AP DIGITAL MEDIA SDN BHD v 1. ) Alfred Tan Bee Kwan (BA-B52NCvC-177-07/2021)

ALFRED TAN BEE KWAN (No. K/P: 860730-56-5661)

EDSON TONG YU XIAO (No. K/P: 800515-01-5101) …DEFENDANTS

SEMANGAT MODEN SDN. BHD. (No. Syarikat: 918680-U)

OPTOPRENEUR EDUCATION GROUP SDN BHD (No. Syarikat: 813228-X) ...THIRD PARTIES GROUNDS OF JUDGMENT (FULL TRIAL) A.

This matter concerns a series of sale and purchase transactions involving gloves between the Plaintiff, AP Digital, and two Defendants, Alfred (SD1) and Edson (SD3) (collectively referred to as the “Defendants”).

AP Digital entered into contractual arrangements with the Defendants for the supply of gloves. The dispute relates to allegations that AP Digital suffered losses arising from the Defendants’ conduct.

The action is divided into two parts: (1) the main claim by AP Digital against the Defendants; and (2) third-party proceedings brought separately by each 22/07/2025 11:44:25 BA-B52NCvC-177-07/2021 Kand. 124 Defendant against different third parties. The Plaintiff's submissions pertain only to the main claim.

AP Digital’s claims against the Defendants are based on allegations of fraud, deceit, fraudulent misrepresentation, and breach of warranty or promise. The Defendants denied these allegations and initiated third-party proceedings against other entities.

Central to the dispute are two entities, Vera Collections (Reg. No. 002428305-D) and Vera Collection PLT, through which invoices were issued. Evidence was presented concerning the Defendants' use of these entities’ names without authority, including the issuance of invoices under a business name (Vera Collections) that had ceased to exist since 2016.

Key factual issues raised include whether the Defendants' roles were that of suppliers or merely intermediaries or agents and whether the Defendants breached promises or warranties made to AP Digital.

The Plaintiff seeks, among other remedies, the sum of RM368,878.00, general damages (to be assessed), exemplary damages, aggravated damages, interest, and costs. B.

By their respective submissions, the parties have crystallized the 'Amended Issues to be Tried' (as filed in Enclosure 22 – Bundle H) into the following:

Whether the Defendants were agents, middle-men or managers for the sale, purchase and supply of gloves and thus, having no privity with AP Digital?

Whether the Defendants had fraudulently misrepresented and committed tort of deceit/fraud or conspiracy to defraud against the Plaintiff?

Whether the Defendants had made any warranty and/or promise through the series of transactions and breached the same by using and/or misappropriating the Plaintiff’s funds?

Whether AP Digital is entitled to the Outstanding Sum of RM368,878.00, general damages, exemplary damages and aggravated damages? C. PLAINTIFF’S SUBMISSION

Plaintiff submitted that the first and critical issue is whether the Defendants were mere middlemen or agents. According to Plaintiff, this should be answered firmly in the negative: the Defendants carried themselves at all times as sellers, not intermediaries.

Plaintiff contended that from the outset and at all material times, the Defendants never disclosed to AP Digital that they were brokers or agents. On the contrary, AP Digital dealt directly and exclusively with the Defendants for the purchase of gloves, establishing a buyer-seller relationship.

It was only much later, on 16.10.2020 — after AP Digital persistently sought answers — that Edson (Second Defendant-SD3) for the first time alleged via WhatsApp that the Defendants were “brokers” and attempted to disclaim responsibility for refunds.

Plaintiff submitted that the Defendants' assertion that AP Digital was contracting with third-party suppliers is wholly baseless due to the following reasons:

No contracts were entered into between AP Digital and any third parties.

(ii) No invoices were ever issued by third parties to AP Digital.

(iii) AP Digital had never communicated or dealt with any alleged third-party suppliers.

This is supported by the trial testimony of Edson and further confirmed by Barbara (SD-2), the Defendants’ own subpoena witness. Barbara testified that companies such as Optopreneur Education and Optopreneur Global had no contracts with AP Digital.

Plaintiff relied on the case of ABS Solution (S) Pte Ltd v Lim Teck Hoe & Anor [2024] MLJU 3491 as a closely analogous authority supporting its position. There, the Singapore High Court found that the defendants, in a similar context involving gloves sales during COVID-19, were not agents but contracting parties: “[18] ... M Can entered into a contract to supply Nitrile Gloves to the plaintiff and was therefore not functioning as a mere agent.”

Similarly, in Bulsing Ltd v Joon Seng & Co [1972] 2 MLJ 43, the Court held that when an agent signs a contract in their own name and appears as the principal, they cannot later claim to be an agent to escape liability.

Plaintiff submitted that in the current case the Defendants issued invoices in their own name and Alfred (First Defendant - SD1) even signed those invoices. No agency agreement was ever disclosed or evidenced.

Thus, applying these authorities, the Defendants must be found to have contracted directly with AP Digital as principals.

Plaintiff submitted that the basis of AP Digital’s claim is fraud. Plaintiff relied on Radiant Splendour Sdn Bhd & Ors v Dato’ Seri Najib Razak & Ors [2020] MLJU 961 and Yap Sau Choon v Cheong Hong Un & Ors [2016] 1 LNS 871 for the elements to establish fraud and conspiracy.

Based on MGG Pillai v Vincent Tan [1995] 2 MLJ 493 and Renault SA v Inokom Corp Sdn Bhd [2010] 5 MLJ 394, Plaintiff submitted that the agreement need not be proven by direct evidence; circumstantial evidence suffices.

For conspiracy by unlawful means, Plaintiff relied on Global Ventures Network Sdn Bhd v Lokman bin Dato’ Mohd Kamal [2018] 6 MLJ 103 and submitted that it is not necessary to prove a predominant intention to injure — the use of unlawful means (fraud, deceit) itself suffices.

Plaintiff submitted that if the facts is viewed chronologically i.e on 12.06.2020, AP Digital was introduced to the Defendants at a warehouse meeting (subsequently revealed to belong to FitLion). Throughout, Defendants projected themselves as sellers and gave assurances regarding the gloves. Then the Defendants collected substantial sums from AP Digital. Upon failure of delivery, the Defendants avoided responsibility and belatedly alleged they were “brokers”. Plaintiff submitted that the pattern of conduct, the absence of disclosed principals, the collection of payments directly, and the false assurances amount to a deliberate fraudulent scheme to deceive AP Digital.

Plaintiff again placed their reliance on ABS Solution (S) Pte Ltd. It was submitted that the Court there found a fraudulent conspiracy to defraud buyers during the COVID-19 crisis, and a similar pattern of deceit through layered intermediaries was uncovered.

Plaintiff is arguing that Alfred and Edson conspired together in a fraudulent scheme to cheat AP Digital through fake or unauthorized invoicing, improper money transfers, and complex company structures to hide or shield their personal liability.

Plaintiff submitted that Alfred was just feigning ignorance in which he tried to claim he was just following Edson's orders and didn’t know the transactions were unauthorized. However, the evidence (like his WhatsApp messages and his own admissions) shows he was actively involved and knew what was happening. They operated as partners ("rakan kongsi") to defraud AP Digital, intentionally keeping other company officials/owner of Vera Collections PLT like Joseph Chew (SP3) and Desmond Yau (SD4) in the dark.

Alfred and Edson used Vera Collection's name to issue invoices and deal with AP Digital without the real owners' knowledge or permission. When trouble surfaced, Edson tried to get Vera Collection’s owners to sign backdated appointment letters to make Alfred’s acts look legitimate, but they refused.

Plaintiff pointed out that there was a complex web of payments where money was spread across many companies controlled by Edson, Desmond, Barbara Chin, and others. Most of these companies had no proper audited accounts filed, were dormant, insolvent, or wound up and had no legitimate glove business operations.

With regard to the role of Barbara Chin (a subpoenaed witness of the Defendant), Plaintiff submitted that this witness had admitted under cross-examination that she signed a Statutory Declaration (SD) because the Defendants told her to, without fully understanding it. Further, this witness also confirmed that her companies (Optopreneur Edu and Optopreneur Global) were used to receive and move money around.

In addition, Plaintiff submitted that there was also refund issue with Supreme Office, one of the alleged supplier. Evidence revealed that refunds that Supreme Office paid to Semangat Moden (controlled by Edson) were never returned to AP Digital, even though the refunds were for AP Digital’s transactions. Instead, Edson claimed the refund money belonged to Semangat Moden.

Plaintiff argued that the Defendants’ various actions (e.g., using many companies, having Barbara signed an SD, backdating letters) were deliberate acts to confuse, mislead, and cover up their fraud.

Plaintiff submitted that it had established a case of fraudulent misrepresentation against the Defendants on the balance of probabilities.

Plaintiff relied on Yeohata Machineries Sdn Bhd & Anor v Coil Master Sdn Bhd & Ors [2015] 6 MLJ 810 and Victor Cham & Anor v Loh Bee Tuan [2006] 5 MLJ 359 submitted what constitute fraudulent misrepresentation under the circumstances of the case.

Plaintiff submitted that the representations made by the Defendants were by words and conduct, including at the 1st meeting on 12.06.2020, the Defendants represented they had sufficient glove supplies to meet AP Digital’s demands. The Defendants represented they were authorized representatives or owners of Vera Collections Group.

Plaintiff submitted that the conduct of issuing invoices under Vera Collections and Vera Collection PLT, signed by Alfred, constituted further representations by conduct, as recognized in Yeohata Machineries.

Plaintiff submitted that these representations were made knowingly false or recklessly without caring for their truth, as Alfred admitted under cross-examination that he made no independent verification of Edson's authority and simply relied on Edson's word.

Plaintiff submitted that the Defendants' knowledge that they had no authority from Vera Collection PLT is confirmed by the testimony of Joseph Chew (SP3), who testified that Vera Collection PLT did not issue the invoices and Alfred was not authorized to sign any invoices. He further confirmed that neither Defendant had authority to act on behalf of Vera Collection PLT.

Plaintiff submitted that Edson also admitted during cross-examination that he had no written authorization from Vera Collection PLT to issue invoices or contract with AP Digital.

Plaintiff submitted that AP Digital relied upon these misrepresentations in entering into the glove purchase transactions with the Defendants, and suffered losses as a result, satisfying the legal requirements of fraudulent misrepresentation as outlined in Victor Cham.

Plaintiff submitted that had the Plaintiff known the Defendants had no authority and no capacity to deliver the gloves, it would not have entered into any dealings with them.

Plaintiff submitted that the Defendants' witnesses lacked credibility, having given evasive, contradictory, illogical and self-serving evidence throughout the trial. Plaintiff submitted that such testimony must be weighed with caution by the Court.

Plaintiff submitted that AP Digital is entitled to recover the outstanding sum of RM368,878.00, based on Section 61(1) of the Sale of Goods Act 1957 which affirms this remedy: "Nothing in this Act shall affect the right of the seller or the buyer to... recover the money paid where the consideration for the payment of it has failed."

Accordingly, the Plaintiff is entitled to a refund of the monies paid for gloves not delivered Plaintiff also prayed for general damages (to be assessed), aggravated damages, and exemplary damages, together with interest and costs.

Plaintiff submitted that aggravated damages are available where the injury was exacerbated by malice, insolence, or high-handed conduct. Plaintiff referred to Messenger Newspapers Group v National Graphical Association [1984] IRLR 397 (CA) in which Caulfield J held: "Certainly exemplary and aggravated damages can be awarded against inanimate legal entities like limited companies, and I cannot see any reason why the same legal entities cannot be awarded aggravated and exemplary damages."

Although there is a conflicting decision in Eaton Mansions (Westminster) Ltd v Stinger Compania De Inversion SA [2013] EWCA Civ 1308, Plaintiff submitted that aggravated damages are justified here due to the severe reputational harm and deliberate deception suffered.

Thus, Plaintiff prays for RM100,000.00 as aggravated damages.

Plaintiff submitted that exemplary damages are justified under the second category described in Rookes v Barnard [1964] 1 All ER 367 (HL): "Where a defendant with a cynical disregard for a plaintiff’s rights has calculated that the money to be made out of his wrongdoing will probably exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity."

The Defendants' misconduct was calculated to profit at the Plaintiff's expense through fraud and deceit.

Accordingly, Plaintiff prays for RM200,000.00 as exemplary damages.

Plaintiff submitted that under Section 57 of the Sale of Goods Act 1957, damages for non-delivery include:

Costs of alternative arrangements;

(ii) Compensation obligations to third parties;

(iii) Market price differences;

(iv) Foreign exchange losses; and

Loss of profits and business disruption.

In cases involving fraudulent misrepresentation, the principle is to restore the Plaintiff to the position it would have occupied had the fraud not occurred (Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158). Based on this principle, Plaintiff submitted that it should be granted liberty to apply for the assessment of such further general damages.

Plaintiff submitted that in light of all the evidence, the Defendants were not agents but principals in the sale of gloves to AP Digital. The Defendants engaged in fraud, deceit, and conspiracy, causing significant losses to AP Digital.

Accordingly, Plaintiff submitted that judgment should be entered in favour of the Plaintiff against the Defendants with the following reliefs.

