Brunsfield Metropolitan Sdn Bhd v Sime Darby Property Berhad (WA-22NCC-389-06/2025)

SIME DARBY PROPERTY BERHAD (No. Pendaftaran.: 197301002148 (15631-P))

PACIFIC TRUSTEES BERHAD (No. Pendaftaran.: 199401031319 (317001-A)) …DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT (Enclosures 58 and 59)

The Defendants filed Enclosure 58 to expunge parts of 3 affidavits and Enclosure 59 to strike out paragraphs 30 to 38 of the Statement of Claim filed in these proceedings, all on the same grounds that they disclose privileged “without prejudice” communications (“WP Communications”). S/N 1pdivtIGaUa1Ly6amJ7TQg

It was accepted that for the most part, the impugned WP Communications do comprise communications for the purpose of settling an ongoing dispute that did not ultimately lead to a settlement. The Plaintiff’s main argument is that the communications are admissible based on the exception that the privilege would cloak an unambiguous impropriety. Background facts

3.

The 2nd Defendant is the escrow agent holding a RM5,000,000.00 stakeholder sum (“Stakeholder Sum”). Under the SSA, the Stakeholder Sum was deposited by the Plaintiff to be held for 12 months from completion, extendable by a further 6 months (“Extended Retention Period”), as security for claims that may be made against the JV Co.

Disputes arose between the parties relating to the release of the Stakeholder Sum under the SSA, and the payment of a further sum claimed to be due to the Plaintiff under a settlement agreement. The latter related to the issue of liquidated ascertained damages (“LAD”) no longer be payable to purchasers in a development by the JV Co. S/N 1pdivtIGaUa1Ly6amJ7TQg

The Plaintiff filed prior actions against the 1st Defendant vide Originating Summons No: WA-24NCVC-868-02/2025 (“OS 868”) and Originating Summons No: WA-24NCC-110-02/2025 (“OS 110”) in relation to the aforesaid disputes.

On 16-4-2025, the Plaintiff made a “without prejudice” offer to the 1st Defendant to compromise and settle OS 868 and OS 110. The Plaintiff now claims that the 1st Defendant had deceitfully strung the Plaintiff along in settlement negotiations until 8-6-2025, when the Extended Retention Period was due to expire, and submitted a fraudulent eleventh-hour claim on the Stakeholder Sum on 5-6- 2025 (“Alleged Fraudulent Claim”).

OS 110 has since been discontinued. On 4-9-2025, an Order was made to transfer and consolidate OS 868 with the present action. In the present action, the Plaintiff seeks, inter alia, the following relief: a) a declaration that the Alleged Fraudulent Claim made by the 1st Defendant is in breach of contract, raised in bad faith and/or fraudulent; b) specific performance of contractual obligations under the SSA; and c) damages. Analysis and findings

The basis for Enclosures 58 and 59 is fairly straightforward. The general rule is that “without prejudice” communications are inadmissible in any court proceedings in evidence of the negotiations attempted. This is a well-established common law rule that exists for strong policy reasons (Malayan Banking Bhd v Foo See Moi [1981] 2 MLJ 17). S/N 1pdivtIGaUa1Ly6amJ7TQg

Section 23 of the Evidence Act 1950 expressly disallows a person from proving an admission in a civil case if it is made, either upon an express condition that evidence of it is not to be given, or under circumstances from which the Court can infer that the parties agreed that evidence of it should not be given.

The 1st Defendant argued that the WP Communications nevertheless fall within the general rule as privileged communications, and as none of the known exceptions apply, they should be excluded. The Plaintiff made the following arguments: a) The Court is functus officio; b) Certain unmarked communications are not privileged; and c) The WP Communications is evidence of an unambiguous impropriety. The Court is functus officio

The Plaintiff did not contend that there was a waiver of privilege or issue estoppel. Instead, the argument — if correctly understood by this Court — is that the WP Communications were already read in relation to the Plaintiff’s application for interlocutory injunctions in Enclosure 4, and that this Court has heard and dismissed Enclosure 4 on 15-8-2025. In so doing, it has ruled on the admissibility of the WP Communications and is functus officio in respect of that issue. S/N 1pdivtIGaUa1Ly6amJ7TQg

This Court has reviewed the broad grounds for the dismissal of Enclosure 4 by the learned Judge who decided the matter, and note that it clearly did not deal with the issue of admissibility of the “without prejudice” communications at all, nor was there any reference to the same. In fact, the Judge had either declined to consider the evidence or, upon reviewing it, found that: “[t]he Plaintiff's central allegations of fraud and unconscionability against the First Defendant are without merit and represent an impermissible attempt to re-characterise ordinary commercial disputes as fraudulent conduct.” Considering this, it is a curious argument for the Plaintiff to make.

