KOPERASI MUTIARA NEGERI SEMBILAN BERHAD v Rabinder Kaur a/p Ranjit Singh (WA-22NCvC-605-10/2025)

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR FEDERAL TERRITORY OF KUALA LUMPUR, MALAYSIA CIVIL SUIT NO: WA-22NCVC-605-10/2025 BETWEEN

1. KOPERASI MUTIARA NEGERI SEMBILAN BERHAD (KOOP NO: 70)

2. TETUAN MUTHU & PARTNERS ... PLAINTIFFS AND

1. RABINDER KAUR A/P RANJIT SINGH (NRIC NO: 611210-10-5912)

2. JETINDER SINGH A/L RANJIT SINGH (NRIC NO: 761004-14-6565)

3. JAGJEET SINGH S/O RANJIT SINGH (NRIC NO: 650328-14-5065) All Advocates & Solicitors of the High Court of Malaya practising law under the name and style of MESSRS SALEEM GILL & PARTNERS as a partnership ... DEFENDANTS 04/06/2026 10:39:10 WA-22NCvC-605-10/2025 Kand. 54 **Note : Serial number will be used to verify the originality of this document via eFILING portal GROUNDS OF JUDGMENT Introduction

1. In the ordinary course of conveyancing, a solicitor entrusted with stakeholder funds stands as a sentinel between the contracting parties. Such a solicitor stands, as it were, between the contracting parties as a neutral custodian of their bargain, holding the funds in medio, beyond the reach of either party, until the contractual conditions governing their release have been satisfied or until both principals jointly direct otherwise. The role is not merely administrative, it is fiduciary in character, underpinned by the fundamental expectation that the stakeholder will adhere strictly to the terms upon which the money was entrusted to him.

2. The present dispute arises from an alleged departure from that path of duty. What commenced as a proposed purchase of land gradually unravelled into a far more troubling narrative. The plaintiffs describe a transaction that, instead of progressing towards completion, became entangled in allegations of deception, undisclosed moneylending arrangements, and the unexplained dissipation of substantial stakeholder funds.

3. The plaintiffs are Koperasi Mutiara Negeri Sembilan Berhad (“the first plaintiff”) and its solicitors, Tetuan Muthu & Partners (“the second plaintiff”). They now seek summary judgment against the defendants, a firm of solicitors, for the return of the sum of RM800,000. The plaintiffs’ claim is straightforward. The defendants, having received the sum in their capacity as stakeholders pursuant **Note : Serial number will be used to verify the originality of this document via eFILING portal to the contemplated land transaction, are said to have released the money to a third party without the requisite authority or consent. In doing so, the plaintiffs contend that the defendants committed a breach of trust. Matters are said to have been compounded when the defendants thereafter furnished a solicitor’s undertaking to repay the sum but failed to honour that undertaking.

4. The application before this Court is brought under Order 14 of the Rules of Court 2012, a procedural mechanism designed to prevent defendants from delaying judgment where no genuine defence exists. Order 14 rule 1(1) empowers a plaintiff to apply for judgment where a defendant has no defence to a claim. The jurisdiction is, however, exceptional and must be exercised with caution. As the Federal Court held in National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 1 CLJ Rep 283: “...We think it appropriate to remind ourselves once again that in every application under O.14 the first considerations are (a) whether the case comes within the Order and (b) whether the plaintiff has satisfied the preliminary requirements for proceeding under O. 14. For the purposes of an application under O. 14 the preliminary requirements are:

(ii) the statement of claim must have been served on the defendant; and

(iii) the affidavit in support of the application must comply with the requirements of r. 2 of the O. 14. It is to be observed that a case is not within O. 14: (a) where no statement of claim has been served on the defendant; (b) where the indorsement on the writ includes a claim or claims outside the scope of O. 14 as coming within r. 1(2); (c) where the affidavit in support of the application is defective, **Note : Serial number will be used to verify the originality of this document via eFILING portal e.g. in omitting to state the deponent's belief that there is no defence to the claim or part to which the application relates; (d) where the application is made in an action against the Government [O. 73 r. 5(1) ]. If the plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If however, these considerations are satisfied, the plaintiff will have established a prima facie case and he comes entitled to judgment. The burden then shifts to the defendant to satisfy the Court why judgment should not be given against him [see O. 14 r. 3 and 4(1)].” [Emphasis is mine]

5. It follows that the Court’s inquiry proceeds in two stages. First, the Court must be satisfied that the action properly falls within Order 14 and that the procedural prerequisites have been strictly complied with. Absent compliance, the application is liable to fail at the threshold. Where, however, those requirements are met, the plaintiff establishes a prima facie entitlement to judgment, and the evidential burden shifts to the defendant.

6. At that second stage, the defendant must demonstrate that there is “an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of that claim” within the meaning of Order 14 rule 3. The scope of that inquiry has been authoritatively explained by the Court of Appeal in ES HVAC Sdn Bhd v Miracle Asset Builder Sdn Bhd [2019] 3 MLJ 485: “[12] Now, the law with respect to summary judgment is fairly trite. The general rule is that a plaintiff must prove its case in a trial. The O 14 jurisdiction is only to be exercised in very clear cases. The intention was **Note : Serial number will be used to verify the originality of this document via eFILING portal not to shut out defendants from their day in court (see Malayan Insurance

7. Thus, the Court’s task at this stage is not to conduct a mini-trial or to determine disputed questions of fact. Rather, it is to assess whether the defence raised is bona fide and raises a real triable issue, or whether there exist circumstances which, in fairness, warrant investigation at a trial. A defence which is shadowy, implausible, or advanced merely to delay the inevitable will not suffice. Conversely, where the material discloses a genuine issue calling for judicial determination, the defendant must not be shut out from his day in Court.

