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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO. 12B-528-09/2012
LAU HOCK CHIANG & 2 ORS.
v.
NORAZEAN BINTI ABDUL AZIZ & ORS.
GROUNDS OF JUDGMENT
This is an appeal against the decision of the Learned Sessions
Court Judge after full trial allowing the Respondents’/Plaintiffs’ claim
against the Appellants/Defendants to invalidate the sale transaction
based on fraud.
Brief Background
Based on an oral agreement the Respondents agreed to take over
the operation of a reptile zoo business from the Appellants located
at I-City Shah Alam for the consideration sum of RM300,000.00.
The said zoo was run by a company owned by the Appellants
known as True Discovery Sdn. Bhd.
It is the Respondents’ case that they had in good faith paid
RM200,000.00 to the Appellants specifically to take over the
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operation of the reptile zoo located at I-City Shah Alam. However,
subsequently according to the Respondents it was discovered that
they could not operate the said zoo at the said premises as the
tenancy was terminated.
The Respondents’ claim is premised on fraud as pleaded in
the Statement of Claim. The Respondents contended that the
Appellants failed to provide any information on the tenancy,
inventory of the company etc as requested.
The Memorandum of Appeal
The grounds of appeal are as follows:“1.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta
dan undang-undang apabila memutuskan yang Respondenresponden/Plaintif-plaintif telah membuktikan frod melampaui
keraguan yang munasabah (“beyond reasonable doubt”) atau
atas imbangan kebarangkalian.
2.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta dan
undang-undang dalam memberikan penghakiman memihak
Plaintif-plaintif pada hal berdasarkan pliding dan segala
keterangan, tiada dasar sama sekali (“no basis”) untuk beliau
berbuat demikian.
3.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta
dan undang-undang apabila gagal memutuskan yang kausa
tindakan Plaintif-plaintif adalah perjanjian jual beli syer dalam
syarikat yang dikenali sebagai True Discovery Sdn Bhd
(“TDSB”) dan bukannya perjanjian jual beli suatu perniagaan
reptile zoo seperti yang diplid oleh Plaintif-plaintif.
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4.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta
dan undang-undang dalam kegagalan memutuskan bahawa
penjualan syer TDSB adalah atas permintaan Plaintif-plaintif
(“at the Plaintiffs’ behest”).
5.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta dan
undang-undang apabila gagal memutuskan yang perjanjian
jual beli syer tersebut melibatkan pengarah dan pemegang
syer TDSB, Erliyanti Bt Mohd Nor (“Erliyanti”) yang masih
memegang jawatan pengarah dan memperolehi lebih syer
TDSB hasil daripada perjanjian tersebut.
6.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta
dan
undang-undang
apabila
gagal
memutuskan
yang
selaras dengan perenggan (5) sebelum ini, Plaintif-plaintif
dianggap
mempunyai
pengetahuan
atau
mempunyai
pengetahuan
sepenuhnya
(“deemed”)
tentang
TDSB
termasuk perniagaan reptile zoo tersebut.
7.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta dan
undang-undang apabila gagal memutuskan yang Plaintif 1
hanya berjumpa Defendan 1 buat pertama kalinya pada hari
perjanjian jual beli syer tersebut ditandatangani dan Plaintifplaintif tidak pernah langsung berjumpa dengan Defendandefendan.
8.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta dan
undang-undang dalam kegagalan memutuskan yang selaras
dengan perenggan (7) di atas, Defendan-defendan tidak
pernah membuat apa-apa representasi kepada Plaintif-plaintif
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dan Plaintif 1 telah mengaku yang segala representasi
tentang perniagaan tersebut adalah dibuat oleh seorang
bernama Hussein, suami kepada Erliyanti.
9.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta
dan undang-undang dalam kegagalan memutuskan yang
Plaintif-plaintif telah gagal memanggil saksi-saksi untuk
membuktikan tuntutannya terutamanya Hussein. Puan Hakim
telah gagal menggunakan inferensi yang bertentangan
(“adverse
inference”)
di
bawah
Seksyen
114(g)
Akta
Keterangan 1950 terhadap Plaintif-plaintif.
