1
IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO. D22-3489-1998
GRANDBASE SDN. BHD.
v.
1. PIONEER CONCRETE SERVICES (M) SDN. BHD.
2. PIONEER CONCRETE (M) SDN. BHD.
GROUNDS OF JUDGMENT
Background
The matter was first heard and tried before Justice Datuk Abdul
Wahab Patail on 27.6.2005 and 28.6.2005 based on the 3rd Amended
Statement of Claim. Before a decision was given and based on the
Plaintiff’s application for a further amendments to the Statement of
Claim Justice Datuk Abdul Wahab gave his decision allowing the
Plaintiff’s claim. The Defendants filed an appeal against the decision
and also against the Order allowing the further amendments. The
Appeal against the amendments was allowed and the matter was
remitted to this Court for further hearing.
The Learned Counsels for the Plaintiff and the Defendants agreed
that they would rely on the evidence adduced based on the 3rd
2
Amended Statement of Claim and the Defence during the hearing
before Justice Datuk Abdul Wahab. Both parties submitted their
Written Submissions to this court for consideration.
Pioneer International Ltd (PIL) is an Australian public company
involved in ready-mix concrete and was interested to establish
a manufacturing business in Malaysia. They were however
unsuccessful as the policy of the Malaysian Government does not
allow foreigners from holding 30% equity. It was also difficult to get
concrete mixer truck licenses. The Registrar of Companies had also
rejected PIL’s application to use the word ‘pioneer’ as part of its
name.
Sometime in December 1990 Ivor Baker, PIL’s director approached
Alex Chuah (PW3) to assist in getting the approval of the name of the
company. PIL’s representative, Richard Ho had also requested PW3
to introduce PIL to Bumiputra companies or individuals with political
connections to facilitate entry into the ready mixed cement market in
Malaysia and also to be PIL’s joint venture partners.
PIL agreed to give PW3 a 10% shares in the JV company as
consideration for his services. It was then agreed as follows:1)
The Bumiputra partners for the JV would be Wanita UMNO
through a company known as Fijar Sdn. Bhd. (Fijar);
2)
Fijar would hold 20% shares; and
3)
PW3 would hold 20% shares on behalf of the Plaintiff.
3
Sometime in 1991 the name ‘Pioneer’ was approved and the First
Defendant was incorporated. The Second Defendant was also
incorporated on 19.7.1991 as vehicle for the JV.
It is contented by the Plaintiff that the Defendants had informed
UMNO Wanita that they would require 25 mixer trucks licenses by
1992, 25 licenses in 1993 as well as a further 15 licenses by 1994.
The Plaintiff and the First Defendant proceeded to apply for 90 units
of mixer trucks ‘C’ class carrier licenses for the first year operations.
On 29.11.1991 the First Defendant, Fijar and the Plaintiff entered into
the Joint Venture Agreement (JVA), Technical Services Agreement
Management Services and the Consultancy Services Agreement.
The JVA was subject to certain Conditions Precedent (CP) that within
180 days the following will be fulfilled,
i)
approval is obtained enabling the First Defendant to hold
60% shares in the Second Defendant;
ii)
all licenses permits required by the Second Defendant to
conduct the said business of manufacture are granted;
iii)
the Ministry of Trade approves the Technical Services
Agreement Management Services; and
iv)
all the 90 Class “C” Carriers licenses are obtained and
the FIC approves the holding of PIL of the capital of the
First Defendant.
After the execution of the JVA the First Defendant proceeded without
waiting for the CPs to be fulfilled. The First Defendant erected a
4
premix concrete plant in Johore Bahru in December 1991. The said
plant was in the Second Defendant’s name and mixer truck were
purchased as 10 carriers licenses had been duly approved. The
Second Defendant operated the JV premix concrete manufacturing
business. The shares however were never transferred to the Plaintiff
and instead remained with the First Defendant. The Second
Defendant continued to pay director fees to PW3 until 1995. The
Bumiputra directors were paid directors fees until sometime in 1998.
