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2025 MarsdenLR 5829
HIGH COURT MALAYA PULAU PINANG
TAN LENG KEAT – Appellant
Versus
TAN YUNG QUAN & ORS AND ANOTHER CASE – Respondent
[Civil Suit No: PA-22NCVC-136-08/2018 & PA-22NCVC-122-04/2019]
The transfer of shares by an individual lacking mental capacity due to dementia, procured by undue influence, is considered null and void under the Contracts Act.
Headnote:(A) Contracts Act 1950 - Sections 14, 16, and 17 - Evidence Act 1950 - Section 103 - Transfer of shares - Plaintiff claims transfer of deceased shares in KMSB to D1 was invalid due to incapacity and undue influence. Court finds deceased lacked mental capacity and was subjected to undue influence, rendering the transfer null and void. (Paras 2, 14, 20-23, 46)
(B) Proof of mental capacity - Burden of proof lies on the Plaintiff to establish the deceased's incapacity at the time of transfer. The standard of proof required in civil cases is on balance of probabilities. (Paras 24-25, 32)
(C) Fraud - Evidence of fraud not established due to failure to call key witness. (Paras 44-45)
(D) Res Judicata - Previous claims barred, but the current suit addresses the validity of the share transfer. (Paras 20-21)
| Table of Content |
|---|
| 1. consolidation of suits and plaintiff's claims. (Para 1 , 2 , 4) |
| 2. plaintiff's intentions and actions regarding shares. (Para 3 , 5 , 13) |
| 3. details of transfer and alleged fraud. (Para 6 , 7 , 8 , 9) |
| 4. valuation and alleged loss due to fraud. (Para 10 , 11) |
| 5. deceased's mental capacity and undue influence. (Para 12 , 14) |
| 6. defendant's arguments and counterclaims. (Para 15 , 16 , 18) |
| 7. issues of res judicata and mental capacity. (Para 20 , 21 , 22) |
| 8. burden of proof regarding mental capacity. (Para 23 , 24 , 25) |
| 9. expert testimony and its implications. (Para 26 , 27 , 28 , 29) |
| 10. conclusion on the mental incapacity factor. (Para 30 , 31 , 32) |
| 11. standard of proof regarding fraud. (Para 33 , 34) |
| 12. arguments against allegations of fraud. (Para 36 , 37) |
| 13. chronology of events and transfer details. (Para 38 , 39 , 40) |
| 14. undue influence findings and implications. (Para 41 , 42 , 43) |
| 15. conclusion on fraud allegations and dismissal. (Para 44 , 45) |
| 16. final judgment and declarations. (Para 46) |
[1] These two suits; PA-22NCVC-136-08/2018 and PA-22NCVC-122-04/2019 were consolidated and heard together. For ease of convenient, the Defendants in both suits will be referred to their names; Tan Yung Quan as D1, See Hong Ngo @ Chee Kwan Fong as D2 in suit PA-22NCVC-136-08/2018 and Tan Joo Leng as D3 and Ooi Yoong Yoong as D4 in suit PA-22NCVC-122-04/2019.
[2] The Plaintiff, is suing the Defendants in his capacity as the executor of his deceased mother Wong Kuan Hoh @ Wong Kuan Lan, (deceased) seeking for a declaratory relief with regard to the validity of the transfer and/or sale of the deceased's shares in Kayangan Mutiara Sdn Bhd (KMSB) to D1. The Plaintiff claims that the transfer and/or sale of the shares of 335,000.00 are null and void on the grounds that the deceased had no or insufficient mental capacity at the time of the deceased signing the transfer of the shares in question. Further the Plaintiff claimed that the transfer and/or sale of the shares was procured by means of fraud and/or undue influence.
[3] The Plaintiff's prayed inter alia, the return of 335,000.00 shares which is equivalent to 33.5% owned by the deceased to be transferred back by D1 to the Plaintiff within 14 days from the date of Judgment or alternatively the Defendants to the value of 33.5% shares inclusive of the assets. The Plaintiff has abandoned his claims in para 25 (b) and (c) of his Amended Statement of Claim.
B. Background Of The Case
[4] Around early June 2014, Wong Kuan Hoh @ Wong Kuan Lan (the deceased) informed the Plaintiff of his intention and desire to transfer 335,000.00 shares owned by him (equivalent to 33.5% of the shares of Kayangan Mutiara Sdn Bhd) to the Plaintiff, who is the only biological child of the deceased. On 30 June 2014, the deceased was diagnosed by a medical specialist from KPJ Selangor Specialist Hospital with Dementia Secondary to Alzheimer's Disease.
[5] On the morning of 12 September 2014, the Plaintiff instructed his friend, Gan Kheng Chuah, to deliver a letter ("the Letter") signed by the Deceased, which was addressed to the Secretary of the Company. The letter stated the Deceased's intention to transfer all of his shares and directorship to the Plaintiff.
[6] On the late morning of 12 September 2024, an Extraordinary General Meeting ('EGM') was held by the board members. At that time, the deceased was still a director and shareholder of the company, but the deceased was not informed about the Extraordinary General Meeting. In this EGM, the deceased was removed as an authorized signatory for all the company's bank accounts and also for the change of the company's bank account details, without the knowledge or approval of the deceased. After the Extraordinary General Meeting, at around 12:00 pm, after the D4, as the secretary of the company received the letter, D1, D2 and D3, jointly and/or separately, hurried to the deceased's house and, through fraudulent means/undue influence, deceived the