Award RM368,878.00 to the Plaintiff;

(ii) Award aggravated damages of RM100,000.00;

(iii) Award exemplary damages of RM200,000.00;

(iv) Order that general damages be assessed; and

Award interest and costs to the Plaintiff. D. DEFENDANTS’ SUBMISSION

Counsel for the First Defendant submitted that the First Defendant was, at all material times, merely an agent and/or intermediary in the transactions involving the purchase and supply of nitrile gloves for the Plaintiff.

The First Defendant denied any loss suffered by the Plaintiff regarding the three transactions involving Maxcare, AMST, and Hankare gloves. The First Defendant also denied any breach of contract, fraud, deceit, or misappropriation of the Plaintiff’s funds.

It was submitted that the Plaintiff made direct payments to third-party suppliers without the First Defendant’s involvement, proving the First Defendant’s role as an intermediary only.

The First Defendant raised the issue of Third Parties not named as Defendants, arguing that payments were made to Third Parties, who were the actual suppliers, and not to the Defendants. Despite this, the Plaintiff filed this suit only against the Defendants.

First Defendant averred that the use of Vera Collection PLT invoices was for accounting purposes with the owners’ consent. The signature on the invoices was a template, not the personal signature of the First Defendant. The First Defendant was never a director, shareholder, or officer of Vera Collection PLT.

First Defendant contended that should the First Defendant be found liable, he is entitled to indemnity from the relevant Third Parties involved in the transactions.

First Defendant contended that funds paid by the Plaintiff were channelled through Semangat Moden Sdn Bhd, an entity linked to the Second Defendant and not the First Defendant. Brokers such as Barbara Chin and Tan Jia Hui handled the purchase of Maxcare gloves, with payments made directly by the Plaintiff to entities managed by these brokers.

First Defendant highlighted the fact that Supreme Office Furniture System Sdn Bhd refunded RM197,250.00 to Semangat Moden Sdn Bhd, not to the First Defendant. The First Defendant had no knowledge of the refund mishandling until this case arose and lodged a police report regarding the matter. The First Defendant reiterated that he acted purely as an agent/intermediary and was not responsible for the Plaintiff’s alleged loss.

The First Defendant asserted that the Plaintiff's payment was channelled to a selling and/or supplying company, namely Optopreneur Education Group Sdn Bhd (the proposed Third Party) and Optopreneur Global Education Sdn Bhd. However, Optopreneur Education Group Sdn Bhd / Optopreneur Global Education Sdn Bhd have refused, been negligent and/or failed to refund the amount of RM130,000.00 to the Plaintiff. This is supported by a Statutory Declaration by Barbara Chin (one of the Directors of Optopreneur Education Group Sdn Bhd and the Second Defendant's witness – SD2), affirmed on 31.01.2023, attached as Exhibit TYX-4 in the Second Defendant's Affidavit in Support (Content 73, Bundle J).

The relevant paragraphs 3, 5, 6, and 7 of the said Statutory Declaration (SD-2) are reproduced below: “The sum of RM80,000.00 received by Optopreneur Global Education Sdn Bhd (1156064-M) and RM50,000.00 received by Tan Jia Hui was later transferred to Optopreneur Education Group Sdn Bhd (Company No: 813228-X) for the purpose of the said sale and supply transaction.” "As a result, Optopreneur Education Group Sdn Bhd (Company No: 813228- X) refunded AP Digital Media Sdn Bhd the sum of RM80,000.00, leaving a balance of RM130,000.00." "Subsequently, as Optopreneur Education Group Sdn Bhd was facing financial issues due to the Covid-19 pandemic, the balance sum of RM130,000.00 was utilized by the company." "As at the date, Optopreneur Education Group Sdn Bhd has ceased to be active and as such will not be able to recuperate and refund the sum of RM130,000.00 to AP Digital Media Sdn Bhd."

The First Defendant contended that although Optopreneur Education Group Sdn Bhd has been dissolved/struck off from SSM’s register, any liability, if any, of each director or officer of the company continues and can be enforced as if the company had not been dissolved. Since Barbara Chin (SD-2) herself came to Court to state that her company faced financial difficulties and the liability for repayment to the Plaintiff lies with SD-2 as the director. SD-2, as director of Optopreneur Education Group Sdn Bhd, cannot shield herself behind the corporate entity. The corporate veil can be lifted to render SD-2 personally liable to the Plaintiff. Furthermore, it is evident that Optopreneur Education Group Sdn Bhd still had outstanding debts and liabilities towards the Plaintiff, and it attempted to avoid liability by dissolving the company from SSM.

Based on the above, it was said that all the named Third Parties who received payments directly from the Plaintiff (without involving the First Defendant) are the actual sellers and/or suppliers of the nitrile gloves.

It was submitted that the Plaintiff was also aware that the First Defendant had made efforts (before this action was filed) to recover some of the outstanding sums from the Third Parties – the glove sellers and suppliers involved.

The First Defendant further stated that the Plaintiff was aware of the outstanding balance owed by the Third Parties, and the First Defendant was separately trying to recover the same.

However, such recovery efforts by the First Defendant were stopped after the Plaintiff’s representatives threatened the Defendants by saying that violence and 'underworld' connections would be used against them to retrieve the payments.

The First Defendant thereafter lodged a Police Report on 04.08.2020 regarding this incident.

The First Defendant relied on and invoked the general law principle of Doctrine of Privity towards the Plaintiff and the Third Parties, where the Plaintiff was fully aware that the First Defendant was merely a middleman managing the procurement/purchase of gloves from Third Parties on behalf of the Plaintiff at all material times.

It was said that even though there was no written document or contract appointing the First Defendant as agent/middleman between Plaintiff and Defendant, the facts and evidence show that the First Defendant acted as an agent/middleman to assist the Plaintiff in procuring gloves from Third Parties.

There was no contract with the First Defendant, and payments were made directly by the Plaintiff to the respective Third Parties. There was no direct payment by the Plaintiff to or through the First Defendant or any entity owned/controlled by the First Defendant for any of the glove supply transactions dated 17.06.2020 (first order), 30.06.2020 (second order), and 1.07.2020 (third order).

The First Defendant submitted that contracts for these three transactions were entered into and agreed directly between the Plaintiff and the Third Parties (Vera Collection PLT), not the First Defendant in his personal capacity.

The First Defendant relied on Section 183 of the Contracts Act 1950 which provides: "In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them."

First Defendant submitted that here, there was clearly no written contract or "agency agreement" between the Defendants and the Plaintiff containing agreed terms regarding the supply of gloves.

According to the First Defendant, at all material times, contracts under the law existed directly between the Plaintiff and the Third Parties. Thus, the First Defendant is not liable to the Plaintiff for any business losses between the Plaintiff and the Third Parties.

The Plaintiff's claim now is an attempt to allege fraud or misrepresentation and to impose liability on the First Defendant despite the absence of any pleading of a contract between Plaintiff and First Defendant.

First Defendant relied on the Court of Appeal case Sri Sutera Sdn Bhd v Mohamed Bin Abid And Another Appeal [2004] 2 MLJ 321 in which the Court of Appeal emphasized: "[12]... by virtue of section 183 of the Contracts Act 1950, the second defendant, being the agent of the first defendant, could not be personally liable for a contract entered into on behalf of the first defendant."

First Defendant also relied on the High Court case of Sophii Haji Nawi @ Saphii Nawi v. The Sarawak Land Development Board & 3 Ors [2006] 1 LNS 175, it was held: "... the 3rd Defendant was only an agent of the 1st Defendant and as such could not be held liable for the act of his principal."

Similarly, in Dtx Advance Engineering Sdn Bhd v. Eng Hong Electric Service & Ors [2023] 1 LNS 2034, the High Court said: "[9]... D1 to D4 acted as agents for D5... and are not personally liable... which aligns with the general rule under Section 183 of the Contracts Act 1950."

First Defendant cited the case of Tenaga Nasional Bhd v Majlis Daerah Segamat [2022] 2 MLJ 119 in which the Federal Court reinforced that: “Courts have no jurisdiction over non-parties not properly brought before the court, and no order can be made against them.”

First Defendant submitted that at all material times, the contractual relationship legally existed between the Plaintiff and the Third Parties (based on Vera Collection PLT invoices), and not with the First Defendant personally. It was said that the Plaintiff's current claim is simply an attempt to allege fraud/misrepresentation to impose liability on the First Defendant where no such contract between Plaintiff and Defendant has ever been pleaded.

The First Defendant argued that the Plaintiff cannot raise new issues about agency or contractual nexus at the hearing or trial if it was never pleaded. Reference was made to Iftikar Ahmed Khan v. Perwira Affin Bank Bhd [2018]

The First Defendant submitted that the Plaintiff's allegations of fraudulent misrepresentation and fraud were baseless and merely intended to tarnish the Defendants' image in court and create an appearance of a cause of action against the First Defendant.

It was contended that the Plaintiff had full knowledge that the First Defendant was acting as an agent and intermediary for sourcing glove suppliers, agreed to pay commission to the First Defendant, knew that the gloves were supplied by third parties (not by the First Defendant), consented to the business arrangements (including direct payments to third-party suppliers), and entered into contracts with Vera Collection PLT for the glove supply transactions. Furthermore, these were not the first transactions between the Plaintiff and the First Defendant.

The First Defendant submitted that the Plaintiff failed to prove any fraudulent misrepresentation against him, and no prior notice or formal complaint alleging fraud was issued before the Plaintiff filed the claim. It was contended that the allegations of fraud were an afterthought following the Plaintiff’s failure to recover payment from third parties, indicating mala fide intent.

The First Defendant submitted that the Plaintiff called SP-3 (Chew Wei Min @ Joseph), owner of Vera Collection PLT, to substantiate the fraud allegation, but SP-3’s evidence was unreliable and contradictory, especially since SP-3 was aware of the use of Vera Collections' invoices as early as July 2020 but only lodged police reports months later in October 2020.

Regarding the allegation of conspiracy and/or unlawful fraud, the First Defendant submitted that evidence from Plaintiff’s witnesses confirmed that when refunds were delayed, the Plaintiff had agreed for the First and Second Defendants to chase third-party suppliers for the refunds, and thus no fraudulent or conspiratorial conduct could be established.

On damages, the First Defendant submitted that there was no justification for exemplary or aggravated damages, relying on Sistem Televisyen Malaysia Bhd & Ors v Nurullah bt Zawawi & Anor [2015] 6 MLJ 703, where the Court of Appeal held: “[36] For all the reasons stated we held that there had not been established circumstances in the present case justifying either exemplary or aggravated damages... there was no evidence of any kind of high-handed, oppressive, insulting or contumelious behavior by the defendants... there was no basis to award exemplary and aggravated damages but the award of RM250,000 included such damages, which was plainly wrong.”

The First Defendant further submitted that the Plaintiff failed to prove fraud even on the balance of probabilities standard, citing Hong Leong MSIG Takaful Bhd (previously known as Hong Leong Tokio Marine Takaful Bhd) v Shantawood Manufacturing Sdn Bhd [2016] 6 MLJ 32, as authority.

Therefore, the First Defendant prayed for the Plaintiff’s claim against him to be dismissed with costs.

Second Defendants firmly denied themselves as sellers, it was submitted that Defendants never represented themselves as sellers; they only assisted Plaintiff in finding suppliers.

Second Defendant emphasized that there were clear admissions from the Plaintiff's own witnesses (SP1 and SP2) where they admitted that Defendants were only tasked to find suppliers.

There was evidence of such knowledge where SP1 acknowledged that Defendants were engaged to locate a supply, not supply directly. SP2 also confirmed that refunds pursued were from suppliers, not Defendants. Whatsapp evidence disclosed that the Plaintiffs knew from the beginning that issues were with suppliers.

Second Defendant’s legal position is that the Plaintiff never reasonably believed Defendants were sellers. Plaintiff’s own admissions (oral and documentary) are binding and strongest form of evidence (ESSO Malaysia Bhd v Hills Agency (M) Sdn Bhd & Ors [1994] 1 MLJ 740 page 2 cited). It was submitted that the Plaintiff’s case of misrepresentation lacks bona fides and should be rejected.

Second Defendant also raised the issue of Locus Standi. It was argued that Plaintiff's contract was with Vera Collection PLT as all invoices were issued by Vera Collection PLT — not the Defendants personally. Thus, the Plaintiff’s contractual rights lie against Vera Collection PLT, not the Defendants.

According to the Second Defendant, the doctrine of privity of contract applies, and thus, only parties to a contract can sue or be sued upon it. As the contracts were between the Plaintiff and Vera Collection PLT, the Plaintiff has no cause of action or locus standi against the Defendants personally.

Despite Plaintiff subpoenaed SP3 (director of Vera Collection PLT) to allege Defendants misused Vera Collection’s name without authority, Second Defendants’ position is that misuse is not established as SP3 admitted he had no full knowledge or control over Vera Collection PLT’s day-to-day operations and he too agreed that SD4 and Second Defendant (Edson) jointly managed business dealings without informing him on everything.