It is the contention of the Plaintiff that the First Defendant failed to
honour its agreement to transfer 20% of the shares pursuant to
the JVA to the Plaintiff and to Fijar. It is also contended that the
Defendants failed to pay they consultancy fees of 0.4% to the Plaintiff
or to Fijar as agreed pursuant to the Consulting Services Agreement.
The Plaintiff then proceeded to commence proceedings against the
Defendants in 1997.
After the commencement of the action the
Second Defendant was sold to the Sunway Group for RM81 million.
ISSUES
The intention of the parties when the JVA was
executed on
29.11.1991
To ascertain the intention of the parties it is necessary at the outset
to examine the terms and conditions of the JVA. The terms and
conditions agreed upon in the JVA would reflect the desired intention
of the parties.
In Bekalan Sains P&C Sdn Bhd v. Bank Bumiputra Malaysia Bhd
[2011] 1 LNS 232 the Court of Appeal vide the judgment of Abdul
5
Malik Ishak JCA states inter alia as follows:
“ In deciding whether the parties have reached an agreement, the law
looks for an offer by one party and an acceptance to the terms and
conditions of that offer by the other. There would be a bargaining
process leading up ultimately to an agreement or meeting of the minds.
This is the traditional method of analysis of an offer and an acceptance
which has been applied by the courts in determining the formation of the
contracts. But for a contract to be formalised, all the terms and
conditions must be fulfilled. The failure to fulfil a term or a condition
would not give rise to a concluded contract.”.
In the case of Ayer Hitam Tin Dredging Malaysia Bhd v. Y.C. Chin
Enterprises Sdn. Bhd. [1994] 3 CLJ 133 the Supreme Court held
inter alia as follows:
“ It is a matter of construction whether the execution of the further contract
is a condition or term of the bargain, in which case there is no
enforceable contract as the law does not recognise a contract to enter
into a contract, or whether it is a mere expression of the desire of the
parties as to the manner in which the transaction already agreed to will
in fact go through, in which case there is a binding contract and
reference to the more formal document may be ignored. In this respect,
the Court, in its task to ascertain the intention of the parties will,
generally speaking, apply an objective test. In other words, it will ask
itself what would the intention of reasonable men be if they were in the
shoes of the parties of the alleged contract.”.
In Michael C Solle v. United Malayan Banking Corporation [1984]
1 CLJ 267 (Rep); [1984] 1 CLJ 151; [1986] 1 MLJ 45 the Federal
Court held that,
“ the principles of construction to be applied to the undertaking are similar
to those applied to an ordinary contract. The intentions of the parties are
6
to be gathered from the language used. They are presumed to have
intended what they said. The common and universal principle is that an
agreement ought to receive that construction which its language will
admit, which will best effectuate the intention of the parties, to be
collected from the whole of the agreement.”.
This exercise of construction therefore calls for a detailed the
examination of the terms of the joint venture as a whole and not
piece-meal having regard to the context, circumstances and purpose
for which the joint venture was agreed upon y the parties. When that
is applied, then the true purport of the JVA can be appreciated and
the intention of the parties given effect to.
The JVA was between the Plaintiff and the First Defendant as well as
another company known as Fijar Sdn. Bhd. Due to the stringent
conditions of the Malaysian Government the JVA was in actual fact
a vehicle for the First Defendant to establish a business in Malaysia
i.e. in particular the manufacturing of premix concrete. This was the
environment surrounding the circumstances leading to the execution
of the JVA and this intention and purpose mere incorporated in the
JVA. The Recital of the JVA reads as follows,
“ The parties have agreed to cooperate in the form of a joint venture upon
the terms and conditions hereinafter appearing in carrying on in Malaysia
the manufacture of pre-mixed concrete.”.
Paragraph II of the Recital expressly states as follows,
“ A) For the purpose of the aforesaid joint venture, PCSM, has caused to be
incorporated in Malaysia on the 19th day of July 1991 under the Companies
Act, a private company with limited liability called ”PIONEER CONCRETE
(MALAYSAI)SDN.BHD’ with an authorized capital of M$20,000,000.00 (Ringgit
Twenty Million)….”.