10.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta
dan undang-undang dalam kegagalan memutuskan yang
Plaintif-plaintif sendiri adalah bertanggungjawab ke atas
penamatan penyewaan perniagaan reptile zoo tersebut
kerana
ini berlaku setelah
Plaintif-plaintif
memperolehi
kawalan eklusif terhadapnya.
11.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta dan
undang-undang dalam kegagalan memutuskan yang Plaintifplaintif dengan membuat bayaran selanjutnya sebanyak
RM50,000.00 pada 21.12.2011 telah mengesahkan yang
perjanjian tersebut adalah teratur.
12.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta dan
undang-undang dalam kegagalan memutuskan yang “caveat
emptor” adalah terpakai dalam transaksi perjanjian tersebut
dan Plaintif-plaintif yang bertanggungjawab menguruskan
“due diligence” perniagaan tersebut.
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13.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta dan
undang-undang dalam kegagalan memutuskan yang Plaintif 1
dengan Erliyanti telah menguruskan TDSB sebagai pengarahpengarah sejak 2.12.2011 dan Plaintif-plaintif telah menerima
keuntungan perniagaan tersebut untuk tempoh 2.12.2011
sehingga penghakiman tersebut.
14.
Puan Hakim yang bijaksana telah terkhilaf disegi fakta dan
undang-undang dalam kegagalan memutuskan yang Plaintif
1 masih didaftarkan sebagai pengarah dan Plaintif-plaintif
berkewajipan memberikan akaun dan inventori perniagaan
reptile zoo tersebut bagi tempoh 2.12.2011 sehingga
penghakiman tersebut.
15.
Puan Hakim yang bijaksana tela hterkhilaf dari segi fakta dan
undang-undang apabila gagal memutuskan bahawa Plaintifplaintif telah gagal memplid dan mengemukakan keterangan
representasi yang kononnya dibuat kepada mereka dengan
tepat dan sempurna.
16. Puan Hakim yang bijaksana telah terkhilaf dari segi fakta dan
undang-undang apabila memutuskan bahawa Hussein bin
Abdullah adalah ajen kepda Defendan-defendan sedangkan
tiada sebarang keterangan dikemukakan oleh pihak Plaintifplaintif untuk membuktikan sedemikian dan sebaliknya pihak
Defendan-defendan telah menafikan perkara tersebut.
17.
Puan Hakim yang bijaksana telah terkhilaf dari segi fakta dan
undang-undang apabila gagal memutuskan bahawa pihak
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Plaintif-plaintif telah gagal membuktikan tanpa keraguan
yang munasabah bahawa Defendan-defendan mempunyai
pengetahuan
bahawa
tenansi
premis
tersebut
telah
ditamatkan semasa perjanjian jual beli saham tersebut dibuat
di antara Plaintif-Plaintif dan Defendan-Defendan.
18.
Puan Hakim yang bijaksana telah terkhilaf dari segi fakta
dan undang-undang apabila gagal mengambilkira keterangan
SP2 bahawa beliau dimaklumkan tenansi premis tersebut
ditamatkan pada hujung bulan Disember 2011 iaitu sebulan
selepas perjanjian jual beli saham tersebut dibuat dan fakta
ini jelas menunjukkan bahawa Defendan-Defendan tidak
mempunyai sebarang pengetahuan berkenaan penamatan
tenansi tersebut.”.
Sessions Court Judge Decision
The grounds of judgment of the Sessions Court Judge (“SJ”) are at
pp. 87 - 93 RR. In brief, the SJ allowed the Respondents claim on
the following grounds:
(a)
That the Appellants together with their agent, Hussein bin
Abdullah had willfully cheated the Respondents by not
disclosing that the tenancy of the Reptile zoo had been
terminated. (p. 91 RR).
(b) The Respondent had made payments in the sum of
RM200,000.00 for a business where the value was not
justified and/or supported with evidence (p. 91 RR).