8. The present application therefore raises a singular piercing question, where the contractual terms of stakeholding are clear, and a solicitor admits to releasing funds contrary to those terms on the unilateral instruction of one party, does a triable issue exist? Or is **Note : Serial number will be used to verify the originality of this document via eFILING portal the remedy at law so plain that the defendants must answer judgment now? Background Facts

9. The dispute finds its genesis in a proposed conveyancing transaction embodied in a sale and purchase agreement dated 18 April 2025 (“the SPA”). By that instrument, the vendors, Chong Ah Chin and Yap Hui Leng (“the Vendors”), agreed to sell to the first plaintiff a parcel of land situated in Ulu Yam, Selangor (“the Land”) for a purchase price of RM1,200,000. The defendants, practising under the name and style of Tetuan Saleem Gill & Partners, acted as solicitors for the Vendors in the transaction.

10. On 17 April 2025, the defendants received from the first plaintiff a cheque in the sum of RM800,000, in respect of which a client account receipt dated 7 May 2025 was subsequently issued. This substantial remittance comprised the contractual deposit together with a further part payment of the purchase price. The SPA made careful provision for the custody of these monies. Clause 1.2 stipulated, in clear and unmistakable terms, that the sum was to be paid to the Vendors’ solicitors “as stakeholders… on the express undertaking given by the Vendor’s Solicitors to hold the same and release in accordance with Clause 7.1 herein.” The legal character of the payment was therefore neither ambiguous nor provisional. The defendants were to hold the money strictly as stakeholders pending the fulfilment of the contractual conditions governing its release. **Note : Serial number will be used to verify the originality of this document via eFILING portal

11. Clause 7.1 of the SPA prescribed a carefully structured mechanism, for the disbursement of the stakeholder funds. The clause permitted the release of monies in a specified order of priority. First, to the Vendors’ financier in redemption of any encumbrance; secondly, towards statutory outgoings and necessary professional fees; and finally, upon completion of the transaction, the balance to the Vendors themselves. The clause was evidently designed to ensure that the stakeholder funds would only be deployed in furtherance of the transaction and in accordance with the contractual bargain struck between the parties.

12. Events, however, soon departed from that carefully drawn agreement. Between May and June 2025, the entire sum of RM800,000 had been released by the defendants. The plaintiffs aver, and the defendants themselves acknowledge in their pleadings, that the funds were paid to a company known as JN Teguh Capital Sdn Bhd (“JN Teguh”). The defendants maintain that the release was effected pursuant to letters of instruction dated 17 April 2025 and 5 May 2025 issued by the Vendors. Yet the SPA itself casts an immediate shadow over that explanation. The first schedule of the SPA expressly recorded the Vendors’ financier as “NIL”. On the face of the contractual documents, therefore, no financier existed to whom redemption monies were payable.

13. Matters took a more dramatic turn in June 2025. A new firm of solicitors, Messrs JP Chong & Co, surfaced on the scene purporting to act for the Vendors. By letters dated 26 June 2025 and 17 July 2025, the Vendors disavowed the transaction altogether. They asserted that they had never signed the SPA and alleged that the **Note : Serial number will be used to verify the originality of this document via eFILING portal entire arrangement was tainted by fraud. Of particular significance was their claim that they remained in possession of the original issue document of title to the Land, a document which, in the ordinary course of conveyancing, would typically have been deposited with the Vendors’ solicitors had the transaction been proceeding in a regular fashion.

14. Confronted with these developments and the apparent collapse of the transaction, the defendants sought to address the situation through the professional undertakings. The sequence of these undertakings assumes importance and must therefore be recorded with some precision.

15. First, the first defendant issued a solicitor’s letter of undertaking dated 9 July 2025. The undertaking provided as follows: “We, hereby undertake and confirm that the sum of Ringgit Malaysia Eight Hundred Thousand (RM800,000.00) only will be refunded to you on or before 31 July 2025. A further sum of RM150,000.00 representing costs and damages will also be reimbursed to you on or before that date. This undertaking is given in good faith and with the understanding that the refund will be made promptly once the funds are received by us from Vendor and/or nominee.” [Emphasis is mine]

16. The plaintiffs, acting through the second plaintiff, found the initial undertaking unsatisfactory. Their concern was directed at the conditional language which appeared to tie repayment to the receipt **Note : Serial number will be used to verify the originality of this document via eFILING portal of funds from the Vendors or their nominee. The plaintiffs therefore declined to accept the undertaking in that form.

17. In response, the first defendant issued a revised undertaking, also dated 9 July 2025. This revised undertaking was transmitted to the second plaintiff by email on 10 July 2025 at 10:17 a.m. The terms of the revised undertaking were as follows: “We, hereby undertake and confirm that the sum of Ringgit Malaysia Eight Hundred Thousand (RM800,000.00) only will be refunded to you on or before 31 July 2025. A further sum of RM150,000.00 representing costs and damages will also be reimbursed to you on or before that date. This undertaking is given in good faith and in consideration of you granting us time till 31 July 2025 to make the refund and payment.” [Emphasis is mine]

18. The significance of the revised undertaking lies in the removal of the earlier qualification tying repayment to the receipt of funds from the Vendors. In its revised form, the undertaking appeared, at least on its face, to be unconditional.