Thus, Second Defendant submitted that there was implied authority to use Vera Collection PLT’s name as SP3 acknowledged Vera Collection PLT was involved in other glove transactions and all resources (invoices, stamps, staff) were openly shared among companies linked to SP3, SD4, and Second Defendant. It was also alleged that Vera collection PLT’s business logo and templates were accessible and used by Second Defendant with implied permission.

Alternatively, Second Defendant submitted that even if there were unauthorized acts (disputed), the right to sue lies with Vera Collection PLT, not the Plaintiff. There was no proven fraud directly between Plaintiff and Defendants. Hence, Plaintiff’s action against Defendants should fail for lack of locus standi.

The Second Defendant submitted that the most damning evidence of Vera Collection PLT’s knowledge, agreement, and/or acquiescence to the Defendants’ role as agents arises from a police report lodged by the First Defendant on 4.8.2020 ("D1 Police Report"), the material points of which are:

The Defendants acted as middlemen for Vera Collection PLT in transactions with the Plaintiff and Supreme Office Furniture System Sdn Bhd;

(ii) Plaintiff’s monies were paid to Supreme Office Furniture System for 10,000 nitrile gloves, which were later rejected due to poor quality;

(iii) The Defendants actively pursued a refund and lodged the report to protect themselves against liability.

It was the Defendants' case that a draft of D1 Police Report was sent to SD4 (a director of Vera Collection PLT) for approval via WhatsApp on 4.8.2020. SD4 read the draft, raised no objection, and the final report was lodged that evening. D1 Police Report was also furnished to both SD4 and SP3 on 8.8.2020.

Accordingly, the Second Defendant submitted that SD4 and SP3, having been privy to and having acquiesced to the draft without objection, are estopped from alleging surprise, fabrication, or inaccuracy. The Defendants' appointment as agents is clearly evidenced by the D1 Police Report, regardless of the absence of formal documentation.

The Second Defendant relied on Tindok Besar Estate Sdn. Bhd. v Tinjar Co. [1979] 2 MLJ 229, emphasizing that acts and deeds contemporaneous with events are more reliable than self-serving subsequent denials.

Further, the Second Defendant highlighted that SP3 only lodged a police report denying the Defendants' authority two months later, on 15.10.2020, contrary to his and SD4’s claim of immediate action (Pages 218 and 771 Notes of Proceeding). This delay coincided with the Plaintiff threatening SP3 with legal action (Page 122 Notes of Proceeding).

Thus, the Second Defendant submitted that SP3’s police report was not prompted by genuine objection to D1 Police Report, but was self-serving in response to potential litigation. As at the date of submission, Vera Collection PLT, SP3, and SD4 are notably not sued by the Plaintiff.

Second Defendant submitted that the absence of written authority does not preclude a finding of agency, particularly where conduct and dealings support an implied agency.

It was undisputed that prior to the glove transactions at issue, the Second Defendant had acted on behalf of Vera collection PLT in other business dealings, without any formal written authorization. SP3 and SD4 confirmed that even in prior dealings (e.g.Samsung transactions), no letter of authorization had been issued to the Second Defendant.

The Second Defendant submitted that Vera Collection PLT’s consistent knowledge, acceptance, and benefit from the Defendants' activities, without any objection, supported the existence of an implied authority, pursuant to Sections 139 and 140 of the Contracts Act 1950.

The Second Defendant further submitted that Vera Collection PLT, through SP3 and SD4, never revoked the Defendants’ implied authority nor objected contemporaneously. Instead, SP3 and SD4 "played along" with the Defendants, as evidenced by their testimonies, thereby leading the Defendants to reasonably believe that their authority continued. Accordingly, the Defendants cannot be faulted for continuing to act on behalf of Vera Collection PLT.

In support of this argument, the Second Defendant relied on the conduct and silence of SP3 and SD4, and cited Yoon Goon How v Aston Villa Sdn Bhd [2024] 7 MLJ 139 in which it was held at page 2 that: "(7) The Court agreed with the Defendant that the only inference that could be drawn from the Plaintiff’s conduct and silence and lack of objection for a long period of time was that the Plaintiff had consented to and/or accepted the 50% salary deduction and the change of his designation to a consultant of the Defendant. Having led the Defendant to believe that he had no objections to any of those two matters, the Plaintiff was now estopped from contending otherwise."

Consequently, the Second Defendant submitted that Vera Collection PLT, SP3, and SD4 are estopped from denying the Defendants' authority to act on behalf of Vera Collection PLT in relation to the glove transactions.

The Second Defendant submitted that having established the existence of implied authority from Vera Collection PLT, the Defendants’ actions were carried out in the course of ordinary business.

In support of this, the Second Defendant submitted:

Vera Collection PLT did not restrict the nature of business it engaged in, deciding transactions based on their benefit to all parties involved. (Page 819 of Notes of Proceeding dated 19.11.2024)

(ii) Vera Collection PLT expanded into sanitizer and glove businesses after the spread of Covid-19, involving the same suppliers. (Page 745 of Notes of Proceeding dated 19.11.2024)

(iii) The Defendants had previously used Vera Collection PLT for other glove transactions, which SP3 and SD4 knew about but failed to inquire into or object to. (Page 212 of Notes of Proceeding dated 13.8.2024; Page 757 of Notes of Proceeding dated 19.11.2024)

(iv) The initial glove transaction with the Plaintiff was successful and undisputed, demonstrating ordinary business dealings. (Page 48 of Notes of Proceeding dated 24.10.2023)

In the subsequent transactions: a) First Transaction: partial delivery was made, and a refund was provided for non-deliveries. (Page 51 of Notes of Proceeding dated 24.10.2023; Paragraph 6(d) of Plaintiff’s Statement of Claim) b) Second Transaction: partial delivery was made with a refund for the rejected goods. (Page 56 of Notes of Proceeding dated 24.10.2023; Paragraph 7 of Plaintiff’s Statement of Claim) c) Third Transaction: No delivery occurred, but a full refund was issued. (Page 57 of Notes of Proceeding dated 24.10.2023)

(vi) The Second Defendant actively pursued refunds from third-party suppliers on behalf of the Plaintiff, even after disputes arose. (Page 62 of Notes of Proceeding dated 24.10.2023)

(vii) At no material time did either Defendant personally receive any payment from the Plaintiff, with all payments made to company accounts. (Page 63 of Notes of Proceeding dated 24.10.2023)

The Second Defendant further submitted that these facts demonstrated transparency, delivery of goods, partial performance, and active efforts to secure refunds — all features inconsistent with fraud or conspiracy.

Accordingly, the Second Defendant submitted that the Plaintiff’s allegations of conspiracy and fraud were untenable given the clear evidence that all dealings were conducted within the ordinary course of business and not induced by fraud, misrepresentation, or conspiracy to injure the Plaintiff. This is supported by evidence of successful transactions, partial deliveries, refunds, transparency in dealings, and the Defendants' active pursuit of refunds for the Plaintiff.

Second Defendant cited Tai Lee Finance Co Sdn. Bhd. v The Official Assignee of The Property of Ngam Kim Yong & Ors [1983] CLJ (Rep) 387 at page 391: "Whether fraud exists is a question of fact, to be decided upon the circumstances of each particular case. Fraud must mean 'ACTUAL FRAUD', i.e., dishonesty of some sort..."

It was submitted that the Plaintiff’s claim of fraud must first establish misuse or misappropriation of Vera Collection PLT by the Defendants, which is an issue between the company and the Defendants — not the Plaintiff and the Defendants. In the absence of such proof, the Plaintiff’s action must fail for lack of locus standi and/or cause of action.

The Second Defendant submitted that the Plaintiff has failed to establish the key element of actual dishonesty required to prove fraud. Relying on Wong Chong Kiew v Lee Hock Seng & Anor [2020] MLJU 482 and PJTV Denson (M) Sdn Bhd v Roxy (Malaysia) Sdn Bhd [1980] 2 MLJ 136, the Second Defendant argues that actual fraud requires clear proof of dishonesty or a dishonest intent— neither of which has been demonstrated in this case. Consequently, the Plaintiff’s allegation of actual fraud is untenable and should be dismissed.

Addressing the Amended Issues to Be Tried, the Second Defendant submitted as follows: a) On whether the Defendants made false, untrue, fraudulent, or deceitful representations to the Plaintiff: The answer is Negative — there was no false representation; the Defendants merely acted to assist in sourcing suppliers. b) On whether the Defendants committed the tort of deceit or conspired unlawfully: The answer is Negative — the transactions were conducted in the ordinary course of business, and no fraud or conspiracy was proven. c) On whether the Defendants owe the Plaintiff RM368,878.00: The answer is Negative — no privity of contract existed between the Plaintiff and Defendants individually. d) On whether the Defendants breached any warranty or misused the Plaintiff’s funds: The answer is Negative — any failure to refund fully was due to third-party suppliers, not the Defendants personally. Refunds and deliveries had been pursued and partially fulfilled. e) On whether the Defendants were merely agents, middlemen, or managers: The answer is Positive — the Defendants acted as the Plaintiff’s appointed agents to find glove suppliers and not as principals to the transactions.

Based on the aforesaid, the Second Defendant prayed that the Plaintiff’s action be struck off with costs. E.

There are two main causes of action in this case. The first is breach of contract, and the second is conspiracy to defraud, rendering the transaction a fraudulent one.

The primary averment made by the Plaintiff against the Defendants is that the Defendants were not authorised to use the name "Vera Collections" and "Vera Collection PLT" as entities to issue invoices for the transactions in question.

The main defence raised by the Defendants is that the use of the name "Vera Collection" in the transactions was impliedly permitted. In addition, the First and Second Defendants contend that they merely acted as intermediaries or middlemen in the said transactions. Their role, as alleged, was limited to that of agents engaged in sourcing glove stocks from the market.

According to the Defendants, the transactions in issue were direct transactions between the Plaintiff and the supplier. In other words, the First and Second Defendants claim they were merely brokers in the deals that ultimately did not materialise. As such, they submit that they ought not to be held liable where the supplier either absconded with the funds or failed to deliver the gloves, or delivered goods that did not conform to the agreed specifications.

This Court notes that the First Defendant contended that the Plaintiff was not entitled to raise new issues concerning agency or the existence of a contractual nexus during the hearing or trial if such issues were not previously pleaded. In support of this submission, reliance was placed on the case of Iftikar Ahmed Khan v Perwira Affin Bank Bhd [2018] 1 CLJ 415.

However, upon careful scrutiny of the pleadings, particularly at page 36 of the Statement of Defence, it is evident that the Defendants themselves raised the issue of agency. Specifically, they asserted that they were acting as agents or brokers engaged to source glove stock from third-party suppliers. Accordingly, the issue of agency was already introduced into the pleadings by the Defendants themselves.

Further, this Court is of the view that the Plaintiff has pleaded material facts sufficient to support the existence of a contractual nexus. In Quah Swee Khoon v Sime Darby Bhd [2000] 2 MLJ 600, the Court of Appeal allowed the appeal and held as follows: “(1) The Industrial Court in holding that there was a breach of implied term leading to constructive dismissal was not adjudicating upon an unpleaded point as all the facts relevant to that point was pleaded. Only the legal result thereof was not pleaded. It is unnecessary to plead the legal result which will inevitably follow from a set of pleaded facts (see p 606B–C). Gopal Sri Ram JCA (as he then was) said the following: “Turning once again to the pleadings, it is abundantly clear that the appellant was complaining that he had been driven out of employment whereas the respondent was contending that the former had left of his own volition. Whether one would describe the conduct complained of as amounting to constructive dismissal or the breach of the implied term governing mutual trust and confidence is really a matter of semantics. Nothing turns upon it. At the end of the day, the question simply is whether the appellant was driven out of employment or left it voluntarily. Upon that question, the pleadings in the present instance are sufficiently precise. Ms Seah has drawn our attention to passages in well-established authorities which hold that material facts may be pleaded without the legal consequences following them. We would gratefully adopt what was said by ScruttonLJ, in Lever Bros Ltd v Bell [1931] 1 KB 557 at pp 582–583: “The practice of the Courts is to consider and deal with the legal result of pleaded facts, although the particular legal result alleged is not stated in the pleading.” …………… Having regard to the nature of the allegations made and the contentions raised by either side in their written case and reply, we are satisfied that the finding by the Industrial Court on the implied term point was not one that offended any rule of pleading. It follows that the learned judge was quite wrong in acting upon that ground to quash the award. We are satisfied that had the learned judge addressed his mind to the issues that arose upon a joinder of the parties’ pleadings, he would not have came to the conclusion that he did.

In light of the foregoing, it is incorrect for the Defendants to assert that the Plaintiff is precluded from raising or relying on the issues of contractual nexus and agency. These issues were not only expressly raised by the Defendants themselves, but also flow from material facts pleaded by the Plaintiff. As such, they clearly fall within the scope of the trial. The Plaintiff was, therefore, fully entitled to respond to and rely upon the issues of contractual nexus and agency in advancing its case.