(c)
By not disclosing and/or giving information on the Tenancy
Agreement, Inventory, List of Assets, Profit & Loss Accounts
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show an intention to cheat by the Appellants in the transaction
(p.92 RR).
(d)
No
receipts
were
issued
for
the
payment
of
the
RM200,000.00.
Plaintiff’s/Appellant’s Submission
In brief, the Appellant submitted the following:
1)
The Respondents agreed to enter into the contract by
paying the initial RM200,000.00. On 30.11.2011 a contract
by letter executed by the First Appellant. The First
Respondent had acknowledged receipt of the first payment
of RM150,000.00 by 3 cheques as part payment for the
sale of “True Discovery Sdn. Bhd.”. The agreed price was
RM300,000.00. This was subsequently replaced it with a
Banker’s cheque of RM150,000.00.
2)
The First Appellant had signed the transfer from transferring
22,000 shares in the Company as well as a letter of
resignation as a director.
3)
On 2.12.2011 the Respondents executed a letter of indemnity
in favour of the Appellants agreeing to sell the 99%
shareholding in True Discovery Sdn. Bhd. As well as to
relinquish the management of the company.
4)
On 1.12.2011 the Appellants handed over the business and
management of the Company to the Respondents.
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5)
On 21.12.2011 the Appellants received another RM50,000.00
out of the balance outstanding.
6)
The representations made by the Appellant, if at all, must be
proven beyond reasonable doubt.
7)
It is further contended that the Respondents had failed to
plead the particulars of the fraud.
Defendant’s/Respondent’s Submission
1)
That Hussein was the partner and/or agent of the Appellants.
2)
That the payments of RM200,000.00 was made at the
insistence of the Appellants.
3)
The Respondents did not receive any information or
documents.
4)
All matters came to a halt when it was discovered that the
said reptile zoo had to vacate the I-City premises.
5)
That the stand of the First Appellant that he knew nothing of
the inventories and the tenancy is highly suspect as the only
business of the company is the said reptile zoo.
6)
The transaction was based on goodwill and trust as there was
no formal agreement.
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7)
No valuable consideration for the said RM200,000.00 as there
was no premises, no animals and no inventory to operate.
8)
The SJ had rightly held that on a balance of probabilities
accepted the Respondents’ version of facts as it appeared to
be more credible and truthful.
Decision
It is settled law that an appellate Court should be slow to interfere
with the decision of a trial judge. (Siti Aisha Ibrahim v. Goh Cheng
Hwai [1982] CLJ 544; [1982] CLJ (Rep) 326; [1982] 2 MLJ 124).
The legal burden is on an appellant to satisfy an appellate Court
that the trial Judge has erred in coming to his conclusion. Samar
Mansor v. Mustafa Kamarul Ariffin [1974] 1 LNS 147; [1974]2
MLJ 71 and Ramamurthi Ramani v. Sri Ram & Co. [1998] 2 CLJ
822; [1998] 2 MLJ 744.
In the case of Ong Kim Hai v. Kusaini Surip [1984] 2 CLJ 281;
[1984] 1 CLJ (Rep) 310; [1984] 2 MLJ 28 the Federal Court in
clarifying the powers of the appellate Court stated:
“ The approach to the exercise of the power available to an appellate
court is as stated by Lord Denning MR in Kerry v. Carter [1969] 1 WLR
1372 where he said:
……….This court adopts in regard to apportionment the same
attitude as it does to damages. We will interfere if the judge has
gone wrong in principle or is shown to have misapprehended the
facts; but, even if neither of these is shown, we will interfere if we
are of opinion that the judge was clearly wrong.”.
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Agreement
There is no written agreement between the Parties. However,
the Parties had agreed that the consideration for taking over
the business is RM300,000.00. This was confirmed by the 1st
Respondent in Examination-in-Chief,
“ Harga untuk mengambilalih perniagaan tersebut dengan
segala
inventori,
haiwan
dan
pekerja
sediada
telah
dipersetujui pada RM300,000.00…”.