19. The deadline of 31 July 2025 passed without payment.

20. It is against this factual backdrop that the present application arises. The plaintiffs now seek summary judgment for the sum of RM800,000 together with the additional sum of RM150,000 promised in the undertaking. However, at the hearing, the learned counsel for the plaintiffs adopted a more measured course. He **Note : Serial number will be used to verify the originality of this document via eFILING portal indicated that the application would be confined to the recovery of the principal sum of RM800,000, leaving the claim for RM150,000 to be ventilated at trial.

21. The defendants resist the application. Their defence, broadly stated, is that the entire transaction was in truth a sham devised to settle gambling debts, that the plaintiffs’ solicitor, Mr Muthu, was aware of the true nature of the arrangement, and that the allegations of fraud surrounding the transaction render the matter unsuitable for summary determination. Plaintiffs’ Contention

22. The plaintiffs’ case is premised upon what they describe as two cardinal principles, namely the sanctity of the contractual stakeholding arrangement embodied in the SPA, and the inviolable nature of a solicitor’s professional undertaking. Their submission, expressed with some force, is that the present matter is not one of factual complexity but of legal clarity. Once the relevant contractual terms and admitted acts are placed side by side, they contend that the defendants’ liability emerges with unmistakable clarity.

23. First, the plaintiffs premise their argument in the express terms of the SPA. The defendants have admitted that the sum of RM800,000, entrusted to them as stakeholders, was released to JN Teguh. The plaintiffs submit that this admission, when read against clause 7.1 of the SPA, constitutes nothing less than a judicial admission of a breach of trust. The SPA, they emphasise, was explicit as to the permitted destinations of the stakeholder funds. The contractual **Note : Serial number will be used to verify the originality of this document via eFILING portal mechanism allowed payment first to the Vendors’ financier, thereafter to statutory outgoings and related expenses, and finally to the Vendors upon completion.

24. The SPA itself records, in the first schedule, that the Vendors’ financier was “NIL”. The plaintiffs therefore contend that the contractual architecture left no room for the defendants to release funds to any purported financier, let alone to a third-party company such as JN Teguh. On this footing, the payment to that entity, whatever the underlying explanation may be, fell wholly outside the four corners of the contract.

25. Further, the plaintiffs invoke the well-established legal principle governing stakeholder deposits. A stakeholder, they submit, holds the deposit in medio, neither for the vendor nor for the purchaser exclusively, but for both until the contractual conditions governing its release have been fulfilled. The consequence of that fiduciary position is that the stakeholder cannot, without the consent of both contracting parties, part with the money in a manner inconsistent with the agreed terms.

26. In support of that proposition, the plaintiffs rely on the decision in Toh Theam Hock v Kemajuan Perwira Management Corporation Sdn Bhd [1988] 1 MLJ 116, where it is contended that the court there held in unequivocable terms that a stakeholderstands in a position akin to that of a trustee for both parties and Is not at liberty to part with the deposit save in accordance with the terms of the contract or with the consent of both parties. **Note : Serial number will be used to verify the originality of this document via eFILING portal

27. The plaintiffs submit that the principle stated in that passage applies with full force to the present case. Once the RM800,000 was paid to the defendants as stakeholders, the defendants were bound to hold the sum in accordance with the contractual framework of the SPA. The unilateral instructions of the Vendors, it is argued, could not lawfully authorise a departure from those obligations.

28. Secondly, the plaintiffs’ place considerable reliance on the solicitor’s undertaking issued by the first defendant on 9 July 2025. While the initial undertaking contained language which appeared to qualify repayment upon the receipt of funds from the Vendors or their nominee, the revised undertaking, issued later the same day and transmitted on 10 July 2025, removed that qualification.

29. The plaintiffs submit that the revised undertaking amounted to a clear and unequivocal promise to repay the sum of RM800,000 by 31 July 2025. Such undertakings, they emphasise, occupy a special place in the administration of justice. The courts have consistently treated a solicitor’s undertaking not as a mere private promise but as a solemn professional obligation enforceable with rigour.

30. Against this background, the plaintiffs characterise the defendants’ present defence as a red herring from the true issues. The allegations that the transaction was a sham, or that it was connected with gambling debts, are said to be legally irrelevant to the defendants’ duties as stakeholder solicitors under the SPA and to their subsequent professional undertaking. Even if such allegations were assumed to be true for the sake of argument, the plaintiffs contend that they do not absolve the defendants from the strict **Note : Serial number will be used to verify the originality of this document via eFILING portal obligations they assumed when they accepted the RM800,000 as stakeholders and later undertook to repay it.

31. In the plaintiffs’ submission, therefore, the matter ultimately reduces to a straightforward proposition, that the defendants received the plaintiffs’ money as stakeholders under a written contract, released it in a manner inconsistent with that contract, and thereafter promised to refund it but failed to do so. On that footing, the plaintiffs argue that no triable issue arises and that judgment ought properly to be entered in their favour under Order 14. Defendants’ Contention

32. The defendants paint a starkly different picture, one that seeks to lift the veil of the formal contract to reveal a murkier reality beneath. They invite the Court to look beyond the written instrument and to examine what they describe as the true nature of the arrangement. According to the defendants, the SPA was not, in substance, a genuine agreement for the sale and purchase of land. Rather, it was said to be a contrivance, a legal facade designed to cloak what was in truth a moneylending arrangement intended to resolve the Vendors’ outstanding debts.

