The court found no fraudulent misrepresentation by the Defendants, ruling that they genuinely believed in their representations, while ordering repayment for failure to issue shares.

JUDGMENT

Mohd Arief Emran Arifin J:

A. Introduction

[1] This is a case that exemplifies the importance of the old adage of the need to look before you leap. This litigation could have been prevented if parties had considered the investments carefully, the representations that were allegedly made, the terms of the agreement signed and the type of investment in the said company.

B. Background Facts

[2] The Plaintiff and his wife had met the 3rd and 4th Defendants sometime in December 2022.

[3] At the said meeting, the Plaintiff allege that the following was represented to him by the Defendants through the 3rd and 4th Defendants:

(i) The 1st Defendant is desirous of expanding its business operation and will be undertaking an Initial Public Offering ("IPO").

(ii) The 1st Defendant is readily and financially stable to proceed with the IPO.

(iii) The 1st Defendant's paid-up capital shall not be increased more than 3 times the current paid-up capital at the time of the IPO.

[4] The Plaintiff further alleges that a Term Sheet concerning a proposed issuance of redeemable convertible preference shares in the 1st Defendant was also shared with the Plaintiff by the said Defendants. The said Term Sheet was also relied on by the Plaintiff.

[5] The Plaintiff agreed to the proposal made by the Defendants and paid the total sum of RM200,000.00 by way of a cheque dated 23 December 2022 and 15 January 2023 to the 1st Defendant in return for shares in the 1st Defendant. Based on the Term Sheet the shares were valued at RM25.00 per share and this would be for 8,000 shares in the 1st Defendant.

[6] Subsequently the sum of RM100,000.00 was also to be paid by the Plaintiff to the 1st Defendant. However, at the request of the 3rd and 4th Defendants, the said sum was paid to the 2nd Defendant.

[7] According to the Plaintiff, the 3rd and 4th Defendants had then requested a loan for the sum of RM570,000.00 to be used by the 2nd Defendant for a project with a company known as Clement & Associates Sdn Bhd ("C&A Project").

[8] The Plaintiff claims that the 3rd and 4th Defendants had then requested that the said loan be converted into an investment in the 2nd Defendant. He alleges that the Defendants represented the following:

(i) The C&A project is best participated in through the 2nd Defendant.

(ii) The purported market value of the 2nd Defendant is RM100,000,000.00.

(iii) A total of 10,000,000 shares will be issued by the 2nd Defendant with a value of RM0.01 per share.

(iv) The return on investment from the said project may amount to 200% of the sum invested.

(v) The validity period of the offer is up to 31 May 2023.

(vi) The 2nd Defendant will expand its business and will be subject to an IPO exercise.

(vii) The 2nd Defendant is financially stable and will be ready to proceed with the IPO and the C& A project.

[9] The Plaintiff had agreed to invest in the 2nd Defendant and paid a further sum of RM30,000.00 to the 2nd Defendant's account.

[10] The Plaintiff contends that the Defendants had, jointly and/or severally, acted dishonestly, in bad faith and/or recklessly disregarded the Plaintiff's interest causing injury to his interest. The Plaintiff's claim that the representations referred to earlier were false and fraudulently represented to him to convince him to invest in the 1st and 2nd Defendants.

[11] The Plaintiff also contends that there was a conspiracy to defraud by an unlawful means to cause injury to the Plaintiff. Particulars of the said conspiracy are as follows:

(i) that there was material misrepresentation by the Defendants.

(ii) that the said Defendants had wrongfully caused the sums stated above to be invested in the 1st and 2nd Defendants.

(iii) that the 1st and 2nd Defendants were not financially sound.

(iv) that the Defendants will not honour the refund arrangement.

[12] The Plaintiff also contends that the said Defendants had breached the terms of the Term Sheet and Investment Agreement and also claim for the tort of conversion.

[13] I also note that the Plaintiff