7
Clause 2.1 of the JVA sets out the CP as follows:“ The provisions of this Agreement (save for the Excepted Clauses) are
conditional upon:2.1.1
the grant/issue before the Conditional Date of:i)
all Appropriate Approvals to the holding by PCSM of 60%
(Sixty per cent) of the total issued capital of PCM from time
to time including (by reference for PCM’s issued capital
referred to in Clause 5.3) PCSM’s Initial Shares;
ii)
all such licences, permits, consents and the like (upon
terms and conditions acceptable to PCM) as may be
required by PCM for the conduct of the said Business
including a Manufacturing Licence; and
iii)
the grant (upon terms and conditions acceptable to PCM
and PIL) of the approval of the MINISTER OF DOMESTIC
TRADE & INDUSTRY, MALAYSIA to:a)
the Technical Services Agreement; and
b)
the Management Services Agreement
referred to in Clauses 12.1 and 12.2 respectively and to be
executed pursuant thereto; and
2.1.2
the issue by the CVLB to PCM at the following times and upon
terms and conditions acceptable to PCM of an aggregate of 90
(Ninety) Carriers Licences:i)
20 (Twenty) Carriers Licences within 14 (Fourteen) days
from the date hereof;
ii)
20 (Twenty) Carriers Licences within 90 (Ninety) days from
the date hereof;
iii)
50 (Fifty) Carriers Licences before the Conditional Date;
and
2.1.3
the grant before the Conditional Date of the FIC Approval
(PCSM).”.
8
It is stipulated under the JVA that the provisions of the Agreement
(save for the Excepted Clauses) are conditional upon the following:1)
The grant of the appropriate approvals/license before the
conditional date:(a)
The appropriate approvals to the holding of the First
Defendant of 60% of the total issued capital of the
Second Defendant form time to time;
(b)
All such licenses, permits, consents as may be. required
for the conduct of the business include the Manufacturing
License (ML); and
(c)
Approval of the Minister of Domestic Trade of the
Technical Service Agreement and the management
Agreement.
2)
The issuance by the CVLB to the Second Defendant at the
following times and upon terms and conditions an aggregate of
90 (Ninety) Carriers Licences 90 carrier licenses as follows,
i)
20 (Twenty) Carriers Licences within 14 (Fourteen) days
from the date hereof;
ii)
20 (Twenty) Carriers Licences within 90 (Ninety) days
from the date the JVA is executed i.e 29.11.1991;
iii)
50 (Fifty) Carriers Licences before the Conditional Date;
and
3)
The grant before the Conditional Date of the Foreign
Investment Committee’s (FIC) approval.
9
The evidence before the Court shows that PIL had throughout the
JV held 100% shares in Second Defendant until it was sold off
for RM81 million in 1998. Furthermore based on both oral and
documentary evidence the intention of PIL was to manufacture and
sell the premix concrete in Malaysia. PIL had been trying to expand in
Malaysia but due to the stringent conditions was unable to do so. In
his Witness Statement Alex Chuah aka Chuah Eng Chuen (PW3)
said that sometime in 1990 he received a call from one John Tan of
Tana Tran International (Thailand) Co. Ltd arranging for a meeting
between PW3 and one Richard Ho who was the MD of Pioneer
International Pte Ltd (Pioneer S) Singapore. At the meeting in Kuala
Lumpur Richard Ho informed him that Pioneer wanted to reestablish
their business in Malaysia under the Pioneer name but was
unsuccessful and had asked PW3 do get the following,
“ 1.
To get approval to incorporate a company in Malaysia with the
name “Pioneer” in it. He stated that Pioneer had withdrawn from
Malaysia in 1963 to Hong Kong and since early 1990 they had
been trying to get the company registered through Khaw & Hussein
as she was the daughter of the First Minister of Transport but were
not successful since Registrar of Companies (ROC) rejected the
use of the name.
