Dato Suhaimy Bin Othman v Infinity Trustee Berhad (BA-22NCvC-133-03/2022)

Infinity Trustee Berhad 2. Zuranita binti Muhd Zain (Summoned as agent and/or officer of 1st Defendant) …Defendants GROUNDS OF JUDGMENT Introduction [1] Plaintiff's cause of action against Defendants was for an alleged breach of Subscription Agreements between Plaintiff and Asia Cornerstone Asset Management Company Limited (Asia Cornerstone). Plaintiff further contended misrepresentation by the 2nd Defendant, resulting in Plaintiff investing in the scheme and not receiving payments as scheduled. [2] After hearing witnesses from both parties, on the balance of probabilities, I have dismissed Plaintiff's claim with cost to the Defendants. 17/03/2025 15:01:04 BA-22NCvC-133-03/2022 Kand. 37 S/N E7i5FQydG0mSxdmFWgkpnw [3] Plaintiff has now appealed to the Court of Appeal, and my reasons are below. The Parties [4] Plaintiff is an individual engaged in various enterprises before his retirement and had participated in several investment schemes. [5] Plaintiff and the 2nd Defendant have known each other for a period of time, as the 2nd Defendant's brother was previously employed by Plaintiff. [6] The 1st Defendant is a trustee company incorporated in Malaysia, specializing in trust and fund-related matters. [7] The 1st Defendant was appointed by Asia Cornerstone to act as a trustee, and the 1st Defendant's role was to facilitate the receipt of investment funds from investors in Malaysia and subsequently transfer these funds to Asia Cornerstone in Hong Kong. [8] Asia Cornerstone was a licensed asset management company with the Securities and Futures Commission, the financial regulatory authority of Hong Kong. [9] The 2nd Defendant was employed as a Relationship Manager with The Rain Maker Mgmt Sdn. Bhd. (Rain Maker). The 2nd Defendant's responsibilities included engaging with potential investors and promoting investment schemes. [10] Rain Maker is a company incorporated in Malaysia that focuses on marketing and promoting investment schemes to potential investors in S/N E7i5FQydG0mSxdmFWgkpnw Malaysia. Asia Cornerstone appointed Rain Maker as its marketing agent in Malaysia to promote its investment products to potential investors. Salient Facts Plaintiff's case [11] Asia Cornerstone holds investments in MyFiziq Limited, a company listed on the Australian Stock Exchange, and to fund its investments, Asia Cornerstone issued a debt instrument known as the Short-Term Note. [12] Rain Maker was the marketing agent for Asia Cornerstone and was tasked with seeking interested investors to subscribe to the Short-Term Note. [13] On or around May 2020, the 2nd Defendant invited Plaintiff to subscribe to the Short-Term Note issued by Asia Cornerstone. [14] During multiple meetings between the Plaintiff and the 2nd Defendant, the 2nd Defendant testified that she had adequately explained the details of the Short-Term Note to the Plaintiff. [15] Subsequently, on 20.05.2020, Plaintiff, at his own will, signed a Subscription Form to subscribe to the Short-Term Note in the amount of RM150,000.00. [16] The following day (21.05.2020), Plaintiff signed another Subscription Form to subscribe to the Short-Term Note in the amount of RM850,000.00, totalling RM1,000,000.00. [17] The purpose of the Subscription Form was to authorize Asia Cornerstone to use, process, and disclose Plaintiff's personal information S/N E7i5FQydG0mSxdmFWgkpnw to any third party to facilitate the subscription request and for CTOS checking. This authorization is noted at the bottom of both Subscription Forms signed by the Plaintiff. [18] On the day Plaintiff signed the Subscription Forms, Plaintiff also issued two cheques for RM150,000.00 and RM850,000.00, respectively, in favour of the 1st Defendant. The 2nd Defendant collected the cheques, and she handed them to Rain Maker to be credited into the 1st Defendant's bank account. [19] After Plaintiff signed the Subscription Forms on 31.05.2020, he executed two Short-Term Note Subscription Agreements with Asia Cornerstone for the subscription of the debt instrument (the Agreements). [20] The first agreement was for the subscription sum of RM150,000.00, and the second was for the sum of RM850,000.00. [21] Undisputedly, the parties to the Agreements were the Plaintiff and Asia Cornerstone only. The 1st Defendant and 2nd Defendant were not parties to the Agreements. [22] After Rain Maker had banked the cheque, the 1st Defendant received the funds and transferred them to Asia Cornerstone. On 16.06.2020, Asia Cornerstone confirmed receipt of the investment sum and issued two official receipts for RM150,000.008 and RM850,000.009 to Plaintiff. The official receipts, Subscriptions Forms, and the Agreements were duly received by the Plaintiff on 05.07.2020. [23] According to the Agreements, Plaintiff is entitled to a return on investment between 20% to 24% per annum, payable by Asia S/N E7i5FQydG0mSxdmFWgkpnw Cornerstone to Plaintiff in 12 tranches over a term of 13 months commencing from the date of the Agreements. [24] The first agreement carries a total Interest of approximately RM30,000.00 to RM36,000.00, with each tranche amounting to around RM2,500.00 to RM3,000.00. [25] The second agreement carries a total Interest of approximately RM170,000.00 to RM204,000.00, with each tranche amounting to around RM14,166.67 to RM17,000.00. [26] Based on the above, on 30.07.2020, via Rain Maker's account, the Plaintiff received a tranche of interest amounting to RM17,000.00 for the second agreement and RM2,500.00 for the first agreement. [27] Upon receiving the interest, the Plaintiff informed the 2nd Defendant that he had received interest from his investment: [28] However, on 06.09.2021, the Plaintiff alleged that he had not received any more interest from Asia Cornerstone, despite documentation indicating otherwise. [29] Consequently, Plaintiff instructed his solicitors to issue a letter of demand to Asia Cornerstone, the 1st Defendant, and the 2nd Defendant, seeking the return of the entire investment sum and the maximum interest purportedly due under the Agreements. [30] It was contended that both the 1st Defendant and 2nd Defendant did not receive the letter of demand. [31] Subsequently, on 30.03.2022, Plaintiff commenced this suit against the Defendants, alleging they had breached the terms and conditions of the Agreements. S/N E7i5FQydG0mSxdmFWgkpnw [32] The Plaintiff is claiming a sum of RM1,234,000.00 against both Defendants to be liable jointly or severally as of 31.6.2021 with 5% interest until final realization. Defendants' defence [33] The Defendants' submissions and Defence were as follows:

The Defendants are not named in the agreements. The Plaintiff had not pleaded any other cause of action besides breach of contract.

The contracts referred to were agreements entered between Plaintiff and Asia Cornerstone. Defendants were not parties or privy to it, and Plaintiff had clear knowledge of it.

Clause 8.2 of the agreements stipulates that in the event of default, the Fund Manager (Asia Cornerstone) shall return the investment sum to Plaintiff as an investor.

The agreements constitute the entire contract between Plaintiff and Asia Cornerstone regarding the investment. There is no other contract, as stated in Clause 16 of the agreement.

The Plaintiff cannot selectively enforce certain parts of the agreement while disregarding the other.

The Defendants were not parties to the agreements, and the essential elements of offer, acceptance, and consideration necessary for forming a valid contract were clearly absent.

As Defendants are not privy to the contact, no obligations or remedies are enforceable against them.

If Plaintiff was not paid any return of capital or interest by Asia Cornerstone (which is disputed), Plaintiff is at liberty to recover pursuant to section 74(1) of the Contract Act for compensation of any losses resulted from the alleged breach.

The 2nd Defendant explained to Plaintiff that the 1st Defendant was appointed by Asia Cornerstone as a trustee company, and Plaintiff admitted that he does not know the 1st Defendant and only knows the 2nd Defendant.

Plaintiff failed to prove the relationship between the 1st Defendant and the 2nd Defendant.

The 2nd Defendant had not misrepresented Plaintiff as he had agreed to the scheme at his own will. Analysis and Findings [34] Upon conclusion of the full trial and after hearing evidence from witnesses of both parties and reading the submissions filed, on the balance of probabilities, I am of the opinion as follows: The Agreements [35] The 1st Defendant is a trustee company that accepts payments from investors as beneficiaries for Asia Cornerstone. [36] The Short-Term Note Subscription Agreements were between Plaintiff and Asia Cornerstone, and Plaintiff's present cause of action in this suit was a breach of the said agreements. It is pertinent to note that neither Plaintiff nor the Defendants disputed the validity of the S/N E7i5FQydG0mSxdmFWgkpnw agreements, nor did they plead any vitiating factors at the time Plaintiff executed the agreements. [37] In the event of default, which was the central claim of the Plaintiff, the agreement itself stipulates that the obligation to refund or return the investment sum was by the Fund Manager, that is, Asia Cornerstone. Clause 8 of the agreement provides: "8. EVENTS OF DEFAULT

