NG KIM GEK & ANOR v NEW AGE PORTFOLIO SDN BHD [2022] MLJU 50

 

NG KIM GEK & ANOR v NEW AGE PORTFOLIO SDN BHD [2022] MLJU 50

Court of Appeal (Putrajaya)

Search Warrant under Copyright Law

Facts

1.     The Appellant was the former director and shareholder of the Respondent.  On 24 April 2008, the Respondent purchased a piece of land in Pekan Kinrara, Petaling, Selangor (“Property”).

2.     Subsequently, a sale and purchase agreement was entered between the Appellant and the Respondent in the view of purchasing the Property (“Agreement”).

3.     The Respondent then brought the case to the High Court for the Appellant’s breach of the Agreement i.e. failure to pay the balance purchase price of the Property.

4.     The Appellant argued that they have no obligation to pay the Respondent the purchase price based on an alleged collateral contra agreement (“Collateral Contra Agreement”).

5.     The learned High Court judge found favour for the Respondent based on the evidence of the Respondent and allowed the claim by the Respondent who was the plaintiff during the High Court proceedings.

6.     Thus, the appeal is by the Appellant contended that the learned High Court judge had failed to consider all the available evidence that proved the existence of a Collateral Contra Agreement and hence made an erroneous finding that the Appellant failed to prove the existence of such Collateral Contra Agreement.

Issue Whether the learned High Court judge is correct in dismissing the Appellant’s claim on the existing of a Collateral Contra Agreement.
Ratios

1.     The Court highlighted that the issue whether there was a Collateral Contra Agreement is an issue which is fact-sensitive and that it is trite law that the findings of the learned judge should not be disturbed by an appellate court unless that finding was plainly wrong.

2.     The evidence by the Appellant purporting the existence of the Collateral Contra Agreement is produced below for clarity-

“11.1. The oral statements made by the witnesses of the Defendants are persistent and supported side by side in respect of the existence of oral collateral/arrangement in which the Property was meant to be contra;

11.2. The contemporary documents which is the Sale And Purchase Agreement dated 28 April 2008 entered between the Defendants (“Appellant”) and the vendor showed that the Plaintiff (“Respondent”) had made payment of ten percent (10%) of the purchase price of the Land when the Appellants were still the existing directors and shareholders of the Respondent;

11.3. The contemporary documents showed that the Appellant indeed have paid a cash sum of RM199,988.00 (for the purpose of share capital payment) to the Respondent company. As such, the injection capital of RM199.988.00 coincides with the payment of the two percent (2%) of the purchase price in SPA Land which were contributed by Dato’ See and the Appellant;

11.4. It was not disputed that Dato’ Lai and/or any of the new shareholders of the Respondent did not pay any consideration to the Appellant to transfer the shares to the Respondent; and

11.5. On the probability of consideration, there must be consideration in existence to transfer the shares to Dato’ Lai and/or any of the new shareholders of the Respondent in the form of oral collateral/arrangement in which the Property was meant to be contra.”

3.     The Appellant also took a clear position that they have no obligation to pay the Respondent any purchase price as it was reached in the oral Collateral Contra Agreement that-

(a)      investment allegedly made by the Defendants in the Plaintiff;

(b)      the Defendants’ agreement to resign as directors and shareholders of the Plaintiff and to transfer their shares in favour of Dato’ Lai and new shareholders / investors; and

(c)       the Defendants’ agreement not to receive any payment in respect of the transfer of their shares to Dato’ Lai and new shareholders.

(hereinafter referred to as the “Considerations”).

4.     The Respondent on the other hand took the position that there was no reference of the Collateral Contra Agreement in the Agreement.  The Agreement also does not stipulate the Property is being given to the Appellant with such Considerations.

5.     The Court held that it is apparent that the learned High Court judge had undertaken a detailed analysis of all the available evidence presented by both parties.  Below is the quoted grounds for clarity-

“27. The defendants’ version of the facts was difficult to believe. It is pertinent to note that there is no mention of the contra agreement in the agreement. The plaintiff is a company and here was no contemporaneous evidence either by way of correspondence or a board resolution evidencing the contra agreement alleged by the defendants.

28. Further, it was unclear from the defendants’ evidence at trial as to what was their case. Were they alleging that the alleged oral contra agreement was with the plaintiff or Dato’ Lai or both. The plaintiff cannot be bound by an alleged contra agreement reached between Dato’ Lai, See and the second defendant as a company is separate from individual from its shareholders and directors.

29. It is also pertinent that in the Defence, the defendants did not furnish sufficient particulars as regards to the contra agreement and the investments allegedly made on behalf of the plaintiff company. There are also no documents to support the defendants’ assertion that they had made investments on behalf of the plaintiff. This was acknowledged by the second defendant. He testified that he had made a payment of about half a million ringgits towards the 10% deposit to purchase the land. And this sum was paid in cash to See. However, under cross-examination See claimed that he paid the 10% deposit amounting to more than RM1,050,000.00. If indeed they had paid the 10% deposit for the land, it was odd that there was no mention of this payment in the earner action that was brought against them by Dato’ Lai.

30. It is also pertinent that in the Defence, the defendants did not furnish sufficient particulars as regards to the investments/payments allegedly made on behalf of the plaintiff company which purportedly led to the contra agreement.”

6.     With that taken into consideration, the Court believe that the finding of facts by the learned High Court judge regarding the existence of the Collateral Contra Agreement was not proven.

7.     Accordingly, the Court found that the claim by the Appellant’s counsel that the learned High Court judge had neglected to evaluate all of the available information given before making her conclusion is, to put it mildly, erroneous.

8.     On the contrary, the Court believe the learned High Court judge adequately and judiciously weighed all of the material submitted by both parties.

9.      As a result, the Court conclude that the issue on the existence of the Collateral Contra Agreement is without validity.

 

Decision

The Court of Appeal dismissed the appeal with order as to costs of RM10,000.00.
Key Take Away

1.     A collateral contra agreement, most commonly known as collateral contract is usually a single term contract, which contains extra provisions pertaining to the same subject matter as in the main contract.  Normally it may be made orally.

2.     There are three (3) elements necessary to prove the existence of a collateral contract-

(a)  Promissory in nature;

(b)  Intention to induce; and

(c)  Consistency.

 

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