2.
To get for them “C” carrier licences for the Mixer Trucks for their
proposed ready mix concrete business.
3.
Names of influential Bumiputera who could become shareholders in
their local company.
4.
As consideration for this they are willing to give the Bumiputera
partners 30% equity interest in the local JV company and they will
give me 10% equity interest in the JV.”.
10
PW3 was then introduced to Mr. Ivor Baker the MD of Pioneer Far
East Ltd who informed him that if the word “Pioneer” could be used
tehn the word “Power” would be acceptable. Ivor Baker then sent
PW3 a note informing him that the word “Pioneer” could not be used
and sought assistance of potential partners to secure the name of the
Joint Venture. Other issues that were raised by Richard Ho and Ivor
Baker was on the issue of foreign equity participation in Malaysian
companies. PW3 also explained that at that time the Government did
not allow premix concrete industries to be 100% owned by foreigners
as there were sufficient local companies involved in that business
which does not require any technical skills.
David Ngu Ung Woo (DW1) was the nominee shareholder of PIL and
he confirmed during cross-examination that he held the shares in his
name as a nominee and trustee for PIL,
Q:
Refer to Q23. You agree right up to 1998 you held one share in First
Defendant?
A:
I was a nominee.
Q:
Put it to you throughout the period from incorporation 1992-1998,
100% of equity to 2nd Defendant was held by the First Defendant?
A:
Yes.
He further said in evidence that he did not have any knowledge
that the First Defendant was compelled to reduce its shares by the
Government.
Q:
Put it to you that during that period the Government never insisted
you divert your shareholding in 2nd Defendant?
A:
I do not have any knowledge of that.
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DW1 was the only witness fir the Defendants.
It is the contention of the Defendants that Plaintiff had failed to fulfill
the CP as stipulated in the JVA by the Conditional Date. Accordingly
it is submitted the JVA is null and void. The First Defendant is
therefore not obliged to advance the RM400,000 for the Plaintiff 20%
shares. The Plaintiff is also not entitled to the dividend and the fee as
stipulated.
Under the JVA it is the obligation of the Defendants to apply for the
appropriate approvals and licenses as stipulated in Clause 2.2. and
2.3,
“ Appropriate Approvals
PCSM shall apply within 21 (Twenty One) days from the date hereof for
for the Appropriate Approvals (including the FIC Approval (JV).”.
“ Requisite Licences
PCM shall cause PCM to apply within 21 (Twenty One) days from the
date hereof for the Requisite Licences.”.
The Second Defendant would not have been able to secure the
necessary approvals and licenses without the assistance and
participation of Wanita UMNO through Fijar and also Alex Chuah.
Approval of the “C” Carrier Licenses were given immediately on
25.1.1991 even before the JVA was executed.
Based on the documentary evidence Fijar and the Plaintiff were JV
partners and held 20% shares in the JV company. The JVA was
drafted in a manner that the it was Second Defendant’s obligation to
12
apply for all the required licenses and approvals and that business
can only commence after the CPs have been duly fulfilled,
“ The FIC Approval (JV) shall be deemed not to be granted and the
Condition Precedent specified in Clause 2.1.1(i) shall be deemed
unfulfilled in either of the following cases:2.2.1
if the FIC refuses or does not grant the FIC Approval (JV) before
the conditional Date; or
2.2.2
if an approval to the holding by PCSM of 60% (Sixty per cent) of
the issued capital of PCM from time totime (including PCSM’s
Initial Shares) is granted by the FIC before the Conditional Date
upon terms and conditions which are unacceptable to PCSM
AND
within 14 (Fourteen) days of its receipt of the approval granted,
PCSM notifies FSB and CSB of the unacceptability of the terms
and conditions concerned
AND
upon appeal to the FIC, the terms and conditions concerned are
not modified by the FIC before the Conditional Date OR are
modified by the FIC but in such manner that they remain
unacceptable to PCSM and PCSM so notifies FSB and GSB
within 14 (Fourteen) days of PCSM’s receipt of the approval as
modified.”.
