DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR
(BAHAGIAN DAGANG)
D1-22-422-04
ANTARA
FURNISHING FASHIONS SDN BHD
(No. Syarikat: 182239-K)
… PLAINTIF
DAN
1.
SOON SENG COMPANY SDN BHD
(No. Syarikat: 006479-X)
2.
DATO’ TAI E KING
3.
DATO’ DR. TAI HEAN SING
4.
SIGMAPRISE SDN BHD
(No. Syarikat: 525741-H)
… DEFENDAN- DEFENDAN
GROUNDS OF DECISION
1. The Plaintiff, Furnishing Fashions Sdn Bhd, is a private limited
company nominated by Westmount Leisure Sdn Bhd (“Westmount”) as a
subcontractor to undertake works and for the supply, commission, sale
and delivery of goods for the construction of the Golden Legacy Hotel in
Malacca.
1
2. The Plaintiff’s claims against Soon Seng Company Sdn Bhd (“the 1st
Defendant”), Dato’ Tai E King (“the 2nd Defendant”) and Dato’ Dr Tai
Hean Sing (“the 3rd Defendant”) is for a sum of RM 4,828,872.06 being
the outstanding amount owing by Westmount to the Plaintiff in respect of
works done based on representations and undertakings by the 1st
Defendant, made through the 2nd and 3rd Defendants. The Plaintiff’s
claim against the 4th Defendant is for an account of all benefits received
pursuant to the disposal of the Pan Pacific Legacy Hotel (subsequently
known as the Golden Legacy Hotel) by Westmount to the 4th Defendant
and to pay the same to the Plaintiff with interest and costs. The Plaintiff
also claims damages against all the Defendants for conspiracy to defraud
in relation to the disposal of the said Hotel, together with interest and
costs.
3. The Plaintiff’s claim is denied by all the Defendants. The 1st, 2nd and 3rd
Defendants’ case is that there is no privity of contract between the
parties. The 2nd and 3rd Defendants denied giving any undertaking or
guarantee to the Plaintiff. All the Defendants denied any conspiracy to
defraud the Plaintiff contending instead that the sale of the Hotel to the
4th Defendant was on a willing buyer and willing seller basis.
The Plaintiff’s Case
4. Yeoh Guat Kim (PW 1), a director of the Plaintiff, testified as to the
Plaintiff’s dealings with Westmount and the Defendants. The Plaintiff was
appointed as a nominated sub-contractor of Westmount in relation to the
construction of a Hotel initially known as Pan Pacific Legacy Hotel and
subsequently called the Golden Legacy Hotel. It was awarded a contract
for interior design works for the 1st, 6th and 7th floor public areas of the
said Hotel for a lump sum of RM 5,088,289.00 (“the 1st Contract”). In
respect of this contract the Plaintiff was also issued with instructions for
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additional works from time to time. Most of these instructions were given
by a representative of Westmount through written site memos.
5. The Plaintiff was also appointed as the nominated sub-contractor for
interior design works to the rooms, suites, baths and corridors for the
said Hotel for an award sum of RM 5,450,000.00 (“the 2nd contract”). The
Plaintiff was also issued with instructions for additional works in respect
of this contract. Although no letter of award was issued in respect of
these additional works however it is PW 1’s evidence that the additional
works were certified.
6. Apart from the interior design works, Westmount also ordered loose
furniture from the Plaintiff for the Hotel with a total value of RM
1,000,444.72, which furniture were all delivered between December 1997
and January 1998. The delivery orders were acknowledged by staff of
Westmount who present at the time of the deliveries. The delivery orders
contained an acknowledgement from a person named WAI AHA whose
designation was described as “Resident Engineer, Pan Pacific Legacy
Hotel Malacca, Westmount Leisure Sdn Bhd (Soon Seng Group)”.
Evidence was adduced that a delivery schedule and a set of relevant
delivery orders were furnished by the Plaintiff and these documents were
verified by the said Wai Aha. However, these documents were not sent to
the 1st Defendant. Neither were invoices issued in respect of loose
furniture supplied and delivered by the Plaintiff sent to the Soon Seng
Group.
7. PW 1 testified that due to the non-payment of outstanding sums for work
that was already done, works under the 1st and 2nd contracts were
initially being carried out at a minimal pace. On or about December
1997, all the works under the 1st contract, including additional works,
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had been completed and almost 100% of the loose furniture had been
furnished and delivered by the Plaintiff. At that point in time, the amount
owed by Westmount Leisure was RM 4,828,872.06. In 1998, the amount
outstanding was more than RM 3 million (RM 4,828,872.06 – RM
1,000,444.72).
8. Notwithstanding the delay in completing the works, Westmount was
nevertheless keen for the Plaintiff to complete the outstanding work
under the 2nd contract. To that end a number of meetings were held
between the Plaintiff and Westmount in early 1998 to discuss the nonpayment of outstanding monies as well as the completion of outstanding
works under the 2nd contract. According to PW 1, the 2nd and 3rd
Defendants attended a few of these meetings as representatives of the 1st
Defendant as well as Westmount. They had requested that
Plaintiff
continue with the outstanding works under the 2nd contract but were
informed that they would not continue unless the outstanding monies
were paid.
9. According to PW 1, a final meeting was held sometime in May 1998
wherein the 2nd and 3rd Defendants had proposed as follows:
i.
The 2nd and 3rd Defendants undertook to ensure that the 1st
Defendant do pay the Plaintiff all the outstanding monies owing to
the Plaintiff for work done and completed to date as well as
outstanding works under the 2nd contract provided the Plaintiff
commences the balance works under the 2nd contract immediately;
ii.
In the interim, the 1st Defendant would contra 10 units of
apartments under a project of the 1st Defendant known as ‘The
Heritage’ and 2 other units of factory lots under a project known as
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‘Alpine Industrial Park’ as part payment of monies owing to the
Plaintiff;
iii.
An additional sum of RM 150,000.00 in cash to be paid to the
Plaintiff; and
iv.
The Plaintiff to undertake to complete the additional works on the
10th and 11th floors of the said hotel under the 2nd contract.
10.
