Manzer Medical Sdn Bhd v Bongsor Bina Sendirian Bhd (W-02-1198-05/2012)

REKAJATI ARKITEK ... APPELLANTS AND BONGSOR BINA SENDIRIAN BHD ... RESPONDENT [In the matter of High Court Malaya at Kuala Lumpur Civil Suit No: S3-22-53-2003 (MT(2)-22-90-1999) Between Bongsor Bina Sendirian Bhd ... Plaintiff and

Manzer Medical Sdn Bhd

Syed Abdullah b Syed Mohsin Al Mohdar

Rekajati Arkitek

Malaysian Building Society Berhad ... Defendants Heard together In the matter of High Court Malaya at Kuala Lumpur Civil Suit No: S6-22-588-1999 Between Bongsor Bina Sendirian Bhd ... Plaintiff and Malaysian Building Society Berhad ... Defendant Heard together [In the matter of High Court Malaya at Kuala Lumpur Civil Suit No: S5-22-193-2000 Between Bongsor Bina Sendirian Bhd ... Plaintiff and Manzer Medical Sdn Bhd ... Defendant] CORAM: ABDUL WAHAB BIN PATAIL, JCA BALIA YUSOF BIN HAJI WAHI, JCA ABANG ISKANDAR BIN ABANG HASHIM, JCA JUDGMENT OF THE COURT Brief facts of the case [1] Pursuant to an agreement ("the Agreement") between Bongsor Bina Sendirian Bhd ("the Plaintiff") and Manzer Medical Sdn Bhd ("1st Defendant"), the Plaintiff agreed to build and complete a six-storey specialist hospital building in Kota Bharu, Kelantan ("the construction project") while 1st Defendant agreed to pay the Plaintiff for the work done on the basis of "letter of acceptance of tender" dated 21 January 1999. [2] It was agreed that the acceptance of the said letter of tender was subject to the terms and conditions of the Tender Documents which stipulated that the form and condition of the contract will be the Persatuan Arkitek Malaysia ("PAM") Form of Contract with its terms and conditions therein ("the contract"). [3] One of the terms of the PAM Contract Form is that $ 1^{\mathrm{st}} $ Defendant will pay to the Plaintiff upon the issuance of Interim Certificate issued by the $ 1^{\mathrm{st}} $ Defendant's architects, namely Rekajati Arkitek ("the $ 3^{\mathrm{rd}} $ Defendant"). [4] The Plaintiff commenced building and construction works thereto. [5] The $ 1^{\mathrm{st}} $ Defendant issued an irrevocable instruction to its financier, Malaysia Building Society Berhad ("the $ 4^{\mathrm{th}} $ Defendant" / "MBSB") to directly pay the Plaintiff all loan drawdown payments for the work by a letter dated 6 February 1999. MBSB had affirmed that the Plaintiff would accept and comply with the directions. [6] In addition, there were also conditions that the Plaintiff should place with $ 1^{\mathrm{st}} $ Defendant, among others, a Performance Bond in the form of Banker's Guarantee. The Plaintiff had obtained and handed over to the $ 1^{\mathrm{st}} $ Defendant, an Insurance Implementation Insurance no 18567 / IG / 99 dated 29 April 1999 from the Malayan British Assurance ("MBA") ("the guarantee"). [7] The guarantee provides, among others, that if the Plaintiff commits a breach of its obligations under the contract, the buyer will indemnify $ 1^{\mathrm{st}} $ Defendant RM1, 116, 500 within three months after receiving a written notice from the $ 1^{\mathrm{st}} $ Defendant. [8] By letter dated 2 March 1999, MBSB agreed to release loan drawdown directly to the Plaintiff. Two (2) Architect Certificates had been issued namely Interim Architect Certificate No. 1 dated 31 May 1999 in the sum of RM1,971,300.00 and Interim Architect Certificate No.2 dated 13 July 1999 in the sum of RM 564,000 (collectively referred to as "the certificates"). [9] Despite the issuance of the certificates, the Defendant had refused, neglected, and / or failed to make payment of the amount stated in the certificates to the Plaintiff. Instead, the $ 1^{\mathrm{st}} $ Defendant terminated the Plaintiff's employment on the ground that it had wholly suspended and then stopped work on site and for removing materials from the site without consent of the Architect. [10] The Plaintiff thus instituted a civil action against the Manzer Medical Sdn Bhd vide Civil Suit S-22-90-2003 ("Suit 90") to claim among others: a. The sum of RM1,971,300.00 in respect of interim Architect Certificate No 1; b. The sum of RM 564,000.00 in respect of Interim Architect Certificate No 2; c. Interest at the rate of 8% per annum on the sum of RM2,535, 300.00 from the date of judgment till the date of full realisation; and d. Costs of this suit. [11] In Civil Suit S6-22-588-1999 ("Suit 588"), the Plaintiff instituted an action against MBSB to Claim among others, the sum of RM1,971,316. 