Having examined the terms and conditions of the JVA as well as
the related documents and applying the principles of construction of
documents it is crystal clear from the reading of the recital as well as
the terms and conditions as set out in the JVA that the main
intentions of the Parties are as follows:
i.
to form a joint venture company to carry on the
manufacture of pre- mixed concrete in Malaysia; and
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ii.
a joint company specifically incorporated for that purpose
i.e. Pioneer Concrete (Malaysia) S/B.
It cannot be denied based on the facts and the evidence, both oral as
well as documentary that the parties’ intention subject to the CPs was
to establish a business manufacturing premixed concrete upon the
terms and conditions as stipulated in the JVA.
Whether the First
Defendant by causing to commence the
manufacturing of pre-mix concrete waived the CP requiring that
a Manufacturing License (ML) be issued before commencement
of operations and by doing so the First Defendant had agreed to
be bound by the rules and regulations
By a letter dated 23rd March 1992 from FIC had confirmed that no
approval was necessary for the joint venture that is, First Defendant
to hold shares in the 2nd Defendant,
“ Tuan Khaw & Hussein
Tingkat 6, Menara Boustead
64 Jalan Raja Chulan
50200 Kuala Lumpur.
Tuan,
Cadangan usahasama di dalam Pioneer Concrete (Malaysia) Sdn. Bhd.
di antara Pioneer Concrete Services (Malaysia) Sdn. Bhd., Fijar Sdn.
Bhd. dan Grandbase Sdn. Bhd.
------------------------------------------------------------------------------------------------Saya diarah merujuk kepada surat tuan bertarikh 10hb. Januari 1992
mengenai perkara di atas dan memaklumkan bahawa cadangan
usahasama tersebut tidak perlu mendapatkan kelulusan Jawatankuasa
Pelaburan Asing (Foreign Investment Committee–FIC) memandangkan
Pioneer Concrete (Malaysia) Sdn. Bhd. ditubuhkan bagi menjalankan
aktiviti
perkilangan
yang
memerlukan
Perdagangan Antarabangsa dan Industri.
kelulusan
Kementerian
14
Sekian.
“ BEKRHIDMAT UNTUK NEGARA ”
Saya yang menurut perintah,
t.t.
( SHARA MD JADI )
b.p. Setiausaha
Jawatankuasa Pelaburan Asing.”.
Approvals for the manufacturing activities will however require
approval from the Ministry of International Trade and Industries
(MITI). The other approval was to enable the First Defendant to hold
the 60% of the issued and paid up capital before the JV and
subsequently to enable the Second Defendant to begin the
manufacturing of the premix concrete. It is the obligation of Second
Defendant to apply the approvals within the period as stipulated in
Clause 2.3,
“ PCSM shall cause PCM to apply within 21 (Twenty One) days from the
date hereof for the Requisite Licences
AND
FSB and GSB shall render all such advice and assistance as may be
reasonably required of them respectively for the grant of the Requisite
Licences.
The Requisite Licences shall be deemed not to be granted and the
Condition Precedent specified in Clause 2.1.1(ii) shall be deemed to be
unfulfilled in any of the following cases:2.3.1
if the MTI refuses or does not grant the Manufacturing Licence
before the Conditional
2.3.2
if a manufacturing licence is granted to PCM before the
Conditional
Date
upon
unacceptable to PCM
terms
and
conditions
which
are
15
AND
Within 14 (Fourteen) days of its receipt of the manufacturing
licence granted, PCM notifies the Parties of the unacceptability of
the terms and conditions concerned
AND
upon appeal to the relevant authority, the terms and conditions
concerned are not modified before the Conditional Date OR are
modified by the relevant authority but in such manner that they
remain unacceptable to PCM and PCM so notifies the Parties
within 14 (Fourteen) days of PCM’s receipt of the manufacturing
licence.”.