Accordingly, the first substantive issue to be determined is whether the Defendants were acting as agents, middlemen, or managers in relation to the sale, purchase, and supply of gloves, and thereby lacked privity of contract with the Plaintiff, AP Digital. Issue [1]: Whether the Defendants were acting as agents, middlemen, or managers in relation to the sale, purchase, and supply of gloves, and thereby lacked privity of contract with the Plaintiff, AP Digital Relationship between Defendants and the Plaintiff

In this case, the Court finds that the relationship between the Plaintiff and the Defendants is, in fact, one of principal and agent. The Defendants were acting as agents of the Plaintiff. This constitutes a legal agency, as the Defendants were authorized to act on behalf of the Plaintiff and to represent the Plaintiff in dealings with the supplier. See Section 140 of the Contracts Act 1950. Section 140 of the Contracts Act 1950. Definitions of express and implied authority

An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case. ILLUSTRATION A owns a shop in Kajang, living himself in Kuala Lumpur, and visiting the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purpose of the shop, and of paying for them out of A’s funds with A’s knowledge. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop.

The definitions under Section 140 are reinforced by authoritative commentary. As stated in Chitty on Contracts Volume II: Specific Contracts (31st edition, 2012) at p. 29, para 31–042: “Express authority is that “given by express words”: implied authority is that inferred from the conduct of the parties and the circumstances of the case”. (see Hely-Hutchinson v Brayhead Ltd [1968] 1 Q.B. 549, 583)

In a similar vein, the principles of agency are outlined in The Commercial Law of Malaysia by Wu Min Aun & Beatrix Vohrah, Longman Malaysia, Chapter 14 ‘Law of Agency’, p. 387, where the authors note: “In certain circumstances the law will infer the creation of an agency by implication. For example: -

When a person by his words or conduct holds out another person as having authority to act for him. For example, if a person allows another to order goods on his behalf and habitually pays for them, an agency maybe implied. In such a case, he will be bound by the contracts as if he has expressly authorized them.”

Even though there was no formal written appointment, this Court finds that there was express appointment in the present case. The Plaintiff had expressly requested the Defendants to source gloves and had indicated their agreement to the purchase and placement of orders (see Purchase Order by the Plaintiff at page 52 Bundle B).

This finding is supported by SP1’s own testimony in Court: - Page 21 of Notes of Proceeding dated 24.10.2023 SP1 said – “We appointed the two of them to be our representatives to find a supply of gloves” - Page 21 of Notes of Proceeding dated 24.10.2023 SP1 said – “we then appointed them as our representatives to find a supplier” - Page 22 of Notes of Proceeding dated 24.10.2023 SP1 said – “when I say appointment, my understanding is we are buying from them. So, they are finding us a supply, we are paying them”

Documentary evidence further supports this conclusion. At Page 166 of Bundle B (Whatsapp Conversation), the following messages were exchanged: “1st July 2020 11:44am – Sean @ Ap Media: Hi Fred fred, Once you have sighted stock pls share details here. Moving forward all glove related details if can, can we share in here. So the whole team is updated immediately. We need to work efficiently. ….

11.58am – Alfred Tan zitron: ok 3rd July 2020 9:12am – Adrian Ap Media: Let’s move fast and get clarity on everything. Documentation as mentioned has to be above board. If you guys have anything that’s on the market to purchase please let us know. …..

9.23am – Alfred Tan zitron: Cun

9.23am – Alfred Tan zitron: Will get all the invoices out shortly.”

At Page 162 of Bundle B (Whatsapp Conversation), SP2 texted: “A lot of excuses which I really don't think the two of you are being honest about. From the first purchase, Alfred was thanking us for saving the two of you. These purchases were done on the pretext of you and Alfred mentioning you could supply the gloves in the short space of time. All negotiations were done with the two of you only. Your issues with your SUPPLIERS, as I mentioned FROM THE BEGINNING, doesn't concern us as the dealings, prices and deliveries were what you and Alfred agreed to before we transferred the amounts. These were done following Alfred’s and your instructions solely”

These messages clearly demonstrate that the Plaintiff had consented to the Defendants being assigned a specific task: to source gloves in the market. There is therefore actual authority conferred upon the Defendants. As noted in Chitty on Contracts Volume II: Specific Contracts at p. 29, para 31–042: “Actual authority is a “legal relationship between principal and agent created by a consensual agreement to which they alone are parties. (see Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 Q.B. 480, 502.)

The fact that the Plaintiff made payments directly to the suppliers does not negate the Defendants’ status as agents. Notably, the Second Defendant (“SD3”) expressly acknowledged that the Plaintiff made payments to third parties solely upon SD3’s instructions, and not on the directions of the suppliers themselves.

SD3 further explained that the arrangement was necessitated by the Plaintiff’s need to secure stock urgently and to navigate issues with bank transfer limitations. Having considered this explanation, the Court finds that the essential fact remains that the Plaintiff made payments entirely based on the Defendants’ instructions, without any direct dealings with the suppliers.

In the premises, the Court finds that the Defendants were acting as mercantile agents. A mercantile agent is defined as one who, in the ordinary course of business as an agent, has authority to sell, consign, buy, or raise money on the security of goods. See The Encyclopedia of Forms and Precedents, Fourth Edition, Volume 1 — Agency Documents, p. 173.

There is also no dispute that the Defendants received remuneration for their engagement under the agency arrangement. Evidence shows that in relation to the AMST gloves (Supreme Office) second order for 1,000 cartons, the Plaintiff paid RM270,000 (see Page 47 of Bundle B — invoice dated 30.6.2020). From this amount:

RM250,000 was paid to Supreme Office.

(ii) RM20,000 was retained by the Defendants as commission.

The Third Defendant admitted that this RM20,000 represented a margin of profit equivalent to RM2 per box (see letter from Supreme Office at page 14 of Bundle J – first paragraph).

Although the Plaintiff argued that this amount constituted a marked-up profit, and hence that the Defendants were not acting as agents, the Court takes a different view.

Firstly, under section 138 of the Contracts Act 1950, no consideration is required to create an agency relationship.

Secondly, the statute refers to remuneration, not merely commission, and the term remuneration encompasses a broader meaning (see sections 170 and 173 of the Contracts Act 1950).

Thirdly, the profit retained by the Defendants does not amount to a secret profit, but rather a profit to which the Plaintiff had consented. Had there been no such consent, the Defendants would have been under an obligation to account for it pursuant to section 164 of the Contracts Act 1950.

In this case, the Court finds that the Plaintiff had agreed to the Defendants retaining the said profit. It is therefore properly characterized as an agreed remuneration forming part of the Defendants’ entitlement under the business arrangement.

Support for this view may also be found in The Commercial Law of Malaysia by Wu Min Aun and Beatrix Vohrah (Longman Malaysia, Chapter 14 "Law of Agency", pp. 406–407): “The amount of commission and the terms under which it is payable depend on the terms of the contract of agency. As a general rule, the right to receive commission or other remuneration becomes due upon the substantial completion of all that an agent is contracted to perform, even when the contract may have fallen through due to the default of either the principal or the third party. Where no amount is agreed, the agent is entitled to reasonable remuneration, that is, on a quantum meruit basis.”

Based on the foregoing, this Court is satisfied that the Defendants were acting as agents of the Plaintiff in respect of the transactions in question.

The Defendants now contend that they are not privy to the contract in question, and instead assert that the proper party to be held liable is either Vera Collections or Vera Collection PLT. It is their position that they were merely acting as agents of the Vera Collection group of companies and therefore cannot be held personally liable. This argument is premised on the invoices which were issued using the letterhead of the Vera Collection entities. Issue [2]: Whether the First and Second Defendants were acting as agents of Vera Collection / Vera Collection PLT in respect of the transaction with the Plaintiff?

This Court finds the Defendants’ argument untenable for the following reasons:

Firstly, the Defendants purported to act on behalf of a company (Vera Collections – as referenced in the first invoice) which had already been dissolved at the time of the alleged contract. A dissolved entity cannot form or be party to a valid legal agreement, nor can it appoint agents to act on its behalf.

Secondly, there is nothing in the invoices to indicate that the First Defendant executed them on behalf of any alleged principal, namely Vera Collections or Vera Collections PLT. All three invoices in issue were signed personally by the First Defendant. He did not indicate that he was signing as an agent, nor did he reference any principal. This is inconsistent with the basic legal principles of agency. As stated in Chitty on Contracts, Volume I, General Principles, p. 470, para 4 – 038: “Signature by Agent Section 2(3) under the Law of Property (Miscellaneous Provisions) Act 1989 in England requires signature “by or on behalf of each party to the contract”. Clearly, no difficulty arises where an authorized agent signs on behalf of a principal who is named in the document otherwise satisfying the section. On the other hand, a signature made without authority clearly does not satisfy the section (as not made on behalf of the would-be party) and it is to be noted that a solicitor is not necessarily authorized to sign the writing on behalf of his client merely as a result of the solicitor-client relationship. However, where a person with authority to sign does so “as agent only” and no principal is named or identifiable from the document, it has been said that the section is presumably not satisfied as one of its parties is not named, this view apparently resting on the proposition that the identity of the contracting party is a term of the contract, all the terms of the contract being required to be incorporated in the document by s. 2(1).”

At the time of execution of the invoices, the First Defendant clearly knew he was not even an employee, staff, representative, or authorized person of either Vera Collection or Vera Collection PLT. It is therefore untenable for him to now assert that he was acting on behalf of the Vera companies.

Thirdly, the Defendants knew they had no authority to act on behalf of the Vera Collection group of companies. In fact, there was an attempt to fabricate written authorization after the fact, but to no avail. Both owners of Vera Collection PLT confirmed in court that they never authorized either Defendant to act as their agent. A signature made by the First Defendant on the invoices, in the absence of such authority, cannot bind Vera Collection PLT, as the act was not done on behalf of the company. Furthermore, Vera Collection PLT expressly refused to ratify or backdate any letter of authorization.

Fourthly, there were clear objections raised by the owners of Vera Collection PLT, particularly SP3 Joseph Chew Wei Min, regarding the use of Vera Collection entities in the glove transaction. SD4 Desmond Yau Kah Soon, another owner of Vera Collection PLT, testified that while he did not initially object to Edson (SD3) using the company's account to receive money, believing that the funds could be used to offset debts owed by Edson to the company and that he could also take the money to settle his debt amounting to a sum of roughly 30 thousand and above as Edson was having debt issue at that time and owed him money.(see page 849 – 851 of the Notes of Proceeding), he had no knowledge of the nature of the transaction involving the Plaintiff.

According to SD4’s testimony in court: “I do not know what is the transaction for but I approved the transaction.” SD4 also testified that daily there are so many transactions and he just trust Edson so he approved those transactions. But on 13 August 2020 (D14), he did raise a question why Edson was using Vera Collection PLT again for his own transaction. SD4 further raised the issue: “Tell me again why Barbara using Vera again in the first place.”

In addition, SD4 said he did not even know the debt to AP Digital and the nature of the Plaintiff’s claim against the two Defendants.

SD4 confirmed that he was unaware of the invoice at page 47 of Bundle B, he never received the invoice at page 47 of Bundle B from Edson. SD4 said he did not know about the invoice at page 47 of Bundle B at the material time when the message was sent to him “can check Vera got 35K” (see page 8 of Bundle M – WhatsApp from Edson to Desmond).

He did not approve its issuance and Vera Collection PLT never endorsed or authorized that invoice. This is evident from the proceedings at page 847 of the Notes of Proceedings: “S: Okay. Let’s now go back to page number 47, Bundle B. Did Edson or Alfred at any time furnished you this invoice number 47? S: Have they? S: They have never given you before? J: Never. S: My second question to page 47 invoice is that whether they have sought your approval in issuing this invoice. When I say you meaning I am talking about Vera Collection PLT. S: Vera Collection PLT, was Vera Collection PLT aware of this invoice transaction from the onset, from the start? S: Did Vera Collection PLT approve and endorse this invoice?

Further, the letter marked D16, which purported to appoint Alfred Tan Bee Kwan as a sales agent for Vera Collection PLT, was not signed by either of the company's owners. SD4 testified that Edson had asked him to sign a backdated letter (dated 1 March 2020) but he refused. Joseph Chew later received the same letter but also did not sign it. Besides, SD4 confirmed that all major contracts must be signed by the owners themselves and that, given both owners reside in Malaysia, there was no necessity to appoint external agents.

SD4 also testified that the WhatsApp group “007” referenced in Bundle M was intended solely for internal discussion between himself, Joseph, and Edson, relating to their core business — i.e., the buying and selling of returned goods — and had no relation to the glove transaction with the Plaintiff. SD4 subsequently left the group upon discovering that the company was being misused.

SD4 also confirmed that Vera Collection and Vera Collection PLT had no shared business dealings. While Edson (SD3) and Wong Jia How (the sole proprietor of Vera Collection, which had been dissolved on 8 April 2016) may have had some personal dealings, these were unrelated to Vera Collection PLT's operations.

Moreover, SD3 (Second Defendant) himself admitted that he never received any documentation — such as invoices or delivery orders — from any purported third-party supplier in the glove transaction with the Plaintiff. This is highly suspicious. If he and the First Defendant were truly acting as agents of Vera Collection PLT, the company would have at least been in possession of such basic transactional documents.

It is clear from the evidence that the glove transaction between the Plaintiff and the Defendants was distinct from previous dealings that may have been “mutually agreed” upon within the Vera Collection PLT. This glove transaction, by contrast, was undertaken without authorization and over the explicit objections of SD4.

