This is a case : PANASONIC APPLIANCESAIR-CONDITIONINGPLAINTIFFS(MALAYSIA) SDNBHD

I need explain and to do presentation based on which my sir was highlighted in yellow colour but i dont understand this case. If anyone can means please give explanation for each sentences.

IN THE HIGH COURT OF MALAYA AT SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN, MALAYSIA CIVIL SUIT NO: BA-22NCV-161-03/2016 BETWEEN PANASONIC APPLIANCES AIR- CONDITIONING PLAINTIFFS (MALAYSIA) SDN BHD AND 1. TOP SQUARE SDN BHD DEFENDANTS [NO. SYKT: 359044-1] 2. VIJAYAN A/L MUNIANDY [NO. K/P: 620802-08-5657] 3. SARASPATHY A/P ELHUMALAY [NO. K/P: 630506-08-5416] 4. HALIMI BIN MOHAMAD [NO. K/P: 750925-05-5189] 5. NOOR AZLINDA BINTI ZAINUDDIN [NO. K/P: 801219-11-5669] 6. MUAAZ BIN HASHIM [NO. K/P: 900810-10-5669] 7. MAULANA BIN HASHIM [NO. K/P: 900810-10-5677] 8. GANAPRAKASH A/L VIJAYAN [NO. K/P: 921104-10-6173] ANDJUDGMENT Introduction 1. On 18 October 2019, the Court of Appeal ordered this case to be retried due to the unavailability of the grounds of judgment of the previous High Court Judge who had retired. 2. The action arises from false invoices that were issued by Top Square Sdo Bhd ("the first defendant") to Panasonic Appliances Air-Conditioning Malaysia Son Bhd ("the plaintiff"). When the falsification of the invoices came to the knowledge of the plaintiff, it instituted this action to recover the monies paid under the false invoices from the first defendant and its directors, the second to the eighth defendants. The defendants then applied to join the General Manager of the plaintiff and three others as third parties to the suit. The Parties 3. The plaintiff is a company involved in the business of manufacturing air conditioners for export.8. Sometime in 2014, Data Shan left the plaintiff's employment. The plaintiff then discovered discrepancies in the invoices issued by the first defendant, and appointed Price Waterhouse Coppers ("PWC") to prepare an investigation report. By letter dated 18 August 2014, the plaintiff terminated the first defendant's appointment .as its freight forwarder on the ground that the latter had defrauded it by submitting false claims and false documents. The first defendant, however, did not respond to the letter. 9. In March 2016, the plaintiff instituted this action against the defendants to recover the monies paid on the subject invoices, and the latter commenced third party proceedings to seek indemnity in the event they are found liable to the plaintiff. The action was subsequently set down for trial and witnesses were called. 10. After hearing submissions, on 17 May 2017, the previous High Court judge had allowed the plaintiff's claim and dismissed the defendants third party claim. The defendants appealed and a retrial of the action was ordered by the Court of Appeal. The case was subsequently called up before me for case management. 11. Counsel for both the plaintiff and third parties orally applied for the evidence recorded by the previous judge to be adopted and that I arrive at a decision on the said evidence in view of the fact the defendants had admitted in their defence that the subject invoices were false in that no services had been rendered to the plaintiff. The defendants did not support the application on the ground that theyinvoices. The plaintiff also founded its claim to recover the monies on the basis of breach of fiduciary duty, unjust enrichment, restitution and knowing receipt. 15. It was also the plaintiff's case that the directors of the first defendant were also personally liable for the fraud committed by the first defendant - under common law by lifting the corporate veil and under section 304 of the Companies Act 1965. Case for the defendants 16. In its defence, the first defendant acknowledged that the subject invoices were false, but pleaded that they were all issued to the plaintiff on Dato Shan's instructions. The first defendant pleaded that it was not liable as it had acted on Dato Shan's instructions and had no intention to defraud the plaintiff. It was further pleaded that Dato Shan had falsely represented that the plaintiff needed the invoices for the tax management scheme of its excess funds. Dato Shan had explained that this scheme was to be executed by channeling the monies paid to the first defendant under the subject invoices to the plaintiff's associated company, MMG. 17. It was the defence of the directors of the first defendant that they were not liable as it was Gana (4], supra) who was solely responsible for the management and operation of the first defendant at the material time. They were not aware of theplaintiff but to ensure that Data Shan would not carry out his threat to terminate its contract with the plaintiff. 