The court upheld the validity of a Settlement Agreement, emphasizing principles of res judicata and estoppel, and ruled that the Respondents could not benefit from their own wrongdoing.

JUDGMENT

Azimah Omar JCA:

A. Introduction

[1] The Appeal before us is a case of a contractual party (the 1st Respondent) attempting to unlawfully extricate itself from the contract it voluntarily entered into despite the fact that the 1st Respondent had already partially performed the contract.

[2] The 1st Respondent in this present appeal had by their own initiative, offered to undertake to settle the judgment debt of another company (in liquidation) owed to the Appellants (the Petitioners) vide a Settlement Agreement. As consideration of the 1st Respondent's undertaking and indemnity, the Appellants must agree to allow (and not object) to having the Winding-Up Order against the judgment-debtor company be set aside. The Winding-Up Order was duly set aside by the Winding-Up Court in view of the parties' autonomy and mutual agreement to settle the debt out of Court.

[3] Two years since had passed and almost 40% (RM150,000.00) of the Judgment Debt was settled by the 1st Respondent in compliance of the Settlement Agreement. A salient fact which clearly envisages the 1st Respondent's unequivocal admission to the validity of the Settlement Agreement, the truth of the judgment-creditor company's debt owed to the Appellants, and even the validity of the Winding-Up Order obtained against the judgment-creditor company. The 2nd Respondent even entered into a Guarantee Agreement as guarantor, to guarantee that the 1st Respondent shall pay as per the terms of the Settlement Agreement.

[4] It is strange that after the partial performance of the Settlement Agreement (and full admission of the validity of the judgment debt as well as the Winding-Up Order) the 1st Respondent sought (vide Originating Summons) to renege from the Settlement Agreement and now insisted that the Settlement Agreement was fraudulent and was a nullity. This was despite the unequivocal admissions of the 1st Respondent and the fact that the Winding-Up Court was already functus officio as it had already set aside the Winding-Up Order in view of the parties' Settlement Agreement.

[5] The Appellants retorted by filing their own counterclaim against the Respondents so as to enforce the terms of the Settlement Agreement which were unequivocally and unconditionally agreed upon by the 1st Respondent.

[6] The Learned Judicial Commissioner ("Learned JC") on 16 December 2022 had allowed the Respondents' Originating Summons to invalidate the Settlement Agreement (despite the Learned JC's own finding that there were no elements of fraud or deceit from the Appellants). Consequently, the Learned JC also dismissed the Appellants' counterclaim.

[7] Dissatisfied with the self-contradictory decision of the Learned JC, the Appellants filed this Appeal before us. It must be noted that the Respondents had not appealed against the entirety or any part of the Learned JC's decision. Thus, it is patently clear that the Respondents unequivocally admitted the truth in the Learned JC's decision that there were no elements of fraud, concealment, or deceit emanating from the Settlement Agreement or the Winding-Up Order. Thus, it shall not be open for the Respondents to contend on any allegation of fraud, concealment, or deceit in the Appellants' Appeal before us.

[8] For a proper appreciation of the contentions above, it is crucial that we first understand the facts underlying this case.

B. Facts Of The Case

[9] On 28 March 2019, the Appellants ("Chan Kok Sung and Chan Wai Kit") commenced a Winding-Up Petition No: WA-28NCC-293-03-2019 against the judgment debtor company ("SME Majujaya") and successfully obtained a Winding-Up Order on 11 June 2019 ("WU Order").

[10] The 1st Respondent ("Accupro") approached the Appellants and offered to undertake and settle the judgment debt owed by SME Majujaya. Accupro and the Appellants entered into a Settlement Agreement on 3 July 2019 ("Settlement Agreement").

[11] The salient terms of the Settlement Agreement, amongst others, are:

• Clause 1.1(a) & (b) - Accupro will settle a