PW 1 identified her signature on the letter of confirmation (pages 23 – 24
of Agreed Bundle B) that was sent to her. Whilst agreeing that the
attendance of the 2nd and 3rd Defendants was important and she had
agreed to continue with the outstanding works because of the promises
and undertakings that were made by them, she nevertheless had to
admit that there was nothing about the alleged undertaking in the letter
of confirmation. The Court notes no mention of the alleged guarantee
given by the 2nd and 3rd Defendants as representatives of the 1st
Defendant and also no mention that the debts of Westmount would be
settled by the 1st Defendant. It was put to PW 1 and she denied that the
2nd Defendant had never met her at any time; that the 2nd and 3rd
Defendants had never held themselves out as representing the 1st
Defendant; and they had never given a guarantee that the 1st Defendant
would settle Westmount’s debts. However, she had to admit that at no
time after the receipt of the confirmation letter did she request
Westmount or the 1st Defendant to include the guarantee and
undertaking as terms of their agreement. She denied that she did not
request for the inclusion of the guarantee and undertaking because there
was no such guarantee and undertaking. She disagreed that her
allegations were all a concoction and an afterthought to get the money
from the 1st Defendant.
5
11.
PW 1 said that the Plaintiff accepted the proposal because they knew
that Westmount was “a subsidiary of the Soon Seng Group of companies”
with 1st Defendant as the principal company. The Plaintiff knew that
Westmount was set up for the purpose of the construction of a hotel to
enable the 1st Defendant to have a 5-star hotel among its businesses.
She testified that at the material time, four of the directors of Westmount
(the 2nd Defendant, Tay Kwok Peng, Tai Swee Kian & Cheong Wei Ling)
were also directors of the 1st Defendant. Further, delivery orders and the
delivery schedule signed by Wai Aha indicated that Westmount was part
of the Soon Seng Group. As such, the Plaintiff felt that based on the
representations and undertakings of the 2nd and 3rd Defendants they
would not face any difficulties in collecting payments as the same would
be undertaken by the 1st Defendant in the event of default by
Westmount.
12.
Thus, when Westmount sent a letter dated 18.5.1998 confirming the
terms of agreement and requesting the Plaintiff’s confirmation of the
terms, PW 1 signed the acceptance on behalf of the Plaintiff (pages 23 –
24 of Agreed Bundle B). The total value of the property contra and cash
payment under the agreement amounting to RM 3,090,600.00 were all
successfully effected. She agreed that the Plaintiff’s claims against
the 1st, 2nd and 3rd Defendants for the alleged outstanding sums
owed by Westmount were premised solely on this letter.
13.
The Plaintiff then continued with the outstanding works under the 2nd
contract. In the course of such work, Westmount’s request for additional
interior design works were acceded to by the Plaintiff. PW 1 explained
that they did so because they had received the property contra and cash
payments following the earlier representations and undertakings of the
2nd & 3rd Defendants. They thus felt that the representations and
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undertakings were genuine and that both the payments for the balance
works under the 2nd contract as well as the additional works would be
honored.
14.
The total value of the additional works under the 1st and 2nd contracts
was RM 2,188,499.02 and RM 1, 747,201.64 respectively. Confirmation
of payment and certification issued by the Plaintiff to Westmount in
respect of both original and additional works under the 1st and 2nd
contracts were signed by Westmount (P 5A & B). However, there was
admittedly no mention of the 1st Defendant in these documents and
neither were they sent to the 1st Defendant.
15.
On or about November 1998, the Plaintiff sought payment of outstanding
monies due to them. PW 1 met with the 3rd Defendant and was informed
that he would arrange for 1st Defendant to contra two more factory lots
from Alpine Industrial Park as interim payment and would arrange
further payments to the Plaintiff later. Unfortunately the payment did not
materialize. The Statement of Account issued to Westmount dated
29.3.2001 in respect of all the works done and completed by the Plaintiff
in respect of the said Hotel shows an outstanding amount of RM
4,828,872.06 (P 6). According to PW 1, this amount was never disputed
by Westmount.
16.
Initially, Westmount gave excuses that the Hotel was not doing well and
that payments would be made as soon as business picked up. However,
towards the end of 1999, it became apparent that Westmount was in
serious financial difficulties and was refusing to pay all its contractors,
including the Plaintiff.
7
17.
The Plaintiff was informed of a proposed restructuring scheme for
Westmount whereby after the restructuring it would be able to pay off all
its creditors. Westmount intended to divest its interests in the Hotel to
meet its debt obligations except that a sale of the Hotel then was not in
the best interests of its creditors and shareholders. Among the primary
objectives of the proposed restructuring scheme (pages 28 – 68 of Agreed
Bundle Part B) was the restructuring of the amounts owed to
Westmount’s unsecured creditors and the repayment of its debts to the
Scheme Creditors in an orderly manner. To that end, it sought their
support for the continuation of the Hotel’s operations with a view to
achieving a higher realization value upon subsequent disposal of the
Hotel.
18.
The amount owed by Westmount to Plaintiff at that point in time was in
excess of RM 1 million and as such it fell under Scheme C of the
proposed restructuring scheme whereby it would have received RM 1.00
for every RM 1.00 owed. PW 1 was aware that the proposed scheme
required the agreement of all the creditors including the secured
creditors. MBSB was a secured creditor. However, PW 1 claimed not to
be aware that most of the creditors did not approve of the restructuring
scheme.
19.
Whilst awaiting the proposed restructuring scheme to be carried out, the
Plaintiff discovered that on or about 14.2.2000 a winding-up petition had
been presented against Westmount by one of its creditors but the matter
was settled through the payment of 5 installments of RM 40,000.00
each. In the meantime, on 30.12.2000, Westmount entered into a sale
and purchase agreement with Sigmaprise Sdn Bhd, the 4th Defendant,
for RM 110,000,000.00. When Westmount defaulted on the payments to
the creditor, a prohibitory order was registered on 21.3.2001 on the
8
property of Westmount. This prohibitory order had the effect of
prohibiting dealings in respect of the said property including the sale of
the property to the 4th Defendant.
20.
On 13.4.2001, Westmount obtained an order from the High Court at
Malacca to validate the sale of the property to the 4th Defendant, a
subsidiary of MBSB. The Plaintiff did not apply to set aside this
validation order.
21.
On 31.5.2001, Westmount obtained an order from the High Court at
Kuala Lumpur for the cancellation of the prohibitory order. The sale of
the property to the 4th Defendant was then completed and the 2nd
Defendant, who stood as a guarantor for Westmount, was discharged as
guarantor. The sale and purchase of the property did not include the
non-permanent fittings and fixtures such as furniture. According to PW
1, after the property was purchased by the 4th Defendant, the nonpermanent fittings and fixtures were used by the 4th Defendant for the
purposes of the Hotel.
22.
After the property was disposed of by Westmount, another winding up
petition was presented against it and this time Westmount was wound
up. PW 1 complained that the sale of the property to the 4th Defendant
was not made known to the Plaintiff or to the other creditors of
Westmount. PW 1 testified that the Plaintiff was thus unable to recover
the RM 4,828,872.06 owed to it and it was for that reason that it had
filed this action against the 1st, 2nd, 3rd and 4th Defendants. During crossexamination by counsel for the 2nd and 3rd Defendants, she admitted that
she filed this action against the Defendants out of desperation.
