Yui Chin Song & 4 Lagi v Lee Ming Chai & 5 Lagi (No. 02(f)-118-10/2017 (N))

1 IN THE FEDERAL COURT OF MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO.: 02(f)-118-10/2017(N) _______________________________________________

1. YUI CHIN SONG

2. YUI SWEE LIAN

3. YUI SWEE YING

4. TEW SU KEOW

5. PACIFIC-V HOLDINGS (M) SDN BHD .. APPELLANTS

1. LEE MING CHAI

2. TAN QUEK CHUNG

3. NGO FONG WONG

4. NGO HOONG SANG

5. DING MING DOK @ TING LING THU

6. (COMPANY NO. 495686-M) .. RESPONDENTS [IN THE MATTER OF THE COURT OF APPEAL, PUTRAJAYA CIVIL APPEAL NO. N-02(W)-1305-08/2015 _____________________________________________ PACIFIC-V HOLDINGS (M) SDN BHD .. APPELLANT .. RESPONDENT 2 (CONSOLIDATED WITH) IN THE MATTER OF THE COURT OF APPEAL, PUTRAJAYA CIVIL APPEAL NO. N-02-(W)-1038-06/2015 _____________________________________________

1. YUI CHIN SONG

2. YUI SWEE LIAN

3. YUI SWEE YING

4. TEW SU KEOW .. APPELLANTS

1. LEE MING CHAI

2. TAN QUEK CHUNG

3. NGO FONG WONG

4. NGO HOONG SANG

5. DING MING DOK @ TING LING THU

6. (COMPANY NO. 495686-M) .. RESPONDENTS] CORAM RICHARD MALANJUM, CJ AHMAD MAAROP, PCA ZAHARAH BINTI IBRAHIM, CJM RAMLY HJ ALI, FCJ ALIZATUL KHAIR BINTI OSMAN KHAIRUDDIN, FCJ

1. The appellants in the present appeal were, at the material time, shareholders in the 6th respondent 3 company (Tampin Theme Park). The 1st, 2nd and 4th appellants were the directors there. The appellants were the plaintiffs in the action at the High Court. In this judgment, the parties will be referred to as they was in at the High Court.

2. In their statement of claim before the High Court, the plaintiffs sought for declaratory orders that the transactions for the transfer of shares in Tampin Theme Park by the plaintiffs in favour of the 1st, 2nd, 3rd and 4th defendants were null and void; and the appointment of the 1st respondent (Ming Chai) as director of the company was void, on the ground that the shares were transferred by fraud and undue influence perpetrated by Ming Chai with the assistance of the 5th respondent (the new company secretary appointed by Ming Chai).

3. The High Court dismissed the plaintiffs’ claim with costs. The Court of Appeal affirmed the decision of the High Court and dismissed their appeal. The 4 plaintiffs then filed a notice of appeal to this Court. The appeal was against the whole of the decision of the Court of Appeal.

4. On 10.10.2017 this Court granted leave to appeal on the following questions:-

(ii) whether section 41 of the Specific Relief Act 1950 is a complete code governing an action for a declaration having regard to the decision of the Indian Supreme Court in Supreme-General Films Exchange Ltd v. His Highness Maharaja Sir Brijnath Singhji Deo & Ors. A.I.R. [1975] SC 1810 and that of the Federal Court of Malaysia 5 in Tan Sri Haji Othman Saat v Mohamed bin Ismail [1982] 2 MLJ 177. (Question 2);

(iii) where there are several defendants to an action all of whom save one make a submission of no case to answer, are the defendants who made a submission of no case to answer entitled to call evidence having regard to the decision in Alexander v Rayson [1936] 1 KB 169 and Simirah v Chua Hock Lee [1963] MLJ 239 at 241 and to the provisions of Order 35 rule 4(5) of the Rules of Court 2012. (Question 3).