97 for the Interim Certificate No.1 and RM564,000 for Interim Certificate No.2. [12] While vide Civil Suit S5-22-193-2000 ("Suit 193"), the Plaintiff claimed against Manzer Medical Sdn Bhd for among others, a mandatory injunction to compel the Defendant to return the guarantee and to restrain the Defendant from issuing any notice to Malayan British Assurance to allow MBA to make payment to the Defendant. [13] In the Statement of Defence in Suit 90, the $ 1^{\mathrm{st}} $ Defendant contended, among others, that there was no formal contract between the Plaintiff and the Defendant, the Plaintiff had taken late possession of the site and the two Interim Architect Certificates were already cancelled by the $ 3^{\mathrm{rd}} $ Defendant vide its letter dated 28 July 1999. [14] The Defendant, on the other hand made a counterclaim for the sum of RM 5,000,000.00 as general damage for loss of opportunity to run a specialist hospital, the expenses to complete the abandoned project, and loss of trust from the specialist hospital suppliers. [15] MBSB in its Defence in Suit 588 denied having made any agreement, or representation to the Plaintiff that it will pay the loan drawdown directly to the Plaintiff. By a letter dated 2 March 1999, MBSB had refused to the Plaintiff's application for an irrevocable letter of undertaking that MBSB will pay the money to the Plaintiff upon the issuance of the Architect certificate. [16] While in Suit 193, Manzer Medical Sdn Bhd contended among others that the contract between Plaintiff and Manzer Medical Sdn Bhd had been lawfully terminated vide letter dated 6 July 1999 and the Plaintiff was not entitled to claim for the guarantee. [17] Vide the Court order dated 19 June 2003, the High Court allowed the Plaintiff's application to consolidate and hear all these three suits together and the case thereinafter was registered bearing no. S3-22-53 2003. Decision of learned High Court Judge [18] The learned High Court Judge decided among others, that the $ 1^{\mathrm{st}} $ Defendant, $ 2^{\mathrm{nd}} $ Defendant, and $ 3^{\mathrm{rd}} $ Defendant were jointly and severally liable to pay the Plaintiff the sum of: a. RM 1,971,300.00 together with interest; b. RM 564,000.00 together with interest; c. General damages and costs to be assessed by registrar; [19] The High Court Judge also granted the Plaintiff a mandatory injunction to compel the $ 1^{\mathrm{st}} $ Defendant to immediately return the guarantee. While the counterclaim by $ 1^{\mathrm{st}} $ Defendant, $ 2^{\mathrm{nd}} $ Defendant, and $ 3^{\mathrm{rd}} $ Defendant against the Plaintiff, and the Plaintiff's claims against the $ 4^{\mathrm{th}} $ Defendant were also dismissed as they were not proven. The Appeal [20] Dissatisfied with the High Court decision, the $ 1^{\mathrm{st}} $ $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants appealed to the Court of Appeal. We heard this appeal for two days after which we dismissed the appeal with costs of RM 30,000.00 jointly and severally payable by all the three Defendants. This is thus, our grounds for having so decided, with specific emphasis on the sole appeal of the $ 3^{\mathrm{rd}} $ Defendant, namely Rekajati Arkitek. Issue raised by the 3 $ ^{rd} $ Defendant [21] At the end of the trial, the trial Judge found against all the Defendants except the $ 4^{\mathrm{th}} $ Defendant, MBSB. All of the three Defendants were found to be jointly and severally liable to the Plaintiff. The trial Judge found there was a conspiracy among the three Defendants to defraud the Plaintiff of the payment due and owing to the Plaintiff pursuant to the two certificates that were issued for the work done by the Plaintiff. The trial Judge also dismissed all the Defendants' counterclaims. [22] The appeal of the $ 3^{rd} $ Defendant relates essentially to its dissatisfaction against the finding of the learned trial Judge that it was liable for having conspired with the other Defendants to defraud the Plaintiff in respect of the payment. In fact, one of the issues to be determined by the learned trial Judge was whether there was an alleged conspiracy by the $ 1^{st} $ , $ 2^{nd} $ , $ 3^{rd} $ , and $ 4^{th} $ Defendants to defraud the Plaintiff. [23] What would amount to a conspiracy to defraud as a tortious