9
23.
In the course of the evidence of PW 1, a question arose as to whether she
had met the 2nd and 3rd Defendants before. She insisted that the
meetings held at Westmount’s office were attended by both 2nd and 3rd
Defendants and further, that that was not the first time that she had met
them. According to PW 1, she first met the 3rd Defendant in 1990 and the
2nd Defendant in 1997. The 3rd Defendant had given her a job to supply
and install carpets for a few of his projects, namely Corinthian
Apartments & Tuscany Apartments.
The Case for the 1st & 2nd Defendants
24.
The 2nd Defendant, Dato’ Tai E King (DW 1), testified on his own behalf
as well as on behalf of Soon Seng Company Sdn Bhd, the 1st Defendant.
The 1st Defendant was formed in 1965. Its shareholders were Tai Chet
Siang, Tai Ho Seng and DW 1, each holding 6508 shares. In 1977 there
were 4 directors namely Tai Kok Peng, Tai Swee Kian, Tai Ho Seng and
DW 1. Although he was both a director and holding 1/3 of the shares of
the 1st Defendant, he did not have effective control of the 1st Defendant
as it was the Board of Directors who would make decisions on company
matters and business.
25.
DW 1 admitted that he was a director and shareholder of Westmount
holding one (1) share. The only other shareholder is a company called
Belabur Jaya Sdn Bhd which held 6,906,106 shares. He denied that
Westmount was wholly owned by the 1st Defendant or that it was a
subsidiary or an associate of the 1st Defendant. He denied that
Westmount was specifically created to build and own the Golden Legacy
Hotel.
26.
Westmount was originally incorporated in 1984 as Westmount Industrial
Estates Sdn Bhd. It changed its name to Westmount Leisure in 1985. Its
10
directors at the time of incorporation were the 2nd Defendant and Tay
Kok Beng and they held one share each in the company. Prior to
venturing into the hotel business, it was not engaged in any active
business. According to DW 1, the building of the Golden Legacy Hotel
was Westmount’s project and not that of the 1st Defendant.
27.
Belabur Jaya became a shareholder of Westmount in 1996. Its
shareholders were the 2nd Defendant, Ong Peng Yan, Tai Chet Siang and
Tai Swee Kian, each holding 11 shares, and TYY Resources Sdn Bhd
which held 18,300,000 shares. In 1996, the directors were Tai Swee
Kian, Tai Ho Seng, Tay Kwok Beng and Tai Kok Thye. TYY Resources was
the old name for Soon Seng Company Sdn Bhd, the 1st Defendant.
28.
DW 1 disagreed that Westmount was indirectly controlled by the 1st
Defendant by virtue of the fact that Belabur Jaya, the major shareholder
of Westmount, was controlled by the 1st Defendant as its majority
shareholder. He insisted that each of the companies had its own board of
directors. However it could not be disputed that he was a common
director in all 3 companies.
29.
The land on which the Hotel was built was alienated by the Malacca
State Government to Belabur Jaya in the mid 1970s. No development
took place. In 1996, the State Government issued a notice warning that if
the land was not developed, it would be taken back. Belabur Jaya then
looked for a company to set up the hotel project. They took Westmount
Industrial Estates Sdn Bhd, changed its name to Westmount Leisure and
transferred the land from Belabur Jaya to Westmount. In return, Belabur
Jaya was given shares in Westmount. DW 1 agreed that the decision to
use Westmount to develop the Hotel was made by Belabur Jaya. That
11
decision of Belabur Jaya must have received the approval of the 1st
Defendant, its majority shareholder.
30.
The cost of constructing the Hotel far exceeded the RM 80 million that
was originally estimated. RM 78 million was financed from MBSB for
which DW 1 stood as guarantor. In the final analysis, Westmount did not
have the financial capacity to pay its creditors in full.
31.
DW 1 was referred the letter of Westmount dated 31.7.1997 confirming
the Plaintiff’s appointment as a nominated sub-contractor for interior
design works to the 1st, 6th and 7th floors of the Hotel, which letter was
signed by the 3rd Defendant as “Director”. DW 1 sought to explain that
the 3rd Defendant was not a director of Westmount but a director of the
Hotel project. He was appointed by the board of directors, including DW
1 himself and he reported to the board.
32.
DW 1 admitted that he had heard of Wai Aha and that he “could be” the
resident engineer for the hotel project. He reported to the 3rd Defendant.
DW 1 was then referred to the signatures and chop appearing on delivery
orders P2A to P2D. The chop of Wai Aha appears as follows:
Name: WAI AHA
Designation: Resident Engineer
Pan Pacific Legacy Hotel Malacca
Westmount Leisure SDN BHD,
(Soon Seng Group)
At first DW 1 attempted to say that he had never seen the above chop
before. However, upon cross-examination, he admitted that he had in
fact seen the chop before although he disagreed that the absence of
12
objections from the 1st Defendant as to Westmount being a part of the
Soon Seng Group proved that it was in fact part of the Group.
33.
What are the companies that form the Soon Seng Group? According to
DW 1, they are Safety Development Sdn Bhd, Alpine Industrial Park and
Westmount.
34.
DW 1 was referred to the letter dated 18.5.1998 relating to the contra of
the Heritage Apartments and Alpine Industrial Park units as part
payment of debts owing to the Plaintiff.. He agreed that the letter was
written by John Ng on the instructions of the board of directors of
Westmount.
35.
DW 1 agreed that the Plaintiff had requested payment for works
completed in 1998. Although there was still some uncompleted work,
however Plaintiff informed that it would not complete the work unless
payment was made. However, DW 1 disagreed that he and the 3rd
Defendant had met with the Plaintiff to discuss payments and that it was
following these discussions that arrangements were made to transfer 10
units of Heritage Apartments and 2 units in Alpine Industrial Park as
well as other cash payments to the Plaintiff. He denied any discussions
but instead maintained that the discussions were between John Ng and
the Plaintiff. The Court recorded the following evidence from DW 1 on
this issue:
“Yes, Mr. John was authorised to discuss with Plaintiff on amounts
outstanding to the Plaintiff. I was a member of the Board of
Directors at that time. Yes, John was authorised to make
proposals in respect of specific properties to offset amounts owing
13
to the plaintiff. Yes, these specific instructions were authorised by
the Board of Directors.”
36.