31. I turn now to address the other issues raised in this case. Whether the first defendant had committed fraud on the plaintiff 32. Following the Court of Appeal's decision in Yeohata Machineries v Coil Master [2015] 6 MLJ 810, in order to succeed on a claim predicated on fraud, the plaintiff must prove: (a) a representation of fact made by words or conduct; such representation must have been made with the knowledge that it was false, or without any genuine belief that it was true; (C) the representation must have been made with the intention that it should be acted upon by the plaintiff; (d) the plaintiff had acted upon the false representation; and (e) the plaintiff suffered damage by acting upon the false representation. 33. The issue of standard of proof in finding fraud in civil cases found a resting place in Sinnaiyah v Damai Setia [2015] 7 CLJ 584, where the Federal Court held:"With respect, we are inclined to agree with learned counsel for the plaintiff that the correct principle to apply is as explained in In re B (Children) (supra). It is this: that at law there are only two standards of proof, namely, beyond reasonable doubt for criminal cases while it is on the balance of probabilities for civil cases. As such even if fraud is the subject in a civil claim the standard of proof is on the balance of probabilities. There is no third standard. And "(Njeither the seriousness of the allegation nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts. Hence, it is therefore up to the presiding judge, after hearing and considering the evidence adduced as being done in any other civil claim to find whether the standard of proof has been attained. "The inherent probabilities are simply something to be taken into account, where relevant, in deciding where the truth lies". The criminal aspect of the allegation of fraud and the standard of proof required thereof should be irrelevant in the deliberation." See also Md Hilmi bin Md Noor & Anor (suing in their personal capacities and as administrators for the deceased, Md Noor bin Mohamed) v Azman bin Ahmad & Qrs [2016] 6 MLJ 205 (CA) 34. Coming back to the instant case. Counsel for the first defendant contended that no fraud had been committed by first defendant as the subject invoices were issued on the instructions of Dato Shan to assist the plaintiff. There was absent any intention to deceive or cause harm to the plaintiff. As I have found in [30] above, the first defendant had issued the subject invoices not to help the plaintiffOther causes of action 38. As noted earlier at [14], the plaintiff's claim is also based on other causes of action. a. Breach of fiduciary duty 39. It being common ground that the first defendant was the plaintiff's forwarding agent, it could not be gainsaid that the first defendant had acted in breach of its fiduciary duty as agent of the plaintiff by receiving payments under the subject invoices despite knowing no services had been rendered. The first defendant is therefore liable to account to the plaintiff for the gains made out of breach of fiduciary duty. b. Knowing receipt 40. I also find that by knowingly receiving the monies made from breach of fiduciary duty, the first defendant becomes a constructive trustee over the same and is liable to account to the plaintiff. c. Unjust enrichment and restitution 41. Equally, on the facts, it is undisputable that the first defendant had unjustly enriched itself at the plaintiff's expense by receiving the monies when no services had been rendered.42. I therefore find that the plaintiff's claim against the first defendant in respect of all the causes of action pleaded in its pleading, to wit, breach of fiduciary duty, knowing receipt and unjust enrichment have been established. Whether directors of D1 are liable for the fraud committed by D1 43. That brings me to the second issue. It is trite that a company is nothing but an association of persons, who are its beneficiaries, governed by the directors and shareholders of the company. Thus, oftentimes situations arise, when these beneficiaries try to misuse this veil and in such situations the corporate veil of separate legal entity of the company has to be removed and the members of the company are made liable directly. 44. It is settled law that the company alone is liable for all the acts done and the debts incurred by it and not the directors or the shareholders who are in fact the beneficial owners of the company. But a company is not capable of doing any act itself, and the business is always carried on by individuals. Piercing the corporate veil is one of the most widely used concepts to attribute liability to that person who has misused or abused the principle of corporate personality. See Ahmad Zahri bin Mirza Abdul Hamid v AIMS Cyberjaya Sdo Bbd [2020] 5 MLJ 58 [FC]. 