5. The grounds posed by the plaintiffs to support the appeal are as follows:-

(ii) the High Court misdirected itself in holding that the 1st to 4th plaintiffs had no standing to recover the shares that had been transferred to the 1st 6 to 5th defendants on the ground that the 1st to 4th plaintiffs had earlier acquired their titles from an insolvent vendor;

(iii) the High Court having found that the 1st to 4th plaintiffs had no title to the shares, should have gone on to hold that the 1st to 5th defendants acquired no title from them;

(iv) the High Court erred in applying section 41 of the Specific Relief Act 1950 without considering the principles that govern the remedy of declaration;

(vi) the High Court failed to follow and apply the decisions in Alexander v Rayson [1936] 1 KB 169 and Simirah v Chua Hock Lee & Anor [1963] MLJ 239, when permitting a defendant who had 7 elected to make a submission of no case to answer, to call evidence;

(vii) the High Court erred in law in failing to draw proper inferences from the totality of evidence before it;

(viii) the High Court erred in law and/or in fact in failing to take into account relevant consideration when arriving at its decision;

(ix) the High Court erred in law and/or in fact in taking into account irrelevant consideration when arriving at its decision;

(xi) the Court of Appeal erred in affirming the whole decision of the High Court. 8 Brief facts 6. The dispute in the present case centred on the issue of shares and directorship in a family company, Tampin Theme Park, which at the material time, was dealing in investment and property development. The company was originally founded by Yui Cha Bok (Cha Bok) and his wife, Lee Tui Eng (Tui Eng).

7. In 2003 Cha Bok and Tui Eng transferred their shares in the company to their son, Yui Chin Chau (Chin Chau) and his wife, Tew Su Keow (Su Keow). Both were made directors of the company. As at January 2006, the company comprised all the plaintiffs as shareholders, whilst the 1st, 2nd and 4th plaintiffs were directors.

8. Cha Bok was declared bankrupt on 9.11.2006, his wife Tui Eng was declared bankrupt on 23.8.2007 and Chin Chau was declared bankrupt on 25.3.2007. Before his bankruptcy Chin Chau transferred all his shares (comprising shares transferred earlier to him 9 by Cha Bok and Tui Eng to the 1st, 2nd and 3rd plaintiffs and his wife Su Keow, transferred part of her shares comprising shares transferred earlier to her by Cha Bok and Tui Eng) to the 1st, 2nd and 3rd plaintiffs.

9. The main complaint by the plaintiffs was against Ming Chai, the 1st defendant in the suit. The plaintiffs alleged that Ming Chai was an unlicensed money lender who had offered loan to Cha Bok since the year 2003; and had, by undue influence, persuaded the plaintiffs and Cha Bok to make him one of the directors of the company on a promise to obtain bank loan for the company which was in financial difficulty at that time, and to exonerate Cha Bok of his debts; and that he would resign as a director and surrender the shares of the company after the bank loan was procured.

10. The plaintiffs alleged that when Ming Chai became a director of the company, by fraud and undue influence he took control of the management of the 10 company and moved the secretarial office from Seremban to Setiawan, Perak and appointed a new company secretary (the 5th defendant).

11. The plaintiffs also alleged that Ming Chai had induced them and Cha Bok to attend at the new secretary’s office in Setiawan to sign various documents in blanks which allegedly were for the preparation of papers for the appointment of a new secretary and for the purpose of procuring bank loan facilities and appointing him (Ming Chai) as a new director.

12. Sometimes in 2006, the company was granted loan by HSBC Malaysia Berhad (Melaka Branch) in the amount of RM4.2 million. However, Ming Chai failed to exonerate Cha Bok of his debts besides failing to surrender the shares in the company to the plaintiffs and failed to resign as a director as promised earlier.

13. Later, the plaintiffs discovered that they were no longer directors of the company and their shares had 11 been transferred to the 1st, 2nd, 3rd and 4th defendants by fraud perpetrated by Ming Chai with the assistance of the new company secretary, without their knowledge. The plaintiffs claimed that all the relevant Forms 32A for the alleged transfer of the shares from the 1st, 2nd, 3rd and 4th plaintiffs to the 1st, 2nd, 3rd and 4th defendants were forged. The plaintiffs then filed the present suit. At the High Court

14. After full trial, the learned High Court judge made inter alia the following findings:-

(ii) that the subsequent transfer of the shares from the plaintiffs in favour of the 1st, 2nd, 3rd and 4th defendants which the plaintiffs claimed was done fraudulently, amounted to providing security “for loan to a person connected with a director by any person …” and caught by the prohibition under section 133A(1) of the Companies Act 1965; and the shares were acquired by the 1st, 2nd, 3rd and 4th defendants conditional upon procurement of bank borrowing with the assets of the company as security, thus implying financial assistance by the company to deal with its own shares, therefore contravening section 67 of the Companies Act 1965;

