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2021 MarsdenLR 508
HIGH COURT MALAYA KUALA LUMPUR
DATO EII CHING SIEW @ YII CHING SIEW – Appellant
Versus
HAIRIE ZAIREL OH & ORS (ENCLS 19 & 21) – Respondent
[Suit No: WA-22NCC-578-11/2020]
A plea of non est factum must be rigorously substantiated; lack of understanding or care in signing cannot excuse responsibility if the signatory is aware of the document's contents.
Headnote:(A) Limitation Act 1953 – Civil Law Act 1956 – The plea of non est factum was examined concerning the circumstances under which a director signed share transfer forms. The Plaintiff failed to establish that he did not understand the documents signed and could not support his claim of fraudulent misrepresentation. Since the claim was filed post the statutory limit, it was found to be time-barred. (Paras 31, 52, 63)
Facts of the case: The Plaintiff claimed he was denied the proportional distribution of shares from a block owned by his company, believing he had an agreement with other directors. The alleged fraud was not timely discovered, with the claim filed years later after the transactions occurred. (Paras 13-17, 25, 56)
Findings of Court: The action was time-barred as it was filed after the limitation period and could not be substantiated under relevant statutes. (Paras 63-64)
Issues: The primary issue was whether the plea of non est factum could hold given the Plaintiff’s knowledge and role within the company. (Paras 31, 52)
Ratio Decidendi: The court ruled that mere reliance on others without verifying the documents signed is insufficient to claim non est factum. Any plea must be supported by clear evidence of misunderstanding regarding the nature of the documents, which was not met by the Plaintiff. (Paras 31-44)
Result: The Plaintiff's claim was struck out with costs.
JUDGMENT
[Striking Out Applications - Enclosures 19 And 21]
Introduction
[1] This judgment deals with the plea of non est factum and the degree of care reasonably expected of a director when signing share transfer forms and company resolution in relation to the transfer. In this case, the rejection by the Court of the plea had the consequence of the action being caught by the Limitation Act 1953 .
Background Facts
[2] In 1999, YTY Industry Sdn Bhd ('YTY Industry') was a wholly owned subsidiary of YTY Holdings Sdn Bhd ('YTY Holdings'). The shareholders of YTY Holdings were the Plaintiff, Oh Tiam Seng (Deceased) ('OTS'), 2nd Defendant ('D2'), 3rd Defendant ('D3'), 5th Defendant ('D5') and the 3i Group pic ('3i Group').
[3] The Plaintiff was a director of:
(i) YTY Industry from 7 December 1988 until 26 April 2012; and
(ii) YTY Holdings from 1 April 2000 until its voluntary liquidation on 26 July 2020.
[4] On 12 September 2005, the Plaintiff incorporated Biogreen Network Sdn Bhd ('Biogreen'). He was a director of Biogreen and held 99.99% of the shareholding therein.
[5] On 30 September 2005, Biogreen acquired:
(i) the 10,555,556 "A" Ordinary Shares that the 3i Group held in YTY Holdings; and
(ii) the 333,333 Ordinary Shares that D3 held in YTY Holdings.
[6] As a result of these acquisitions, Biogreen held 10,888,889 shares in YTY Holdings comprising Ordinary and 'A' Ordinary shares ('Biogreen Block').
[7] On 18 March 2009, Biogreen transferred the Biogreen Block to OTS, D2, D4 (as a nominee for D3) and D5 in different proportions ('the Transfer'). The Plaintiff together with another director of Biogreen had executed the Forms of Transfer of Securities (Form 32A) on behalf of Biogreen to OTS, D2, D4 and D5 in respect of the Biogreen Block.
[8] There were two Forms 32A executed by the Plaintiff for each of OTS, D2, D4 and D5, one for the Ordinary shares and the other for the Ordinary 'A' shares of YTY Holdings from the Biogreen Block ('the Transfer Forms'). The name of the transferor, the transferees and the number of shares were clearly printed on the Transfer Forms.
[9] It is not in dispute that just prior to the Transfer, the Plaintiff had held 6,666,666 YTY Holdings shares representing 30% of the entire shareholdings of YTY Holdings.
[10] It is to be noted that none of the shares of YTY Holdings constituted in the Biogreen Block was transferred to the Plaintiff. In other words, the Plaintiff was not presented with any Form 32A with his name as transferee for any of shares from the Biogreen Block.
[11] It is also not disputed that on the same date, namely 18 March 2009, the Plaintiff had sold and transferred 3,333,333 of his shares in YTY Holdings to OTS, thereby reducing his shareholding to 15% only.
[12] In respect of the Transfer, the Plaintiff as a director of YTY Holdings was a signatory of a resolution dated 2 April 2009 by YTY Holdings that approved the Transfer ('the Resolution'). The Resolution is a 1-page document where the names of Biogreen as the transferor and OTS, D2, D4 and D5 as the transferees were printed together with the number of shares that each had received from the Biogreen Block.
The Plaintiff's Claim
[13] It is the Plaintiff's claim in this action that the Plaintiff, together with OTS, D2, D5 and with participation of D3, had an agreement that the Biogreen Block was 'to be transferred and distributed to the parties in proportionate (sic) to their shareholding in YTY Holdings as at 30 September 2008' ('the Agreement'). The Plaintiff claimed that OTS, D2, D3 and D5 were entrusted to transfer and distribute the Biogreen Block in the proportions as agreed.
[14] According to the Plaintiff, pursuant to the Transfer in 2009 above, the Biogreen Block was transferred and distributed out to the parties by OTS, D2 and D5 with the active participation of D3 in accordance with the proportions of their respective shares in YTY Holdings as at 30 September 2008 except that contrary to the Agreement the Plaintiff was never a