33. The defendants’ case is therefore premised upon the proposition that the transaction, from its very inception, was never intended to culminate in a conveyance of the Land. Instead, it was structured as a financial mechanism to generate funds for the Vendors, with the purported purchase price serving merely as a convenient framework through which the monies could be channelled. **Note : Serial number will be used to verify the originality of this document via eFILING portal

34. To support this account, the defendants rely principally on the affidavit evidence of two individuals, Manogaran a/l Munusamy (“Manogaran”) and Md Arfizal bin Md Ariffin (“Md Arfizal”). Through these affidavits, the defendants attempt to reconstruct the underlying narrative of the transaction and to demonstrate that the disbursement of the RM800,000 deposit was intimately connected to the Vendors’ pre-existing financial liabilities. More significantly, the defendants seek to implicate the second plaintiff in this alleged arrangement, asserting that the plaintiffs’ own solicitor was fully cognisant of the true nature of the scheme.

35. The defendants allege that, prior to the execution of the SPA, the Vendors had accumulated substantial gambling debts, purportedly amounting to RM600,000, owed to a moneylender known as “Max”. According to the defendants, the transaction in question was devised primarily to liquidate this debt. It is further asserted that the stated purchase price of RM1,200,000 was artificially inflated and bore little relation to the true market value of the Land. The defendants contend that the inflated price was deliberately chosen to generate sufficient liquidity to discharge the debts while simultaneously providing a margin for those who had facilitated the arrangement.

36. The mechanics of this alleged financial arrangement are said to have been orchestrated by Manogaran. On the defendants’ account, the RM800,000 paid by the first plaintiff was never intended to be retained as stakeholder funds pending completion of a genuine sale. Instead, the defendants assert that the monies were, from the **Note : Serial number will be used to verify the originality of this document via eFILING portal outset, earmarked for the settlement of the Vendors’ debts to the moneylenders.

37. In this regard, the defendants place reliance on the affidavit of Md Arfizal, who deposed that he had been instructed by Manogaran to withdraw the funds immediately upon their receipt. The breakdown of the disbursements, as described by the defendants’ witnesses, is said to reveal payments directed towards “Max” and certain members of his staff. These payments were allegedly made in exchange for the release of the original title deed to the Land. On this narrative, the payment to JN Teguh represented merely the final step in the settlement of the Vendors’ debts, a step which the defendants say they undertook pursuant to instructions from their clients, the Vendors.

38. Central to the defendants’ resistance to the present application is the alleged role played by Mr Muthuraman Muthu (“Mr Muthu”), a partner of the second plaintiff firm and, at the material time, the chairman of the first plaintiff. The defendants contend that the second plaintiff cannot properly present itself as an innocent stakeholder solicitor acting solely in the interests of its client. Rather, it is alleged that Mr Muthu was the directing mind and principal architect of the entire arrangement.

39. The defendants assert that Mr Muthu was actively involved in negotiating the terms of the alleged loan arrangement and was aware that the Vendors’ gambling debts, said to amount to RM600,000, needed to be discharged in order to secure the release of the title deed. On this basis, the defendants contend that Mr **Note : Serial number will be used to verify the originality of this document via eFILING portal Muthu knew that the defendants’ role was not that of a neutral stakeholder holding the deposit pending completion, but merely that of a conduit through which the funds would pass for the purpose of settling the Vendors’ debts.

40. Synthesizing these points, the defendants submit that the present dispute is enveloped in serious allegations of fraud and impropriety. They contend that the Court should be slow to determine such matters summarily, particularly where questions arise concerning the true nature of the transaction and the alleged involvement of the plaintiffs’ own solicitor.

41. The defendants therefore contend that the solicitor’s undertaking dated 9 July 2025 must be viewed within the broader context of what they describe as an ongoing attempt to resolve a complex and contentious situation. They submit that the undertaking was given in the course of settlement discussions and ought not to be construed as a definitive admission of liability that forecloses their right to contest the underlying issues at trial.

42. On this footing, the defendants maintain that the matter raises substantial questions of fact and credibility, including the true character of the transaction, the alleged involvement of the plaintiffs’ solicitor, and the purpose for which the funds were disbursed. These, they argue, are matters that can only properly be resolved through a full trial rather than the summary procedure contemplated under Order 14. **Note : Serial number will be used to verify the originality of this document via eFILING portal Court’s Analysis and Findings

43. I have carefully considered the voluminous affidavits filed by both parties, together with the written and oral submissions advanced before the Court. An application under Order 14 of the Rules of Court 2012 calls for a disciplined judicial inquiry. The question is not whether the defendant’s narrative is imaginative or elaborate, but whether it discloses a bona fide triable issue. The court must therefore distinguish between a defence which is real and one which is merely illusory, a shadow cast across the proceedings without substance behind it.

44. The story told by the defendants is one of a hidden intrigue, but the law, with its sharp focus, demands that we look to the written contract which the parties signed. The Nature of Stakeholding and the Breach of Trust

45. The starting point of the analysis lies in the nature of a solicitor’s role when holding funds as a stakeholder. In this jurisdiction, the obligations of a stakeholder solicitor are not merely contractual conveniences arising from the agreement between the parties. They are obligations imbued with fiduciary character and reinforced by the professional duties owed by solicitors as officers of the court.