(iii) that in view of the contravention of section 67 and section 133A of the Companies Act 1965, the claim by the plaintiffs to relief premised 13 upon allegation that the transfer of the shares in the company was actuated by a promise to secure borrowing for the company using as security the assets of the company to settle the debts of Cha Bok owed to other persons, was clearly unsustainable. It amounted to a claim premised upon an illegality which the court cannot lend a hand based on the maxim of “ex turpi causa non ovitur action”;

(iv) that in view of the plaintiffs confirming that they were aware that they had signed the transfer Forms 32A in blanks, it is now not open for them to claim that there was fraud or that the documents were forged, as they have signed the forms with their eyes open, and they were not illiterate and neither were they novices where business is concerned;

(vi) that the plaintiff could not take advantage of their own wrong or carelessness when they chose to sign documents in blank, and later cried foul of any discrepancies. At the Court of Appeal

15. The Court of Appeal was in agreement with the learned judge of the High Court and dismissed the appeal filed by the plaintiffs. In conclusion, the Court of Appeal ruled:- “Taking into consideration the facts of both cases in a holistic manner and the conduct of plaintiffs in both the 15 suits and applying the law as was done by the learned judge, we do not think any reasonable tribunal would have granted the prayers sought in both the suits. We also do not want to go into the nitty gritty of the facts and application of the law by the learned judge as we took the view that the decisions of the judge to dismiss both the suits were correct decisions.” At the Federal Court

16. We will now deal with the leave questions posed before us.

17. Question 1 - relates to a question whether the transfers of movable property (in this case, the shares of the company) by the transferors (Cha Bok and his wife Tui Eng) to the transferees (Chin Chau and his wife Su Keow) in 2003 were void by reason of the insolvency of the transferors (i.e. when they were adjudged bankrupt), and if so were the transfers by the said transferees (Chin Chau and Su Keow) to subsequent transferees also void for want of title? 16 Section 52 of the Bankruptcy Act 1967

18. As stated earlier, the High Court ruled that the transfers of the shares from Cha Bok and Tui Eng to Chin Chau and Su Keow and from Tui Eng to Su Keow, and subsequently from Chin Chau to the plaintiffs, were void pursuant to subsection (1) of section 52 read with subsection (1) of section 47 and subsection (1) of section 3 of the Bankruptcy Act 1967 (the Act), and therefore the plaintiffs as the subsequent transferees had no locus standi to initiate the present claim against the defendants.

19. The plaintiffs throughout the proceedings, maintained that their claim against the defendants was based on the fact that the 1st, 2nd, 3rd and 4th defendants had obtained the shares and directorship in the company by undue influence, fraud and forgery designed by Ming Chai with the help of the 5th defendant (the company secretary). 17

20. The plaintiff’s stand is any avoidance of settlement of property (including shares) under section 52 of the Bankruptcy Act is void. That section confers the right on the DGI to treat the settlement or transfer as void. The plaintiffs are entitled to invoke section 52 of the Bankruptcy Act for a declaration that the transfer of the shares to the subsequent transferees is void. The section gave the way for the plaintiffs to maintain the present action.

21. The defendants, on the other hand maintained that the question posed by the plaintiffs in the present appeal as regards section 52 of the Bankruptcy Act has no effect on the findings of the learned judge and is therefore irrelevant. It was argued that from a plain reading of section 52, the effect of the section is to render a transaction void only as against the DGI. The section confers the right only on the DGI to treat the settlement or transfers of the shares as void as against himself but not other persons. In the 18 present case, there was no attempt by the DGI to be a party, hence it is not open to the plaintiffs to invoke the section, especially in support of their claim. The defendants contended that the plaintiffs were not bona fide and were actuated by bad faith in attempting to agitate section 52 of the Act before the court.

22. Subsection (1) of section 52 of the Act, is relevant for consideration in determining this question. It provides: “(1) Any settlement of property, not being a settlement made before and in consideration of marriage or a settlement made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after marriage in right of his wife, shall, if the settlor becomes bankrupt within two years after the date of the settlement, be absolutely void against the Director General of Insolvency, and shall, if the settlor becomes bankrupt at any subsequent time within five years after the 19 date of the settlement, be void against the Director General of Insolvency, unless the parties claiming under the settlement can prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement, and that the interest of the settlor in such property had passed to the trustee of such settlement on the execution thereof.”

