Global Ventures Network Sdn Bhd v Lokman bin Dato' Mohd Kamal (W-02(NCVC)(W)-2119-12/2015)

Panther Car Co (M) Sdn Bhd (Company No.: 129743-P)

Ahmad Tarmuzi bin Abu Bakar (I.C. No.: 430321-06-5077)

Global Ventures Network Sdn Bhd (Company No.: 815543-H)

Nor’ Iman binti Omar (I.C. No.: 721015-06-5166)

Mazlan Fadhli bin Abdul Majid (I.C. No.: 620208-03-5681)

Ahmad Hanif Solhi bin Omar (I.C. No.: 810616-06-5211) … Defendants] 2 [heard together with] IN THE COURT OF APPEAL, MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO: W-02(NCVC)(W)-182-01/2016 BETWEEN LOKMAN BIN DATO’ MOHD KAMAL … APPELLANT (I.C. NO.: 890320-14-6103) AND PANTHER CAR CO (M) SDN BHD (COMPANY NO.: 129743-P) … RESPONDENT [In the Matter of the High Court of Malaya at Kuala Lumpur (Civil Division) Civil Suit No: 22NCVC-632-11/2013 Between Lokman bin Dato’ Mohd Kamal … Plaintiff (I.C. No.: 890320-14-6103) And

Panther Car Co (M) Sdn Bhd (Company No.: 129743-P)

Ahmad Tarmuzi bin Abu Bakar (I.C. No.: 430321-06-5077)

Global Ventures Network Sdn Bhd (Company No.: 815543-H)

Nor’ Iman binti Omar (I.C. No.: 721015-06-5166)

Mazlan Fadhli bin Abdul Majid (I.C. No.: 620208-03-5681)