45. The plaintiff seeks to make the directors liable by lifting the corporate veil to hold them accountable for the fraudulent acts of the first defendant. They rely on twogrounds - (a) common law and (b) section 304(1) of the Act of the Companies ACI '1905. [a) Common Law 46. I take ground (a) first. The two off quoted cases on the subject are Gilford Motor Company Ltd v Home [1933] All ER Rep 109 and Jones v. Lipman [1962] 1 All EK 442 47. In the Gilford Motor case, Mr. Home was an ex-employee of The Gilford motor company and his employment contract provided that he could not solicit the customers of the company. In order to defeat this, he incorporated a limited company in his wife's name and solicited the customers of the company. The company brought an action against him. The Court of Appeal was of the view that if a company is formed only for the purpose of carrying on an activity which a person would otherwise be barred for doing or as a mere sham to cloak his wrongdoings, then the corporate veil could be lifted. f Jones v Lipman, the defendant contracted to sell his land to the plaintiff and thereafter changed his mind, and in order to avoid an order of specific performance, he transferred his property to a company. The plaintiff brought a suit of specific performance against the defendant. The court in this case lifted the corporate veil and ordered specific performance both against the defendant and the company. The Court held that the company here was a "maskwhich (Mr. Lipman) held before his face in an attempt to avoid recognition by the eye of equity"- 49 The principle enunciated in the two cases quoted in the preceding paragraphs has been applied in numerous Malaysian cases. In Jakako Sakao v Ng Pek Yuen [2010] 1 CLJ 381, the appellant, a Japanese citizen and the first respondent were business partners in a restaurant and decided to acquire a property. In which they operated their restaurant business. I he appellant contobuted to the purchase price. I he first respondent purchased the property and registered it in her sole name. Thereafter the first respondent sold the property to the second respondent company. The appellant then commenced proceedings against the respondents to establish that she was the beneficial owner of the property. The Federal Court in allowing the appellant's claim explained at [23] and [27]: "A more recent statement of the doctrine of corporate personality is to be found in the case of Woolfson V Strathclyde Regional Council 1978 SLT 159 which is authority for the proposition that a litigant who seeks the court's intervention to pierce the corporate veil must establish special circumstances showing that the company in question is a mere facade concealing the true facts.So here. The first respondent sold and transferred trust property to the second respondent which was a device and a sham, a mask which the first respondent's husband held before his face in an attempt to avoid recognition by the eye of equity. Accordingly, this is a case in which there are special circumstances showing that the second respondent company is a mere facade concealing the true tacts. The trial judge was therefore correct in holding the second respondent accountable to the appellant for the trust property..." 50. A more recent statement of the doctrine of corporate personality is to be found in the decision of the Court of Appeal in Tenaga Nasional Berhad v Icham Niaga Sdo Bbd [2015] MLJU 2165. In this case, the Court cited with approval the judgment of the Supreme Court of United Kingdom in VTB Capital Plc v Nutritek International Corp [2013] UKSC 5 wherein the latter went to substantially restate the English company law position in relation to piercing of the corporate veil. 51. It would be useful to briefly deal with the facts in VTB Capital case. There the plaintiff, VTB Capital, took the position that it had been induced into entering a $225m loan agreement on the basis of fraudulent misrepresentations by a Russian businessman, Mr Konstantin Malofeey, who was said to be the ultimate owner of both the borrower/purchase (RAP LLC, a Russian company) and the vendorinsolvent, VIB sought permission to sue Mr Malotrey, Nurinter and other alleged group companies for deceit and conspiracy. VTB also applied to pierce the corporate veil and include a claim against the defendants for damages for breach of contract, alleging that Malofees used RAP as a puppet company to orchestrate the fraud. VTB was unsuccessful and appealed to the Supreme Court. 52. The Supreme Court was asked to decide whether the corporate veil could be lifted in order to hold the person controlling the company liable, as if he had been a co- contracting party with the company concerned, to a contract where the company was a party but he was not, and where neither he nor any of the contracting parties intended him to be. The Court concluded that it would be contrary to existing authority or principle to pierce the veil in this way and that the corporate veil can only be pierced if there is some "impropriety" and the impropriety must be linked to the use of the company structure to avoid or conceal liability. 