23. Section 52 of the Bankruptcy Act affects only settlement or transfer of shares by the bankrupt transferors (in this case, Cha Bok and Tui Eng) i.e. transactions between the bankrupt as the transferors and the immediate transferees. Subsequent transferees like the defendants do not fall within the ambit under section 52. Under the section, any transfer of property shall be absolutely void against the DGI if the transferor becomes a bankrupt within 2 years after the date of the transfer; and shall be void against the DGI if the transferor becomes a bankrupt after 2 years but within 5 years after the date the transfer. In the present case it is 20 not in dispute that the transfers of the shares by Cha Bok and Tui Eng took place in 2003. Cha Bok was adjudged bankrupt on 9.11.2006 and Tui Eng was adjudged bankrupt on 25.3.2007. It is not disputed that their bankruptcies occurred after the transfers but within the period of 5 years stipulated in subsection (1) of section 52. It must be stressed that the avoidance under section 52 is only “against the Director–General of Insolvency”. As such only the DGI is entitled to a declaration that the said transfer or transaction is void, under the section.

24. That being the case, the plaintiffs in the present case cannot invoke section 52 to avoid the transfers of the shares. The learned judge erred in her findings that the transfers of the shares by Cha Bok and Tui Eng to Chin Chau and to Su Keow within the stipulated period were void pursuant to subsection (1) of section 52 of the Act. The learned judge had also erred in her findings that the subsequent transfers by 21 Tui Eng and Chin Chau to the plaintiffs, were also “null and void.”

25. Section 52 of the Bankruptcy Act is not meant to avoid all transaction or settlement of property executed by the settlor within the period stipulated period therein. Section 54 of the same Act, provides protection for bona fide transactions without notice. Under subsection (1) of section 54, with respect to the avoidance of certain settlements or preferences, “nothing in the Act shall invalidate in the case of a bankruptcy, (d) any contracts, or dealing or transaction by or with the bankrupt for valuable consideration if the contract, dealing or transaction takes place before the date of the receiving order; and the other person had not, at the time of contract, dealing or transaction, notice of any available act of bankruptcy committed by the bankrupt before that time.” 22

26. Subsection (3) of section 53B of the same Act, provides similar which protection to subsequent transferee when it stipulates as follows: “(3) Notwithstanding subsections (1) and (2), where any person, (not being the person who acquired the property from the bankrupt) to whom the property was sold, resold or otherwise disposed of, had paid or given therefor valuable consideration and acted in good faith such person shall not be subject to the operation of this section and the Director General of Insolvency’s recourse for recovery of the consideration so paid or given or its value shall be solely against the person who entered into the transaction with the bankrupt.”

27. Under the above provision, the right or title of any subsequent transferee of the property (not being the person who acquired the property from the bankrupt) is saved from the effect of section 52 of the Act. The title of any subsequent transferee who had given valuable consideration and had ‘acted in good faith’ passes to the transferee and remains with the 23 transferee. The DGI cannot challenge his title. The DGI’s only recourse for recovery of the consideration or money so paid or its value shall be solely against the person who entered into the transaction with the bankrupt or the immediate transferee, but not against subsequent transferee who had given valuable consideration and had ‘acted in good faith’.

28. In the present case, by virtue of subsection (3) of section 53B of the Bankruptcy Act, the title or rights on the transferred shares passed to and remained with the defendants (as subsequent transferees), who had given valuable consideration in the form of money for a value of RM60,000 for the 60,000 shares and had ‘acted in good faith’ in the transaction. The said shares were purchased by and transferred to the defendants on 15.6.2005. The transfer took place more than one year before the adjudication. It would be impossible for the defendants to have known that the plaintiffs had obtained their titles from a bankrupt 24 or ‘bankrupt would-be’. Therefore, the defendants had clearly acted in ‘good faith’ in acquiring the shares from the plaintiffs. There is no evidence adduced during trial that the defendants had acted in ‘bad faith’ in the transactions.

29. Based on the above consideration, our answer to Question 1 is as follows: The transfer of a movable property by a transferor who was insolvent or adjudged bankrupt to a transferee is void. However a further transfer of the said properly by the said transferee to a subsequent transferee is not void for want of title if the subsequent transferee has given valuable consideration and has ‘acted in good faith’ in the transaction. Fraud, Forgery and Undue Influence

30. The plaintiffs’ main challenge to the titles of the defendants on the shares in question was premised on the ground that the transfer of the shares to the 25 defendants was vitiated by fraud, forgery and undue influence. The plaintiffs alleged that the transfer of the shares was by way of forgery of documents i.e. Forms 32A; and by way of undue influence by Ming Chai and without the knowledge of the plaintiffs. Essentially the plaintiffs were pleading non est factum.

