AT GLOVE ENGINEERING SDN BHD v 1. ) HAI HONG CAPITAL SDN BHD 2. ) P'NG SIM GUAN 3. ) P'NG LAI HENG 4. ) HAI HONG HOLDINGS SDN BHD 5. ) AARON KHOO TENG SOON

Case Significance

Applies the burden-of-proof principles under sections 101–106 of the Evidence Act 1950 (per Dr Shanmuganathan v Periasamy) to a contested Share Sale Agreement, holding the agreement validly terminated by the buyer and ordering the vendors to refund the deposit.

This High Court (Pulau Pinang) decision follows a full trial of a claim and counterclaim arising from a Share Sale Agreement. The plaintiff, a subsidiary of a listed company, sued in respect of the termination of a Share Sale Agreement (SSA) concerning the shares of a glove-manufacturing company, the defendants being shareholders of that company. The main issue the court identified for determination was whether the SSA had been validly terminated by the plaintiff, with the related issues addressed as they arose.

At the outset the court reminded itself of the principle that he who asserts must prove, so that the plaintiff bore the legal and evidential burden to establish, on a balance of probabilities, a prima facie case against the defendants, the onus shifting to the defendants only once that burden was discharged. It cited the Federal Court's exposition in Dr Shanmuganathan v Periasamy s/o Sithambaram Pillai on sections 101, 102, 103 and 106 of the Evidence Act 1950, under which the party who would fail if no evidence were given bears the burden, and the burden as to a particular fact lies on the party wishing the court to believe in its existence, with facts especially within a person's knowledge to be proved by that person.

On the background facts, the acquiring group had conveyed its interest in acquiring the shares of the glove company to certain of the defendants at a meeting in June 2020. Having considered the evidence and submissions in their entirety, the court found on the balance of probabilities in favour of the plaintiff. It examined the termination provisions of the SSA, in particular the clause setting out the consequences of termination, under which the vendors were to return the deposit together with part payment of advances and moneys received. In the result the court allowed the plaintiff's claim, including a declaration that the SSA was validly terminated by the plaintiff and an order that the defendants refund the deposit paid. The judgment illustrates the application of the burden-of-proof principles to a contested share-sale termination.