46. The Federal Court in Datuk M Kayveas & Anor v Bar Council [2013] 5 MLJ 640 explained the legal nature of stakeholding obligations in unequivocal terms. Jeffery Tan FCJ, delivering the **Note : Serial number will be used to verify the originality of this document via eFILING portal judgment of the Court, adopted with approval the reasoning in Toh Theam Hock (supra) and stated: “[31] In our system of conveyancing, ‘the word ‘stake’ is in common parlance used to apply to any money to be disposed of in accordance with what may happen in future: and whoever is in possession of the money is often described as a stakeholder. The manner in which the money is to be disposed of depends on the terms on which it is held’ (Toh Theam Hock v Kemajuan Perwira Management Corporation Sdn Bhd [1988] 1 MLJ 116 per Hashim Yeop A Sani SCJ, as he then was, delivering the judgment of the former Supreme Court)… When solicitors hold funds as stakeholders, they hold those funds as trustee and not in a contractual or quasi-contractual capacity (see Alimand Computer Systems Ltd v Radcliffes & Co, (1991) Times, 6 November, QBD). ‘If an estate agent or solicitor, being duly authorised in that behalf, received a deposit ‘as stakeholder’, he is under a duty to hold it in medio pending the outcome of a future event. He does not hold it as agent for the vendor, nor as agent for the purchaser. He holds it as trustee for both to await the evidence: see Skinner v The Trustee of Property of Reed and Others [1967] 2 All ER 1286 at p 1287; [1967] Ch 1194 at p 1200) per Cross J. Until the event is known, it is his duty to keep it in his own hands; or to put it on deposit at the bank…” [Emphasis is mine]

47. That statement of principle is of central importance to the present dispute. Once funds are received by a solicitor as stakeholder, the solicitor assumes the position of a trustee. The money is not held for the unilateral benefit of the vendor or purchaser, but rather for both parties pending the occurrence of the contractual events which govern its release. **Note : Serial number will be used to verify the originality of this document via eFILING portal

48. In the present case, there is no dispute that the defendants received the sum of RM800,000 as stakeholders. Clause 1.2 of the SPA expressly stipulated that the defendants, as the Vendors’ solicitors, were to hold the sum “as stakeholders… on the express undertaking given by the Vendor’s Solicitors to hold the same and release in accordance with Clause 7.1 herein.” The contractual duty imposed upon the defendants was therefore precise and unequivocal.

49. Clause 1.2 of the SPA is reproduced as follows:

1.2 Purchase Price The said Property is to be sold and purchased at the total purchase price as stated in Section 8 of the First Schedule hereto (hereinafter referred to as “the Purchase Price”). The Purchaser shall upon the execution of this Agreement pay to the Venidor’s Solicitors as stakeholders the sum of money as stated in Section 9 of the First Schedule hereto (hereinafier referred to as “the Deposit) by way of deposit and part payment towards the Purchase Price of the said Property and on the express undertaking given by the Vendor’s Solicitors to hold the same and release in accordance with Clause 7.1 herein. Further the Vendor hereby declares that the Vendor's Solicitors are hereby authorized to receive payment of and give good receipt for the Purchase Price. [Emphasis is mine]

50. Clause 7.1 of the SPA further prescribed a defined hierarchy governing the disbursement of the stakeholder funds. The clause permitted payment first to the Vendors’ financier, thereafter to statutory outgoings and professional fees, and finally to the Vendors upon completion. It is to be noted that the first schedule of the SPA **Note : Serial number will be used to verify the originality of this document via eFILING portal records, in unmistakable terms, that the Vendors’ financier was “NIL”.

51. Clause 7.1 of the SPA is reproduced as follows:

7.1 Release of Monies to the Vendor The Purchase Price which shall be paid to the Vendor's Solicitors as stakeholders shall be dealt with by the Vendor’s Solicitors in the foflowing manner:-

(ii) any arrears of water, electricity and telecommunication charges;

(iii) the legal fees, stamp duty and registration fees required for stamping and registration of the Discharge of Charge (if any) and any other document the registration or presentation of which is required to enable the Transfer to be registered in the name of the Purchaser or his nominees;

(iv) such sums which the Vendor is required to pay under this Agreement;

52. Against that contractual background, the defendants’ own pleading assumes particular significance. At paragraph 8.1(a) of the statement of defence, the defendants admit that the RM800,000 was released to JN Teguh pursuant to instructions from the Vendors. Even taking that assertion at face value, the fundamental difficulty confronting the defendants is immediately apparent. The SPA itself declared that there was no financier to whom redemption monies were payable.

53. The defendants have not explained, either in their pleadings or affidavits, how JN Teguh could properly fall within the category of Vendors’ financier contemplated by clause 7.1 when the SPA itself recorded that no such financier existed. The difficulty is not merely evidential, it is structural. The contractual framework leaves no room for the interpretation advanced by the defendants.

