Whether P had entered into a separate agreement with a third party i.e., Tan and received payments from him which justified the default in payment of rentals by D? Finding [3] Plaintiff (P)’s claim against the Defendant company (‘D’) is primarily based on a Lease Agreement (‘LA’) dated 8.01.2015 to lease out P’s land to D for a period of 8 years. Terms and conditions (‘T&C’) of the L/A are stated therein and not in dispute. [4] P’s case is that the Notice of Termination (‘NOT’) issued to D is valid and justified as D had failed to make any payments to P contrary to the T&C of the L/A, including the deposit itself. The NOT was claimed to have been premised on the default of rental payments and nothing else. [5] D’s reason for not making the payments under the LA was that they were a newly established company with some foreign directors and took time to open a current account. However, the company search Page 7 of 24 showed that D1 had only 1 foreign director. D alleged that when they were prepared to pay in April 2015, PW2, the authorised representative of P, refused to accept payment of the deposit sum and outstanding rentals. Also, that PW2 had entered into a separate agreement with one Mr. Tan Wei Shung of RPM Communication Trucks Sdn. Bhd. over the same land and received RM24,000.00 from the said Tan, who was a director of D until 7.5.2015. [6] Clause 9 of the L/A states expressly that: “9. Rights of Determination of this Lease by Lessor 9.1 If the Rental hereby reserved of any part thereof shall be in arrears and unpaid for Seven (7) days after becoming payable (whether formally demanded of not) or if any covenant on the part of the Lessee herein contained shall not be performed or observed or…… in every such case it shall be lawful for the Lessor at any time thereafter to re-enter the Demised Premises or any part thereof in the name of the whole and thereupon this Lease shall absolutely determine but without prejudice to the right of action of the Lessor in respect of any antecedent breach of any covenant of the part of the Lessee herein contained.” Page 8 of 24 [7] As can be seen Clause 9 of the LA allows for the L/A to be terminated if rental due remains unpaid for 7 days or more which occurred in this case. D failed to settle the outstanding payments for at least 5 months before the NOT was issued by P. [8] PW2, P2’s father and the appointed representative of the Plaintiffs testified that: “Despite occupying the said Property since December 2014, the Defendants had made no payments to the Plaintiffs. He was in charge of collecting rent from the Defendant. Every time he visited the said Property to collect rent, he was told that the Defendant does not have a company account. Therefore, they could not make any payment. The Defendant requested for some time to make the said Payments. On the Plaintiffs’ instruction PW2 gave the Defendant several extensions of time. Despite that, the Defendants failed to make any payments.” Page 9 of 24 [9] It was, thus, correctly contended by the Plaintiffs that the LA was validly terminated in view of the uncontradicted evidence of breach of clause 9 as adverted to in view of D’s default in payment of rentals. [10] In their defence to the instant claim, D relied on the evidence of their Business Consultant which is briefly, as follows: “Since D was a newly established company and being a company with some foreign directors they took some time to open the current account for D; At the meeting on 28/4/2015 between DW1 and PW2, DW1 alleged that he had brought the Company’s chequebook and he will issue all outstanding rentals and also the deposit sum. However he claimed that PW2 refused to accept any payment and asked DW1 to refer to Mr. Tan as PW2 has received some monies from Mr. Tan; Subsequently, DW1 and PW2 met again where PW2 handed a copy of the receipt he issued to Mr. Tan and DW1 gave a copy of the LA to PW2; Page 10 of 24 Mr. Tan was authorized by D’s company to arrange all payments under the said LA. But, based on the said receipt DW1 noticed that the payments were issued to RPM Commercial Trucks Sdn. Bhd. and not to D’s company.” [11] Reverting to the issue of D being a newly established company that took several months to open a current account, P referred to the evidence of DW1 himself and pointed out, inter alia, that: “DW1 alleged that D took several months to open a current account. DW1 claims that he was involved in the process of applying for the current account. But, he does not remember the forms submitted in applying for the current account. When challenged to produce any documents showing the process of opening of the current account, DW1 claims he does not have copies of the same.” [12] It was apparent that D merely made a bare assertion without any supporting evidence that