The buildings in Heritage belonged to Safety Development Corporation
Sdn Bhd (“Safety”). DW 1 admitted that he was the founder as well as a
director and shareholder of Safety. He was also a director, promoter and
shareholder of Alpine Industrial Park (“Alpine”). He agreed that
instructions were given to Heritage and Alpine to contra specific units
towards the Plaintiff’s account and that he was involved in the decision
to do so in his capacity as director of all 3 companies. He disagreed that
the contra arrangement went through because the 1st Defendant allowed
it. He would have the Court believe that the companies acted on their
own volition and the arrangement was not earlier made known to their
majority shareholder.
37.
DW 1 testified that Westmount sold the Golden Legacy Hotel to
Sigmaprise Sdn Bhd, the 4th Defendant in 2000 for RM 110 million. It
was a negotiated price. The main person who was involved in the
negotiations with MBSB was John Ng Yan Chuan, the Senior General
Manager of Westmount, who carried out the decisions of the Board in
relation to the Hotel project. He negotiated on behalf of his employer,
Westmount, and the owner of the Hotel. John Ng has since emigrated to
Australia and his present whereabouts are unknown.
38.
DW 1 told the Court that he attended two of the negotiations with John
Ng on behalf of Westmount. The 1st Defendant was not involved in the
sale and neither did it authorize DW 1 or anyone else to represent it at
any of the meetings. DW 1 said that he did not at any time hold himself
out as representing the 1st Defendant in the Hotel project.
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39.
Clause 2.1 of the Sale and purchase Agreement shows that the Hotel was
sold with ‘Fixtures’. ‘Fixtures’ is defined as “The permanent fittings and
fixtures the full particulars of which are listed in the Second Schedule
hereto”. Fixtures would clearly not include the furniture. When asked,
DW 1 was unable to say what had happened to all the non-permanent
fittings and fixtures of the Hotel.
40.
The amount outstanding to MBSB as at 19.10.1999 was about RM 100
million. The current market value of the Hotel at that time was about RM
91 million. He agreed that if the Hotel was sold at the market value,
Westmount would still owe MBSB around RM 10 million. And if force
sold at RM 73 million, there would be RM 30 million owed. He agreed
that as guarantor, he would be personally liable for the shortfall.
41.
DW 1 denied that there was a conspiracy between the 1st Defendant, 2nd
Defendant, Tai Hean Sing and the 4th Defendant to sell the Hotel to the
4th Defendant in order to defeat the Plaintiff’s claim. According to him
Westmount was making genuine efforts to settle its debts to the Plaintiff
and had even offered properties to contra its debts. Similarly the sale of
the Hotel to the 4th Defendant was a genuine attempt to settle the debt
owed to MBSB, a secured creditor.
42.
DW 1 insisted that the 1st Defendant did not ask Westmount to sell the
Hotel to the 4th Defendant to settle its debt with MBSB. The 1st
Defendant was not indebted to the Plaintiff for works done for and goods
supplied to Westmount. Up until the date of service of the Writ on the 1st
Defendant, the Plaintiff had not made any demands to the 1st Defendant
for payment of the RM 4,828,872.00 or any part thereof in respect of
works done for or goods supplied to Westmount. At no time between the
years 1997 and 1999 did the Plaintiff ever write to the 1st Defendant to
15
accuse it of defrauding it, deceiving it, or concealing the sale of the Hotel
as well as the proceeds of the sale.
43.
DW 1 had explained how properties belonging to companies in which the
1st Defendant was a shareholder came to be offered to Plaintiff in
settlement. Westmount had asked Safety and Alpine to lend it money to
settle its debts. Those companies had no cash to lend as their monies
were all tied down in properties. Westmount then asked if some of their
unsold properties could be given to settle its debts and payment for the
properties would be made later when the Hotel began operations. As a
result of this arrangement, properties in the Heritage Apartments and
the Alpine Industrial Park came to be offered to Plaintiff by Westmount.
44.
DW 1 denied knowing anything about the cash that was offered for
settlement. He neither issued nor was aware of any variation orders. He
denied ever having met PW 1 before coming to Court.
The 3rd Defendant’s Case
45.
The 3rd Defendant, Dato’ Tai Kee Sing @ Tai Hean Sing (DW 2), is the
son of the 2nd Defendant. He claimed to have no relationship, interest or
shareholding in the 1st Defendant.
46.
DW 2 testified that the persons in charge of the initial stage of
construction/implementation of the Golden Legacy Hotel (formerly
known as the Pan Pacific Legacy Hotel) operations were himself as
project manager and John Ng Yan Chuan, the Senior General Manager of
Westmount. His own appointment as project manager by the Board was
to oversee the construction of the Hotel and to liaise with the Japanese
operator of the Hotel to build it according to their requirements. The role
of John Ng was to co-ordinate the day to day construction activities and
16
to liaise with the main contractor and the more than 120 subcontractors. He admitted during cross-examination that his father, the
2nd Defendant, sat on the Board of Directors of Westmount. He himself
had no shareholding in Westmount. There was no commercial or
contractual relationship between the 1st Defendant and the Plaintiff.
47.
The Hotel was managed by the Pan Pacific Group who reported to
Westmount, the owner of the Hotel. Since its inception in December 1997
until end 1998, Pan Pacific Management was in charge of operations
headed by Mr. Sam Takigawa and Mr. ST Foo. From 2000 onwards, the
management and operations of the Hotel was handled by John Ng Yan
Chuan.
48.
It is the 3rd Defendant’s evidence that the name “Soon Seng Group” was
just an “umbrella name given to our group of companies”. He clarifies
that “ours” means any company belonging to “us” and “us” means the
shareholders of those companies that are collectively referred to as the
Soon Seng Group. He agreed the Westmount is a company within the
Soon Seng Group of companies and that the 1st Defendant holds majority
shares in Westmount.
49.
DW 2 disputes that he or the 1st Defendant should be held liable for the
debts of Westmount as there exist no privity of contract between them.
He denies giving an “undertaking or guarantee” of payment in
consideration of Plaintiff continuing with or expediting outstanding
works on the Hotel. Most of the negotiations with sub-contractors and
letters of award were handled by John Ng Yan Chuan and himself during
initial stages of construction of the Hotel but he had never at given such
an undertaking or guarantee to any sub-contractor (including the
Plaintiff) as a consideration or inducement for them to do their work.
17
Neither had he executed any such undertaking or guarantee in his own
personal capacity. It is his evidence that the Plaintiff, like all other subcontractors, resumed or completed their work based on their own
decision and responsibilities under the letter of award.
50.
Whilst admitting that he did not know if the 1st Defendant had executed
any guarantee or agreement for works to be carried out by the Plaintiff,
the 3rd Defendant added that there was no nexus or privity of contract
between the Plaintiff and the 1st Defendant as the letter of award was
between Westmount and the Plaintiff.
51.