The Respondent made payments to the Appellants and had
issued and executed a document entitled “Acknowledgement
Receive of Payment as Part Payment of True Discovery Sdn. Bhd.”.
The aforesaid document marked as Exhibit D9 was prepared by the
1st Respondent herself stipulating that the payment as for the sale
of the company known as True Discovery Sdn. Bhd. On 2.12.2012
the 1st Respondent gave the replacement Banker’s cheque for
RM150,000.00. A further RM50,000.00 was paid on 21.12.2011.
Therefore, based on the evidence the Respondents knew that the
transaction involved the sale of shares of the company and not just
the taking over of the reptile zoo.
The subject matter of the transaction
The subject matter of the transaction is the sale of the company and
not the reptile zoo. The 1st Respondent admitted in evidence that
she had purchased the shares and had also signed a Letter of
Indemnity dated 2.12.2012 in favor of the Appellants. The 1st
Respondent had also confirmed in evidence that pursuant to Form
49 she was a director of the company.
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The sub tenancy
Hj. Helmi Ali (PW2) the 1st Respondent’s husband gave evidence
that Hussein had informed him sometime in mid December that
the premises occupied by the reptile zoo was under a sub tenancy.
Hussein was not called as a witness.
The Appellant’s witness (DW4) confirmed in evidence that he
handed over the management of the company including the reptile
zoo to the Respondent on 1.12.2011. The transfer forms of the
shares were all signed. The Respondents did not challenged this
evidence.
Fraud
Section 17 of the Contracts Act 1950 provides five different acts
which may constitute fraud,
“ Fraud includes the following acts committed by a party to a contract or
with his connivance or by his agent with intent to deceive another party
thereto or his agent or to induce him to enter into a contract:
a) the suggestion as to a fact of that which is not true by one who
does not believe it to be true.
b) the active concealment of a fact by one having knowledge or
belief of the fact.
c) a promise made within any intention of performing it.
d) any other act fitted to deceive; and
e) any such act or omission as the law specially declares to be
fraudulent.”.
The standard of proof for fraud in civil proceedings is beyond
reasonable doubt. In P.J.T.V. Denson (M) Sdn. Bhd. & Ors. v.
Roxy (Malaysia) Sdn. Bhd. [1980] 1 LNS 55; [1980] 2 MLJ 136,
138 FC, Raja Azlan Shah CJ Malaya (as His Royal Highness then
was) states;
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“ Whether fraud exists is a question of fact, to the decided upon the
circumstances of each particular case. Decided cases are only
illustrative of fraud. Fraud must mean “actual fraud, i.e., dishonesty of
some sort” for which the registered proprietor is a party or privy. “Fraud
is same in all Courts, but such expressions as ‘constructive fraud’
are... inaccurate”; that ‘fraud’ implies a willful act, on the part of one
whereby another is sought to be deprived, by justifiable means, of
what he is entitled” (per Romilly M.R. In Green v. Nixon). Thus, in
Waimiha Sawnmilling Co. Ltd. v. Waione Timber Co. Ltd., it was said
that “if the designed object of a transfer be to cheat a man of a known
existing right, that is fraudulent...”.
In the instant case the Respondents had raised issues of ‘fraud’
and/or ‘concealment’ and/or ‘suppression of information’. However,
there were no particulars of fraud/concealment/suppression of
the information, pleaded. It is trite that pleadings should contain
sufficient particulars to ensure that the parties are informed of the
case that they have to meet and particulars relating to allegations
of fraud, must be sufficiently stated in the Statement of Claim.