8.1 The Fund Manager is deemed to have committed a default if the Fund Manager breach of any of the terms herein stipulated and without prejudice to the generality of the foregoing, upon the happening of any one or more of the following events:

the Fund Manager shall fail to take all necessary action to remedy any breach of this agreement within seven (7) days from the receipt of any written notice from the Investor complaining of such breach;

the Fund Manager enters into any composition or arrangement with its creditors; or

there is a distress or execution or other process of a court of competent jurisdiction be levied upon or issued against any property of the Fund Manager and such distress or execution or other process, as the case may be, is not satisfied by the Fund Manager within seven (7) days from the date thereof. (hereafter collectively referred to as "Events of Default").

8.2 Upon the occurrence of any of the Events of Default, the Fund Manager and Investor hereby agree that this agreement shall be terminated in accordance with the provisions of this agreement.

8.3 Upon the early termination of this agreement, the Fund Manager shall immediately return and/or transfer or cause to return and/or transfer the face value of the Short-Term Note within thirty (30) days to the Investor." S/N E7i5FQydG0mSxdmFWgkpnw [38] In addition, the agreements constitute the entire contract entered into between the Plaintiff and Asia Cornerstone regarding the investment made by the Plaintiff. There is no other contract entered into by either of the parties pertaining to the investment made by the Plaintiff, as evidenced in clause 16 of the agreement. "16. ENTIRE AGREEMENT