31. Particulars of fraud of Ming Chai as pleaded by the plaintiffs are as follows:

32. The particulars of fraud as pleaded by the plaintiffs are facts-based. They are purely questions of fact to be evaluated based on the evidence adduced during trial. That being the case, the learned trial judge who had heard and observed the witnesses was in the best position to decide on the matter and accordingly came to the necessary findings.

33. The learned judge after full evaluation of the totality of the evidence adduced made found that the plaintiffs had failed to establish their claim against 27 the defendants based on the balance of probabilities and therefore the plaintiffs’ action was dismissed with costs. The Court of Appeal affirmed the said decision. The Court of Appeal took the view that the decision of the trial judge to dismiss the plaintiffs’ action was correct.

34. On our part, we have perused the notes of evidence as well as the judgments of the courts below, and we are also of the same view with the Court of Appeal that the decision of the learned judge in dismissing the plaintiffs’ action against the defendants was correct. As it stands, the allegations of fraud, forgery and undue influence, as pleaded by the plaintiffs in their attempt to get the transfer of the shares in question to the defendants be declared void, were not proven on the balance of probabilities by credible evidence. Therefore, the plaintiffs’ attempt to get the transfers of the shares declared void must fail, and be dismissed. 28 Question 2 Section 41 of the Specific Relief Act 1950

35. Question 2 arose on the ruling of the learned judge that “the plaintiffs have no legal rights to claim ownership in the shares, and accordingly have no legal right to invoke any relief under section 41 of the Specific Relief Act 1950.”

36. The plaintiffs argued that a plaintiff in an action for a declaration does not require to show that he has a present cause of action (citing the decision in Tan Sri Haji Othman Saat v. Mohamed Ismail [1982] 2 MLJ 177 as an authority). The plaintiffs contended that the learned judge after holding that the transfers of the shares in the present case were caught by section 52 of the Bankruptcy Act 1967 because of the subsequent insolvency of the transferors, and were 29 therefore void, should have held that since the plaintiffs took no title to the share, the relevant defendants as subsequent transferees obtained no title as well. The plaintiffs’ stand is that even if they have no present cause of action, they are justified in asking for a declaratory order outside the scope of section 41 of the Specific Relief Act 1950 by virtue of Order 15 rule 16 of the Rules of the High Court 1980 [now the Rules of Court 2012].

37. The plaintiffs’ submission above was based on the assumption that the transfers of the shares were void by virtue of section 52 of the Bankruptcy Act 1967 and the plaintiffs had not obtained good title to the shares. However, as we have stated earlier, the transfers of the shares in the present case were not avoided under the section against any person (except the DGI). Therefore the issue as submitted by the plaintiffs did not arise and the court was not obliged to exercise its discretion to make any 30 declaratory order under section 41 of the Specific Relief Act 1950, nor under Order 15 rule 16 of the Rules of Court.

38. Accordingly, we are of the view that Question 2 need not be answered. Question 3 “No case to answer”

39. With regard to Question 3, learned counsel for the plaintiffs contended that in a suit where there are several defendants, each defendant has his or her own case which he must open and close; and a party who elects to submit no case to answer must stand and fall on his submissions. According to the plaintiffs, in the present case, the 1st, 2nd, 3rd, 4th, and 6th defendants made submissions of no case to answer at the end of the plaintiffs’ case. The learned judge did not put those defendants to election to stand or fall on their submissions. Instead, the 31 learned judge allowed those defendants to call evidence.

40. The plaintiffs argued that the course permitted by the learned judge was against settled authorities, and it was wrong in principle and a breach of procedural fairness to permit a defendant who has elected to make a submission of no case to answer to call evidence in his defence.

41. Learned counsel for the defendants, on the other hand submitted that any answer to Question 3 would be irrelevant on ground that the premise of Question 3 as drafted by the plaintiffs is factually wrong. According to learned counsel, on the facts of the case, at the close of the plaintiffs’ case only the 1st to 4th defendants made submissions of no case to answer, while the 6th defendant, although represented by the same counsel, did not make such a submission. In fact at the close of the plaintiffs’ case, counsel for 6th defendant informed the court 32 that the 6th defendant would be calling a subpoenaed witness, the stakeholder of rental monies. There was no objection by the plaintiffs against the calling of the said witness. Therefore, the 6th defendant was fully within its right to call evidence.