54. The law governing stakeholder deposits has long been settled. In Toh Theam Hock (supra), Hashim Yeop A Sani SCJ, citing with approval the words of Lord Edmund Davies in Sorrell v Finch, articulated the governing principle in these terms: **Note : Serial number will be used to verify the originality of this document via eFILING portal “In sale and purchase agreement cases the position is put clearly by Lord Edmund-Davies in Sorrell v. Finch who repeated what was said in Maloney v. Hardy: “The essence of stakeholding in vendor and purchaser cases is that a binding contract of sale has been entered into and the intending purchaser deposits with a third party a sum to be held pending completion; meanwhile the third party holding that deposit may part with it to neither contracting party without the consent of the other ...” [Emphasis is mine]

55. The principle expressed in that passage admits of little ambiguity. A stakeholder is not at liberty to release the deposit upon the unilateral instruction of one party alone. The deposit must remain in medio unless the contractual conditions are fulfilled or both parties consent to its release.

56. In the present case, the defendants candidly acknowledge that the release of the RM800,000 was carried out pursuant to the Vendors’ instructions. There is, however, no evidence whatsoever that the first plaintiff consented to the payment of the funds to JN Teguh.

57. The professional standards governing solicitors reinforce this obligation. The Bar Council Malaysia Ruling 14.10(3), referred to in Ang Ban Giap v Worldwide Holdings Bhd & Anor [2019] 8 MLJ 669, states in unequivocal terms: "[36] …A solicitor acting as stakeholder for 2 or more parties must strictly adhere to the terms of the stakeholding at all times. No money or **Note : Serial number will be used to verify the originality of this document via eFILING portal document held by a Solicitor as stakeholder shall be released, utilized, applied or otherwise dealt with such Solicitor except in accordance with the terms of the stakeholding or with the express written consent of all relevant parties.For example, a Solicitor holding the final 5% of the purchase price under a sale and purchase agreement prescribed by the Housing Development (Control and Licensing) Regulations 1989 must not (for whatever reason) release the same before the expiry of the stakeholding period(s) and/or in contravention of Schedule G Agreement or Schedule H Agreement as the case may be. [Emphasis is mine]

58. The professional rule reflects the underlying legal duty imposed upon a stakeholder. A solicitor entrusted with stakeholder funds must adhere strictly to the contractual terms governing those funds and must not act upon the unilateral instructions of one party to the detriment of the other.

59. In the present case, the defendants have not demonstrated compliance with the contractual terms of the stakeholding arrangement, nor have they produced any evidence of the plaintiffs’ consent to the release of the funds. The inevitable conclusion is that the payment of the RM800,000 to JN Teguh was affected in breach of the fiduciary duty imposed upon the defendants as stakeholders under the SPA.

60. On the material presently before the Court, that breach is both clear and incontrovertible. **Note : Serial number will be used to verify the originality of this document via eFILING portal The Murky Transaction and the Alleged Sham

61. The defendants’ principal line of defence rests upon a contention that the transaction was, in truth, a sham. According to their narrative, the SPA was not intended to facilitate a genuine conveyance of land but was instead devised as a mechanism to discharge the Vendors’ alleged gambling debts. The defendants further contend that the plaintiffs, through Mr Muthu, were aware of and complicit in this arrangement. On that footing, the defendants submit that the plaintiffs cannot now present themselves as innocent parties aggrieved by the dissipation of stakeholder funds.

62. These allegations require careful consideration, for it is well established that courts exercise caution when fraud is alleged. The presence of fraud may, in appropriate circumstances, justify the refusal of summary judgment so that the issues may be examined at trial. The mere invocation of fraud, however, does not automatically convert every dispute into a triable issue. The court must examine the relevance of the alleged fraud to the legal cause of action before it.

63. In the present case, the alleged fraud relates not to the existence of the stakeholding arrangement, nor to the defendants’ receipt of the RM800,000 as stakeholders, nor indeed to the defendants’ admitted release of those funds. Rather, the defendants’ allegations concern the supposed underlying motivation behind the SPA and the alleged financial arrangements between the parties. That distinction is critical. **Note : Serial number will be used to verify the originality of this document via eFILING portal

64. The plaintiffs’ claim before this Court is not one seeking specific performance of the SPA against the Vendors, nor is it an action to determine the validity or enforceability of the SPA itself. The claim is far more confined. The plaintiffs sue the defendants, in their capacity as stakeholder solicitors, for the return of trust monies which were disbursed contrary to the express terms governing the stakeholding.

66. Whether the transaction was motivated by a genuine purchase of land, by a debt settlement, or by some hybrid of the two, does not alter the legal character of the defendants’ obligations once they accepted the funds as stakeholders. A solicitor who agrees to hold funds as stakeholder is bound to administer those funds strictly in accordance with the contractual terms governing the stakeholding. The existence of a collateral arrangement, even if established, cannot absolve the stakeholder from compliance with those written terms.

67. In this regard, the SPA itself contains what may properly be described as an entire agreement clause. Clauses 20.6 and 20.7 provide that the written agreement represents the complete understanding between the parties and supersedes prior negotiations or arrangements. Such provisions serve an important commercial function. They prevent parties from later seeking to undermine the written bargain by invoking alleged oral agreements or collateral understandings inconsistent with the contract.

68. Clauses 20.6 and 20.7 of the SPA are reproduced as follows: **Note : Serial number will be used to verify the originality of this document via eFILING portal

20.6 Agreement Embodies Terms This Agreement sets out the entire agreement and understanding between the parties hereto and supersedes and cancels in all respects all previous agreements and undertakings, if any, between the parties hereto with respect to the subject matter hereof.