When queried as to the current whereabouts of John Ng Yan Chuan, the
3rd Defendant confessed that he did not know. He had left after
Westmount was wound up. He understood that John Ng had emigrated
to Australia and he had not been in contact with him.
52.
The 3rd Defendant testified that the Heritage properties belonged to
Safety whilst Alpine was the registered owner of Alpine Industrial Park.
He was neither a shareholder nor a director in these two companies. He
was informed by Mr. John Ng about a transfer of some properties in
Heritage and Alpine Industrial Park to the Plaintiff to set-off part of
Westmount’s debt but claimed to have no personal knowledge of this.
53.
The 3rd Defendant was aware that MBSB was the charge financier for the
Hotel. He came to know subsequently from John Ng and his father that
the Hotel was sold to Sigmaprise. He was not involved in any way with
negotiations for the sale of the Hotel. His position as project manager
ended in early 1998 and he left Westmount soon after that to concentrate
on his own business.
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54.
Notwithstanding answer 32 of his witness statement, DW 2 denied that
he had heard about the sale of the Hotel from his father. He claimed he
was told about the sale of the Hotel as well as about Westmount being
wound up by John Ng during an informal lunch. He also learnt about the
transfer of properties to the Plaintiff from John Ng. His conversations
with John Ng took place when John came home to visit his parents. At
that time, the 3rd Defendant was no longer engaged in any matter with
Westmount. All the sub-contractors were appointed by John Ng who was
given a free hand to decide both on the identity of the sub-contractors as
well as the value of their sub-contract work. John Ng reports to the
Board.
55.
The 3rd Defendant also denied that there was any conspiracy between the
1st Defendant, the 2nd Defendant and himself with the 4th Defendant to
defraud the Plaintiff by selling off the Hotel to the 4th Defendant,
Sigmaprise. He did not personally derive any proceeds from the sale of
the Hotel to Sigmaprise.
56.
The Plaintiff’s claim of RM 4,828,872.06 was allegedly due from
Westmount sometime in 1999 or on or about 29.3.2001. The 3rd
Defendant did not receive any notice of demand from the Plaintiff or their
solicitors to hold him liable for any alleged undertaking at any time
between 1999 and 6.4.2004 when the Writ was filed. Neither did he
receive any notice of demand alleging conspiracy to defraud in respect of
the disposal of the Hotel.
57.
The 3rd Defendant also denied that he had made a further representation
in November 1988 fraudulently acting on the behest of the 1st Defendant
where he had purportedly agreed to contra another 2 units of Alpine
Industrial Park factories to the Plaintiff to reduce outstanding debts. He
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argued that Alpine Park did not belong to the 1st Defendant and
furthermore he had no legal authority to deal with Alpine Park units or
speak to do things on behalf of the 1st Defendant. However, he agreed in
cross-examination that if the 1st Defendant is the biggest shareholder of
Alpine, it would mean that Alpine was a company within the Soon Seng
Group of companies.
58.
During cross-examination, the 3rd Defendant clarified that Wai Aha, the
resident engineer for the Hotel project, reports to the General Manager in
charge of projects named Albert Lee. The position of the General Manager
is below that of the Senior General Manager.
59.
The dateline under the 1st contract was 15.11.1997 and that for the 2nd
contract was 15.12.1997. However, the Plaintiff had not yet completed
their work when the Hotel opened sometime in December 1997. He
agreed that at this time, Westmount Leisure had not completely settled
the sums outstanding to the Plaintiff for work already done. However, he
denied that he and his father had met with the Plaintiff to induce them to
continue with the residual work. He contends that he and his father had
never met the Plaintiff. He further denied that he had given undertakings
to the Plaintiff or that based on such undertakings, the Plaintiff had
resumed work.
The 4th Defendant’s Case
60.
Huzaifah binti Zainuddin (DW 3) who testified on behalf of Sigmaprise
Sdn Bhd, the 4th Defendant had been its company secretary since
25.9.2006.
She
was
also
a
Senior
Manager,
Jabatan
Perundangan/Kustodian in Malaysia Building Society Berhad (MBSB).
The 4th Defendant is a wholly owned subsidiary of MBSB.
20
61.
Reference was made to the 1st party legal charge registered as Bil
Perserahan No. 11465/97, Jilid 597, Folio 71 by the Pentadbir Hakmilik
Tanah Negeri Melaka on 4.12.1997. The charge was created by
Westmount in favour of MBSB as security for financing facilities totaling
RM 78 million. The charge annexure would show that Westmount, the
registered proprietor of the land who was developing the Pan Pacific
Legacy Hotel, created the charge in favour of MBSB for bridging loans of
RM 53 million and RM 25 million. A copy of the Perakuan Pendaftaran
Gadaian appears at page 39 of Agreed Bundle A.
62.
On or about December 2000, Westmount and MBSB had conducted a
restructuring of Westmount’s outstanding debts. MBSB had given its
consent to Westmount to sell the land and the Golden Legacy Hotel to
the 4th Defendant, a wholly owned subsidiary of MBSB, for RM 110
million. No monetary consideration was in fact paid by the 4th Defendant
because the sale was a set-off for Westmount’s indebtedness to MBSB.
The agreement was translated into a Sale and Purchase Agreement
between Westmount and the 4th Defendant dated 30.12.2000.
63.
Reference was made to Preamble G of the Sale and Purchase Agreement
which states that 3 winding-up petitions had been filed against
Westmount as at 30.12.2000. Because of these petitions, Westmount
had applied for a Validation Order to validate the sale of the land and
Hotel to the 4th Defendant. A Validation Order was made by the Malacca
High Court vide Originating Summons No: 24-28-2001 on 13.4.2001.
Based on the Validation Order, there would have been no necessity for
the 4th Defendant to seek the assistance of the 1st, 2nd and 3rd
Defendants to conclude the Sale and Purchase Agreement. In any event,
the 1st, 2nd and 3rd Defendants were not parties to or privy to the Sale
and Purchase Agreement.
21
64.
Reference was also made to a Kuala Lumpur High Court Order dated
31.5.2001 setting aside a Prohibitory Order obtained by judgment
creditors, Charles Meyer and Associates Sdn Bhd.
65.
DW 3 denied the Plaintiff’s allegations of conspiracy to defraud. She
pointed out that Westmount had applied for and obtained a Validation
Order for the sale of the property to the 4th Defendant. If the sale
transaction was suspicious, surely the Plaintiff would have taken steps
to stop the transaction, which they did not do. Neither was there any
action taken to challenge the setting aside of the Prohibitory Order.
66.