42. In the present case, the records show that at the close of the plaintiffs’ case only the 1st to 4th defendants made a submission of no case to answer. The 6th defendant, although represented by the same counsel did not make such a submission. Learned counsel for the 6th defendant informed the court that the 6th defendant intended to call one subpoenaed witness and “this witness will be coming on Monday”. At the continuation of the trial two witnesses (DW2 and DW3) were called to testify in the defence of the 6th defendant. The 1st to 4th defendants did not call any witness after submitting no case to answer. The other witness (DW1) was called by the 5th defendant (who was not involved in the issue of no case to 33 answer). The calling of DW2 and DW3 by the 6th defendant was the source of the plaintiffs’ complaint on this issue.

43. It is not in dispute that when learned counsel for the 1st to 4th defendants made a submission of no case to answer, the learned judge did not put them to election. Perusal of the records of proceedings indicated that no such election was ever put the counsel at that time.

44. Learned counsel for the plaintiffs complained that the evidence of the plaintiffs that they had signed blank A4 papers and Forms 32A for the share transfers in their allegations were not challenged by the 1st to 4th defendants, as they failed to adduce any evidence refuting the plaintiffs’ testimony; and thus the trial judge has failed to judiciously evaluate the evidence on the basis of no case to answer. 34

45. This practice which should be followed by the court in such circumstance has been approved again and again in a number of authorities such Laurie v. Raglan Building Co. Ltd [1942] 1 KB 152 (CA); Yuill v. Yuill [1945] 1 All ER 183; Storey v. Storey [1961] P 63 (CA); Ramayee Gengau & Ors. v. Tan Yik Kok & Anor [1983] 1 CLJ 326; Simirah v. Chua Hock Lee & Anor [1963] MLJ 239; and Young v. Rank [1950] 2 KB 510.

46. The basic principles on the issue as adopted in those authorities cited above may be summarised as follows-

(ii) if the judge does not put the defendant to election whether to call evidence or not, then in such a situation the defence retains his right to call evidence if his submission fails; and

(iii) if the defendant or his counsel has so elected, he is bound by it and loses his right to call evidence in the defence case and accordingly must stand or fall on their submission.

47. The following statement by Lord Greene M.R., sitting at the Court of Appeal, in the case of Yuill v. Yuill (supra) provides a clear picture on the issue: “It does not mean that counsel by submitting no case ipso facto loses his right to call evidence if his submission fails. He only loses that right if he definitely elects to call no evidence. He may make this election expressly or (as in Laurie v. Raglan Building Co Ltd) impliedly. The practice which has been laid down amount to no more than a direction to the judge to put counsel who desires to make a submission of no case to his election and to refuse to rule 36 unless counsel elects to call no evidence. Where counsel has so elected he is, of course, bound: but if for any reason, be it through oversight or (as here) through a misapprehension as to the nature of counsel’s argument, the judge does not put counsel to his election and no election in fact takes place, counsel is entitled to call his evidence just as much as if he had never made the submission.”

48. This Court in Syarikat Kemajuan Timbermine Sdn Bhd v. Kerajaan Negeri Kelantan Darul Naim [2015] 3 MLJ 609 has laid down the principle on this issue in the following words: “The respondent’s election to call no evidence at the trial did not preclude the reversal of plainly wrong findings of the High Court by the Court of Appeal. Though no witnesses were called by the respondent and even if the appellant’s evidence was unopposed and therefore presumed to be true, that did not automatically mean the evidence had satisfied the burden of proving the existence of the settlement agreement borne by the appellant, or mean the burden of proving on balance of probabilities no longer applied or that a case to answer was automatically 37 made out. The evidence adduced by the appellant had to be sufficient to prove the existence of the settlement agreement. The appellant failed to discharge that burden.”

49. The above ruling was consistent with the well-established principle that the burden of proof at all times is borne by the plaintiff on the balance of probabilities to establish his case against the defendant or the existence of a legally enforceable claim against the defendant. It is upon the plaintiff, and certainly not the defendant, to discharge that burden. It is for the plaintiff to prove his case and satisfy the court that his claim is well-founded before the court can grant judgment on his claim. The fact that the defendant has led no evidence or called no witnesses does not absolve the plaintiff from discharging his burden in law.