Fifthly, there is no clause or provision in the invoices that has the effect of exonerating the Defendants from personal liability. As stated in Chitty on Contracts, Volume II, Specific Contracts, p. 64, para 31 – 096: “ Where “agent” is in fact principal: his liabilities. In some cases a party who purports to act as agent had no principal but himself. There is authority that if the other party can establish that fact, the apparent agent can be sued on the contract unless, perhaps, he has expressly contracted in such terms as to exclude his liability as a principal, or where his evidence on this question is disbelieved by the court he may be held personally liable on the contract.”

In the present case, no such clause exists, and this Court does not accept the Defendants’ evidence on this issue.

Sixthly, the Second Defendant cannot properly rely on Tindok Besar to argue that the D1 Police Report is more reliable evidence of the Defendants' alleged authority from Vera Collection PLT. Unlike the spontaneous acts contemplated in Tindok Besar, the D1 Police Report was a premeditated document, lodged with a clear and self-serving motive. The Defendants were prompted to lodge the report in an attempt to evade personal liability after issuing an invoice without proper authorisation. Rather than being a neutral contemporaneous record, the D1 Police Report was deliberately crafted to shift liability onto Vera Collection PLT and cannot be regarded as credible or impartial evidence of agency.

Seventhly, both Defendants admitted that they were partners in the glove transaction. The Court finds that since the First Defendant personally executed the invoices — knowing he was not authorized — and did so under the belief that the Second Defendant was authorized (which he was not), and the Second Defendant was his partner in this venture, both are to be held personally liable for the obligations arising from the transaction. Section 7 of the Partnership Act 1961 (Revised 1974) provides that: “Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership.”

Based on section 7 of the Partnership Act 1961 (Revised 1974), partners are each other’s agents when contracting in the course of the partnership business. Accordingly, both Defendants are liable as contracting parties, except where the contract or relevant legislation otherwise provides — which is not the case here.

Based on the totality of the evidence, this Court answers the above issue in the negative. This court finds the argument that the Plaintiff’s recourse lies against the Vera Collection entities unpersuasive. While the Defendants rely on the formal issuance of invoices by Vera Collection group companies, the evidence adduced — including WhatsApp conversations, oral testimonies, and the conduct of the parties — points clearly to the Defendants’ direct involvement and assumption of responsibility in the transactions.

Notably, it was the Defendants who communicated with the Plaintiff, coordinated supply arrangements, instructed packing and delivery services, and provided instructions on payments. It is further undisputed that the Plaintiff had no contract, whether written, implied or express, with any of the third parties supplying the gloves.

As such, notwithstanding the use of letterheads bearing the name of Vera Collection entities, this Court is satisfied that the Defendants cannot disclaim liability by characterising themselves as mere agents of the Vera Collection companies. The totality of the evidence supports the conclusion that the Defendants acted in their own capacity in dealing with the Plaintiff and are accordingly privy to the contract.

In conclusion, Vera Collections and Vera Collection PLT are not privy to the transaction. They neither authorised nor ratified the actions of the Defendants, and there is no basis upon which liability for the transaction with the Plaintiff may be imputed to them. Consequently, the Defendants are personally liable for the contract into which they entered under the guise of acting for Vera Collection

The Defendants argued that they were merely acting as agents and therefore cannot be personally liable for the losses suffered by the Plaintiff. However, this court finds that such a general assertion does not reflect the true legal position on the liability of agents.

In Chitty on Contracts, Volume II, Specific Contracts, at p. 58, paras 31– 084/085, the general principle is stated as follows: “Upon the general principle that the contract of an agent is the contract of the principal, it is often said that an agent is prima facie neither liable upon any agreement into which he enters in a representative capacity nor able to sue on it… But this formulation can be relied on too much.”

The text further clarifies that: “It is not the law that, if a principal is liable, his agent cannot be. The true principle of law is that a person is liable for his engagements (as for his torts) even though he is acting for another, unless he can show that by the law of agency he is to be held to have expressly or impliedly negatived his personal liability.”

Thus, even if the Defendants are found to have acted in the capacity of agents, this does not automatically absolve them of liability. The existence of an agency relationship does not, in and of itself, negate personal responsibility.

It is well-established that an agent may still be personally liable, and entitled to sue, depending on the nature and construction of the contract as well as the surrounding circumstances. This was clearly emphasized in Rusholme, etc. Ltd v SG Read & Co [1955] 1 W.L.R. 146, 150, and reaffirmed in Maritime Stores v HP Marshall & Co [1963] 1 Lloy’'s Rep. 602; The Swan [1968] 1 Lloyd’s Rep. 5; Domsalla v Dyason [2007] EWHC 1174 (TCC), [2007] B.L.R. 348; Goei Tsusho Co Ltd v Leader Engineering and Construction Ltd [2010] 2 H.K.L.R.D. 1084.

Further, Chitty on Contracts, at p. 72, para 31–112, makes it abundantly clear that an agent may be liable in tort: “In general, an agent may be liable for his torts. Thus it has been held that an estate agent and a solicitor may owe independent duties of care to the party with whom their principal is, through them, dealing; and a duty may sometimes be owed to a person not party to that transaction.”

This principle is also supported in The Commercial Law of Malaysia by Wu Min Aun & Beatrix Vohrah, at p. 398, which states: “Normally, an agency arises out of an agreement, express or implied, between the principal and agent, and as such, their rights and duties will depend on the terms of the contract of agency. Where the contract of agency is silent on the terms, the rights and duties of an agent to his principal and vice versa are governed by sections 164 to 178 of the Contracts Act 1950.”

In the present case, sections 165 and 173 of the Contracts Act 1950, along with illustration (b) to section 173, are particularly relevant. For ease of reference, the laws are reproduced below.

See section 165 of the Contract Act 1950. Skill and diligence required from agent

An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business, unless the principal has notice of his want of skill. The agent is always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill, or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want of skill, or misconduct.

A, a merchant in Kuala Lumpur, has an agent, B, in London, to whom a sum of money is paid on A’s account, with orders to remit. B retains the money for a considerable time. A, in consequence of not receiving the money, becomes insolvent. B is liable for the money and interest from the day on which it ought to have been paid, according to the usual rate, and for any further direct loss— as, e. g., by variation of rate of exchange—but not further.

A, an agent for the sale of goods, having authority to sell on credit, sells to B on credit, without making the proper and usual enquiries as to the solvency of B. B, at the time of the sale, is insolvent. A must make compensation to his principal in respect of any loss thereby sustained.

A, an insurance broker employed by B to effect an insurance on a ship, omits to see that the usual clauses are inserted in the policy. The ship is afterwards lost. In consequence of the omission of the clauses nothing can be recovered from the underwriters. A is bound to make good the loss to B.

A, a merchant in England, directs B, his agent at Kelang, who accepts the agency, to send him 100 bales of cotton by a certain ship. B, having it in his power to send the cotton, omits to do so. The ship arrives safely in England. Soon after her arrival the price of cotton rises. B is bound to make good to A the profit which he might have made by the 100 bales of cotton at the time the ship arrived, but not any profit he might have made by the subsequent rise. Illustration (b) shows that where an agent acts beyond authority, or without proper disclosure or ratification by the principal, the agent bears personal liability.

Now we turn to section 173 of the Contracts Act 1950.

Agent not entitled to remuneration for business misconducted An agent who is guilty of misconduct in the business of the agency is not entitled to any remuneration in respect of that part of the business which he has misconducted.

A employs B to recover RM100,000 from C, and to lay it out on good security. B recovers the RM100,000 and lays out RM90, 000 on good security, but lays out RM10,000 on security which he ought to have known to be bad, whereby A loses RM2,000. B is entitled to remuneration for recovering the RM100,000 and for investing the RM90,000. He is not entitled to any remuneration for investing the RM10,000, and he must make good the RM2,000 to A.

A employs B to recover RM1,000 from C. Through B’s misconduct the money is not recovered. B is entitled to no remuneration for his services, and must make good the loss.

From the above, this court is of the view that the law is clear that agency does not create a blanket shield from liability. An agent may be personally liable in contract or tort where the circumstances show improper conduct, want of authority, or where the contract and surrounding dealings indicate an intention to assume personal responsibility. The above two provisions clearly illustrate that an agent may be held personally liable if a loss is caused by his misconduct. In the present case, this Court must further consider whether there was any misconduct by the Defendants that resulted in the loss.

In The Commercial Law of Malaysia by Wu Min Aun and Beatrix Vohrah (Longman Malaysia, Chapter 14, "Law of Agency," at p. 407), misconduct is defined as: "The term 'misconduct' refers to wrongful or improper conduct which results in a wrongful gain to the agent or a wrongful loss to the principal."

In Manager, Scudai Estate, Johore Bahru v Narayanan [1960] 1 MLJ 162, the Court adopted the definition of misconduct as set out by Willes J. in the Court of Appeal decision of Harmer v Cornelius (141 ER 94, at p. 98): “The failure to afford the requisite skill which had been expressly or impliedly promised, is a breach of legal duty, and therefore misconduct”.

In the High Court case of Ho Kam Seong v Arab Malaysian Securities Sdn Bhd [2000] 6 MLJ 641, at page 163, it is stated: “This duty to exercise reasonable care and skill is applicable to everyone practising a calling involving personal skill, such as: accountants and auditors, agents, architect, engineers and surveyors, auctioneers, barristers (when engaged on non-litigious matters), dentists, directors of companies, divers, nurses, patent agents, physicians and surgeons, solicitors, stockbrokers, insurance brokers, valuers and veterinary practitioners.”

Before this Court addresses the issue of misconduct, it is necessary to first examine the transactions in question. The following are the details of the three transactions entered into between the Plaintiff and the Defendants:

First Order – Handkare Gloves (1,000 Cartons)

The first transaction involved the supply of 1,000 cartons of Handkare gloves, purportedly supplied by Semangat Moden.

(ii) The invoice for this transaction, dated 19.6.2020, was issued under the name "Vera Collections" (P2/page 4 of Bundle C). However, at the material time, Vera Collections had already expired as a registered entity (page 32 of Bundle C).

(iii) SD3 explained that the use of the expired company's name was due to a mistaken use of the wrong template (page 67 of Bundle B). Although SD1 had indicated via WhatsApp (page 69 of Bundle B, time-stamped 9:23 a.m. on 3.7.2020) that corrected invoices would be issued under "Vera Collections PLT," no such corrected invoice was ever produced in Court.

(iv) The Plaintiff contends that had SD3 sought proper authorization, he would have known that the company was no longer active. The Plaintiff further submits that SD3 had a habitual practice of improperly using other entities' letterheads without authority, thus creating artificial layers to avoid liability.

The Plaintiff paid a total of RM223,628, consisting of RM200,000 in cash payments and RM23,628 for packaging.

(vi) Only RM159,250 worth of gloves were delivered. After deducting the refunded amount of RM20,000, the outstanding sum due to the Plaintiff for this transaction is RM44,378.

Second Order – AMST Gloves (1,000 Cartons)

The second transaction related to the supply of 1,000 cartons of AMST gloves, sourced through Supreme Office.

(ii) The invoice, dated 30.6.2020, was issued under "Vera Collection PLT” (page 47 bundle B), a limited partnership registered between SD4 (Desmond Yau Kah Soon) and SP3 (Chew Wei Min) (SSM search at page 1 of Bundle E).

(iii) SD3 admitted he had no written authorization from the partners to act on behalf of Vera Collection PLT but asserted that he personally had sufficient authority to act.

(iv) The Plaintiff paid RM270,000 for this transaction (page 47 of Bundle B), where RM250,000 was paid to Supreme Office and RM20,000 was taken as a commission, allegedly representing a margin of RM2 per box (see page 14 of Bundle J).

Only 182 cartons, valued at RM49,140, were delivered. SD3 contended that 192 cartons were delivered, but no evidence was provided to substantiate this claim.

(vi) A refund of RM26,360 was made to the Plaintiff.

(vii) After deducting the value of goods delivered and the refunded sum, the amount still outstanding under this transaction is RM194,500.

(viii) According to an affidavit filed by SD3 (at page 8 of Bundle J, Exhibit TXY-1), Supreme Office purportedly refunded RM197,250 to Semangat Moden. The Second Defendant/SD3 stated that Semangat Moden did not refund the money to the Plaintiff as there was an ongoing dispute, and the funds had been utilised to finance the company's operations.

Third Order – Maxcare Gloves (900 Cartons)

The third transaction concerned the supply of 900 cartons of Maxcare gloves, purchased through Optopreneur Group from Maxileen.

(ii) The invoice for this transaction, dated 1.7.2020, was issued under "Vera Collection PLT” (page 50 of bundle B).

(iii) The Plaintiff paid RM252,000 for this transaction.