In any case, a court becomes functus officio only once it has finally disposed of a matter and exhausted its jurisdiction over that decision. The doctrine is about finality. Findings made in relation to an interlocutory injunction application rarely fall within that scope because it is preliminary in nature.

By Enclosures 58 and 59, this Court is now called upon to determine admissibility before the WP Communications is deployed at trial. The fact that the Court has already been exposed to the WP Communications material does not dissolve the “without prejudice” rule or render the applications academic. S/N 1pdivtIGaUa1Ly6amJ7TQg

As a matter of principle, a ruling on admissibility remains necessary to determine whether the material forms part of the evidential record upon which the Court may properly rely. This Court acknowledges a practical dilution of the relief sought once exposure has occurred. There is a loss of prophylactic force, but a ruling on Enclosures 58 and 59 have not lost their juridical purpose. Unmarked communications are not privileged

The Plaintiff referred to a text message in March 2025 (“March Text”) before the Plaintiff’s formal offer to settle on 16-4-2025 and a final ultimatum on 21-5-2025 (“May Letter”) to elicit a response from the 1st Defendant among the WP Communications, but both were not marked “without prejudice”. The Plaintiff therefore argued that they do not form part of the settlement negotiations, and are not protected from disclosure.

Ironically however, it is the Plaintiff’s case that the 1st Defendant first opened the door to settle the then pending suits out of Court by the March Text. Settlement negotiations and the WP Communications marked “without prejudice” then ensued between solicitors. When the 1st Defendant was unresponsive, the Plaintiff’s solicitors wrote the May Letter which referred to the “without prejudice” letters.

Considering this, the Plaintiff appears to be blowing hot and cold on the March Text by now suggesting that it does not form part of the settlement negotiations. It does, as does the May Letter. The fact that they are not marked “without prejudice” is inconsequential S/N 1pdivtIGaUa1Ly6amJ7TQg as the Court will look at the substance of the communications. If there is a series of letters and the initial letter reveals an express or implied intention that the correspondence is not to be referred to at the trial, then the series of letters that follow will be given the same standing. Evidence of unambiguous impropriety

This is the crux of the resistance to Enclosures 58 and 59. To recap, the Plaintiff argued that the WP Communications is essential to the narrative about the 1st Defendant’s conduct in a larger fraudulent scheme to ultimately keep the Stakeholder Sum for itself. It is less about what was communicated than the effect of delayed communications by the 1st Defendant during that privileged occasion i.e. it allegedly lulled the Plaintiff from pressing its claims in Court until it was too late.

The Plaintiff therefore argued that the exception articulated in Unilever PLC v The Procter & Gamble Co [2001] 1 All ER 783 (“Unilever”) is engaged to admit the WP Communications into evidence, because their exclusion would otherwise shield the 1st Defendant from an unambiguous impropriety i.e. there was a clear abuse of the privilege.

The English Court of Appeal in Unilever delivered an instructive decision on the various exceptions to the “without prejudice” rule. One of the exceptions was explained in this way: S/N 1pdivtIGaUa1Ly6amJ7TQg “(4) Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguous impropriety’ (the expression used by Hoffmann LJ in Forster v Friedland [1992] CA Transcript 1052). Examples (helpfully collected in Foskett’s Law & Practice of Compromise (4th edn, 1996) p 153–154 (para 9-32)) are two first-instance decisions, Finch v Wilson (8 May 1987, unreported) and Hawick Jersey International v Caplan (1988) Times, 11 March. But this court has, in Forster v Friedland and Fazil-Alizadeh v Nikbin (1993) Times, 19 March, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion.” [Emphasis added]

According to Robert Walker LJ in Unilever, the exception should be applied only in the clearest cases of abuse of a privileged occasion and concluded as follows: “[The modern authorities] show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties, in the words of Lord Griffiths in Rush & Tompkins Ltd v Greater London Council [1988] 3 All ER 737 at 740, [1989] AC 1280 at 1300: “to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of S/N 1pdivtIGaUa1Ly6amJ7TQg compromise, admitting certain facts.” Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders. Lord Griffiths in the Rush & Tompkins case noted, and more recent decisions illustrate, that even in situations to which the without prejudice rule undoubtedly applies, the veil imposed by public policy may have to be pulled aside, even so as to disclose admissions, in cases where the protection afforded by the rule has been unequivocally abused.”

