and the third is that it must be a material 1 inducement to entry into the contract.” 2 3

Section 18 of our Contracts Act 1950, defines 'misrepresentation' as 4 follows : 5 6

"Misrepresentation". 7 “ Misrepresentation” includes - 8

the positive assertion, in a manner not warranted by the information 9 of the person making it, of that which is not true, though he believe it to 10 be true;

any breach of duty which, without an intent to deceive, gives an 12 advantage to the person committing it, or anyone claiming under him, by 13 misleading another to his prejudice, or to the prejudice of anyone 14 claiming under him; and 15

causing, however innocently, a party to an agreement to make a 16 mistake as to the substance of the thing which is the subject of the 17 agreement. 18 19

Although the term ‘fraudulent misrepresentation’ is not expressly 20 used in section 18 of the Contracts act 1950, the definition of ‘fraud’ in 21 section 17 of the said Act covers fraudulent misrepresentation, in 22 particular section 17(c) thereof. 23 24

Having considered the evidence adduced through the documents 25 exhibited and oral testimonies of the witnesses called during the trial, it is 26 my view that the Defendant’s representations had indeed induced the 27 Plaintiffs to give their consent and agreement to enter into the Consent 28 Judgement that was recorded on 17.10.2013. 29 30

On the facts it would be important to note that the Defendant’s 31 summary judgment application had been refused by the Court and 32 S/N GCjvtrf2rECoziQARjNPuw therefore the Plaintiffs could have gone on to trial and proceeded to 1 defend Suit 290 until all legal avenues were exhausted. There was no 2 necessity at that time for the Plaintiff to enter into the Consent Judgement 3 had it not been for the representations given by no less than the 4 Defendant’s most senior executive and representative to negotiate the 5 settlement. In my view the word of DW 1 carried weight. He represented 6 the Defendant. His word was more than sufficient for the Plaintiff to be 7 assured. 8 9

The Defendant too assert that there was no need for them to induce 10 the Plaintiffs to enter into the Consent Judgment. They could have gone 11 on to trial to prove their claim. I am not persuaded with their argument. 12 The testimony of DW 1 does not support that contention. Under cross- 13 examination DW 1 had confirmed that it was critical for the Defendant to 14 quickly secure a judgment against the Plaintiffs. DW 1 had frankly 15 conceded that after many years of waiting the Defendant wanted a quick 16 closure in respect of its claim against the Plaintiffs. If not so, the Defendant 17 would never have filed the summary judgment application. Then when the 18 application was rejected, the Defendant’s plan to have a quick closure was 19 jeopardised. 20 21

Again, I take into consideration very seriously the conduct of the 22 Defendant in proceeding to sign the Salient Terms. The Defendant had 23 no need to sign the Salient Terms because the trial dates were coming up 24 soon. If the Defendant was so confident of victory at the trial there was no 25 reason to sign the Salient terms at all. 26 27

DW 1 and PW 2 are not necessarily layman ignorant of the 28 consequences of the terms laid down in the Salient Terms. These 29 individuals are corporate giants, seasoned and gritty businessmen, 30 S/N GCjvtrf2rECoziQARjNPuw leaders in the industry who were well aware of the nature and 1 consequences of inking on the dotted lines. 2 3

The only reasonable inference for the Court to take is to conclude 4 that the Plaintiffs relied on the representations made through the Salient 5 Terms and the Defendant had wanted to induce the Plaintiffs to enter into 6 a consent judgement and the only way to go about it was to sign the 7 Salient Terms. This is because the Salient Terms are advantageous to 8 the Plaintiffs. There is assurance that the Defendant “shall” purchase a 9 15% stake in the reclamation concession company, RCBSB and the 10 purchase price is to be derived from the reclamation rights currently 11 entitled to Eco Intelek Sdn Bhd by virtue of Eco’s shareholding in RCBSB. 12 The Plaintiff would certainly be swayed and relieved by this guarantee 13 given by the Defendant. It is the proverbial carrot at the end of the stick. 14 Not only that, the redemption sum of RM29,000,000 plus interest owing 15 would be set off from part of the purchase consideration. The sweet deal 16 would also be that the Consent Judgement would only take effect 2 years 17 later after 18.10.2015. Why would the Plaintiff not agree to these sweet 18 terms held out so reassuringly by the Defendant. 19 20

What is most significant here and which the Plaintiff had every 21 reason to be assured of was the fact that parties had entered into an 22 agreement in the form of the Salient Terms. It is vital to reiterate that 23 Paragraph 2 of the Salient Terms bear the phrase “the Defendant shall 24 purchase shares in RCBSB….” In addition, paragraph 8 expressly 25 provides : 26 27 “The above salient terms have been agreed in principle with detailed 28 negotiations to follow after the finalisation of the consent order between 29 the parties.” 30 S/N GCjvtrf2rECoziQARjNPuw