Ahmad Hanif Solhi bin Omar (I.C. No.: 810616-06-5211) … Defendants] 3 CORAM: ABANG ISKANDAR BIN ABANG HASHIM, JCA BADARIAH BINTI SAHAMID, JCA MARY LIM THIAM SUAN, JCA JUDGMENT OF THE COURT Introduction [1] These two related appeals which arose from the same trial, were heard together. For ease of understanding, we shall refer to the parties as they were before the High Court. [2] The plaintiff’s claim before the High Court was against six defendants. The plaintiff alleged that these six defendants conspired to defraud him under an investment scheme agreement to import and sell cars. The plaintiff subsequently withdrew his claim against the 5th defendant who was the company secretary of the 3rd defendant but he proceeded to a full trial against the remaining defendants. [3] At the conclusion of hearing, the claim was allowed but only against the 3rd and 6th defendants with the 3rd defendant’s costs to be borne by the 4th defendant. The claim against the remaining defendants was dismissed as was the 1st and 2nd defendants’ counterclaim. 4 [4] The 3rd defendant appealed vide the 1st appeal, Civil Appeal No.: W-02(NCVC)(W)-2119-12/2015; whilst the plaintiff’s appeal which is only in respect of the decision against the 1st defendant, is the 2nd appeal, Civil Appeal No.: W-02(NCVC)(W)-182--01/2016. There are no cross-appeals in both appeals. [5] Upon hearing learned counsel for the respective parties, we affirmed the decision of the High Court in respect of the 3rd defendant and dismissed the 1st appeal. In respect of the 2nd appeal, we found merits in the arguments raised. Consequently, we allowed the appeal, set aside the orders of the High Court in respect of the 1st defendant and entered judgment against the 1st defendant. These are our reasons. Brief facts [6] There were six defendants in the original action. The 1st defendant is a company which has Approved Permits or APs while the 3rd defendant is a company dealing with luxury cars. The 2nd defendant is the Managing Director of the 1st defendant whereas the 4th and 5th defendants are director and Company Secretary in the 3rd defendant. The 6th defendant, on the other hand is an individual. He and the 2nd defendant are related. [7] The plaintiff claimed that the 6th defendant, an individual, representing and with the ostensible authority of the 1st and 3rd defendants, conspired with all the other defendants to defraud him vide an investment scheme involving the import and sale of luxury cars with 5 guaranteed returns and profits. The plaintiff claimed that he invested in this scheme through an agreement dated 9.11.2012 made between the plaintiff and the 6th defendant. Under this agreement, the plaintiff would sell luxury cars that were imported through the 1st defendant, the party with the APs. The plaintiff paid two sums totalling RM2,450,000.00 to the 3rd and 6th defendants. [8] Under the agreement, the cars were expected to be imported into Malaysia by February 2013. When the cars did not arrive, the plaintiff inquired with the 6th defendant in March 2013. He was told that the cars were still with the Customs Department awaiting the issuance of APs. The 6th defendant further assured the plaintiff that he, the plaintiff could expect returns on his investment by June. In June and August 2013, the 6th defendant issued two cheques of RM180,000.00 and RM300,000, purportedly as returns of the investments. Unfortunately, both cheques were dishonoured. [9] The plaintiff decided to call on the 2nd defendant, the 1st defendant’s Managing Director to discuss his investment. The plaintiff went with his father. At that meeting, the 2nd defendant told the plaintiff and his father that the 6th defendant was not a permanent staff of the 1st defendant, that he will settle the matter, and that he will make a police report to that effect to protect the reputation of the 1st defendant which had been tarnished by the 6th defendant’s acts. No police report was lodged. The plaintiff finally never got the cars or his investments, or any of his money back. He then sued alleging that the defendants had colluded amongst themselves to defraud him in the aforesaid investment. The plaintiff claimed a refund of his investments and the promised returns of profits together with other ancillary relief. The 6 plaintiff sought to lift the corporate veil in order to make the 2nd and 4th defendants personally liable. [10] The 1st and 2nd defendants denied liability arguing that there was no privity of contract between them and the plaintiff, and that they had no knowledge of the alleged arrangements. These defendants have counterclaimed for abuse of process. Likewise, the 3rd and 4th defendants, also on the basis of lack of privity of contract. [11] The plaintiff called 7 witnesses including himself; the 2nd defendant testified on behalf of himself and the 1st defendant and called another witness, one Mohd Fazlan Ahmad Tarmuzi [DW2]; while the 3rd and 4th defendants testified through the 4th defendant and one Jafrei Nordin [DW4]. The 6th defendant did not take the stand nor did he call any witnesses to testify on his behalf although he personally conducted the trial on his own behalf. Decision of the High Court [12] The learned Judge found the claim of conspiracy not proved against the 1st, 2nd and 6th defendants, finding from the pleadings and the evidence led that the plaintiff had failed to establish the existence of an agreement between them to defraud the plaintiff. The learned Judge further found, as against the 1st and 2nd defendants, that