(iv) A refund of RM122,000 was made, leaving an outstanding amount of RM130,000 still payable to the Plaintiff. Summary Table of Transactions Order Product Purported Supplier Invoice Name Payment Made Goods Delivered (Value) Refund Received Outstandin g Amount First Handkare Gloves (1,000 cartons) Semangat Moden Vera Collections (expired) RM223,62 8 RM159,25 0 RM20,00 0 RM44,378 Second AMST Gloves (1,000 cartons) Supreme Office Vera Collections PLT RM270,00 0 RM49,140 (182 cartons) RM26,36 0 RM194,500 Third Maxcare Gloves (900 cartons) Optopreneur Group (via Maxileen) Vera Collections PLT RM252,00 0 - RM122,0 00 RM130,000

The total amount claimed by the Plaintiff against the Defendants is: RM44,378 (First Order) + RM194,500 (Second Order) + RM130,000 (Third Order) = RM368,878.00. Issue [4]: Whether the conduct of the Defendants in relation to the glove transactions amounts to misconduct

This Court will next examine whether the conduct of the Defendants in the course of the above glove transactions constitutes misconduct within the meaning of section 165 and section 173 of the Contracts Act 1950, and whether the Defendants may therefore be held personally liable for the losses sustained by the Plaintiff. This requires the Court to examine the actions and representations made by the Defendants throughout the dealings, including the use of business names, handling of funds, and their overall role in the failed transactions, to determine whether such conduct falls below the standards of honesty, integrity, or good commercial practice, thereby amounting to actionable misconduct.

Having heard the evidence and reviewed all documentation pertaining to the three transactions in question, this Court is satisfied that the Plaintiff has established, on a balance of probabilities, that the Defendants are liable for the losses suffered. The Court’s findings are set out as follows. i. Concealment of Agency Status and Misrepresentation

Firstly, the Defendants’ concealment of the fact that neither of them was an authorized agent of Vera Collection PLT constitutes not only a misrepresentation of fact to the Plaintiff, but also a failure to exercise due care and diligence — even if the Defendants argue that they believed they had authorization, despite lacking proper written authorization.

In The Commercial Law of Malaysia by Wu Min Aun & Beatrix Vohrah (Longman Malaysia), Chapter 14 “Law of Agency” at page 399, it is stated that: “under the pretext of the duty to exercise care and diligence, the inference is that the agent must disclose everything coming to his knowledge which is likely to influence the principal in making of the contract.”

Clearly, the Defendants not only failed in this duty but also sought to conceal the issue. If, as they now contend, they were genuinely confident that they were authorised to use the name “Vera Collection” as the entity through which to enter into these glove transactions, it raises a critical question: why then was there a need to prepare a backdated letter of authorisation or appointment, and why were there subsequent efforts to persuade both SP3 and SD4, the owners of Vera Collection PLT, to sign that backdated document (exhibit D16)? ii. Use of Dubious Third-Party Suppliers

Secondly, the named third-party suppliers consisted of suspicious and dubious companies. The Defendants either wilfully concealed or negligently failed to disclose the financial status — whether solvent or insolvent — of these third parties to the Plaintiff. In fact, evidence from the SSM records indicates that these third-party suppliers were clearly engaged in activities wholly unrelated to glove manufacturing. iii. Failure to Refund via Semangat Moden Sdn Bhd

Thirdly, when a refund was made to Semangat Moden Sdn Bhd, the Second Defendant—who admitted to being the main administrator of the company— failed to return the refunded sum to the Plaintiff (see page 621 of the Notes of Proceedings).

At page 608 of the Notes of Proceedings, the Second Defendant confirmed that Semangat Moden was, for all intents and purposes, is his company: “S: Now, that's not being done, but for whatever intents and purposes, this is your company. Semangat Moden is your company, correct? J: On paper, yes.”

This was further affirmed at page 609: “S: So now, today, as of today or whatever the incident that happened, for all intents and purposes, you are the company, correct? J: Yes, I am the main administrator. S: So you are in charge of the company. You run the company, correct?

This omission is significant in light of Section 166 of the Contracts Act 1950, which imposes a duty on an agent to render a proper account to his principal upon demand. The Second Defendant’s failure to do so amounts to a breach of this statutory duty. iv. Withdrawal of Third-Party Notice and Absence of Corroborating

The Defendants sought to attribute the failure to fulfil the Plaintiff's order to issues allegedly encountered by the suppliers. However, during trial, they withdrew the third-party notice against one of the purported main glove manufacturers, namely Supreme Office, on the basis that the company had fully refunded the monies received. This Court is of the view that the said third party — the alleged ultimate contracting party — ought to have been called as a witness to corroborate the Defendants’ position that the failure to supply gloves was due to genuine production constraints, rather than the supplier being merely a conduit for diverting funds paid by the Plaintiff.

The failure to call this witness gives rise to an adverse inference that his evidence would not have supported the Defendants’ case. The same omission applies to the alleged agent for the supplier of the MaxCare brand, one Tan Jia Hui, who is recorded as having received RM50,000 on 1.7.2020, as reflected in the invoice dated 1.7.2020 (see page 50), which states: “Cash: RM50,000 deposit paid to Tan Jia Hui.” Despite being a material witness, this individual too was not called to testify.

This Court also notes that the other named supplier, Semangat Moden — a company under the control of the Second Defendant and his uncle, Tong Kam Keong — failed to even enter an appearance in the third-party proceedings. It is noteworthy that Tong Kam Keong was only appointed as a director on 24.9.2020 (see SSM record at page 14 of Bundle B) — a date subsequent to all the transactions in question. Consequently, he could not have had any direct knowledge or involvement in the transactions at the material time. The timing of his appointment raises the possibility that it was a deliberate attempt to shield the actual decision-makers from scrutiny and accountability by placing a family member — who had no involvement in the disputed transactions — in a formal position of authority after the fact. This may suggest an intention to obscure the chain of responsibility and hinder the tracing of liability for the funds paid by the Plaintiff.

This inference is particularly reinforced when viewed in light of the Second Defendant’s testimony and submission filed, where he appeared to conveniently shift the responsibility for the failure to refund the Plaintiff's monies onto his uncle, claiming that the decision not to refund was made by him. However, despite this assertion and acknowledging that Tong Kam Keong was capable of giving evidence in court, the Second Defendant made no attempt whatsoever to call him as a witness. The following exchange from pages 709–710 of the Notes of Proceedings is particularly revealing: “ S: Okay, can I turn you to the next page, page 9, paragraph 15. Now you have mentioned that there's another director in Semangat Moden by the name of Tong Kam Kiong. J: Correct. S: Is he related to you? J: Yes. S: In what sense? J: He's my uncle. S: Now you say that he has made a decision not to refund or return this money received from Semangat Moden to the Plaintiff. Am I not right? This figure, 197,250. J: I think it is not that he did not agree to return the money but he had to prioritise other business payments also. S: All right, in a way because he made the decision to prioritise other business decisions and because of that the company is short of money or did not have the money to refund to the Plaintiff. Is that correct? J: Correct. S: Now are you calling this Mr. Tong Kam Kiong to come and testify with regards to this fact in Court? S: Is he able to come? J: Possible. S: Possible? J: Yeah. S: But you are not calling him as your witness? J: I believe this is for later matter, right? That was our source of advice.”

This court notes Second Defendant’s final answer — “I believe this is for later matter, right? That was our source of advice” — appears to suggest a deliberate decision to avoid placing this witness before the Court.

In the circumstances, this amounts to a conscious withholding of material evidence and further undermines the credibility of the Second Defendant’s explanation. This court is of the considered view that the above exchange further undermines the credibility of the Defendants' position and raises serious questions about the true reason for the non-performance of the contract and the non-refund of the Plaintiff’s monies. v. Conflict of Interest of the Second Defendant

The Second Defendant is the sole proprietor of Offline Outlet Sdn Bhd and Offline Depot Sdn Bhd — both RM3 companies — and is also the Director and controlling mind of Semangat Moden Sdn Bhd. The names of all these companies appeared on invoices issued as the alleged 'supplier'. It is therefore evident that the Second Defendant cannot now attempt to deflect liability by suggesting that the Plaintiff should proceed against the ‘supplier’ when he was in fact directly involved in and controlled those very entities.

This conduct unmistakably reveals a clear and serious conflict of interest.

In The Commercial Law of Malaysia by Wu Min Aun and Beatrix Vohrah (Longman Malaysia, Chapter 14: 'Law of Agency,' p. 400), it is stated: "An agent must not let his own interests conflict with his duty. The primary duty of an agent is to act solely for the benefit of his principal. He cannot allow his personal interest to conflict with this duty. Consequently, he cannot become a party to a transaction that is against his principal’s interests. The following are two examples of the application of the principle.

If an agent is employed to buy shares, he cannot sell his own shares to the principal (see Armstrong v Jackson [1917] 2 KB 822), unless he has earlier informed the principal and obtained consent. If no consent is obtained, the principal, upon discovery of the fact, has a right to repudiate the transaction (s.168), even if the agent acted fairly and sold the shares at market price."

In the case of Plus Three Consultants (M) Sdn Bhd v Landasan Kapital (M) Sdn Bhd [2025] MLJU 303, the High Court (per Nadzarin Wok Nordin J) reaffirmed the principle that an agent owes fiduciary duties to its principal, including the duty of full disclosure and the duty to avoid conflicts of interest. The Court held that an agent who fails to disclose a conflict of interest forfeits its right to remuneration, irrespective of whether the principal has suffered any actual loss.

In that case, the plaintiff, Plus Three Consultants (P3), had recommended QSR to the defendant, Landasan Kapital (LKSB), as an expert in arbitration proceedings. However, P3 had an undisclosed relationship with QSR which gave rise to a clear conflict of interest. The Court found that P3 had not acted bona fide, as it deliberately withheld disclosure of its relationship with QSR in order to preserve QSR’s prospects of being appointed. This omission deprived LKSB of the opportunity to make an informed decision based on full and frank disclosure by its agent.

The Court in Plus Three Consultants held that: “ [97] In conclusion, from an appraisal of the evidence and the law which I have referred to above, I do find on a balance of probabilities that P3 had not conducted themselves bona fide in its communication of their proposal to recommend QSR to LKSB as the expert in the Arbitration. [100] Hence from the cases cited above, I hold that the effect of the non-disclosure will be that the agent’s right i.e. P3, to remuneration would still be forfeited even if his principal, LKSB suffers no loss or damage.”

It was emphasised in Plus Three Consultants that a principal is entitled to the service of an honest and loyal agent, and only such an agent is entitled to remuneration. Once an agent acts with divided loyalty or suppresses material facts, the right to remuneration is extinguished. The principle is rooted not in compensation for harm but in the maintenance of fiduciary integrity. (See paragraph 122 of the judgment)

Applying the principles mentioned above to the present case, the Second Defendant was plainly under a duty to disclose to the Plaintiff his interest in the named 'supplier' companies. His failure to do so cannot be brushed aside as an oversight. Rather, it strongly indicates an intention to conceal material facts from the Plaintiff. The likely reason for this concealment is also clear: these companies were never genuine glove manufacturers, but merely vehicles used to divert the funds paid by the Plaintiff. Such conduct constitutes not only a breach of duty, but also suggests deliberate bad faith on the part of the Second Defendant. vi. True Nature of the ‘Supplier’ Companies

The true nature of the business activities of these companies, as revealed from the SSM records, is as follows: a) Offline Outlet Sdn Bhd (p. 47, Bundle B): Engaged in holding company activities, the organization, promotion and/or management of events, and the wholesale of a variety of goods without any particular specialization (N.E.C.) (see p. 18, Bundle B – Corporate Information, SSM). b) Offline Depot Sdn Bhd (p. 47, Bundle B): Engages in the wholesale of a variety of goods without any particular specialization (N.E.C.), retail sale of various products over the internet, and activities of holding companies. (see p. 24, Bundle B – Corporate Information, SSM) c) Optopreneur education group (p. 50, Bundle B): Engages in education institution, invest in properties, invest in shares. (see p. 36, Bundle B – Corporate Information, SSM) d) Optopreneur Global Education Sdn Bhd (p. 50, Bundle B): Engages in College and University education (private); other Education N.E.C; business management consultancy services. (see p. 30, Bundle B – Corporate Information, SSM) e) Semangat Moden Sdn Bhd (p. 50, Bundle B): Involved in the export and import of gummed or adhesive paper in strips or rolls, labels, and wallpaper. (see p. 12, Bundle B – Corporate Information, SSM)

It is manifestly clear that none of these companies had any legitimate business in the glove manufacturing industry. The deliberate concealment by the Defendants of the true nature of these purported 'supplier' companies, and their attempt to pass them off as legitimate glove suppliers, demonstrates a dishonest intention. Such conduct amounts to a calculated effort to mislead the Plaintiff and to divert funds under false pretenses. vii. Use of Optopreneur Companies and Statutory Declaration

The two so-called ‘suppliers’ — Optopreneur Education Group Sdn Bhd and Optopreneur Global Education Sdn Bhd — were likewise mere façades in the transaction. Based on the statutory declaration (SD2) and the evidence of subpoenaed witness Barbara Chin, who is also a director of Optopreneur Education Group Sdn Bhd, it is clear that the content of her statutory declaration was primarily intended to show that these companies were unable to deliver the order due to high demand and financial constraints.

This Court finds that Barbara Chin made this statutory declaration at the behest of the Defendants (page 493 of the Notes of Proceeding), after being informed that legal proceedings had commenced. Ms. Chin also admitted that the companies were engaged in educational programmes — a business entirely unrelated to glove manufacturing.