I find it difficult not to agree with the Plaintiffs’ contention that in the 1 circumstances, the only reasonable inference to be drawn from 2 Paragraphs 2 and 8 would be that the Defendant had intended for their 3 representations to be relied upon by the Plaintiffs into agreeing to enter 4 into the Consent Judgement. Thus PW 2 shrewdly was on point when he 5 opined : 6 7 “Ok, finally, we must also take note that IJM has always wanted to 8 secure some of a judgement against the Plaintiff. So, they filed 280(sic) 9 suit for summary judgment against the Plaintiff. And for that reason, IJM 10 was prepared to sign the salient terms of the 11th October. So that the 11 Plaintiff would sign the salient terms and this in order for the Plaintiff to 12 agree to enter the consent judgment. But after the consent judgement 13 was entered, IJM kept the discussion very general and gave the 14 impression they are very genuine and very genuine and refused to 15 commit to the sale. So, and now, for the first time IJM says because, it 16 is because of the reclamation and the legal suit, they could not proceed. 17 From IJM’s, from my understanding of IJM instruction to their solicitors, 18 it is clear to me that IJM was never genuine nor sincere.” 19 20

It is all too clear that the Plaintiffs had relied on the terms of the 21 Salient Agreement when giving their consent. Had it not been for those 22 terms put into writing, I do not think the Plaintiffs would have willingly 23 agreed to record the Consent Judgment. It would be no coincidence too 24 that the Consent Judgement was recorded soon after the Salient Terms 25 was signed. Thus given the aforesaid it is not difficult to appreciate that 26 the Plaintiffs had relied on the representations given by the Defendant and 27 were influenced by those representations to agree to enter into a consent 28 judgement. 29 30

It may well be that indeed both parties were represented by solicitors 31 at the material time in respect of Suit 290, yet it must be borne in mind 32 S/N GCjvtrf2rECoziQARjNPuw that parties had in principle decided not to involve their lawyers but to 1 agree to “come together to find commercial solutions to settle the matters 2 in an amicable manner without further involvement from their lawyers and 3 the courts.” In any event the Salient Terms were signed without the 4 presence and involvement of lawyers. 5 6

It was argued that PW 2 was not a credible witness because he gave 7 unreliable evidence and furthermore he had a vested interest in the sale 8 of the Eco Intelek Sdn Bhd shares. It was contended that his actions and 9 omissions were self-serving. On the part of the Court, from my 10 assessment of PW 2 in his testimony, I found him to be a genuine and 11 credible witness throughout his testimony and had no reason to disbelieve 12 or doubt his testimony. I accepted his evidence which I found was strongly 13 supported through documentary evidence. He was not evasive but was 14 always ready to explain. Whatever discrepancy that was complained off 15 was not sufficient at all to destroy his credibility. In this regard I found his 16 evidence to be entirely consistent with the Plaintiff’s pleaded case. 17 18

Next, in regard to the issue that PW 2 had a vested interest in the 19 sale of the Eco Intelek Sdn Bhd shares, these allegations were never 20 suggested to PW 2 when he was cross-examined by counsel for the 21 Defendant. It would certainly be unjust and unfair to raise these 22 allegations at submissions stage without affording PW 2 the opportunity 23 of responding to those allegations. 24 25

I have considered all the other points raised by the parties in their 26 respective submissions and found that it has not persuaded me to change 27 my findings made hereinabove. 28 29 30 S/N GCjvtrf2rECoziQARjNPuw Conclusion 1

In conclusion after having given careful scrutiny and judicious 2 consideration of the facts, evidence and the applicable law, I was satisfied 3 and I make the finding that the Defendant made those representations 4 knowing fully well that they were not true. Those misrepresentations led 5 the Plaintiffs to be induced and/or influenced to give their consent and 6 agreement to enter into the consent judgment and as a result of that it 7 caused the Plaintiffs to suffer loss and damages. 8 9

I hold that the Plaintiffs have proven their case against the 10 Defendant on a balance of probabilities. As such the Plaintiffs are entitled 11 to the reliefs as prayed for in the Amended Statement of Claim. 12 13

Finally, as for costs, by consent, I would order the Defendants to 14 pay the Plaintiff costs of RM85,000 subject to allocator. 15 16 20 December 2022. 17 18 19 20 21 (JULIE LACK) 22 Judge 23 High Court of Malaya 24 Shah Alam, Selangor Darul Ehsan 25 26 27 28 29 30 S/N GCjvtrf2rECoziQARjNPuw Counsel 1 For the Plaintiff : 2 Alex Tan Chie Sian with Ho Zhi Yee 3 (MESSRS. WONG KIAN KHEONG) 4 5 For the Defendant : 6 Ng Sai Yeang with Tricia Sheu Zen Er 7 (MESSRS. RAJA, DARRYL & LOH) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 S/N GCjvtrf2rECoziQARjNPuw