there was a lack of privity of contract to attach any liability. In the learned Judge’s view, the fact that the 1st defendant’s name is mentioned in the agreement “cannot be equated to mean that there is contractual nexus between the plaintiff and the 1st defendant. The unilateral inclusion or mention of the 7 1st defendant in the agreement of 9.11.2013 cannot mean that the 1 st defendant is a party to the contract. No one representing the 1 st defendant had executed the said agreement.” [13] The learned Judge found that the plaintiff should have carried out an independent verification or investigation of the 6th defendant’s position in the 1st defendant instead of assuming that the 6th defendant was an authorised representative of the 1st defendant. The learned Judge accepted the 2nd defendant’s testimony that the 6th defendant was “merely a broker who had introduced potential buyers for cars sold by the 1st defendant.” The learned Judge rejected the plaintiff’s argument of agency that the 6th defendant had apparent authority of the 1st defendant to act for the 1st in relation to the agreement. [14] In contrast, the learned Judge found ample evidence against the 3rd and 6th defendants; that the agreement was made by the 6th defendant on behalf of the 3rd defendant. According to the learned Judge, the fact that the 6th defendant asked the plaintiff to draw the cheques payable to the 3rd defendant’s bank account and had in fact deposited the cheques into the 3rd defendant’s account, with the knowledge and concurrence of the 4th defendant, shows that the 3rd defendant had by conduct, given ostensible authority to the 6th defendant to act on its behalf. The learned Judge however, was not prepared to lift the corporate veil in order to impose personal liability on the 4 th defendant. [15] Because the monies were paid into the 3rd defendant’s account, the learned Judge found that the 3rd defendant had a duty to enquire if the monies were received for proper purposes; otherwise it had a duty to 8 return the monies. As far as the learned Judge was concerned, even if the 3rd defendant was an innocent victim, which His Lordship did not find to be the case, “it cannot be denied that the 3rd defendant had allowed its bank account to be used in such a manner so as to facilitate the perpetration of a fraud. On the facts, it would be wholly inequitable to absolve the 3rd defendant of any culpability.” Had the 3rd defendant enquired, the learned Judge found that it could possibly have prevented the fraud being committed by the 6th defendant. The learned Judge also rejected the 3rd defendant’s claim that the monies that were paid into its account were meant for a joint venture project in Bandar Enstek. [16] The 3rd defendant has appealed [the 1st appeal] and so has the plaintiff, but only in relation to his claim against the 1st defendant [the 2nd appeal]. The appeals are confined to the matters on appeal. Decision of this Court [17] It is our considered opinion that the learned Judge was plainly erroneous in rejecting the claim on the basis of a lack of privity of contract. The plaintiff’s claim against the defendants was never founded on contract but on the tort of conspiracy – see paragraphs 7 to 22 of the Statement of Claim. As for that aspect of the claim, the learned Judge had found this allegation proved only as against the 3rd and 6th defendants; hence the appeals. In this regard, we also found misapprehensions on the law and on the facts that required appellate intervention. We found that the learned Judge ought to have properly appreciated the pleaded case, and evaluate all the evidence led when considering whether the claim of conspiracy was proved. What the 9 learned Judge did was to examine the claim from where or with whom did the plaintiff have a contractual relationship, and having found that it was not with the 1st defendant but with the 3rd defendant, then proceeded to dismiss the claim against the 1st defendant. While that contractual aspect may have thrown some light as to how and who was involved in the scheme, it was but one aspect of the whole investment scheme agreement. That aspect was a good place to start, but it was only a start and should have been the start and not the conclusion of the learned Judge’s evaluation and consideration. In so doing, the learned Judge failed to take into account many material and relevant pieces of evidence led by the plaintiff which stood unexplained and unaccounted for by the defendants and which proved, quite satisfactorily the pleaded case of conspiracy. [18] As the learned Judge quite rightly recognised, in order to make out a case of conspiracy, the plaintiff would need to establish that there was an agreement between two or more persons to injure the plaintiff; and that the acts done in execution of that agreement resulted in damage to the plaintiff. However, the learned Judge fell into error in not considering further whether the conspiracy alleged was one of “simple conspiracy” or conspiracy to injure; or conspiracy where unlawful means have been used, often referred to as “wrongful means conspiracy”. That is an important and necessary question that the learned Judge had to ask himself and of the parties as it will determine the applicable principles. The principles which are applicable depend very much on the specific allegations of conspiracy that are pleaded in the Statement of Claim. In Wu Yang Construction Group Ltd v Zhehiang Jinyl Group Co Ltd [2006] 4 SLR(R) 451, 491, the Court expressed that: 10