However, in the instant case the Respondents did not particularize
the fraud allegedly committed by the Appellants. In the Statement
of Claim (paragraph 13) the Respondents had described the
particulars of fraud as follows,
“a)
Tidak memberikan maklumat berkenaan status tenansi
premises perniagaan reptile zoo di ‘I-City’ Shah Alam
kepada Plaintif-Plaintif;
b)
Tidak memberikan maklumat inventori dan dokumendokumen releven yang lain kepada Plaintif-Plaintif;
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c)
Mendesak
Plaintif-Plaintif
pendahuluan sebanyak
membuat
RM200,000.00
perniagaan yang dinilainya
tidak
bayaran
bagi suatu
diberi
justifikasi
sehingga kini;
d)
Mendakwa bahawa Defendan-Defendan kononnya tidak
tahu apa-apa berkenaan penamatan tenansi;
e)
Merepresentasikan
secara
nyata/tersirat
kepada
Plaintif-Plaintif bahawa perniagaan reptile zoo yang
akan diambil-alih akan terus beroperasi di premises
sedia ada untuk suatu tempoh yang munasabah
lamanya.
f)
Memperdayakan Plaintif-Plaintif untuk jumlah wang
sebanyak RM200,000.00.”.
It is not pleaded when the Respondents had requested for the
documents. It is also not pleaded or described the particulars of the
documents requested.
The Learned Session Judge in her judgment did not explained
how she came to the conclusion that there was fraud perpetrated
but merely said that based on the evidence the Appellants had
expedited the transaction “...secara tergesa-gesa dan penuh
misteri..”. The Learned Session Judge had also applied the wrong
standard of proof required to establish fraud in civil cases which is
beyond reasonable doubt,
“ Berdasarkan dari segala keterangan telah diberikan….atas
imbangan kebarangkalian Mahkamah berpuashati…”.
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The 1st Respondent stated in her Witness Statement that she
and her husband were interested to operate the reptile zoo. In
cross-examination she confirmed that they had not met with any
of the Appellants as they negotiated with Hussein. Hussein’s
wife, Erliyanti Mohd Nor was a director of True Discovery. No
other evidence was adduced to show to the Court the alleged
fraudulent act by the Appellants.
Conclusion
In an appeal when it concerns a finding of fact, the established
principle is that the appellate Court would be slow in disturbing
that findings unless it is so perverse that it is repugnant to
common sense and reasonableness. In China Airlines Ltd. v.
Mafiran Air Corp. Sdn. Bhd. and another appeal [1996] 3 CLJ
163; [1996] 2 MLJ 517, 527 FC, His Lordship Mohamed Dzaiddin
FCJ (as he then was) said of the circumstances where an appellate
Court is permitted to interfere with the findings of fact of the trial
Court as follows:
“ On the other hand, there is a clear authority also from the House of
Lords - and followed by the Privy Council - which says that a distinction
can be drawn between a finding of a specific fact which depends upon
the credibility of witnesses and a finding of fact which depends upon
inference drawn from other facts. In the latter case, an appellate court
will more readily interfere with the trial judge's findings of fact and form
an independent opinion than in the case of the former.”.
It is trite that the findings of fact by the trial Court can be intervened
in circumstances when the trial judge had failed to consider all
the evidence and had not given to each its probative value or when
the trial judge had drawn wrong inference from the facts or when
there was misdirection or non-direction which occasioned a failure
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or miscarriage of justice. Therefore, if the findings of fact by the
trial judge is essentially wrong or that he had wrongly considered
evidence which had not been properly proved and tendered as
exhibit as a basis for his findings or drawn inferences from
unproved evidence, the appellate Court should intervene. In this
instant appeal I have considered the grounds of the Learned
Sessions Court Judge in the context of the evidence tendered in
Court and I am of the view that the learned Sessions Court Judge’
failed to apply the standard of proof required to establish fraud. The
Learned Session Judge did not evaluate and consider the facts
and evidence before her based on the standard of proof required.
In the circumstances based on the reasons mentioned above the
appeal is allowed with cost.
sgd.
( HASNAH BINTI DATO’ MOHAMMED HASHIM )
Judge
High Court of Malaya
Kuala Lumpur.
26th March 2014
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Counsels:
For the Appellants/Respondent:
Messrs. Seow & Megat
- K.K. Lim
- M.L. Chan
- P.Y. Leong
For the Respondent/Applicant:
Messrs. K.Harikrishnan & Co.
- K. Harikrishnan