53. The Court of Appeal in Tenaga Nasional Berhad v Icham Niaga ([50] supra) concluded after examining VTB Capital and the other cases on the subject: "Having examined the authorities cited before us, we were of the considered view that the principles of law on the lifting of the corporate veil as set out in those authorities could be distilled into the following:Alcatel Lucent Malaysia Sdo Rbd [2014] 3 CLJ 713 [FC] and Lam Kam Loy v Boltex Sdo Bhd [2005] 3 CLJ 355 [CA]. 56. Following from the decisions of the Federal Court on the subject of doctrine of corporate personality, I accept the submission advanced by the plaintiff. In light of the foregoing. I find that the plaintiff is entitled to pierce the corporate veil of the (b) Section 304 Companies Act 57. In the event, I am wrong. it bebowes me to next look at ground (b). The plaintiff contends that the directors should be held personally liable under section 304 of the Companies Act as they had carried on the business of the company with intention to defraud the plaintiff as the company's creditor. 58. Section 304(1) of the Companies Act 1065 provides: "If in the course of the winding up of a company or in any proceedings against a company it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the Court on the application of the liquidator or any creditor or contributory of the company may if it thinks proper so to do declare that any person whowas knowingly a party to the carrying on of the business in that manner shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court directs." 59. In Chin Chee Keong v Toling Corporation (M) Sdo Bbd [2016] 6 CLJ 666, the Court of Appeal explained the scope of section 304 at [17] and [20] as follows: The primary object behind s. 304(1) of the Act is to statutorily provide for the lifting of the veil of incorporation in the specific circumstances of fraudulent trading with a view to ultimately pinning personal accountability and liability on the directing minds behind such trading of the company. .. affords the creditor of the company a civil remedy against such persons. The applicable standard of proof for a statutory claim under s. 304(1) is on a balance of probabilities. The term "if it appears' is deployed in the provision and this clearly indicates that a lower degree of proof is required. That lower degree of proof is on a balance of probabilities."30. To successfully rely on s.304(1), the plaintiff must prove the following elements: () that the business of the first defendant was carried out 'with intent to defraud creditors or for any fraudulent purpose); (b) that the directors were knowingly a party to the carrying on of the business in that manner within the meaning of section 304(1). 31. In view of my finding at [34] and [35] that the first defendant had issued the subject invoices to defraud the plaintiff (e creditor of the first defendant). element (9) has been proven. 82. As for the second element, Gana admitted and acknowledged that he was responsible for the issuance of the subject invoices to the plaintiff. As for the other directors, it was their pleaded defence that they were not privy to the fraud committed by the first defendant and Gana. It is trite that the legal burden of proving an allegation lies on the party asserting the allegation. In other words, where a given allegation forms an essential part of a party's case or defence, the proof of the allegation rests on him. The burden was therefore on the directors.. to show that they played no role in the management and operation of the first defendant and were not privy or complicit to the fraud in order to make good their defence. But, for reasons not disclosed, the other directors chose not to give evidence. By electing not to give evidence, it would follow that an adversestatutory provision to expect nothing less from its directors. Gone are the days when a company director can be heard to say that he was a sleeping director and expect to escape liability. His duty may appear onerous but that is to be expected as he is part of the alter ego of the company. He is a fiduciary, a trustee. It is not his business to act like a roque, much less to act to the detriment of the company." 86. In the premises, I find that Gana and the other directors were knowingly parties to the first defendant operating or carrying on business with intent to defraud the plaintiff, a creditor of the first defendant. In the circumstances, the plaintiff is also entitled to rely on section 304 to seek the corporate veil of the first defendant be lifted to make (Gana and the other directors personally liable on the plaintiff's claim in this action. Third party action 37. The defendants claim for indemnity is based on the allegation that all the transactions complained of were carried out pursuant to the oral instructions and/or "understanding" of Dato Shan. Deto Shan had told them to act as they did and, therefore, was under an obligation to indemnify them for the consequences. The defendants also seek an order for the court to lift the corporate veil of MMG to make Deto Shan and his sister liable