was, thus, devoid of any merits. No documentary evidence whatsoever was adduced to show that for a newly established company with foreign directors it would take at least 5 months to open a current account in a local bank. Neither were documents tendered showing Page 11 of 24 the process of opening the current account. Most importantly, it was unreasonable and illogical to expect P1 and P2 to wait for 5 months or more for D to settle the rent without anything to that effect mentioned in the LA. [13] Concerning DW1’s allegation of the meeting at an Indian restaurant (‘mamak shop’) on 28.04.2015 where he claimed to have made attempts to pay the rental together with the deposit to PW2 but the latter refused to accept the same, this too lacked any credibility and was unlikely to be the truth. DW1 was only a business consultant and not D’s director or authorised representative for him to have the authority to execute the company cheques. He then changed his stance when cross-examined about his authority when he first claimed that he had the authority to sign cheques on behalf of the company and later, that the cheques were pre-signed by his son who was then a director of D. Neither were documents produced showing DW1’s authority to sign the company’s chequebook. Similarly, DW1’s evidence of the cheques having been pre-signed contradicted his own evidence that at the meeting with PW2 he had told the latter that he had brought along the company’s chequebook and would issue payments for all the outstanding debts to the Plaintiff. The allegation of pre-singing of the company cheque book could thus, be put to rest. Page 12 of 24 [14] DW1’s evidence that there was only an oral confirmation by D’s director to the Bank that DW2 had the authority to execute the company’s chequebook was not credible at all and unacceptable based on normal/standard banking practice. On the whole, the only conclusion possible under the circumstances is that DW1 had given untruthful evidence that he had made attempts to pay PW2 the outstanding sums on 28.4.2015 and that he had been authorised by D to issue their cheques, bearing in mind the terms under section 35(6) of the Companies Act, 1965 for a person to act as an agent or attorney on behalf of the company. Neither had DW1 produced the alleged pre-signed post-dated cheques (‘PDCs’) nor his authority to issue the same. In essence, there was not an iota of evidence that DW1 had made attempts to pay DW2 the debts owed to P1 and P2 as alleged above. [15] P1 and P2 pointed out to the evidence that upon termination of the LA they received several letters from D’s present solicitors wherein it was alleged that during the subsistence of the LA PW2 had accepted a sum of RM24,000.00 from RPM Commercial Trucks Sdn. Bhd. (‘RPMCT’) where the said Mr. Tan was also a director in contravention of the terms of the LA. [16] P1 and P2 contend as follows on D’s allegation as above: Page 13 of 24 “PW2 admits that sometime in March, 2015 he had received a cheque from Mr. Tan for the sum of RM24,000.00. However, he said that the payment was made as a deposit for security of Mr. Tan’s personal assets on the said Land. This is supported by a letter dated 31/3/2015 (exhibit P2) together with a cheque of RM24,000.00 (exhibit P3); Furthermore, Mr. Tan has also on 1/6/2015 lodged a police report (exhibit P4) claiming that he was prevented by one Chinese man from visiting the said Property to view his personal assets, which were still on the said Property;” [17] P1 and P2 also referred to the evidence that the previous lessor, RPM Commerical Vehicles Sdn. Bhd., had sold some of their fixed assets to RPMCT (See Exhibit P3 and P4). No challenge was raised by D, against this evidence. It is noteworthy that D themselves gave evidence that just 2 days after their letter dated 11.05.2015 wherein the above allegation was made, they attempted to settle the outstanding sum with PW2 but the latter failed to answer their calls. D now claim that PW2 had accepted the rental and deposit sum from their former director, namely Mr. Tan. D’s evidence itself on this issue is, therefore, self-contradictory. Page 14 of 24 [18] In another letter from the same solicitors dated 16.6.2015. D alleged that PW2 had refused to accept the outstanding sums from DW1 and did not mention at the meeting the deposit cheque forwarded by Mr. Tan which could not be encashed due to insufficient funds and had it been disclosed D would have settled all the sums due accordingly. [19] Premised on D’s charging stances and inconsistent versions on the issue at hand it can be surmised that D’s allegation that the Plaintiffs have entered into a Lease Agreement with a third party was purely based on DW1’s assumption. D had failed to establish that the Plaintiff had entered into another Agreement