This raises the critical question: why did the Defendants instruct the Plaintiff to make payment into the accounts of companies that had no capacity or background in glove manufacturing? The transactions occurred in 2020. By the following year, one of these companies had been dissolved and the other was later wound up.

This Court perceives the preparation of the statutory declaration as a deliberate attempt to shift responsibility onto defunct entities by acknowledging receipt of funds but claiming inability to perform due to external factors. In reality, the preparation of this SD, at the Defendants' request, was clearly a calculated move by the Defendants to insulate themselves from liability and to create a false narrative, knowing full well that the Plaintiff’s prospects of recovering the funds from these now-defunct companies would be extremely slim.

In view of the foregoing, the transactions outlined above demonstrate clear and quantifiable losses suffered by the Plaintiff as a result of the Defendants' actions. The Defendants’ failure to disclose material facts, properly manage and document these transactions — coupled with the use of expired or unauthorized company names — evidences a pattern of misconduct.

The outstanding amount of RM368,878.00 remains unpaid despite the Plaintiff having fulfilled its payment obligations. Based on the principles under the Sale of Goods Act (as applicable) and relevant agency law, and in light of the use of unauthorized entities, the failure to obtain proper ratification, and the absence of genuine principal-agent relationships, the Defendants cannot rely on the agency defence to escape liability.

This court agrees with the Plaintiff’s submission that Sections 164 and 165 of the Contracts Act 1950 must be read conjunctively as they delineate the duties imposed upon an agent and the legal consequences arising from a breach of such duties. Section 164 provides that an agent must act in accordance with the directions of the principal, and any deviation that results in loss renders the agent liable to compensate the principal. Section 165 further imposes a duty on the agent to act with reasonable diligence and the skill he possesses, and to make compensation to the principal for the direct consequences of his neglect, want of skill, or misconduct.

These principles are mirrored in Indian law, as illustrated in Pannalal Jankidas v Mohanlal & Anor (1951) 1 MLJ 314 (S.C.). There, the Supreme Court of India interpreted Sections 211 and 212 of the Indian Contract Act—provisions in pari materia with Sections 164 and 165 of our Contracts Act 1950. The court held that an agent who acts contrary to the principal’s instructions, or who fails to act with reasonable diligence and skill, is liable to make good any loss directly resulting from such breach.

The Federal Court in Mahesan v Malaysian Government Officers Co-Operative Housing Society Ltd [1975] 1 MLJ 77 applied these principles in a local context. The Court found that the defendant, an agent, had clearly misconducted himself and breached his duty to the principal. The misconduct related to the concealment of material information and participation in a scheme which caused financial loss to the principal. The Court held that: “….the agent is liable for any loss actually sustained by the principal in consequence of any breach of duty on the agent’s part.”

Applying the above authorities to the present case, it is evident that the Defendants, by their misconduct and failure to observe their duties as agents, caused the Plaintiff to suffer loss. Their conduct constituted a breach of their duty under Sections 164 and 165 of the Contracts Act 1950. The losses suffered by the Plaintiff flow directly from the Defendants’ breach and are neither too remote nor speculative. Accordingly, I find that the Defendants are liable to compensate the Plaintiff for the losses sustained, which are the direct and foreseeable consequence of the Defendants’ misconduct and breach of duty.

This Court finds that the Plaintiff has successfully proved, on a balance of probabilities, that there has been a breach of contract on the part of the Defendants due to their failure to supply the ordered goods in accordance with the Plaintiff’s instructions. Thus, the Defendants are liable for the Plaintiff’s losses and the Defendants are ordered to make full restitution accordingly.

The Defendants are jointly and severally liable to make full restitution to the Plaintiff in the amount of RM368,878.00, with interest. Issue [5]: Whether the Defendants Had Fraudulently Misrepresented and Committed the Tort of Deceit or Conspiracy to Defraud Against the Plaintiff; Issue [6]: Whether the Defendants Had Made Any Warranty and/or Promise

These two issues are closely interrelated, as both concern the Defendants’ conduct during the same series of transactions and their representations to the Plaintiff. Accordingly, the Court will consider and address them together in a consolidated analysis.

The Plaintiff alleges that the Defendants are liable for fraudulent misrepresentation and conspiracy to defraud. In Yeohata Machineries Sdn Bhd & Anor v Coil Master Sdn Bhd & Ors [2015] 6 MLJ 810, the Court of Appeal identified five essential elements of fraudulent misrepresentation:

There must be a representation of fact, either by words or conduct (mere silence is insufficient);

(ii) The representation must be false and made with knowledge of its falsity, or recklessly, without belief in its truth;

(iii) The representation must be intended to be relied upon by the Plaintiff;

(iv) The Plaintiff must have relied upon the representation; and

The Plaintiff must have suffered damage as a result of such reliance.

Similarly, the Court in Victor Cham & Anor v Loh Bee Tuan [2006] 5 MLJ 359 reaffirmed that fraudulent misrepresentation under the tort of deceit requires the representation to be knowingly or recklessly false and to have caused detriment to the Plaintiff through reliance.

As for the tort of conspiracy, in Yap Sau Choon @ Yap Bee Yong & Anor v Cheong Hong Un & Ors [2016] 1 LNS 871, the Court restated the elements for conspiracy to defraud, as drawn from SCK Group Bhd & Anor v Sunny Liew Siew Pang & Anor [2011] 4 MLJ 393 and Yap JH v Tan Sri Loh Boon Siew & Ors [1991] 3 CLJ 2960. They are:

An agreement between two or more persons;

(ii) An agreement to injure the plaintiff;

(iii) Acts done in execution of the agreement resulting in damage to the plaintiff.

It is well-established that a conspiratorial agreement may be inferred from circumstantial evidence indicating a shared intention to defraud, as emphasized in MGG Pillai v Tan Sri Dato Vincent Tan Chee Yioun & Other Appeals [1995]

Further, the Court in Renault SA v Inokom Corp Sdn Bhd & Anor [2010] 5 MLJ 394 explained that such an “agreement” need not be formal but may arise from the coordination of efforts among co-conspirators.

In addressing the Second Defendant's argument that the Plaintiff has failed to establish the essential element of actual dishonesty required to prove fraud, this Court finds that the Defendants’ conduct satisfies the legal requirements of both dishonest/fraudulent misrepresentation and the tort of conspiracy to defraud. Additionally, the dishonest intent underlying the Defendants’ conduct meets the threshold for fraudulent intent under section 420 of the Penal Code.

As discussed in Ratanlal & Dhirajlal’s Law of Crimes, the test for distinguishing fraud from mere breach of contract lies in the accused’s intent at the time of inducement. See Ratanlal & Dhirajlal’s Law of Crimes, 24th edition at page 2105, it is observed therein: “…the question whether the evidence disclose only a breach of civil liability or criminal offence under this section depends upon whether the complainant, in parting with his money, acted on the representation of the accused and in belief of the truth thereof and whether those representations were in fact false to the knowledge of the accused and whether he had a dishonest intention from the outset.” (see Mobarik Ali Ahmed AIR 1957 SC 857: 1957 Cri LJ 1346 (SC): (1958) SCR 328)

It is further stated in the same treatise: “Mere breach of contract cannot give rise to a criminal prosecution. The distinction between a case of mere breach of contract and one of cheating depends upon the intention of the accused at the time of the alleged inducement which may be judged by his subsequent act but of which the subsequent act is not the sole criterion.”

According to the Plaintiff, the representations made by the Defendants were by words and conduct, including at the 1st meeting on 12.06.2020, the Defendants represented they had sufficient glove supplies to meet AP Digital’s demands. The Defendants represented they were authorized representatives or owners of Vera Collections Group.

Based on the Plaintiff’s written testimony (question and answer no. 8) — which was also relied upon by the Second Defendant in his additional submission in reply — the Defendant did not dispute that the question posed was: “What else was represented to AP Digital?” The answer given was: “The Defendants claimed to have connections with glove suppliers and/or manufacturers and would be able to supply gloves to meet AP Digital’s demands.” It is therefore explicitly clear that the Defendants did make representations to the Plaintiff that they were capable of sourcing suppliers and supplying gloves in accordance with the Plaintiff’s requirements.

In the present case, although the Defendants sought to rely selectively on portions of that answer which appeared to support their position — while denying that any representations were made regarding their ability to deliver sufficient quantities of gloves — this Court finds that, even in the absence of an express representation, an inference of misrepresentation may be drawn from the Defendants’ overall conduct. As observed in Ratanlal & Dhirajlal’s Law of Crimes (24th edition, p. 2114), conduct may provide the basis for drawing such an inference of guilt. “Inference of guilt – Under this section it is not necessary that a false pretence should be made in express words by the accused, it may be inferred from all the circumstances including the conduct of the accused in obtaining the property.” (see Shivanarayan 1967 Cri LJ 946: AIR 1967 SC 986)

As stated in Smith and Hogan’s Criminal Law (Oxford University Press, 13th Ed, 2011) by David Ormerod at page 888, “Conduct was capable of providing a relevant representation for the deception offences.” The same page also recognises that representations may be made by other means, including through documents or by omission. It is stated: “Classic examples of such representations include false information provided in mortgage or loan application forms. A straightforward instance of a representation by omission is where a person omits to disclose previous convictions or County Court Judgments on an application form, thereby falsely representing themselves as being of good character or financial probity. Notably, such conduct can amount to a positive misrepresentation – that is, completing a form with knowingly false or misleading information.”

Based on the conduct of the Defendants in issuing the said invoices, this Court finds that there was an express, or at the very least prima facie, representation that they were authorised personnel acting under the entity name “Vera Collection PLT” or “Vera Collections.” The issuance of these invoices also conveyed a representation that the named suppliers were in a position to deliver the gloves in the quantity and manner described by the Plaintiff. The inclusion of multiple alleged suppliers in the invoices appears to have been a deliberate attempt to create the impression that the Defendants had extensive connections within the glove supply market, thereby reinforcing their claimed capacity to fulfil the Plaintiff’s order.

It is therefore incumbent on this Court to consider the intention of the Defendants at the time when they made such representations and instructed the Plaintiff to make payment to the named suppliers in the invoices. Did they believe that those suppliers were all actual glove manufacturers? Did they believe that the alleged suppliers could deliver the gloves as ordered?

This Court does not think so. The applicable test is whether the Defendants even cared as to the truth of the representations made. If they did not, then the test for false representation is fulfilled – a test which is, in fact, of a lesser threshold. The fact that none of the named suppliers were actual or proven as actual glove manufacturers, coupled with the suppression of the fact that the Defendants were not authorised to use the name “Vera Collection PLT” in these glove transactions, suppression of the fact that Vera Collections had expired, is sufficient to demonstrate active deception, dishonesty, or fraudulent conduct.

Accordingly, this Court finds that when the Defendants made such representations, which were untrue or misleading, they were, in law, making false representations. The Court further finds that the Defendants acted with dishonest intent at the material time—both when the invoices were issued and when instructions were given to the Plaintiff to remit payment to the purported suppliers.

The term “fraudulently” is defined in section 25 of the Penal Code as follows: “A person is said to do a thing fraudulently if he does that thing with intent to defraud, but not otherwise.”

In Criminal Law in Malaysia and Singapore by Stanley Yeo, Neil Morgan, and Chan Wing Cheong (Lexis Nexis, 2007) at page 400 - 401, the learned authors explained: “In practice the inclusion of fraudulently makes little difference, as the vast majority of cases are based on dishonesty. However, the legislative intent was clearly to extend the scope of the law into lower levels of fraud. This is further supported by the fact that higher penalties are provided for cases of dishonestly inducing delivery as opposed to fraudulently doing so. ….. Surprisingly few cases have analysed the difference between “fraudulently” and “dishonestly” in detail but some useful insights can still be gained from some early cases. In the Burmese case of King-Emperor v Tha By Aw (1907) 4 BLR 315 their Honours found it necessary to consider whether the appellant had been fraudulent. …they both approved James Stephen’s view, in his History of the Criminal Law of England, that it means an intent to: “….expose some person either to actual injury or to a risk of possible injury … A practically conclusive test … is this – Did the author of the deceit derive any advantage …? If so, it is hardly possible that the advantage should not have had an equivalent in loss or risk to someone else.” In Seet Soon Guan v PP [1955] MLJ 223, the Malaysian High Court considered the meaning of fraudulently in the context of forgery, for which it is also the fault element. ..The Court noted, following Indian authority, that dishonesty tends to focus on transactions in which deprivation of property forms a part, and held that fraudulently should not be so restricted. In language similar to Tha By Aw, it said that a person acts with an intent to defraud if he or she intends that some person be deceived and that, through such deception, an advantage should accrue to him, or that injury, loss or detriment should befall some other person. Drawing these cases together, they appear to suggest that intent to defraud can exist even if there is no intention to cause any property loss or a detriment that can be measured in financial terms. It appears to be sufficient if there is an intention to cause some advantage or to imperil another person’s interests in some way. In practical terms, however, it will rarely be necessary to rely on intent to defraud because the cases that are covered by this part of the offence of cheating involve the delivery of property or the retention of property; they can therefore, almost always, be analysed on the basis of dishonesty.”