DW 3 agreed that the Sale and Purchase Agreement was for the sale of
the property with fixed and permanent fixtures and fittings. She agreed
that the 4th Defendant was not entitled to the non-permanent fixtures
and fittings. However, she was unaware as to what had happened to the
non-permanent fixtures and fittings which were in the Hotel.
Evaluation of the Evidence and Findings
67.
In coming to a decision in this case, the Court has carefully considered
the evidence adduced by all the parties in this suit together with the
documentary evidence relied upon by them. The Court has also gained
considerable assistance from the written submissions and authorities
filed in Court.
68.
The basic facts as to the appointment of the Plaintiff by Westmount are
by and large undisputed. The 1st and 2nd contacts for RM 5,088,289.00
and RM 5,450,000.00 were clearly between the Plaintiff and Westmount.
The supply of loose furniture was to Westmount. That the liability to pay
rests with Westmount cannot be denied by the Plaintiff as it can be seen
22
that they had at all times invoiced Westmount and demands for payment
were also addressed to Westmount.
69.
How then does the Plaintiff base its claims against the 1st, 2nd and 3rd
Defendants? It is the Plaintiff’s case that on or about December 1997,
they had completed all works and additional works under the 1st contract
as well as supplied almost 100% of the loose furniture ordered by
Westmount. However, the same could not be said about the works under
the 2nd contract of which only about 70% had been completed. They were
unwilling to continue with the outstanding work as there were monies
unpaid for work already done. Since the official opening of the Hotel was
fast approaching, Westmount was keen for the Plaintiff to continue with
the work under the 2nd contract. Certain meetings and discussions were
held between Westmount and the Plaintiff culminating in the issuance of
the contra letter dated 18.5.1998. It is the nature of the discussions that
took place prior to the issuance of the said contra letter to which the
parties are not in agreement.
70.
It is the Plaintiff’s case that the 2nd and 3rd Defendants attended a few of
these meetings as representatives of the 1st Defendant as well as
Westmount. Further, PW 1 contends that at the final meeting held in
May 1998, the 2nd and 3rd Defendants had made certain proposals which
included an undertaking to ensure that the 1st Defendant would pay all
outstanding monies owing to the Plaintiff to date as well as for
outstanding works under the 2nd contract provided that the Plaintiff
continue with the balance of the outstanding works immediately.
71.
Whether this meeting and the undertakings by the 2nd and 3rd
Defendants took place would form a major factor in the determination of
this case.
23
72.
The 2nd Defendant has totally denied attending meetings with PW 1 or
giving any undertaking to her. He categorically states that he had never
even met PW 1 before the day he saw her in Court. The 3rd Defendant
admits attending meetings together with John Ng Yan Chuan but denies
having given the undertaking as alleged. The question that arises is this:
Did they/he give the undertaking or not?
73.
The Court notes the evidence of PW 1 as to their “knowledge” that
Westmount was a “subsidiary” of the Soon Seng Group of companies,
with the 1st Defendant as the principal company. Four of the Directors of
Westmount, including the 2nd Defendant, were also directors of the 1st
Defendant. It would also appear that PW 1 set great store over the fact
that delivery orders and delivery schedules signed by one Wai Aha
indicated that Westmount was part of the Soon Seng Group. Based on
the above factors and the alleged representations by the 2nd and 3rd
Defendants, the Plaintiff completed the outstanding works under the 2nd
contract as well as further additional works.
74.
As noted earlier, the 2nd Defendant denies ever meeting PW 1 before the
court hearing. It follows there from that he denies having given any
representations or undertakings. As far as the 3rd Defendant is
concerned, the Court notes his evidence that he was the project manager
appointed to oversee the construction of the Hotel, to liaise with the
Japanese operator of the Hotel and to build the Hotel according to their
requirements. According to him, it was the Senior General Manager,
John Ng’s job to co-ordinate the day to day construction activities and to
liaise with the main contractor and over 120 sub-contractors. John Ng
would therefore play the major role during discussions with PW 1.
24
75.
The Court also notes the 3rd Defendant’s evidence that he was neither a
shareholder nor a director of Westmount or of the 1st Defendant. As
such, he would be in no position to give any undertaking that would bind
the 1st Defendant. Whilst he would, as project manager, have wanted the
Plaintiff to complete the outstanding works, the Court does not see how
it would benefit him to give a personal guarantee of his own to induce or
encourage the Plaintiff to complete the works..
76.
In light of the two disparate versions that have been given by the parties,
the Court turns to the letter that was issued by Westmount to the
Plaintiff after the final meeting to confirm the terms of their agreement.
The Court views this letter as a piece of contemporaneous document
issued at a time when no legal actions were as yet contemplated between
the parties. It refers to their recent discussions and details the contra of
10 units of The Heritage properties and 2 units of Alpine Industrial Park
properties, cash of RM 150,000.00 with a total value of RM 3,090,600.00
which was to “be treated as payment for Package 2 and 3”. In return the
Plaintiff was to complete the outstanding works on the 10th and 11th
floors in accordance with the time schedule.
77.
The Court notes that there is no mention of 2nd and 3rd Defendants’
presence or their roles during the discussion in the said letter. There was
also nothing stated about the guarantees and undertakings that they
purportedly gave. This was admittedly a very important aspect of the
discussions and if it had been inadvertently, or deliberately, omitted in
the letter, surely the Plaintiff would not have confirmed their agreement
to the stated terms. Instead, PW 1 admitted that she appended her
signature in confirmation of the terms of agreement.
25
78.
As such, on this issue of whether the 2nd and 3rd Defendants had given
guarantees and undertakings to the effect that the 1st Defendant would
pay the Plaintiff all outstanding monies owing for work done and
completed to date as well as for outstanding works under the 3rd
contract, the Court finds that the Plaintiff’s contention is not borne out
by the contra letter. The Court finds that the Plaintiff accepted the contra
buildings and cash as payment for Package 2 and 3 and agreed to
complete certain outstanding works. There is no mention of payment in
respect of outstanding works on the 10th and 11th floors. Conceivably,
when all work is completed and the Hotel is operational, Westmount
would then be in a position to pay its creditors. As such, based on the
totality of evidence adduced, the Court finds that the Plaintiff has
failed to prove that the 2nd and 3rd Defendants gave the guarantees
and undertakings as alleged.
79.
The Court will deal next with the second approach taken by the Plaintiff
in raising the issue about the “Soon Seng Group of companies”. The
Plaintiff’s contracts were all with Westmount. Westmount has now been
wound up. As pointed out by learned counsel for the 1st Defendant, in
order to make the 1st Defendant liable, the Plaintiff is now attempting to
lift the veil of incorporation. It is seeking to look beyond the corporate
personality of Westmount to look at its directors and from there to link it
to the 1st, 2nd and 3rd Defendants.
