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2025 MarsdenLR 143
HIGH COURT MALAYA KUALA LUMPUR
NG SWEE PEN & ORS – Appellant
Versus
WALLA ENTERPRISE SDN BHD (ENCLS 79 & 84) – Respondent
[Civil Suit No: WA-22NCvC-113-03/2023]
The purchase under the Share Sale Agreement included all debts owed by the target company to its directors, and failure to pay the Second Balance Purchase Price constituted a breach, justifying termination.
Headnote:(A) Rules of Court 2012 - Order 14A - Share Sale Agreement - Interpretation - Compensation - Plaintiffs sought resolution of contractual interpretation regarding debts owed by the 6th plaintiff; court ruled inclusion of debts in share purchase (Paras 1-4, 40-42); Defendant contended frustration of contract due to unresolved debts, deemed unsustainable (Paras 27-30).
(B) Breach of contract - Defendant failed to pay Second Balance Purchase Price, which entitled Plaintiffs to terminate agreement and forfeit deposits (Paras 48-50).
(C) Legal determination - Plaintiffs' application regarding legal questions suitable for Order 14A resolution without full trial (Paras 33-39).
Findings of Court:
The purchase of shares included all debts, and the Defendant breached the agreement by not paying the Second Balance Purchase Price.
Issues: Proper construction of SSA and legal consequences of termination.
Ratio Decidendi: Clear contractual language leaves no ambiguity regarding debt inclusion; failure to pay constitutes a fundamental breach.
Result: Plaintiffs' application allowed, Defendant's application dismissed, costs awarded to Plaintiffs.
| Table of Content |
|---|
| 1. determination of competing applications regarding ssa. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. factual context of the share sale agreement. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 3. interpretation of debt obligations in ssa. (Para 19 , 20) |
| 4. clarification of ssa language regarding obligations. (Para 21 , 22 , 23) |
| 5. frustration claim and its legal limitations. (Para 27 , 29 , 30 , 31 , 32) |
| 6. suitability of questions under o 14a. (Para 33 , 34 , 36 , 38) |
| 7. affirmative answer to the plaintiffs' first question. (Para 39 , 40 , 41 , 42 , 43) |
| 8. breach of ssa and plaintiffs' rights. (Para 47 , 48 , 49) |
| 9. defendant's application for return of payments. (Para 52 , 53 , 54 , 55 , 56) |
| 10. final ruling on applications and entitlements. (Para 61 , 62) |
(Enclosures 79 And 84)
Introduction
[1] There were two competing applications brought pursuant to O 14A of the Rules of Court 2012. Both sought determination on separate questions of law and interpretation arising from a Share Sale Agreement dated 1 December 2021 ("SSA").
[2] The first application (encl 79) was filed by the 1st to 5th plaintiffs ("Plaintiffs"). Pursuant to this application, the Plaintiffs sought resolution of two legal issues concerning the construction of the SSA and whether the conduct of the defendant amounted to a breach of its terms
[3] The second application (encl 84) was filed by the defendant. Pursuant to this application, the defendant sought determination of the Plaintiffs' entitlement to retain monies previously paid under the SSA following its subsequent termination.
[4] The Plaintiffs' application raised two principal questions as follows:
(a) first, whether upon the proper construction of the SSA, the purchase of shares by the defendant from the 1st to 5th plaintiffs in the 6th plaintiff included all debts owed by the 6th plaintiff to its directors, and
(b) second, whether upon a true construction of the SSA read together with the related documentary correspondence exchanged between the parties' respective solicitors, the defendant had breached the SSA by failing to remit payment of the Second Balance Purchase Price amounting to RM3,291,668.10 in accordance with cl 3.1 (iii)(b) of the SSA.
[5] In contrast, the defendant's application sought determination of the following single question:
(a) whether on the terms of the SSA, the 1st to 5th plaintiffs are legally entitled to retain the sum of RM940,476.60 being the first tranche of the balance purchase price paid by the defendant notwithstanding that the SSA has been cancelled and/or terminated.
[6] The central issue in dispute stemmed from the proper construction of the SSA and the legal consequences following its termination. The Plaintiffs contended that the defendant had committed a breach of contract by failing to make payment of the Second Balance Purchase Price as stipulated thereby entitling the Plaintiffs to terminate the agreement and forfeit the sums already received.
[7] Conversely, the defendant argued that the SSA was either frustrated or rendered void by the Plaintiffs' failure to resolve the internal debts of the 6th plaintiff owed to its directors. On that basis, the defendant sought restitution of the amounts it had paid under the agreement.
[8] Having carefully perused both applications and the affidavits and considered the submissions of both parties, I found merit in the Plaintiffs' application. Conversely, I found that the defendant's application lacks merit and must be dismissed. My reasons follow.
Brief Background Of Facts
[9] On 1 December 2021, the Plaintiffs and the defendant executed the SSA. Under the SSA, the Plaintiffs agreed to sell to the defendant a total of 100,000 ordinary shares in the 6th plaintiff. The total purchase consideration agreed upon was RM4,702,383.00. The scope of the sale extended beyond the shareholding and included two agricultural lands held under Geran 9875/Lot 4056 and Geran 9876/Lot 4057, both located in Mukim Sabai in the