claim? In our view, the trial Judge had adverted to that matter in her Grounds of Judgement and she had said as follows: "Alegasi mengenai konspirasi untuk menipu diplidkan pada perenggan 28, hingga 31 Penyata Tuntutan Terpinda Plaintiff. Bagi membuktikan konspirasi berkenaan Plaintiff mesti establishkan, "there must be an agreement or 'combination' of two or more with the common intention to effect an unlawful purpose or to do a lawful act by unlawful means resulting in damage to the Plaintiff: lihat kes Beverages Holdings Sdn Bhd & Ors v. Kickapoo (Malaysia) Sdn Bhd [2008] 4 CLJ 20 dan Industrial Concrete Products Bhd v. Concrete Engineering Products Bhd & Other Suits [2001] 8 CLJ 262).” [24] The standard of proof for conspiracy to defraud in a civil claim is on the balance of probabilities. In the Federal Court case of Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 7 CLJ 584, our apex Court had occasion to say as follows: "The correct principle to apply is...where it was stipulated that at law, there are only two standard of proof, namely beyond reasonable doubt for criminal cases and 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. Therefore, it is 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 was attained. The criminal aspect of the allegation of fraud and the standard of proof required is irrelevant in the deliberation." [25] The evidence of conspiracy to defraud does not always consist of direct evidence. In fact, more often than not, if not most of the time, it is proven by inferences to be drawn from circumstantial evidence that was adduced before the Court. [26] The $ 3^{\mathrm{rd}} $ Defendant had denied any liability and it also denied that it was a party that was involved in a conspiracy to defraud the Plaintiff as alleged. [27] We had looked at the evidence adduced by the Plaintiff including the documentary evidence. In respect of the conspiracy to defraud the Plaintiff, the 1st Defendant contended that in submitting the 1st and the 2nd Certificates to MBSB for payment, it was a manifestation of the 1st Defendant's intention to pay the Plaintiff. But we were with the Plaintiff that such a contention was illogical, for the simple reason that if the 1st Defendant had really intended to pay the full sums as certified in the 1st and the 2nd Certificates to the Plaintiff, the 1st Defendant would have instructed MBSB, the 4th Defendant to release the drawdown straight to the Plaintiff, and not to the 1st Defendant as had happened in this case. The Plaintiff had also adverted to the fact that it is an undisputed fact that despite a bridging loan being in place, 1st Defendant did not pay its previous contractor, Crest Builder in full. There was a "motive" to commit fraud among the three Defendants i.e. to reduce the costs of construction of the Project, thereby causing loss to the Plaintiff who was not paid for the work that it had performed as certified. [28] We therefore found it opportune to refer to the findings of the trial Judge on this issue based on the documentary evidence as adduced before her. In this case, the trial Judge had alluded to the strains of evidence which to her mind, had constituted the tort of conspiracy to defraud the Plaintiff. We reproduce the trial Judge's appreciation and findings on this issue, identified as Issues no.10 and 11 at pages 24-27 of her Grounds of Judgement. "Daripada keterangan yang dikemukakan Plaintif telah kemukakan keterangan: - Pada sekitar 21.1.19999 Defendan Kedua telah memberi suatu jaminan kepada Plaintif yang pembayaran ada perjanjian tersebut akan dibayar terus kepada Plaintif. - Defendan Pertama melalui Defendan Kedua melalui surat bertarikh 6.2.1999 telah mengeluarkan arahan yang tidak boleh dibatalkan, kepada Defendan Keempat bahawa kos projek akan dibayar terus kepada Plaintiff. - Melalui keterangan surat bertaikh 31.5.1999 Defendan Pertama telah mengarahkan Defendan Keempat membayar sebanyak RM 1,971,300.00 kepada Defendan Pertama. - Dari keterangan SP1, SD1, SD2 dan SD3 mengesahkan bahawa Defendan membatalkan arahan surat terdahulu yang bertarikh 6.2.1999. - Defendan Ketiga telah mengeluarkan Sijil No. 1 pada 16.6.1999 dengan tujuan untuk mendorong Plaintiff untuk meneruskan kerja-kerja pembinaan. - Defendan Pertama melalui Defendan Kedua gagal mengarahkan Defendan Keempat membayar jumlah RM1,971,300.00 