With regards to the ML, since the First Defendant held 100% of
shares in Second Defendant and the paid up capital was below
RM2.5 million no ML is required. The Second Defendant had agreed
to commence manufacturing immediately after the JVA was signed.
The conduct of the Defendants show acquiescence that they have
waived the CP for FIC approval. The application made to the
FIC dated 10.1.1992 was made after the commencement of
manufacturing. In any event FIC approval was not required as
indicated by the FIC in its letter dated 23rd March 1992,
“ ….bahawa cadangan usahasama tersebut tidak perlu mendapatkan
kelulusan
Jawatankuasa
Pelaburan
Asing
(Foreign
Investment
Committee–FIC) memandangkan Pioneer Concrete (Malaysia) Sdn.
Bhd. ditubuhkan bagi menjalankan aktiviti perkilangan yang memerlukan
kelulusan Kementerian Perdagangan Antarabangsa dan Industri.”.
With regards to the ML by a letter dated 22.6.1992 the MITI had
approved
the
application
of
the
Second
Defendant
for
a
manufacturing license under the Industrial Coordination Act 1975
16
subject to certain conditions,
“ Pengarah
Pioneer Concrete (Malaysia) Sdn.Bhd.
.........
Sukacita
dimaklumkan
bahawa
setelah
dipertimbangkan,
permohonan tuan untuk mengeluarkan ‘readymixed concrete’
diluluskan.
.................
.................
................
t.t.
(ASMAT BIN KAMALUDIN)
Pengarah Pelesen...
”.
Attached to the said letter are the conditions of the license imposed
by the Ministry. However, if the capital was below RM2.5million and
the company had less than 75 workers no ML was required.
Clause 1.1 of the JVA defined “Conditional Date” as,
“ the 180th (One hundred And Eighty) day from the date of this Agreement
(or such later date as the Parties may agree upon in writing.”.
It is the submission of the Defendant that the Plaintiff had failed
to fulfill the CPs by the Conditional Date and as a result the JVA
never came into effect and is therefore null and void, The First
Defendant was therefore not obliged to advance the RM400,000 for
the Plaintiff’s 20% share as promised. The Plaintiff is also not entitled
to be paid any dividend or consultancy fees.
It is stipulated in the Ministry’s letter that the Second Defendant was
required to submit certain documents. However, DW1 in cross
17
examination stated that the Second Defendant did not submit the
documents required as the Johor State Government had no objection
to the premix plant at the site as well as the approval plans from the
Johor Town Council. The Defendants had nevertheless proceeded
to set up and establish to as well as continued to manufacture premix
concrete without the ML and used all the 90 carrier licences that had
been granted for the delivery of the concrete. There was definitely a
waiver of the CPs by the First Defendant.
This Court cannot ignore the fact that based on the evidence that the
Defendants had sought the assistance of Alex Chuah (PW3) and as
well as Wanita Umno in securing the various licenses and approvals
for the purpose of the JVA. The approval of the “C” Carrier Licenses
by the Minister of Public Enterprises were given on 25.10.1991 even
before the execution of the JVA. The official letter of approval dated
28.11.1991 and 31.12.1991 with the assistance of the Plaintiff the
Defendants managed to successfully secure the aforesaid licenses
and approvals.
By its own conduct the failure of the First and Second Defendants to
apply to MITI for the ML within 21 days as provided for in Clause 2.3
of the JVA as well as the Second Defendant setting up and starting
the operations to manufacture the premix concrete clearly show that
the First Defendant had in fact elected to waive the CPs. Furthermore
the Defendants continued the manufacturing the premix concrete
without any ML and paying the directors fees to the Plaintiff after the
expiry of the Conditional Date. The Defendants had by their own
conduct waived all the CPs in the JVA. The Defendants took all the
18
benefits of the JV without honoring the agreement to give the Plaintiff
as well as Fijar 20% shares in the Second Defendant as agreed.