Applying these principles to the present case, this Court has analysed the facts through the lens of dishonesty, particularly in light of the undisputed fact that there was both delivery and subsequent retention of property. Notably, the entity Semangat Moden continues to withhold a refund that was made by one of the named suppliers. This continued retention, despite the failed transaction, is a relevant consideration in assessing the presence of dishonest intention.

Given that a relatively stringent test – dishonesty – has already been satisfied, it follows that the lower threshold of fraudulent intent under section 25 of the Penal Code is also clearly met. It is manifest that irrespective of whether the Defendants intended to cause deprivation of property, the evidence reveals that they unequivocally intended, through deception, to secure an advantage for themselves. This is supported by the undisputed fact that all payments made to the respective alleged suppliers were subsequently transferred to the Defendants, particularly the Second Defendant.

In applying these principles, the Court finds that the Second Defendant, despite knowing that the refund was rightfully due to the Plaintiff, made a conscious decision not to return the said sum. This deliberate retention of the refund constitutes dishonest conduct. The overall conduct of the Defendants reveals a clear intention to deceive and defraud the Plaintiff from the outset. On the totality of the evidence, the Court is satisfied that the Plaintiff has established the essential elements of both fraudulent misrepresentation and conspiracy to defraud.

The Defendants have submitted that the facts of this case demonstrate their active efforts to secure refunds, which they argue is a feature inconsistent with the existence of fraud or conspiracy. This Court has duly considered this submission and analysed the relevant factual matrix to determine whether such efforts can negate the existence of dishonest intention at the material time.

In this regard, reference is made to the well-established principle articulated in Ratanlal & Dhirajlal’s Law of Crimes (24th edition, p. 2107), which states as follows: “It was held that the offence of cheating was completed as soon as the accused obtained the money by a promise which he knew he could not fulfil. The fact that long afterwards the accused paid back under pressure a part of the money, did not in any way affect his criminality. The test of criminality is what was in his mind at the time when the money was given to him and whether he at the time intended to repay the same. (see Debendra Prasad (1909) 36 Cal 573)”

This principle is directly applicable to the present case. The mere fact that the Defendants did eventually return part of the money does not absolve them of civil liability, nor does it negate the existence of dishonest intention at the time the money was obtained. The Court notes that there may be numerous motivations behind such repayments. In this case, the Defendants themselves alleged that they were threatened with the use of underground force and were pressured by the Plaintiff, who was actively contemplating legal action.

Moreover, the Court cannot disregard the entirety of the Defendants’ conduct, which is inconsistent with bona fide intentions. This includes requesting Barbara Chin to make a declaration, attempting to backdate an authorisation letter, lodging a police report stating they were mere agents, appointing a new director in Semangat Moden, and other actions evidently designed to evade responsibility. Despite the purported efforts to pursue a refund, the objective fact remains that even monies refund continued to be retained by the Second Defendant.

Further guidance is found in Ratanlal & Dhirajlal’s Law of Crimes (24th edition, p. 1946), where, in addressing the element under section 403 of the Penal Code, it is stated that: “Retention of money for a sufficiently long period by a person who is bound under law to return it to another legally entitled to it raises an inference of a temporary misappropriation within the meaning of this section. … Where it is the duty of the accused to pay over moneys received by him, his non-payment is prima facie evidence that he has wrongfully appropriated them to himself.”

The legal position is well settled: once dishonesty is established at the time of the transaction, the actus reus is complete, and any restitution made thereafter does not cure the illegality. As such, even if the Defendants repaid the amount later, it does not take away the criminality of the act done with dishonest intention.

This court is of the considered view that Mens rea is to be gathered from the intention of the accused at the time of inducement. Later developments cannot alter the nature of the offence. Hence repayment after discovery does not negate the existence of fraudulent intent at the time of the false representation. Subsequent restitution may be evidence of remorse or mitigating circumstances, but it does not displace the earlier dishonest conduct. Accordingly, this Court rejects the submission that the subsequent refund efforts negate the Defendants’ dishonest or fraudulent intention at the material time.

In summary, the evidence demonstrates that:

The Second Defendant exercised control over multiple entities which were invoiced as glove suppliers. These entities were either RM3 companies, dormant, or engaged in businesses wholly unrelated to glove manufacturing.

(ii) The Defendants deliberately concealed the true nature of these entities and misrepresented them as legitimate glove suppliers, thereby inducing the Plaintiff to make payments in reliance on that misrepresentation.

(iii) These misrepresentations were further compounded by the issuance of invoices under the name “Vera Collection PLT” or “Vera Collection,” when the Defendants were not authorised to act under this entity for glove-related transactions. The use of this name falsely conveyed legitimacy and authority.

(iv) Despite the Defendants’ denial, the Court is entitled to infer fraudulent intent based on the Defendants’ conduct. As observed in Ratanlal & Dhirajlal’s Law of Crimes (24th ed) at p. 2114, a false representation may be inferred from conduct, even in the absence of explicit words. The Defendants’ issuance of invoices, instruction for payments, and use of sham companies to receive those funds constitute conduct from which fraud can be inferred.

The statutory declaration (SD2) produced by Barbara Chin after litigation had commenced was clearly contrived. This Court finds that it was orchestrated by the Defendants as a post hoc attempt to shift liability onto unrelated and defunct entities, thereby misleading the Court and the Plaintiff.

(vi) The D1 Police Report was also found to be premeditated and self-serving. Lodged only after litigation loomed, the report appears designed not to report a crime in good faith but to avoid personal liability by creating a misleading record.

(vii) The pattern of deception — including the concealment of the suppliers' true nature, the subsequent refusal/failure to deliver goods, and the subsequent reallocation of Plaintiff’s funds — establishes that the Defendants did not merely breach a contract but were engaged in a coordinated and dishonest scheme.

(viii) The funds paid by the Plaintiff were not used for glove procurement but were ultimately traced to the Defendants, particularly the Second Defendant (see page 707 – 709 Notes of Proceedings). This indicates that the misrepresentations were made with the intention of deriving personal gain through deceit.

(ix) The Defendants' argument that a prior transaction was successfully completed does not absolve them of liability for subsequent fraudulent conduct. This Court adopts the principle in ABS Solution that a prior successful transaction does not preclude a finding that a subsequent fraudulent scheme existed. Rather, a successful transaction may even be used as a strategic device to build trust and to induce the Plaintiff to part with larger sums of money thereafter, under the mistaken belief that the Defendants were genuine intermediaries. This court finds that in this case, the earlier transaction appears to have been a calculated move to build trust before executing a more elaborate scheme of fraud, as cautioned against in ABS Solution.

In short, this factual matrix satisfies the essential elements of a fraudulent conspiracy.

The misrepresentations were knowingly or recklessly made;

(ii) The Plaintiff relied on those misrepresentations and suffered financial loss;

(iii) There existed a combination or agreement — whether express or inferred — among the Defendants to injure the Plaintiff through deceit;

(iv) Acts were carried out in furtherance of that agreement, including issuing false invoices, receiving payments through sham companies, and subsequently attempting to construct a false narrative to avoid liability.

Based on the Federal Court decision in Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 5 MLJ 1, the applicable standard of proof in civil cases involving allegations of fraud is the civil standard — that is, the balance of probabilities. The Court in Sinnaiyah reaffirmed that this standard remains unchanged regardless of the seriousness of the allegation; a higher degree of probability is not required simply because fraud is alleged.

Applying this principle, this Court finds that the Plaintiff has adduced clear, cogent, and compelling evidence sufficient to establish, on a balance of probabilities, that fraud did occur. Accordingly, the Defendants are liable for fraudulent misrepresentation and the tort of conspiracy to defraud. F.

GENERAL DAMAGES

In view of the findings above, I am satisfied that the Plaintiff is entitled to general damages arising from the non-delivery of goods and the fraudulent conduct of the Defendants. I have also found that the transaction in question was tainted by fraudulent misrepresentation. Accordingly, the applicable principle in the assessment of damages is to restore the Plaintiff to the position they would have occupied had the fraud not occurred, in line with the decision in Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 (CA).

The Plaintiff may rely on all relevant supporting documentation to establish the nature and extent of its losses, including both direct and consequential losses. As the precise quantum of damages cannot be determined at this stage, I order that general damages be assessed at a later date as prayed.

(ii) EXEMPLARY DAMAGES

This Court is also satisfied that, in the present case, the breach of contract by the Defendants also constitutes a tort, in light of the misconduct and the failure to exercise due care and diligence in the discharge of their duties as agents. The acts and omissions of the Defendants, amounting to misconduct, have directly caused financial losses to the Plaintiff.

In Tan Sri Khoo Teck Puat v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777, the Court held that: “punitive or exemplary damages might be awarded where a breach of contract was also a tort, but not where it involves only a breach of contract.”

Applying this principle to the present facts, the Court finds that the conduct of the Defendants — particularly the concealment of their true role and interest in the so-called supplier companies, the diversion of funds, and the use of entities with no real glove manufacturing background — went beyond a mere breach of contract and involved wrongful acts which justify the award of exemplary damages.

Having considered the overall conduct of the parties, including the partial refund made and the efforts (albeit limited) undertaken to mitigate the situation, this Court is of the view that an award of RM30,000.00 as exemplary damages is appropriate in the circumstances.

(iii) AGGRAVATED DAMAGES

This Court is not prepared to grant aggravated damages in the present case. In Sambaga Valli a/p KR Ponnusamy v Datuk Bandar Kuala Lumpur & Ors [2018] 1 MLJ 784, the Court of Appeal held as follows: “Now, aggravated damages are classified as a species of compensatory damages, which are awarded as additional compensation where there has been intangible injury to the interest of personality of the plaintiff, and where this injury has been caused or exacerbated by the exceptional conduct of the defendant.”

Having regard to the evidence adduced, this Court is of the view that the Plaintiff has not suffered any injury or loss other than pecuniary loss. There is no evidence to suggest that the Plaintiff suffered reputational damage, feelings of shame, emotional distress, or other forms of intangible harm.

Accordingly, I find that the factual matrix of this case does not support a finding of exceptional conduct by the Defendants that would warrant an award of aggravated damages. G.

At the conclusion of the main trial, there was no appearance filed in Court by any of the remaining third parties. By agreement of the parties, the third party proceedings were to be disposed of purely on submissions, with reliance placed on the existing pleadings and the testimonies of witnesses already called during the main trial.

In view of the foregoing and upon careful consideration of the testimonies of the witnesses, this Court finds that the Defendants have not satisfactorily demonstrated that the failure of the transactions was due to any third party’s default in supplying the goods or refusal to return the money. Indeed, even at the conclusion of the trial, the Court remains unclear as to who the actual glove supplier was, or whether any third party has been positively identified or proven to be legally liable for the failed transactions. Furthermore, both Defendants did not advance any substantive submissions in respect of the third party proceedings, which appear to have been initiated more as a formality than a genuine attempt to establish third party liability.

As previously mentioned in this judgment, the Second Defendant himself is among those alleged to be the liable third party. In these circumstances, the Defendants cannot shift liability to the purported third parties.

Accordingly, the third party proceedings are hereby dismissed, with no order as to costs. H.

Having carefully considered the pleadings, oral and documentary evidence, and the submissions of both parties, this Court finds that the Plaintiff has successfully established its claims against the Defendants on a balance of probabilities.

The Defendants were not mere intermediaries or agents acting on behalf of third parties or the Vera Collection entities. Rather, they were acting in their own capacity and assumed personal responsibility for the transactions in question. Their misuse of corporate identities, failure to disclose their true role and interest in the purported supplier companies, and orchestration of a scheme involving sham entities collectively constituted serious misconduct, breach of fiduciary duty, and fraudulent misrepresentation.

The Defendants’ argument that partial refunds or involvement of other entities negated fraudulent intent is without merit. Dishonest intention is assessed at the time of inducement, and subsequent efforts to refund, particularly under pressure or threat of litigation, do not absolve them of liability.

The Plaintiff has established that it suffered a financial loss of RM368,878.00, which remains outstanding. The Court therefore orders the Defendants to make full restitution of RM368,878.00, jointly and severally, together with interest.

In addition, general damages are to be assessed at a later stage. Exemplary damages in the sum of RM30,000.00 are awarded in view of the Defendants’ egregious conduct, with some allowance for limited mitigating factors. Aggravated damages, however, are not awarded, as the loss suffered by the Plaintiff was strictly pecuniary in nature and did not involve any injury to personality, reputation, or emotional distress.

The costs for this action are fixed at RM20,000, to be paid by the Defendants to the Plaintiff. Dated: 13 June 2025 (YONG LEOU SHIN) Judge Session Court Shah Alam Selangor Counsel for the Plaintiff David Soosay together with Alani Farhah Messrs Haris Ibrahim Kandiah Partnership Petaling Jaya, Selangor Counsel for the First Defendant Maurice Scully Tetuan M Scully Kuala Lumpur Counsel for the Second Defendant Danzel Tan & Stefan Aaron Messrs Rayyan Denzel & Sing Yih Petaling Jaya, Selangor