The court established that the advanced sum was a loan rather than an investment based on the absence of supporting evidence and a clear repayment obligation under the Deed of Settlement.

Introduction

[1] In this judgment, the parties are referred to as they were before the trial court. This was an appeal by the defendant against the decision of the Sessions court. At the conclusion of the full trial, the Sessions court ruled in favour of the plaintiff and allowed the plaintiff's claim for RM450,000.00.

[2] The primary issue in this appeal revolved around the nature of the sum of RM650,000.00 advanced by the plaintiff to the defendant. Essentially, the question before the trial court was whether this amount constituted a friendly loan extended to the defendant or an investment made in the defendant's company, Samdo Smart Solar (M) Sdn Bhd.

[3] Upon perusal of the record of appeal and consideration of the position of the parties as deliberated in the respective submissions, I found nothing plainly wrong in the decision of the Sessions court. Therefore, I dismissed the appeal with costs of RM5,000.00. The defendant was not satisfied and appealed.

Brief Background Facts

[4] The defendant and the plaintiff had been acquainted for over twenty years prior to the events in question. In early 2019, the defendant had initiated contact with the plaintiff to request for financial assistance. The defendant sought this financial support in order to sustain and develop his solar energy business which he operated through his company, Samdo Smart Solar (M) Sdn Bhd.

[5] Between 9 August 2019 and 20 November 2019, the plaintiff transferred a total sum of approximately RM650,000.00 to the defendant's company, Samdo Smart Solar (M) Sdn Bhd These transfers were executed through multiple transactions. A portion of the funds was transferred directly to the company's account while the remaining amount was delivered in cash directly to the defendant.

[6] On 11 September 2019, the plaintiff together with his associate, Poobalasingam a/I Magalingam ("Poobalasingam"), were formally appointed as directors of the Company. Despite holding directorship positions, neither the plaintiff nor Poobalasingam were allotted any shares in the company. Furthermore, they did not receive any salaries, director's fees, profits, or financial returns of any kind during their tenure as directors.

[7] Approximately one year after their appointment, the plaintiff and Poobalasingam mutually agreed to resign from their positions as directors of the company. This decision was made following the receipt of a partial repayment amounting to RM210,000.00 from the defendant. It was expressly agreed that the remaining balance of RM450,000.00 would be repaid by the defendant at a later date.

[8] Subsequent to discussions between the parties, a Deed of Settlement dated 20 October 2020 ("DOS") was executed. The document was drafted by En Mazhar bin Abdul Malek ("Mazhar"), an advocate and solicitor. The DOS explicitly formalized the defendant's obligation to repay the outstanding sum of RM450,000.00 within a period of twelve months. It further provided for a possible extension of an additional twelve months subject to the sole discretion of the plaintiff.

[9] When the defendant defaulted on his repayment obligation under the DOS, the plaintiff through his solicitor issued demand letters dated 6 April 2022 and 10 May 2022. Despite these demands, the defendant failed to remedy his default. As a result of the defendant's continued non-compliance, the plaintiff commenced legal proceedings in the Sessions court to recover the outstanding sum.

Analysis And Findings

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