with a 3rd party as alleged DW1 further claimed that he had arrived to such assumption because PW2 did not answer his calls, which too could not be true based on D’s own letter dated 22.06.2015 which made reference to a tele-conversation between D’s representative and PW2. [20] A scrutiny of the evidence supported the Plaintiff’s contention that D had in fact never made any genuine attempts to settle the outstanding sums due to the former. I upheld the contention that the only conclusion that can be drawn is that DW1 had given untruthful evidence on matter of payment of rentals, i.e., that the Defendant had attempted to make Page 15 of 24 payments on 28/4/2015 and through 4 post-dated cheque as adverted to. It is impossible to issue post-dated cheques when the current account was still not opened. Secondly, if there was a current account opened by the month of February onwards, it established the fact that DW1’s evidence that D could not make payments of rental because there was no current account is untruthful. D’s Counter-Claim (C/C) [21] The counter-claim is predicated on the alleged conspiracy to defraud D by the Plaintiff’s representative (‘PW2’) and D’s former director Mr. Tan (‘Tan’), of which the particulars of fraud and conspiracy are set out in the statement of claim. It was principally alleged that the two of them had acted in collusion for PW2 to receive moneys from Tan that were in fact for payments of rental from D due under the LA with P1 and P2. PW2 had allegedly issued a receipt for the payment in the name of another company that had no connection or relationship with D. Their act and motive was to nullify the LA between the parties. [22] In view of my finding in the main suit that the payment received by PW2 from Tan was for an unrelated and unconnected purpose and that, Page 16 of 24 PW2 had provided a sufficient and reasonable explanation for receipt of the payment, on the present facts and evidence, there was no basis at all for the allegation of fraud and conspiracy against the two persons. It was of utmost importance that D themselves had at one instance alleged that Tan was their director and had made the payment to PW2 pursuant to the rentals due under the LA. [23] It is crucial to note that the burden of proof of fraud and conspiracy is a heavy one. The standard of proof is on a balance of probabilities. Reference can usefully be made to the Federal Court case of Letchumanan Chettiar Alagappan (As Executor to SL Alameloo Achi (deceased) & Anor v Secure Plantations Sdn. Bhd. [2017] 5 CLJ 418 where it was held as follows: “What amounts to ‘fraud’? “It is not easy to give a definition of what constitutes fraud in the extensive signification in which the term is understood by civil courts of justice. The courts have always avoided hampering themselves by defining or laying down as a general proposition what shall constitute fraud. Fraud is infinite in variety (Reddaway v. Banham [1896] AC 199, 221). The fertility of man’s invention in devising new schemes of fraud is so great, that Page 17 of 24 the courts have always declined to define it, or to define undue influence, which is one of the many varieties, reserving to themselves the liberty to deal with it under whatever form it may present itself (Allcard v. Skinner (1887) 36 Ch D 145, 183). Fraud, in the contemplation of a civil court of justice, may be said to include properly all acts, omissions, and concealments which involve a breach of a legal or equitable duty, trust or confidence, justly reposed, and are injurious to another, or by which an undue or unconscientious advantage is taken of another (Story, Eq Jur 187). All surprise, trick, cunning, dissembling and other unfair way that is used to cheat anyone is considered fraud (Finch 439). Fraud in all cases implies a wilful act on the part of anyone, whereby another is sought to be deprived, by illegal or inequitable means, of what he is entitled to (Green v. Nixon (1857) 23 Beav 530, 535)” (Kerr on Fraud and Mistake 7th edn at p. 1). “The concept of fraud is notoriously difficult to define” (Cavell and Anor v. Seaton Insurance Co [2009] EWCA Civ 1363 per Longmore LJ, Mummery and Toulson LJJ in agreement). We would not hazard to define ‘fraud’. We would just say that ‘fraud’ is a generic term which also covers all manner of cheat, deceit and dishonesty. Given its wide Page 18 of 24 meaning, “an action in fraud will usually include a number of distinct causes of action...” and “claims to trace assets in equity or, perhaps, at common law” (Bullen & Leake & Jacobs Precedents of Pleadings 18th edn, vol. 2 at 57-01). It should be noted that an action in fraud is not limited to the tort of deceit as used in Derry v. Peek (1889) 12 App Cas 377, ie, when it is shown that a false representation has been made knowingly