80.
The law with regard to the corporate personality of companies is well
known and need not be recounted here. Each and every individual
company has a separate personality of its own notwithstanding that a
company may be a subsidiary or where there are common directors or
shareholders. (See: Hew Sook Ying v Hiw Tin Hee [1992] 1 CLJ 120
(Rep); Saloman v Saloman & Company Ltd [1897] AC 22)
26
81.
What then is the link between Westmount and the Defendants? The
shareholders of Westmount were Belabur Jaya holding 690,610 shares
and the 2nd Defendant and Tai Chet Siang & Sons Sdn Bhd each holding
1 share. Looking at Westmount’s shareholdings alone would not produce
a link to the 1st Defendant. And although the 2nd Defendant is a
shareholder, he only holds 1 share.
82.
What then about Belabur Jaya? According to DW 1, the shareholders of
Belabur Jaya are the 2nd Defendant, Ong Peng Yan, Tai Chet Siang and
Tai Swee Kian, each holding 11 shares, and TYY Resources Sdn Bhd
holding 18,300,000 shares. TYY Resources was the old name for Soon
Seng Company Sdn Bhd, the 1st Defendant. As such, looking deeper into
Belabur Jaya would bring in the 1st Defendant as majority shareholder
and the 2nd Defendant holding only 11 shares. However, the question is
whether there is sufficient basis for the Court to lift not just one, but
two, corporate veils.
83.
The Court has carefully weighed all the evidence adduced in coming to a
decision. Looking at the background of how the land alienated by the
Malacca State Government came to be transferred to Westmount, the
Court would be able to understand how Belabur Jaya came to be its
majority shareholder. In exchange for the land, Belabur Jaya obtained
shares in Westmount. Belabur Jaya’s stake in Westmount would not be
of value unless Westmount successfully develops the land. From there, it
is only a step away to understanding why the 2nd Defendant would
personally guarantee the bridging loan granted to Westmount by MBSB
for the construction of the Hotel.
27
84. In determining whether the Plaintiff has adduced sufficient evidence to
enable the Court to pierce the corporate veils of Westmount and Belabur
Jaya, the Court will look at the situation from two aspects:i.
Whether the Plaintiff has succeeded in showing that the Defendants
had conspired with one another to work a fraud on the Plaintiff by
pretending to put forward a restructuring scheme for all the creditors
and then quietly disposing off the Hotel to the 4th Defendant; and
ii.
Whether the Court is entitled to look at Westmount, Belabur Jaya,
and the 1st Defendant as forming one single economic unit and to blur
the strict lines of separate legal personalities.
85. It is trite law that the onus of proving fraud lies on the party who alleges it.
As regards the onus of proof, there are authorities which suggest that the
onus of proof is the civil burden in civil proceedings. (See: Ang Hiok Seng
@ Ang Yeok Seng v Yim Yut Kiu (Personal Representative of the
Estate of Chan Weng Sun, Deceased)[1997] 2 MLJ 45; Ong Ban Chai &
Ors v Seah Siang Mong [1998] 3 MLJ 346).
86. However, more recent decisions such as the Federal Court case of Asean
Security Paper Mills Sdn. Bhd. v CGU Insurance Berhad [2007] 2 CLJ
1 have adopted the ‘beyond reasonable doubt’ test. In that case, the
appellant had obtained a fire insurance cover from the respondent. A fire
occurred at the warehouse resulting in the loss of all the stocks of paper
stored in the warehouse. The appellant made a claim against the
respondent under the policy but the respondent refused to pay on the
ground that the claim was fraudulent as the fire was a result of deliberate
acts of arson. The High Court was of the view that there was insufficient
evidence for it to conclude that fraud had been established beyond
28
reasonable doubt and found for the appellant. On appeal, the decision was
reversed by the Court of Appeal. On the issue of the applicable standard of
proof, the Federal Court held as follows:
“It is now settled law that the standard of proof required where
there is an allegation of fraud in a civil proceedings must be one of
beyond reasonable doubt and not on balance of probabilities.”.
87.
The Federal Court also referred to the case of Yong Tim v Hoo Kok
Chong & Anor [2005] 3 CLJ 229 where it held that the standard of
proof for fraud in civil proceedings is proof beyond a reasonable doubt. In
that case, the Federal Court in considering the question of whether the
standard of proof in civil cases for “forgery” as expressed to be on the
balance of probabilities in Adorna’s case should also be applied to the
case of “fraud”, clearly held that the onus of proof for fraud is proof
beyond reasonable doubt. His Lordship Steve Shim CJ succinctly
answered the question at page 235 paragraph c line 3 as follows:
“In the circumstances, the Court of Appeal in the instant case is
misconceived in holding that the proper test to establish fraud is
on the balance of probabilities. In our view, the Court of Appeal
has obviously misdirected itself in rejecting the proposition of law
applied in Saminanthan v Pappa (supra) that the standard of proof
for fraud in civil proceedings is one of beyond reasonable doubt
which has been consistently applied by the courts in Malaysia. We
see no reason to disturb that trend. That being the position, the
answer to the first question postulated has to be in the negative.”.
88.
In light of the clear statement of the law as established by the Federal
Court, it is the Court’s finding that since the Plaintiff has alleged fraud
29
on the part of the Defendants, the standard of proof required for the
Plaintiff to prove the commission of that fraud is proof beyond a
reasonable doubt.
89. The Plaintiff’s allegations of fraud on the part of the Defendants is
premised on the following:
i.
That Westmount’s proposed restructuring scheme was a ploy to stall
the creditors while they attempt to dispose of the Hotel to the 4th
Defendant. Under the proposed scheme, the Plaintiff would have been
able to recover RM 1.00 for every RM 1.00 owed to them;
ii.
Westmount sought the creditors’ support to continue with the Hotel’s
operations. Whilst intending to divest its interests in the Hotel to meet
its debt obligations, it explained that a sale of the Hotel then was not
in the best interests of its creditors and shareholders;
iii.
Westmount/the Defendants did not inform the Plaintiff about the
negotiations to sell the Hotel to the 4th Defendant;
iv.
The sale of the Hotel to the 4th Defendant benefitted the 2nd Defendant
as he was the guarantor for the bridging loan obtained by Westmount
from MBSB; and
v.
After the Hotel was sold to the 4th Defendant, Westmount had allowed
itself to be wound up on the petition of another creditor.