20.7 No Variation No variation of this Agreement of whatever nature shall be made or purported to be made by any party or parties nor shall any variation or purported variation be valid or enforceable unless the same is in writing and duly agreed to and executed by the parties concerned. [Emphasis is mine]

69. Even if one were to assume, for the sake of argument, that some collateral scheme existed to resolve the Vendors’ debts, the defendants, who were themselves the solicitors responsible for drafting the SPA and holding the stakeholder funds, could not unilaterally release those funds on the basis of instructions which contradicted the express terms of the SPA. Professional obligations do not bend to accommodate private arrangements that run counter to the written contract.

70. The courts have repeatedly emphasised the strict standard imposed upon solicitors who act as stakeholders. In P Visnuvarman Pasupathi v Mazlan Abdullah; Majlis Peguam (Intervener) [2023] MLJU 3235, Amarjeet Singh JC (as he then was) addressed a situation in which stakeholder funds were released without the requisite consent. His Lordship stated: **Note : Serial number will be used to verify the originality of this document via eFILING portal "[23] The professional standard of a solicitor is that when stakeholding for his client and a third party no monies held by him shall be released, utilised, applied or otherwise dealt with by such solicitor except with the express written consent of all relevant parties unless there are express terms of the stakeholding. Thus, in this case the liability crystallized when the appellant released the monies without the express written consent of the respondent. Nevertheless, the Disciplinary Committee found that verbal consent as alleged by the appellant was never given by the respondent for the release of the monies. Therefore, the finding of the Disciplinary Committee cannot be assailed and is sound both on fact and law albeit being lenient. There was a clear breach of stakeholding duty by the appellant." [Emphasis is mine]

71. That statement encapsulates the principle applicable here. A solicitor acting as stakeholder must adhere strictly to the terms of the stakeholding arrangement unless all relevant parties expressly consent to a departure from those terms.

72. The evidence relied upon by the defendants, principally the affidavits of Manogaran and Md Arfizal, seeks to describe what they claim to be the true commercial context of the transaction. Yet even if that narrative were accepted at its highest, it does not answer the central legal question confronting the defendants, that is, whether they were entitled, as stakeholders, to release the RM800,000 to JN Teguh without the consent of the purchaser and in circumstances that were inconsistent with the contractual framework of the SPA. **Note : Serial number will be used to verify the originality of this document via eFILING portal

73. In my judgment, the evidence concerning the alleged gambling debts and the supposed debt settlement mechanism does little to assist the defendants on that question. The strict liability of a stakeholder does not turn upon the commercial motivations of the parties but upon the legal duties arising from the stakeholding arrangement.

74. The defendants submit that they acted upon the instructions of the Vendors and for the Vendors’ benefit. That submission, however, misses the essential nature of the role they had assumed. A stakeholder does not hold the deposit exclusively for the vendor or for the purchaser. The deposit is held for both parties, pending completion or the occurrence of the contractual events governing its release.

75. Once that principle is appreciated, the difficulty confronting the defendants becomes plain. They acted upon the unilateral instructions of one contracting party to release stakeholder funds in a manner inconsistent with the SPA and without the consent of the other contracting party.

76. The breach therefore arises not from the alleged background circumstances of the transaction but from the defendants’ own admitted act of releasing the stakeholder funds contrary to the terms of the SPA and without the plaintiffs’ consent. On the material before this Court, that breach stands uncontroverted. **Note : Serial number will be used to verify the originality of this document via eFILING portal The Solicitor’s Undertaking

77. There exists, in addition to the breach of stakeholding duty already identified, a second and independent basis for the plaintiffs’ claim, the solicitor’s undertaking issued by the defendants on 9 July 2025. The legal significance of such undertakings within the administration of justice cannot be overstated. They are not mere courtesies exchanged between solicitors. They are solemn professional assurances upon which courts and practitioners alike are entitled to rely.

78. The chronology of the undertakings in the present case is important. The defendants initially issued an undertaking which contained a qualification that repayment would occur once the funds were received from the Vendors or their nominee. The plaintiffs, quite understandably, declined to accept an undertaking that was conditional upon the defendants recovering the money from third parties. Faced with that rejection, the defendants issued a revised undertaking on the same date.

79. The revised undertaking materially altered the character of the promise. In its revised form, the undertaking stated that the sum of RM800,000 together with RM150,000 would be paid by 31 July

2025. The language of the undertaking is clear. The promise was expressed to be given “in consideration of you granting us time till 31 July 2025 to make the refund and payment.” No qualification was attached to the promise. In particular, there was no suggestion that repayment remained contingent upon the receipt of funds from the Vendors or any other third party. **Note : Serial number will be used to verify the originality of this document via eFILING portal

80. The legal effect of that revision is straightforward. Once the plaintiffs rejected the initial conditional undertaking and the defendants thereafter issued a revised and unconditional undertaking, the latter became the operative and binding instrument governing the parties’ rights and obligations. A party who voluntarily substitutes a conditional promise for an unconditional one cannot later seek to reintroduce the discarded condition by reference to subsequent correspondence or subjective explanations.

81. The defendants have attempted to argue that the undertaking must be understood in the broader context of settlement discussions or that it was given merely for the plaintiffs’ convenience. Such arguments cannot prevail against the clear language of the written undertaking. A solicitor’s undertaking is construed according to its expressed terms. Where those terms are plain, the court will enforce them with rigour.