16.1 This Agreement sets forth the entire agreement between the parties hereto in relation to their respective rights and obligations herein contained, and the Investor hereby agrees and acknowledges that the Investor has not entered into this agreement relying on any representation or warranty made by the Fund Manager." [39] Therefore, the applicability of the terms and conditions of the said agreements are to be applied in their entirety between the contractual parties. [40] Plaintiff had paid a total amount of RM1,000,000.00 to the 1st Defendant's account, and the 1st Defendant supposedly transferred the same amount to Asia Cornerstone. [41] The 1st Defendant was unable to show proof that the amount received from Plaintiff was then transferred to Asia Cornerstone; however, there were official receipts issued by Asia Cornerstone confirming receipt of the investment amount. This is sufficient to show that the contractual obligations between Plaintiff and Asia Cornerstone had been materialized, and its terms and conditions then bind parties. That would be the Plaintiff and Asia Cornerstone. Preliminary objection raised by Plaintiff [42] Before going further, in the course of the evidence given by the 2nd Defendant, she had mentioned that she was a Relationship Manager with S/N E7i5FQydG0mSxdmFWgkpnw Rain Maker from 2019 until 2022 to promote the investment scheme and had not made any representations to Plaintiff in her personal capacity. She then attempted to explain the Rain Maker's role in the scheme. Plaintiff objected to any reference made to Rain Maker's role in the present case as this was not pleaded in her defence. [43] I agree with the Plaintiff that parties are bound by their pleadings; therefore, evidence referring to unpleaded facts/causes of action should not be accepted. Defendants are not permitted to improve their pleading even as an explanation in court other than by way of application to amend (see Mkini Sdn. Bhd. v Raub Australian Gold Mining Sdn Bhd (2021) 5 MLJ, FC). I have then ruled that the 1st Defendant's testimonies referring to Rain Maker's role are material facts relevant to the issue which should be pleaded and failure which, her testimony on the role of Rain Maker are hereby expunged. Is there a binding contract between Plaintiff and Defendants? [44] I reiterate that both subscription agreements clearly state that the parties to the contract are Plaintiff and Asia Cornerstone. Plaintiff relies on the existence of the 1st Defendant's name at the header of the Subscription Form to establish their privity to the contract as a basis for a cause of action for breach of the two agreements and the proof of payment (cheques) to the 1st Defendant. This does not show a nexus between the parties for a concluded contract. [45] On this issue, I agree with the Defendants' submission on the Plaintiff's failure to prove privity of contract. I find that Asia Cornerstone would be the appropriate party to defend any alleged breach alleged by Plaintiff. The 1st Defendant was only in the picture as part of the process related to the cause of action towards Asia Cornerstone. Hence, Plaintiff's S/N E7i5FQydG0mSxdmFWgkpnw failure to make Asia Cornerstone a party had vastly affected their claim in this case. [46] The law is trite that the doctrine of privity of contract states that a person may not enforce a contractual promise and obtain remedies for its breach, even when the promise was expressly made for that person's benefit, if he is not a party to the contract (see Kepong Prospecting Ltd. & Ors v Schmidt (1967) 1 LNS 67, PC, Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Fianance Bhd (1998) 1 MLJ 393, FC and Suwiri Sdn Bhd v Government of the State of Sabah (2008) 1 MLJ 743, FC). [47] I further agree with Defendant's contention that Plaintiff does have a statutory remedy under section 74(1) of the Contract Act (CA) to claim the outstanding sum from Asia Cornerstone if he so desires. Section 74(1) provides: "Compensation for loss or damage caused by breach of contract 74(1) When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it." The 2nd Defendant's misrepresented the Plaintiff? [48] As against the 2nd Defendant, evidence was not led to prove, on the balance of probability, that she was an appointed agent or employee of the 1st Defendant. She clearly testified that she was a relationship manager with Rain Maker and that her role was to promote the scheme to potential investors. The burden of proving any relationship between the 1st and 2nd Defendant is on the Plaintiff. I am of the view that Plaintiff had S/N E7i5FQydG0mSxdmFWgkpnw failed to discharge such burden (refer to sections 102 and 103 of the Evidence Act). [49] While the 2nd Defendant admitted that she did promote the scheme to Plaintiff, I am of the opinion that Plaintiff had failed to prove that the information and explanations by the 2nd Defendant to Plaintiff were a misrepresentation in its legal sense. That is, the alleged representation or information was not true, misled the Plaintiff to his prejudice, and caused him to enter into the agreement mistakenly based on the substance of the subject of the agreement. [50] Anyways, it is to be noted that, though Plaintiff had pleaded representations were made by the 2nd Defendant as at paragraph 11 of the Statement of Claim (SOC), she being the "alter ego" of the 1st Defendant (paragraph 4 of the SOC), misrepresentation was not pleaded specifically by Plaintiff. [51] A misrepresentation is a false claim or statement of a material fact made by one party which persuades the other party to sign a contract. Under section 18 of the CA, misrepresentation is defined as a false statement that is made in good faith but without intent to defraud. [52] In Sim Thong Realty Sdn Bhd v Teh Kim Dar @ Tee Kim [2003] 3 MLJ 460, the Court of Appeal held: "…it is trite that the expression' misrepresentation' is merely descriptive of a false pre-contractual statement that induces a contract or other transaction. But it does not reflect the state of mind of the representor at the relevant time. The state of mind of the representor at the time he made the representation to the representee varies according to the circumstances of each case. It may be fraudulent. It may be negligent. Or it may be entirely innocent…" S/N E7i5FQydG0mSxdmFWgkpnw [53] That being the case, misrepresentation is a cause of action that, once pleaded, the party alleges needs to prove, on the balance of probability, the elements of the same as provided in section 18 of the CA. [54] I am satisfied that the 2nd Defendant had explained to Plaintiff the nature of the investment, the role of the 1st Defendant and the expected returns according to the terms of the Agreements. These are not false or untrue information. The fact that Plaintiff took some time to agree indicates that he was well informed of the consequences of the investment. Thus, the allegation that the 2nd Defendant had misrepresented the information leading to signing the agreement between Asia Cornerstone and Plaintiff is not proven. [55] Moreover, Plaintiff did receive several tranches of dividends generated from the investment, if not all. This confirmed the position of the Plaintiff that he was, in actual fact, not satisfied that he had not profited as he expected, which resulted in this claim against Defendants, which, unfortunately, was not the right party to pursue. Conclusion [56] Premised on the above, I find that the 1st Defendant is not privy to the agreements, and Plaintiff failed to discharge its burden of proof of the existence of a binding contract or nexus between Plaintiff and the 1st Defendant. Plaintiff further failed to prove the 2nd Defendant was the 1st Defendant's agent and had misrepresented him into signing the agreements. S/N E7i5FQydG0mSxdmFWgkpnw [57] On the balance of probabilities, premised on the preceding analysis and the findings, Plaintiff's claim against the Defendants is hereby dismissed with cost of RM15,000.00 subject to the allocator fee to both Defendants. Dated this 17th March 2025. ~signed~ (NOOR HAYATI BINTI HAJI MAT) Judge Shah Alam High Court NCVC 9 Counsels: For the Plaintiff: Hing Hong Ing together with Naziha bte Ahmad Rupaai Messrs Hing Chambers For the Defendant: Cheah Ben Jie together with Tee Choon Seng Messrs LY Lu & Co.