The court emphasized the need for corporate governance and compliance with statutory requirements, ruling that tax evasion and fraudulent actions invalidate trust claims and associated transfers.

Headnote:(A) Companies Act 1965 - Sections 18(1)(h), 122(3) and 140(1) of the Income Tax Act 1967 - Issue of trust assets and corporate governance in family-owned company - Court held that the 2nd Plaintiff had assumed control post the deaths of WTS and WTF, which raised legal complications regarding shareholding and trust assets. Court identified illegal tax evasion and piercing of the corporate veil was warranted due to evidence showing mismanagement of company funds and assets - The document evidencing trust was declared inoperative and lacking statutory compliance, resulting in dismissal of the Claim by the Plaintiffs. (Paras 1-3, 72-86, 140-170)

(B) Admissibility of Evidence - Hearsay and Evidence Act, 1950 - The Court discussed admissibility of documents under the EA, considering the parties' roles and evidence presented during trial, ruling that failure to adhere to procedural requirements impacted the case unfavourably for the Defendants. (Paras 32-37, 44-50, 115-119)

(C) Principles of Natural Justice - The Plaintiffs argued that their right to be heard was violated, justifying setting aside the Consent Judgment, citing jurisdictional concerns and proper protocol in probate matters. (Paras 140-152)

Findings of Court:
Court found the 1st Defendant's fraudulent actions in obtaining consent judgment, and inadequacy of evidence on disputed documents resulted in dismissal of countless claims.

Issues: Major issues surrounding transfer of assets, validity of WTS's will, and procedural misconduct were evaluated.

Ratio Decidendi: Court's decisions relied on illegalities surrounding asset transfer and tax implications, reiterating the principles that promote corporate governance and lawfulness in fiduciary responsibilities.

Result: Claims dismissed, consent judgment set aside. (Paras 1-170)

Table of Content
1. basic facts regarding parties involved and corporate structure (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8)
2. details surrounding challenges to wts’s will and probate matters (Para 9 , 10 , 11 , 12 , 13 , 14 , 15)
3. establishment of factual background regarding the company and its operations. (Para 16)
4. plaintiffs' claims and the 1st defendant's counterclaims (Para 17 , 18 , 19 , 20)
5. discussion of consent order invalidity due to failure of notice (Para 21 , 22 , 23 , 24 , 25 , 26)
6. court analysis on the evidence and judicial criticism (Para 27 , 28 , 29 , 30)
7. final conclusions on multiple lawsuits and the implications (Para 31 , 32 , 33 , 34)
8. clarification of orders and liability for costs (Para 35 , 36 , 37 , 38)
9. rules for admissibility of evidence and their significance in the proceedings. (Para 39 , 40 , 41)
10. discussion on the corporate veil and decisions related to its piercing. (Para 78 , 79 , 80 , 81)
11. establishing grounds for the consent judgment and its implications for the parties. (Para 89 , 90 , 91 , 92 , 93)
12. determining the credibility of witnesses and assessing their testimonies. (Para 95 , 96 , 97 , 98 , 99)
13. final court orders summarizing the decisions taken in these consolidated cases. (Para 170)

[1] This is a case where 3 brothers (3 Brothers) started and ran successfully the business of KTL Sdn Bhd, the first plaintiff company (1st Plaintiff).

[2] The 3 Brothers are Mr Won Thean Sang (WTS), Mr Won Thiam Foo (WTF) and Mr Won Thian Loong (2nd Plaintiff). WTS is the eldest of the 3 Brothers.

[3] The 3 Brothers were the subscribers to the memorandum of association of the 1st Plaintiff (Subscribers) within the meaning of s 18(1)(h) and (2) of the Companies Act 1965 ( CA ). The 3 Brothers were also the first directors of the 1st Plaintiff (1st Directors) as understood in s 122(3) . WTS was also the 1st Plaintiff's managing director (MD).

[4] The original shareholding of the 1st Plaintiff is as follows:

(a) WTS owned 40% shares of the 1st Plaintiff (WTS's Shares); and

(b) WTF and the 2nd Plaintiff each held 30% shares of the 1st Plaintiff.

[5] The 1st Plaintiff's board of directors (BOD) initially consisted of the following persons:

(a) WTS;

(b) WTF;

(d) Madam Leong Oow Lai (1st Defendant). The 1st Defendant was WTS's second wife;

(e) Madam Kong Yoke Chan, WTF's wife (SD1); and

(f) Madam Liew Kim Yew, the wife of the 2nd Plaintiff (2nd Plaintiff's Wife).

[6] WTS passed away on 28 July 2011 and WTF died subsequently on 7 September 2011.

[7] After WTF's demise, the 2nd Plaintiff acquired WTF's 30% shares in the 1st Plaintiff. This means the 2nd Plaintiff presently owns 60% of the shares in the 1st Plaintiff.

[8] The 2nd Plaintiff offered to the 1st Defendant to purchase WTS's Shares for a sum of RM2 million (Proposed Purchase). The 1st Defendant rejected the Proposed Purchase.

[9] There were 3 circular resolutions of the 1st Plaintiff's directors (3 Resolutions) which had been disputed by the 1st Defendant. The 3 Resolutions are as follows:

(a) a resolution dated 22 August 2011 (Resolution dated 22 August 2011) which replaced the authorized signatories of the 1st Plaintiff's bank account with RHB Bank Bhd (RHB) with the following persons:-

(i) the 2nd Plaintiff;

(ii) Mr Won Min Jin, the 2nd Plaintiff's son (SP5); and

(iii) Ms Won Bau Khim, WTF's daughter (SP2).

The Resolution dated 22 August 2011 had been signed by the 2nd Plaintiff, the 2nd Plaintiff's Wife and the 1st Defendant;

(b) a resolution dated 5 September 2011 (1st Resolution dated 5 September 2011) which appointed SP2 and SP5 as directors of the 1st Plaintiff and accepted WTF's resignation as the 1st Plaintiff's director. 1st Resolution dated 5 September 2011 was signed by the 2nd Plaintiff, the 2nd Plaintiff's Wife, 1st Defendant and SD1; and

(c) a resolution dated 5 September 2011 (2nd Resolution dated 5 September 2011) which also appointed SP2 and SP5 as directors of the 1st Plaintiff and accepted WTF's resignation as the

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2014 MarsdenLR 811

HIGH COURT MALAYA KUALA LUMPURKTL SDN BHD & ANOR – AppellantVersusLEONG OOW LAI – Respondent[Suit No: 22NCC-317-03/2013]

The court emphasized the need for corporate governance and compliance with statutory requirements, ruling that tax evasion and fraudulent actions invalidate trust claims and associated transfers.

Cases Referred (5)

HIGH COURT MALAYA KUALA LUMPUR
KTL SDN BHD & ANOR – Appellant
Versus
LEONG OOW LAI – Respondent
[Suit No: 22NCC-317-03/2013]