50. In this regard, Suriyadi, JCA (as His Lordship then was) in Mohd Nor Afandi bin Mohamed Junus v. 38 Rahman Shah Alang Ibrahim & Anor [2008] 3 MLJ 81, recognized the above ruling in the following passage: “There are, however, two sets of circumstances under which a defendant may submit that he has no case to answer. In the one case there may be a submission that, accepting the plaintiff’s evidence at its face value, no case has been established in law, and in the other that the evidence led for the plaintiff is so unsatisfactory or unreliable that the court should find that the burden of proof has not been discharged.”

51. In the present case, the learned judge had exhaustively and painstakingly assessed the evidence of the plaintiffs in its totality in establishing the facts and came to her conclusion, with elaborate reasoning and grounds, that the evidence of the plaintiffs did not meet the requisite standard of proof required, on the balance of probabilities, to establish their claim against the defendants. Even if the 1st to 4th defendant did not call any evidence to challenge or repute the plaintiffs’ witnesses, it does not mean 39 that the trial judge must believe everything the plaintiffs had adduced. The court on its own is duty bound to assess the evidence adduced by the plaintiffs. The court can only accept the uncontested evidence if it crosses the civil standard of proof recognized by proper rules and procedure.

52. In this case, the trial judge had made the correct findings on the factual issues in question that the plaintiffs had failed to establish the elements of fraud, forgery and undue influence as claimed and that findings were affirmed by the Court of Appeal. This Court ought not to interfere with the findings.

53. With the above consideration, we have sufficiently dealt with the relevant issues under Question 3 in the context of the facts and circumstances of the present case. We are therefore of the view that Question 3 need not be specifically answered. In that context we hold that the plaintiffs’ complaint on the issue is baseless and without merit. 40 Section 133A of the Companies Act 1965

54. In addition to the ruling under section 52 of the Bankruptcy Act 1967, the learned judge had also ruled that “the said transaction contravened section 133A (1)(a) and (b) of the Companies Act 1965. This amounts to providing security for loans to a person connected with a director by any persons …”, which is caught by the prohibition under section 133A subsection (1) of the Companies Act 1965. The learned judge found that the transaction where the company provided security in connection with the loan purportedly made to Cha Bok (who is connected to the 1st, 2nd and 4th defendants) by the bank is prohibited under section 133A of the Companies Act 1965. 41

55. Subsection (1)(a) and (b) of section 133A of the Companies Act 1965 provides as follows: “ Prohibition of loans to persons connected with directors.

133A. (1) Subject to provisions of this section, a company (other than an exempt private company) shall not-

56. A plain reading of section 133A of the Companies Act 1965 shows that in order to invoke the prohibition under subsection (1)(a) of the section, there must be evidence to show that it is the company itself (in this Case Tampin Theme Park) that gives loan to the prohibited person i.e. to any person connected with its director or a director of its holding company. The 42 company itself must be the lender, not the borrower. For subsection (1)(b) of section 133A to come into play, there must be evidence to show that it was the company itself which has entered into “any guarantee” or “provided” any security in connection with a loan made to such person by any other person”. The company must be the guarantor to a loan given to any person connected with its director or a director of its holding company; or the company provides security in connection with the loan in question.

57. In the present case, the loan in question was granted by HSBC Malaysia Berhad (Melaka Branch), as the lender, to the company itself (Tampin Theme Park), as the borrower. The security provided by the company was for its own loan, not for anybody else. Hence, the question of the prohibition under section 133A of the Companies Act 1965 does not arise at all. The promise by Ming Chai that the proceeds of the 43 loan were to be used to exonerate Cha Bok of his debts is immaterial for the purpose of the section. In any event, the evidence showed that Ming Chai had failed to fulfill the said promise. We therefore, with are not in agreement with the learned judge on this point. Section 67 of the Companies Act 1965

58. The learned judge had also ruled, in addition, that the shares in the company which were acquired by the 1st, 2nd, 3rd and 4th defendants were conditional upon procurement of bank borrowings with the assets of the company as security, implying a form of financial assistance by the company to deal with its own shares.

59. The learned judge concluded on this issue: “Therefore, in view of the prohibitions by section 67 and 133A of Companies Act 1965, the claim by the plaintiffs to relief premised upon allegation that their transfer of shares in D6 was actuated by a promise to secure 44 borrowings for the D6 using as security the assets of D6, to settle the liabilities of Yui Cha Bok owed to other persons is clearly unsustainable. It amounts to a claim premised upon an illegality which the court cannot lend a hand based on the maxim of ex turpi causa non oritur action.”