82. The strictness with which courts approach such undertakings was emphasised by the Federal Court in Datuk M Kayveas (supra), where it was observed: “[30] That strict rule was borne out of necessity. ‘The reason for the rule, which requires the strict adherence to undertakings, are pragmatic. Undertakings are common throughout legal practice and the continued efficient working of legal practice requires that such undertakings be honoured regardless of other supervening circumstances. The additional reason for the strict application of the rule is to maintain the legal profession’s integrity. Members of the profession must be seen as wholly trustworthy in that, once they have undertaken a particular course of action, **Note : Serial number will be used to verify the originality of this document via eFILING portal they can be depended on to act accordingly. That the duty to honour undertakings is strict means even when a lawyer has erred or made an oversight, circumstances have changed radically, or for the lawyer to adhere to the undertaking will cause hardship, the lawyer must still adhere to the promises made’ (Bhanabbai v Auckland District Law Society [2009] NZAR 282, quoting Professor Duncan Webb in Ethics, Professional Responsibility and the Lawyer (2nd Ed), 2006, para 15.9.17). ‘Undertakings are the bedrock of our system of conveyancing. The recipient of an undertaking must be able to assume that once given it will be scrupulously performed. If property purchaser and mortgage lenders cannot have complete confidence in the safety of the money they put in the hands of a solicitor in the course of property transaction our system of conveyancing would soon break down. The breach of an undertaking given by a solicitor damages public confidence in the profession and in the system of undertakings upon which property transactions depend’ (Briggs v The Law Society Awoloye Kio v Law Society [2005] EWHC 1830; see also United Mining and Finance Corpn Ltd v Becher [1910] 2 KB 296, p 307, where a similar view was expressed by Hamilton J) and ‘undermines the integrity of the profession and will bring it into disrepute’ (Re Lim Liap Khee; Law Society of Singapore v Lim Kiap Khee [2001] 3 SLR 616 per Chao Hick Tin JCA).” [Emphasis is mine]

83. That statement reflects a long-standing principle of professional responsibility. A solicitor’s undertaking carries with it a disciplinary and fiduciary dimension that transcends ordinary contractual obligations. Once given, it must be honoured unless vitiated by circumstances such as forgery, duress, or mistake regarding the undertaking, none of which has been pleaded or established here. **Note : Serial number will be used to verify the originality of this document via eFILING portal

84. In the present case, the position is stark. The defendants gave a clear written undertaking to repay the sums by 31 July 2025. That date passed without payment. The breach of the undertaking is therefore not merely arguable, it is established on the face of the evidence.

85. In circumstances where the undertaking is clear on its face, and where no allegation has been advanced that the undertaking was forged, procured by duress, or otherwise invalid, the defendants remain bound by the very terms they chose to adopt. Courts cannot permit a solicitor to evade the consequences of a written professional undertaking by advancing a retrospective reinterpretation of its meaning. Conclusion

86. When the evidence is stripped of its surrounding allegations of intrigue and concealed arrangements, the essential features of this case emerge with clarity. The defendants were entrusted with the plaintiffs’ money as stakeholder solicitors. That role carried with it strict fiduciary obligations.

87. Those obligations were not honoured. The defendants released the sum of RM800,000 to a third party in circumstances that were inconsistent with the express terms of the SPA and without the consent of the purchaser whose money it was. That act constituted a breach of the stakeholding trust. **Note : Serial number will be used to verify the originality of this document via eFILING portal

88. Matters did not end there. Having been confronted with the consequences of the failed transaction, the defendants issued a clear solicitor’s undertaking to refund the monies by a specified date. That undertaking, too, was not honoured.

89. The defendants’ attempt to recast the transaction as a sham or a vehicle for settling gambling debts does not alter the legal analysis. Those allegations may well concern the relationship between the Vendors and other parties involved in the transaction, but they do not diminish the strict duties owed by a solicitor who has agreed to hold funds as stakeholder. The plaintiffs’ claim is not concerned with the enforcement of the SPA against the Vendors, it concerns the restitution of trust monies improperly released.

90. The law does not permit a stakeholder solicitor to depart from the written terms of the stakeholding merely because one party instructs him to do so. Nor does it permit a solicitor to resile from a clear professional undertaking once given. The obligations are strict precisely because the administration of justice depends upon the reliability of such assurances.

91. Having carefully considered the affidavits and submissions placed before the Court, I am satisfied that the defendants have failed to raise any bona fide triable issue. The breaches of trust and of the solicitor’s undertaking are plain on the face of the evidence.

92. Accordingly, judgment is entered for the plaintiffs against the defendants as follows: **Note : Serial number will be used to verify the originality of this document via eFILING portal

(ii) Costs of this proceeding fixed at RM15,000 to be paid by the defendants to the plaintiffs, subject to allocatur. Dated the 27th day of April, 2026 -SGN- ……………………………………………….. MOH KOK WAI JUDICIAL COMMISSIONER OF THE HIGH COURT HIGH COURT (CIVIL DIVISION NCvC14) HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY OF MALAYSIA Counsel for the Plaintiffs : Joslyne Delano Goonting, Lam May Lan and Tan Yi wen Messrs M L Lum & Co Counsel for the Defendant : N Subramaniyam and Lily Ho Messrs L.Ho & Associates **Note : Serial number will be used to verify the originality of this document via eFILING portal