PUTRAJAYA, Monday 6 September 2010 (Bernama) -- UEM (Group) Bhd has won its appeal to set aside a court decision in ordering the government-linked company to buy out all 49% shares of its joint-venture company with its Singapore partner involving RM81 million.

Justice Datuk Seri Md Raus Shariff, leading a three-man Federal Court panel, ruled that the Court of Appeal was in error when it ordered the buy-out of the shares held by Genisys Integrated Engineers Pte Ltd (GIE) in order to avoid a deadlock.

The panel, which also comprised of Justices Datuk Abdull Hamid Embong and Datuk Heliliah Yusof, restored the High Court's decision which had favoured UEM, by ordering that the joint-venture company, UEM Genisys Sdn Bhd (UEG), be wound up.

In allowing UEM's appeal, Md Raus said the panel was of the view that the Court of Appeal's decision, in wanting to do "complete justice", was in fact doing the opposite.

"It has done a complete injustice to UEM. The consequential orders (made by the Court of Appeal) were such that they were not sought for and yet astonishingly granted. The total effect of the orders was tantamount to unjust enrichment," he said.

Raus said the appellate court, in giving effect to the buy-out order and adopting the valuation of a valuer which valued UEG at approximately RM81 million, had failed to consider the evidence of GIE's managing director and majority shareholder, Seow Boon Cheng, that UEG did not have any cash balance left in its bank account and that it did not have money to pay its creditors.

"Obviously, a buy-out of UEG's shares is not a viable option. UEG, as rightly found by the trial judge, was insolvent," he said.

UEM, a leading infrastructure conglomerate in Malaysia, held 51% equity in UEG which was formed in 1993, specialising in mechanical and electrical engineering, while Genisys Integrated held the remaining 49%.

However, litigations were commenced in 2000 and 2001 after the joint venture went wrong in mid-1998 following total breakdown of relations between both companies.

In 2008, the High Court made the winding-up order after ruling that there was an act of oppression by GIE but the decision was reversed by the Court of Appeal in the same year, replacing it with consequential order of shares buy-out after recognising that there was a deadlock between the partners.

In his 37-page judgment, Raus also said the findings of the trial judge that Seow, the only witness of GIE, was not a credibile witness and that his evidence was bristled with inconsistencies and half truth, were supported by cogent reasons.

The appellate court, he said, fell into error when it relied on selective documents to indirectly reinstate Seow as a credible witness, without assigning any reason for doing so.

He also said a "disturbing feature" of the judgment of the Court of Appeal was that, it had relied on some disputed documents, which had been challenged at the trial, as the basis of reversing the finding of facts of the trial judge.

"Speaking on appellate intervention, we feel a need to remind that a trial judge has the advantage over an appellate court in hearing witness and observing is demeanour.

"Thus, a finding on a witness's credibility based on his demeanour is a personal opinion of a trial judge who had the audio-visual advantage of the performance of witnesses. It should not, ordinarily be disturbed at the appellate stage," he said.

In a press release, UEM Group Managing Director and Chief Executive Officer Datuk Izzaddin Idris said, "This is the most important decision for UEM Group throughout the entire case as it validates our position".

"Following the court's decision, we can finally put this case to rest and continue to focus on strengthening the operations and business direction of the Group."

GIE, in a press statement distributed to the media after the verdict, said the Federal Court's decision to allow the appeal did not resolve the court dispute between both companies which spanned for more than 10 years.

Instead, the company claimed that the decision placed the two parties squarely back into a dispute which had started "because of UEM's blatant disregard for its joint-venture shareholders and partners."

In the statement, the company said it would examine the judgment and decide in due course on whether to seek a review.