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2025 MarsdenLR 5611
HIGH COURT MALAYA SHAH ALAM
USAHA BAHAGIA TIMBER SDN BHD – Appellant
Versus
TUAN KHAIRUL ANNUAR TUAN YUSUF – Respondent
[Civil Suit No: BA-22NCVC-239-06/2023]
The court ruled that the Indemnity Agreement was not vitiated by coercion, undue influence, or misrepresentation, affirming the enforceability of the contract as TK failed to provide adequate proof for his claims.
Headnote:(A) Contracts Act 1950 - Sections 15, 18, and 16 - Claim for payment of a debt under an Indemnity Agreement - Defendant alleged coercion, undue influence, and misrepresentation - Court held that evidence did not establish coercion or undue influence as per legal standards - Defendant's claims were found unconvincing and without sufficient proof - Plaintiff's claim allowed and counterclaim dismissed. (Paras 1, 9, 10, 18, 30, 57)
(B) Coercion and misrepresentation - Coercion defined as threatening any unlawful act to induce agreement - Court found threats were not sufficient to constitute coercion - Misrepresentation requires proof that false statements induced the agreement - Claims of misrepresentation were unsupported by evidence. (Paras 10, 29)
(C) Undue influence - Definitions and burden of proof regarding undue influence - Court found no evidence of a relationship enabling SB to dominate TK's will - Claim of undue influence insufficiently substantiated. (Paras 30, 32)
(D) Waiver or variation - Court dismissed claims of waiver or variation of the Indemnity Agreement, noting the absence of conclusive evidence indicating any such agreement. (Paras 46, 56)
| Table of Content |
|---|
| 1. claim for payment of debt based on agreement. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. defendant's claims on alleged coercion and misrepresentation. (Para 7 , 8 , 9) |
| 3. explanation and analysis of coercion in relation to the agreement. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17) |
| 4. analysis of misrepresentation and its relation to the agreement. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28) |
| 5. examination of undue influence and the burden of proof. (Para 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36) |
| 6. court's observations on the conduct and state of affairs. (Para 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46) |
| 7. discussion of waiver or variation of the agreement. (Para 47 , 48 , 49 , 50 , 51) |
| 8. finding on the enforcement of the indemnity agreement. (Para 52 , 53 , 54 , 55 , 56) |
Introduction
[1] The claim is for payment of a debt based on the terms of a written agreement. The counterclaim raised a host of grounds to vitiate the agreement. The case went to trial with the defendant in the main action, Tuan Khairul Annuar ("TK") accusing the 2nd defendant in the counterclaim, Sunil Bhalla ("SB") of alleged coercion, undue influence and misrepresentation.
Background Facts
[2] TK was a director of the plaintiff ("Usaha Bahagia") since its incorporation on 9 September 2015. SB and one Meor Amsyar bin Meor Halil ("Meor Amsyar") were appointed as directors on 25 January 2022 and are the only remaining directors of Usaha Bahagia. One of the founding directors passed away, two (2) others who were appointed on 24 January 2020 resigned, and TK was removed from the Board of Directors on 3 October 2023.
[3] TK remains a shareholder of Usaha Bahagia. Meor Amsyar is the son of the deceased founding director, Meor Halil bin Meor Nazri. Apart from TK and SB, the other shareholders of Usaha Bahagia are Dato' Ahmad Nazri bin Abdullah and Ahmad Jauhari bin Yahya ("Other Shareholders). It appears that SB and the Other Shareholders came into the picture as investors after TK and Meor Halil procured a timber license from the State Government of Kelantan.
[4] Usaha Bahagia's principal, if not its only business, was to carry on logging operations in Kelantan with its timber license for several compartments at Nenggiri Forest, Kelantan ("Nenggiri Project"). There were factual disputes around how Usaha Bahagia and Nenggiri Project were managed between 2015 and 2019:
a) TK claimed the Board was managing the business collectively, and that SB at all material times acting as a shadow director before he was formally appointed, an influential consultant, advisor and financial controller to Usaha Bahagia and its shareholders.
b) On the other hand, Usaha Bahagia and SB claimed that TK was the only director running operations in Kelantan, and that SB was a minority shareholder who was based in KL where Usaha Bahagia's banking facilities were maintained and representing the interests of the investors.
[5] Following an internal audit into the business initiated by Meor Halil before he passed away, an internal audit report dated 27 September 2019 was prepared ("Internal Audit Report"). Based on its findings, TK received a show cause notice from Usaha Bahagia on 17 February 2020 to explain numerous serious and incriminating issues raised against him ("Show Cause Notice").
[6] In consideration of Usaha Bahagia's forbearance to sue, TK and Usaha Bahagia signed an Indemnity Agreement dated 7 February 2022 ("Indemnity Agreement"). Under the Indemnity Agreement, TK acknowledged that he was responsible for indemnifying Usaha Bahagia for losses amounting to RM8,798,767.83 and that if TK failed to furnish an acceptable repayment proposal, the sum would be payable as a debt ("Debt"). This is the impugned agreement.
Analysis And Findings
[7] TK's pleaded defence is that the Indemnity Agreement was a means for the other directors to escape liability, and that he signed it although he had not breached any duties to Usaha Bahagia and was not personally