yang disahkan melalui Sijil No.1 walaupun telah mengeluarkan surat yang tidak boleh dibatalkan tersebut kepada Defendan Keempat. - pada Julai 1999 Defendan Pertama melalui Defendan Kedua mengarahkan Defendan Keempat melepaskan wang berkenaan kepada Defendan Pertama dan bukannya Plaintif. - pada 13.7.1999 Defendan Ketiga telah mengeluarkan Sijil No. 2 dengan tujuan mendorong Plaintif untuk meneruskan kerja-kerja pembinaan. - Defendan Pertama gagal membayar kepada Plaintiff sejumlah RM 564,000.00 yang disahkan melalui Sijil No. 2. - Defendan Ketiga telah mengeluarkan Sijil tersebut yang bertarikh 25.7.1999 dalam masa 12 hari selepas pengeluaran Sijil No. 2 dan mengesahkan nilai kerja siap yang berjumlah RM1,129,108.29 yang kurang daripada jumlah asal. - Melalui surat Defendan Ketiga yang bertarikh 28.7.1999 yang disalinkan kepada Plaintif telah membatalkan Sijil No. 1 dan 2. Defendan-Defendan Pertama, Kedua dan Ketiga telah berkonspirasi menipu Plaintif untuk jumlah sebanyak RM1,971,300.00 dan RM 564,000.00. Plaintif juga telah menanggung kos yang besar untuk menjalankan kerja-kerja pembinaan tanpa menerima apa-apa bayaran dari Defendan-Defendan, Kerja-kerja telah dilaksanakan oleh Plaintif. Terdapat konspirasi untuk menipu Plaintif oleh Defendan. Akibat daripada konspirasi untuk menipu ini Plaintif telah mengalami kerosakan dan kerugian. Plaintif tidak menerima sebarang bayaran bayaran bagi kerja-kerja yang telah dilaksanakan. Plaintif juga berhak untuk mendapat gantirugi." [29] With respect, we were in agreement with the learned counsel for the Plaintiff that the Plaintiff had proven their cause of action for conspiracy to defraud the Plaintiff on the balance of probabilities by all the $ 1^{\mathrm{st}} $ $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants. The trial Judge had come to the correct conclusion from the inferences drawn from such correspondences. Without the contribution of each of these Defendants, the impugned act against the Plaintiff pertaining to its payment could not have come to its desired fruition. As a result of these exchanges of correspondences, the Plaintiff was denied payment for work it had done at the behest of the $ 1^{\mathrm{st}} $ Defendant. [30] It was averred on behalf of the $ 3 ^{rd} $ Defendant that the learned trial Judge did not consider the finding by Lembaga Arkitek Malaysia ("LAM") that the $ 3 ^{rd} $ Defendant was not guilty of professional misconduct. We took note that the trial Judge did not exhibit expressly in her Grounds of Judgement that she had taken into account that piece of evidence. That evidence had arisen when the Plaintiff referred the matter to the LAM about the alleged role that was played by the $ 3 ^{rd} $ Defendant in this episode. The LAM subsequently reverted back to say that it had found that the $ 3 ^{rd} $ Defendant was not guilty of any professional misconduct. Having said that, we did note that the trial Judge did make a general remark that she had taken into account of all the evidence that was led before her. In any event, in as much as the civil Court would give deep deference to findings made by tribunals of professional bodies, such as LAM, however those findings do not as a matter of law, bind the civil Courts. The civil court would not know what kind of evidence had been considered by the tribunal in coming to the decision that it did in its finding that exonerated its member against whom a complaint was lodged. In the civil Court litigation, all evidence that needed to be adduced would have been adduced by litigating parties in order to prove and disprove the essential ingredients of the torts or the contractual breaches which had been pleaded by the Plaintiff. [31] We noted too, that the trial Judge had subjected the evidence adduced before her to the standard of proof beyond a reasonable doubt when considering whether the Plaintiff had succeeded in proving its cause of action for conspiracy to defraud the Plaintiff against all the defendants, including the 3rd Defendant. In doing so, we had seen that she had relied on several case authorities of high authority, such as Saminathan v Papa [1981] 1 MLJ 121. [32] However, in light of what was decided by our apex Court in the case of Sinnaiyah & Sons [supra] that legal position on the correct standard of proof in all civil cases including, inter alia, for torts such