or without belief in its truth or recklessly, careless whether it be true or false. Order 14 r. 1(2)(b) of the Rules of Court 2012 prevents an application for summary judgment being entered in “a claim by the plaintiff based on fraud”. However, r. 1(2)(b) only prevents an application for summary judgment being entered in a claim based on fraud within the meaning as used in Derry v. Peek, because the term ‘fraud’ in r. 1(2)(b) of the Rules of Court 2012 was construed to take the meaning as used in Derry v. Peek.” [24] My attention was also drawn to the Federal Court case of Sumayah & Sons Sdn. Bhd. v Damai Setia Sdn. Bhd. [2015] 5 MLJ where it was pronounced that: Page 19 of 24 “Even if fraud was the subject in a civil claim, the standard of proof is on the balance of probabilities… it is therefore up to the presiding judge, after hearing and considering the evidence adduced as done in any other civil claim, to find whether the standard of proof had been attained.” [25] It is also important to note S. 103 of the Evidence Act, 1950 which reads that: “The burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any law that the roof of the fact shall lie on any particular person.” [26] In the instant case, it is D who alleged the existence of fraud against P1 and P2 by acting in conspiracy with the said third party through PW2, particularly with the motive of depriving D of use of the subject land. It is, therefore, incumbent upon D to discharge the onus of proof borne by them to prove conspiracy to defraud as alleged against P1 and P2, who are the registered proprietors of the property, which they are seeking to recover without being paid any rentals for several months in breach of the terms of Page 20 of 24 the LA. In the context of the instant counter-claim, the essential question for determination is whether D have proven the particulars as pleaded. [27] By reference to the leading authorities adverted to, including the Hong Kong case of Menford Electronic Art & Computer Design Co. Ltd. v WongTat Victor & Anor [2013] HKCF 17 where the history of the law of fraud has been comprehensively discussed, counsel acting for the Plaintiff has for convenience summarized the principles relating to a plea of fraud as follows: “… there is no definition of what constitutes fraud. Fraud can be infinite in variety. However, based on the Barclay Bank’s case which was cited in the case above fraud in civil action means an international misrepresentation (or in some case, concealment). Fraud can also mean omission, and concealment that involved a breach of legal or equitable duty, trust or confidence, justly reposed, and are injuries to another, or by which an undue or unconscientiously advantage is taken of another. It could also include surprise, trick, cunning, dissembling and other unfair way that is used to cheat anyone is considered as fraud.” Page 21 of 24 [28] In essence, D’s case in support of their C/C was that P1 and P2 had colluded with Mr. Tan and accepted payments which were meant to be monthly rentals under the said Agreement (‘L/A’) and issued a receipt to TP. As pointed out by the Plaintiffs, this, portrayed that it was P1 and P2 who had breached the terms of the LA. Additionally, that they had deliberately and wrongful concealed the fact of payment by Tan from them. [29] I upheld the Plaintiffs’ contention that D’s above argument was totally devoid of any merits and nothing should be further from the truth than the allegation by D as to the party who had breached the LA. What transpired at the crucial meeting on 28.04.2015 between PW2 and DW1 has been discussed earlier, in particular the changing/differing stances adopted by D on facts vital to their defence which rendered their version wholly incredible and improbable. DW1 himself admitted under cross-examination that D’s allegation of fraud was nothing more than his own assumption arrived at from the alleged refusal by PW2 to answer any of his telephone calls. It is clearly flawed to make the serious allegation of fraud based simply on such a bare and unproven assumption. [30] On the whole, it would suffice to state that the evidence of D on the allegation of fraud and/or conspiracy by P1 and P2 that was, in substance, Page 22 of 24 contradictory, inconsistent and lacking in credibility fell far short of the standard of proof required in law for a claim founded on fraud to succeed. I, accordingly, held that D had obviously failed to discharge the burden of proving fraud against P1 and P2 on a balance of probabilities. Conclusion [31] I have duly considered and evaluated the evidence of witnesses for both parties, the documentary evidence, particularly the exchange of correspondence and the contentions of counsel. My findings on the principal issues for determination are as follows.