In Chee Keng Industries Sdn. Bhd. v. Masalam Sdn. Bhd. & 6 Ors
[2000] 1 LNS 179, the court held that by virtue of cl. 4, the sale and
purchase agreement of land was conditional upon the conditions
stated there, in being fulfilled within the time period provided for in
the said agreement. It was a condition of the said agreement that
the approval of the Foreign Investment Committee (FIC) of Malaysia
for the acquisition of the said land by the Plaintiff shall be obtained.
In Tan Beng @ Tan York Soon v. Ji Kang Dimensi Sdn. Bhd. &
Anor [2001] 1 LNS 336, the court held that the sale and purchase
agreement is a conditional agreement in that the relevant transfer
consent from the proper authority must be obtained by virtue of cls.
6(a), 6(b)(ii) and 7.
In National Land Finance Co-operative Society Ltd v. Sharidal
Sdn Bhd [1983] 2 CLJ 76; [1983] CLJ (Rep) 282, where the Federal
Court held that an agreement for sale of immovable property subject
to the approval of Foreign Investment Committee (FIC) is a contract
of sale contingent upon the approval of the transaction by the FIC.
In the instant case the FIC had informed the parties that approval was
not required. What was required as to be done as stipulated in the
JVA was duly carried except where there was no necessity for
approvals and or licences.
19
Whether the CP requiring approval of MITI for foreigners to
hold 60 % of the equity in ready mix concrete industry is void as
being against Public Policy
With regards to foreign equity participation it is the policy of the
Malaysian Government that foreign equity participation in companies
is limited to 30%. Clause 16 of the JVA provides that the invalidity or
unenforceability shall not nullify the underlying intent of the
Agreement,
“ SEVERABILITY
Provided that if the invalidity or unenforceability shall not substantially
nullify the underlying intent of this Agreement and provided that the
invalid or enforceable provisions shall be severable, the invalidity or
unenforceability of any term or provision of this Agreement shall not
affect the validity or enforceability of the other terms or provisions herein
contained which shall remain in full force and effect.”.
The saving provision allows the severance of the invalid terms.
Therefore even if the CP requires foreigners to hold to 60% of the
equity the JVA is not void.
Whether the Defendants had terminated the JVA
There is no evidence of termination or any notice issued by the
Defendants of their desire to terminate the JVA. The Defendant
contended that they had the right to terminate as the CPs have not
been fulfilled. The evidence before clearly show that the Defendants
had by their have waived the CPs. The CPs incidental to the JVA had
been duly performed by the issuance of 90 licenses. Furthermore FIC
confirmed that no approval was necessary. Therefore time is no
longer an essence.
20
Based on the entirety of the evidence and after considering the
Written Submissions as well as authorities of both parties I find
that the Plaintiff on balance of probabilities have proven its case
against the Defendants. The First Defendant had benefited from the
assistance of the Plaintiff and Fijar. The First Defendant has acted
unfairly by keeping the 100% shares in the Second Defendant JV
after commencing with the manufacturing business. Clause 5.3 of
the JVA have set out in crystal clear terms the proportion of the
shareholding. It was also agreed that the sum of RM400,000 on
account of the subscription of the 400,000 shares in the Second
Defendant and the sum of RM200,000 on account of the purchase
and transfer by the First Defendant of 200,000 to be repaid form
dividends declared by the Second Defendant and also consultancy
and management. By its acts and conducts the First Defendant had
denied the Plaintiff is rightful share in the Second Defendant.
Accordingly the Plaintiff’s claim against the Defendants is allowed
with cost of RM100,000.00.
sgd.
( HASNAH BINTI DATO’ MOHAMMED HASHIM )
Judge
High Court of Malaya
Kuala Lumpur.
22nd April 2013
21
Counsels:
For the Plaintiff/Respondent:
Messrs. Gill & Tang
- P.S Gill
- Gurmukh
For the Defendant/Appellant:
Messrs. Khaw & Partners
- Tan Yee Boon
- Cheng Yee Ling