60. Section 67 of the Companies Act 1965 deals with “dealing by a company in its own shares”, etc. Subsection (1) provides: “67. (1) Except as is otherwise expressly provided by this Act, no company shall give, whether directly or indirectly and whether by means of a loan, guarantee or the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company or, where the company is a subsidiary, in its holding company or in any way purchase, deal in or lend money on its own shares.”

61. Subsection (1) prohibits inter alia the giving of “any financial assistance for the purpose of or in 45 connection with the purchase or subscription made or to be made by any person of and for any shares in the company. The financial assistance can be in the form of “a loan, guarantee or the provision of security or otherwise.”

62. In the present case the loan by HSBC Malaysia Berhad (Melaka Branch) was given to the company itself. The company was the borrower. The company received and utilized the proceeds of the loan. The company had provided its assets as security in order to secure the loan. The loan was not granted to the 1st, 2nd, 3rd and 4th defendants. There was also no evidence to show that the assets of the company were given out as security for any loan or financial assistance given to any of the defendants as the subsequent purchasers for the purpose of purchasing the shares in question from the previous shareholders. The promise “to secure borrowings” for the company as the basis for the learned judge’s ruling on this issue, is insufficient 46 to invoke the prohibition of “dealing by a company its own shares” as provided under section 67 of the Companies Act. There is nothing illegal under the section for a company to provide security on its own assets for the purpose of securing a loan for itself. Section 67 of the Companies Act 1967 does not come into the picture. The learned judge erred in her findings on this issue. Conclusion

63. Based on the above reasoning, we summarise our findings as follows:

(ii) the plaintiffs cannot invoke section 52 of the Bankruptcy Act 1967 in getting the transfers of the shares from Cha Bok and Tui Eng declared void by the court as the plaintiffs do not have the necessary locus standi to bring this action against the defendants. Only the DGI is entitled to do so under the section;

(iii) the prohibitions under sections 133A and 67 of the Companies Act 1965 are not applicable to the facts and circumstances of the present case relating to the transfers of the shares to the defendants; therefore the transfers cannot be declared void on this ground; and

(iv) the learned judge was right in allowing the 6th defendant to call (DW2) and (DW3) adduced evidence in its defence on the ground that 6th defendant did not make any submission of no 48 case to answer; hence the 6th defendant was still entitled in law to call evidence in its defence.

64. In the upshot, we dismiss the appeal with costs. Dated: 5TH APRIL 2019 sgd RAMLY HJ ALI FEDERAL COURT JUDGE MALAYSIA Advocates/Solicitors

1. Datuk Seri Gopal Sri Ram (with Pramjit Kaur, David Yii, Demien Chan and Khairul Anwar) (Tetuan Mann & Associates) .. for the Appellants/Plaintiffs

2. GK Ganesan (with Cheang Sek Kwan, Lim Fong Say, James Huntzen Ong and Sukhvinder Singh Sidhu) (Tetuan Chan & Associates) .. for Respondents 1– 4 & 6 (Defendants 1 – 4 & 6)

3. Iruthaya Raj (Tetuan Raj Selva & Co) .. for Respondent 5 (Defendant 5) 49 Cases Referred to:

1. Supreme-General Films Exchange Ltd v. His Highness Maharaja Sir Brijnath Singhji Deo & Ors. A.I.R. [1975] SC 1810

2. Tan Sri Haji Othman Saat v Mohamed bin Ismail [1982] 2 MLJ 177

3. Alexander v Rayson [1936] 1 KB 169

4. Simirah v Chua Hock Lee [1963] MLJ 239

5. Laurie v. Raglan Building Co. Ltd [1942] 1 KB 152 (CA)

6. Yuill v. Yuill [1945] 1 All ER 183

7. Storey v. Storey [1961] P 63 (CA)

8. Ramayee Gengau & Ors. v. Tan Yik Kok & Anor [1983] 1 CLJ 326

9. Young v. Rank [1950] 2 KB 510

10. Syarikat Kemajuan Timbermine Sdn Bhd v. Kerajaan Negeri Kelantan Darul Naim [2015] 3 MLJ 609 50 Legislations Referred to:

1. Rules of Court 2012: Order 15 rule 16 & Order 35 2. Specific Relief Act 1950: Section 41 3. Bankruptcy Act 1967: sections 52, 53B & 54 4. Companies Act 1965: sections 67 and 133A