90. The Court views these allegations of the Plaintiff as falling far below the
requisite burden of proof of fraud beyond a reasonable doubt. A careful
perusal of Westmount’s Proposed Restructuring Scheme (which runs into
30
40 pages) would show that this is a proposal for “an informal scheme of
arrangement” between Westmount and its creditors. The creditors would
include both the secured lender (MBSB) and unsecured creditors as well
as unsecured trade creditors. As pointed out in section 7.2, the Proposed
Restructuring Scheme requires the approval of the secured lender and
there was no assurance that the secured lender would agree to the
Scheme or that he would not commence any legal proceedings against
Westmount. When all was said and done, the proposed scheme was
exactly that – a proposal.
91. The difference between the position of MBSB as a secured creditor and
that of the Plaintiff as an unsecured creditor cannot be gainsaid. As
correctly pointed out by learned counsel for the 1st Defendant, the amount
outstanding to the secured creditor is so huge that even if the unsecured
creditors, including the Plaintiff, had not agreed with the Scheme and had
commenced actions against Westmount, there would have been nothing
left for them when the secured creditor had been paid off. The Court views
the Proposed Restructuring Scheme as a genuine attempt to give the Hotel
some breathing space in the hope that it would then be able to generate
sufficient income to begin to pay off its debts.
92. The Court is unable to find anything shady about the failure of Westmount
to inform the unsecured creditors as to the plans afoot to sell the Hotel to
the 4th Defendant. The Sale and Purchase Agreement between Westmount
and the 4th Defendant took place more than a year after the Proposed
Restructuring Scheme. It must be borne in mind that the valuation of the
Hotel at the material time was only RM 91 million whereas the amount
owing to MBSB as at 19.10.1999 was around RM100 million. If a sale of
the Hotel to the 4th Defendant could have the effect of writing off the debt
owing to MBSB, it made complete economic sense to do so. The Court
31
further notes that no exchange of monies took place. The sale of the Hotel
to the 4th Defendant, a subsidiary of MBSB, had the effect of wiping off
Westmount’s debt to MBSB.
93. The Plaintiff’s complaints and allegations of fraud are centered mainly
against Westmount and to an extent, the 2nd Defendant, as the person
that would have derived the most benefit from the sale to the 4th
Defendant. Unfortunately, the Court is unable to find that the sale of the
Hotel by Westmount to the subsidiary of its secured creditor at a price in
excess of its valuation price, which had the corollary effect of absolving the
guarantor of the loan, amounts to proof of fraud against the guarantor.
94. Based on all the evidence adduced, the Court is unable to find evidence of
any conspiracy amongst the Defendants to work a fraud on the Plaintiff.
The Court finds that the Proposed Restructuring Scheme was not a sham
but a genuine attempt by Westmount to salvage the situation. It is a fact
that to be effective, the Scheme required the approval or agreement of the
secured lender. If the secured lender was not agreeable to staying its hand,
the sale of the Hotel made sound economic sense.
95. On the issue of whether the Court would be entitled to look at Westmount,
Belabur Jaya, and the 1st Defendant as forming one single economic unit,
this would depend on whether there is conclusive evidence that the
companies above-named have conducted themselves in such a way that
the only possible inference is that they were part of a single economic unit.
What then is the evidence relied on by the Plaintiff?
96. The Plaintiff sets much store on the fact that delivery orders for goods sold
and delivered to Westmount were acknowledged receipt of by Wai Aha, the
Resident Engineer of the Pan Pacific Legacy Hotel Malacca. The Plaintiff
32
points out that the name chop of the said Wai Aha includes the words
“(Soon Seng Group)” thus giving the impression that Westmount is part of
the Soon Seng Group. It is undeniable that there is no such company or
legal entity known as the Soon Seng Group.
97. The Court recalls the evidence of the 3rd Defendant that the name “Soon
Seng Group” was an “umbrella name given to our group of companies”.
“Ours” means any company belonging to the shareholders of those
companies. Companies within the Soon Seng Group would include the 1st
Defendant, Westmount, Safety and Alpine. Although it is true that the 2nd
Defendant was the common director for all the companies, the question
that still remains is whether his common directorship would suffice to
pierce the veil of incorporation so as to make the 1st Defendant liable for
the debts of Westmount.
98. The Court is well aware of Plaintiff’s allegations that the 2nd Defendant is
the alter ego of the 1st Defendant and Westmount and that he wielded
considerable power in controlling the companies under the Soon Seng
Group. Whilst it is true that the contra arrangements with Westmount
involved properties owned by Safety and Alpine, no evidence has been
adduced by the Plaintiff to disprove the explanation that the contra units
represented a loan from those two companies of units that could not be
sold.
99. In light of the fact that the Court has already found the Plaintiff’s
allegations of guarantee and undertakings by the 2nd and 3rd Defendants
to be not proved, the Court finds the other pieces of the jig-saw offered by
the Plaintiff such as the use of the words “Soon Seng group” in a rubber
stamp and the contra of buildings belonging to Safety and Alpine to settle
part of the indebtedness of the Westmount to be insufficient to complete
33
the puzzle. As such, on this issue, the Court declines to lift the veil of
incorporation. The actions of each of the companies in this collage must be
viewed at disparately and individually.
100. The Court has found that the Plaintiff’s allegations of conspiracy to
defraud have not been made out. The decision to sell the Hotel to the 4th
Defendant to offset the bridging loan given by MBSB was purely an
economic decision. The Court thus finds that the Sale and Purchase
Agreement entered into between Westmount and the 4th Defendant to be a
valid agreement. The existence of the Validation Order which has never
been challenged by the Plaintiff only cements this conclusion.
Conclusion
101. In conclusion, the Court finds that the Plaintiff has failed to prove its
case against the 1st, 2nd, 3rd and 4th Defendants for compensation
amounting to RM 4,828,872.06 or against the 4th Defendant for an
account of benefits received pursuant to the sale of the Hotel. Similarly,
the Plaintiff has failed to establish a conspiracy to defraud by all the
Defendants acting in concert. The Plaintiff’s complaints about the use of
the non-permanent fixtures and fittings by the 4th defendant have not
been pleaded and are hence not considered. Accordingly, the Plaintiff’s
case against all the Defendants for compensation and damages is
dismissed with costs.
(AMELIA TEE HONG GEOK BTE ABDULLAH)
Pesuruhjaya Kehakiman
Dagang 6
KUALA LUMPUR
25.02.2010
34
Mr. Francis Goh from Messrs Francis Goh & Co for the Plaintiff.
Mr. V. Balasingam & Ms Kemala bt Alang from Messrs Balasingan & Co
for the 1st Defendant.
Mr. Maurice E Scully from Messrs Scully, Woon for the 2nd and 3rd
Defendants.
Encik Abu Bakar & Encik Helmi Hamzah from Messrs Hisham, Sobri &
Kadir for the 4th Defendant.
35