To illustrate the strict application of the exception, the Court of Appeal in Savings and Investment Bank Ltd v Fincken [2004] 1 All ER 1125 maintained the privilege despite a compelling case against excluding evidence that would reveal perjury. In that case, Mr Fincken owed the bank a large debt. Two prior deeds of settlement were entered into, which Mr Fincken defaulted on. He swore an affidavit of means disclosing very few assets and was essentially released by a third deed of settlement.

Some years later, the bank filed a suit for non-disclosure of assets. The High Court allowed an amendment to the writ to rescind the third deed of settlement and include particulars of an admission in a without prejudice meeting that Mr. Fincken had apparently lied about another undisclosed asset. The Court of Appeal disagreed and held: “It is not an abuse of the privilege to tell the truth, even where the truth is contrary to one’s case. That, after all, is what the without prejudice rule is all about, to encourage parties to speak frankly to one another in aid of reaching a S/N 1pdivtIGaUa1Ly6amJ7TQg settlement: and the public interest in that rule is very great and not to be sacrificed save in truly exceptional and needy circumstances.” Therefore, Mr. Fincken’s admission remained privileged and inadmissible.

The Courts in Malaysia have recognised the “unambiguous impropriety” exception, although the local jurisprudence is not well-developed with only a few reported cases. In MKC Corporate & Business Advisory Sdn Bhd v Cubic Electronics Sdn Bhd & Ors [2015] MLJU 567, the plaintiff sought to rely on several letters marked “without prejudice” written by the first defendant. These letters showed that, while assuring the plaintiff that vacant possession would be delivered, the first defendant was at the same time secretly entering into tenancy and sub-tenancy arrangements with third and fourth defendants.

Not unlike this case, the plaintiff contended that the communications were not genuine settlement attempts but formed part of a scheme to deceive it and deprive it of its contractual rights. The Court held that the impropriety disclosed by the letters was clear and unambiguous because they were written by the first Defendant to deceive the plaintiff. The Court emphasized that, where the justice of the case requires it, the court will admit such communications to expose wrongdoing. Accordingly, the letters were admissible under the “unambiguous impropriety” exception to the without prejudice rule. S/N 1pdivtIGaUa1Ly6amJ7TQg

Based on this Court’s review of case law precedents on the application of this exception, “unambiguous impropriety” is a very high threshold and deliberately so. The impropriety must be clear, manifest, and apparent from the communication itself without needing a trial to resolve competing narratives. Hard bargaining, aggressive settlement positions, refusal to settle or even unreasonable or bad-faith negotiations do not suffice.

In this case, this Court finds that the WP Communications did not meet the high threshold required. The only unambiguous fact from the WP Communications sighted is a) the parties had asserted their respective rights and b) the 1st Defendant did not respond to requests from the Plaintiff to propose an amount to be retained in exchange for the release of the balance Stakeholder Sum.

The reason why the 1st Defendant did not respond promptly was not apparent on the face of the communications. Its alleged effect depended upon subsequent conduct and the alleged impropriety can only be appreciated with hindsight. That in itself, is fatal to the concept of “unambiguous” impropriety and for this reason, the WP Communications retain their privilege and are ruled to be inadmissible.

For the reasons set out above, Enclosures 58 and 59 are allowed with costs. In respect of Enclosure 59, the operative orders should reflect that the relevant paragraphs of the Statement of Claim to be struck out are paragraphs 30 to 38 and also paragraph 78 of the S/N 1pdivtIGaUa1Ly6amJ7TQg Statement of Claim dated 18-6-2025, which also refers to the settlement negotiations.

It is noted that the principal assertion by the Plaintiff that the Alleged Fraudulent Claim is in breach of contract, made in bad faith and/or fraudulent, is not affected by this ruling. Bertarikh: 19 Februari 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam Untuk Plaintif: Rishikessingam a/l Rajakulasingam Tetuan Rishi & Partners Untuk Defendan Pertama: Sathya Kumardas, bersamanya Daud Sulaiman and Nurul Hafizah Tetuan Shearn Delamore & Co Untuk Defendan Kedua: Rashveni Dewi Tetuan Paul Cheah & Associates S/N 1pdivtIGaUa1Ly6amJ7TQg