as conspiracy to defraud or even fraud itself, is on the balance of probabilities. [33] So, if the trial Judge was wrong in her application of what ought to be the correct standard of proof in this case, we found that she had erred in favour of all the Defendants when, in fact and in law, she only needed to be satisfied by evidence on the balance of probabilities. As such, no prejudice had been occasioned to all the Defendants, including the $ 3^{\mathrm{rd}} $ Defendant. If even on a higher standard of proof, the trial Judge had found that the Plaintiff had succeeded in proving its case against all the $ 1^{\mathrm{st}} $ to $ 3^{\mathrm{rd}} $ Defendants, if would be illogical, at best, to even contemplate that the Plaintiff ought to fail if a lower standard on the balance of probabilities, were to be applied to the same evidence that were considered by the trial Judge. [34] To dispel all doubts, we also found no reason to disturb all the other findings made by the trial Judge on all other issues before her. [35] In the final analysis, we were in agreement with the findings and the ultimate conclusion reached by the trial Judge on the issue of conspiracy to defraud the Plaintiff. In the upshot, we could not see how we ought to invoke our appellate powers to disturb the decision of the learned trial Judge. We were ever mindful of the observation attributable to Lord Pearce in the case of Onnasis & anor v Vergottis [1968] 2 Lloyds Rep 403, on the proper invocation of appellate powers of the Court of Appeal of England. At page 430 the learned Lawlord had this to say: "The functions of a Court of Appeal is to set aside a Judgement that should not be allowed to stand because it occasions a miscarriage of justice. That wrong or miscarriage of justice may consist of a Judgement in favour of the wrong party. It may also consist of a failure in the judicial process to which both parties are entitled as of right, namely, the weighing of their respective cases and contentions. Such failure may constitute a wrong or miscarriage of justice even though it may appear that the appellant may in the end fail to secure a Judgement in his favour. But the fact that the right party seems to have succeeded in the court below will naturally make a Court of Appeal extremely reluctant to interfere, and it would only do so in the rarest cases. Such matters are questions of degree." [Italics provided by us for emphasis. [36] In this case, the right party seemed to have succeeded in the trial court and as such the extreme reluctance to interfere could not be lightly uplifted from our collective minds, so to speak, unless it had been shown by the Defendants that the impugned decision had been one that is plainly wrong, such that no reasonable tribunal could have arrived at the impugned decision, as did the trial court. That 'plainly wrong test' is attributable, at least in the local context, to the decision in the apex court case of Lee Ing Chin @ Lee Teck Seng & Ors v Gan Yook Chin & Anor [2003] 2 MLJ 97. [37] Applying the above test on appellate intervention to the evidence and circumstances before us pertaining to this appeal, we saw no occasion why we should interfere with the learned trial Judge's decision and findings. Suffice to say that the learned trial Judge could not be described, after due analysis by us, as one that was plainly wrong, such that our appellate intervention was necessary in order to avoid an injustice being occasioned to the Defendants. [38] As such, in the upshot, we unanimously dismissed the appeal with costs of RM10,000.00 from each Defendants (except the $ ^{4^{\mathrm{th}}}$ Defendant) jointly and severally. The decision of the trial Judge was affirmed. Deposit towards account of costs. Dated: 27 June 2018. Sgd. ABANG ISKANDAR BIN ABANG HASHIM Judge Court of Appeal. Parties appearing: For the Appellant: Mr. Ernest Azad together with Mr. Mohd Ilias Mohd Noor; Messrs Mohd Ilias & Co. For the Respondent: Mr. KL Pang together with Miss Shelby Chin, Messrs Cheah Teh & Su. Cases referred to:

Lee Ing Chin @ Lee Teck Seng & Ors v Gan Yook Chin & Anor [2003] 2 MLJ 97

Onnasis & anor v Vergottis [1968] 2 Lloyds Rep 403

Saminathan v Papa [1981] 1 MLJ 121

Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 7 CLJ 584. Note: This copy of the Court's Grounds of Judgment is subject to formal revision.