It is apposite to note that the actual principles of law relating to the tort of conspiracy are none too clear. What is clear is that there are traditionally, two separate and distinct aspects or ways of applying the tort of conspiracy. As might have been surmised, the legal principles with respect to each aspect are somewhat different.

There is, first, the situation where unlawful means have been used (also known as “wrongful means conspiracy”). The relevant law in this context appears to be straightforward. In particular, there is no need for the plaintiff concerned to prove that there has been a predominant intention on the part of the defendant to injure it. It would appear that the very utilisation of unlawful means is, by its very nature, sufficient to render the defendants liable, regardless of their predominant intention. This would appear to be both logical as well as just and fair, especially if we bear in mind the fact that the central core, as it were, of the tort of conspiracy hinges on the proof that the conspiracy is somehow unlawful and that the plaintiff is entitled to succeed provided that it can prove that it has suffered damage.

Secondly, there is the situation where lawful means have been used (also known as “simple conspiracy” or “conspiracy to injure”). Unlike the first category referred to briefly in the preceding paragraph, this second category requires that the plaintiff prove that there has been a predominant intention on the part of the defendants to injure it (see the leading House of Lords decision of Lornho plc v Fayed [1992] 1 AC 448 (“Lornho”)). This additional element is required simply because, without it, the alleged conspiracy would be devoid of any element of unlawfulness. It is precisely because there is a predominant intention on the part of the defendants to injure the plaintiff that the plaintiff is entitled to succeed provided (again) that it (the plaintiff) can prove that it has suffered damage. It is this concerted predominant intention to injure that renders the conduct of the defendants, which would otherwise have been lawful, unlawful or illegitimate. As Lord Bridge of Harwich, who delivered the substantive judgment of the House in Lornho (with which the other law lords agreed), observed (at 465-466): 11 Where conspirators act with the predominant purpose of injuring the plaintiff and in fact inflict damage on him, but do nothing which would have been actionable if done by an individual acting alone, it is in the fact of their concerted action for that illegitimate purpose that the law, however anomalous it may now seem, finds a sufficient ground to condemn their action as illegal and tortious. But when the conspirators intentionally injure the plaintiff and used unlawful means to do so, it is no defence for them to show that their primary purpose was to further or protect their own interests; it is sufficient to make their action tortious that the means use were unlawful. [emphasis added] [19] We found that had the learned Judge examined that critical issue, the learned Judge would have concluded from the pleaded case that the tort of conspiracy under scrutiny was one of conspiracy by unlawful means. The law on “wrongful means conspiracy” does not require the plaintiff to prove that there has been a predominant intention on the part of the defendants to injure the plaintiff. The very utilisation of unlawful means, that is to cheat or to defraud, by its very nature, is sufficient to render the defendants liable, regardless of their predominant intention. After all, the learned Judge recognised that the plaintiff’s allegation was that the whole investment scheme was set out to cheat or defraud the plaintiff. And, insofar as such a claim against the 3rd and 6th defendants is concerned, the learned Judge had no problems finding the claim proved; the only issue in this appeal is whether the 1st defendant was also involved: “…I find that there is ample evidence to found a case against the 3rd and 6th defendants, but none so against the 4th defendant. The evidence shows that 12 the agreement dated 9.11.2013 was made by the 6th defendant on behalf of the 3rd defendant.” [20] Although the learned Judge concluded that the entire claim against the 1st and 2nd defendants failed because the plaintiff had failed to establish any such agreement between these defendants and the 6 th defendants to defraud the plaintiff, his lordship did not elaborate on his reasons for so concluding. It would however, appear that the learned Judge reached this conclusion because he was very much persuaded by the principle of privity of contract, that there was none between the 1st defendant and the plaintiff when the agreement dated 9.11.2012 was examined. And, this, with respect, is where we see the learned Judge is in error. [21] In the tort of conspiracy, the element of agreement does not necessarily refer to an agreement in writing or of the formal nature generally understood in commercial or contractual arrangements. In Renault SA v Inokom Corp Sdn Bhd & Anor and Other Appeals [2010] 5 MLJ 394, 406, the Court of Appeal opined that: [33] It is clear that the very first element to be shown must be an agreement between two or more persons for the purpose of injuring Inokom and Quasar. ‘Agreement’ is not limited to a signed and sealed agreement but any informal agreement, including a combination of efforts of the alleged co-conspirators. After that, it has to be shown or at least alleged that acts were done in execution of that agreement which resulted in damage to Inokom and Quasar. In this case, the acts done would have to be unlawful, namely, the alleged false representation made by Renault to Inokom and Quasar as to the 13 level of investment Inokom and Quasar will have to make for the Kangoo project. [34] It is trite law that the agreement to injure must come first (in other words the agreement should have crystallised), before the alleged unlawful acts are done in execution or pursuant to the agreement. [emphasis added] [22] Nallini Pathmanathan J [as she then was] in the case of Tekital Sdn Bhd v Sarina bt Kamaludin & Ors [2012] 8 MLJ 734, further elucidated: [93] In Clerk & Lindsell on Torts, (18th Ed), at chapter 24, the author states in relation to the element of ‘agreement’ as follows: … Of the various words used to describe a conspiracy, ‘combination’ has been preferred on the ground that ‘agreement’ might be thought to require some agreement of a contractual kind, whereas all that is needed is a combination and common intention, (see Belmont Finance Corp v Williams Furniture Ltd (No 2) [1980] 1 All ER 393. But judicial descriptions still speak of ‘concerted action taken pursuant to agreement’ … But there must be combination; lack of overt acts or an uncommunicated intention to join a conspiracy may show there has not been effective combination … A company, being a separate legal person can conspire with its directors; and the knowledge of the company may be found in the person (usually a director) who has management control (as its alter ego) for the transaction or act in question … [94] From the foregoing passage it is evident that it is not necessary that evidence of any form of contractual agreement be produced. It is sufficient 14 that there is evidence produced that the defendants acted in combination, which is the case here. I have set out in this judgment in relation to each of the defendants why I have concluded that they acted in combination and with common intention. [95] … [96] In Renault SA v Inokom Corp Sdn Bhd & Anor and other appeals [2010] 5 MLJ 394; [2010] 5 CLJ 32 the Court of Appeal had occasion to consider the salient features of a claim founded on the tort of conspiracy. They quoted, inter alia, from the Common Law Library relating to Precedents of Pleadings: … The gist of the tort of conspiracy is not the conspirational agreement alone but that agreement plus the overt acts causing damage (Marrinam v Vibart [1963] 1 QB 234, affirmed [1963] 1 QB 528). Pleading. The statement of claim should describe who the several parties and their relationship with each other. It should allege the agreement between the defendants to conspire, and state precisely what was the purpose or what were the objects of the alleged conspiracy and it must then proceed to set forth, with clarity and precision the overt acts which are alleged to have been done by each of the alleged conspirators in pursuance and in furtherance of the conspiracy, and lastly, it must allege the injury and damages occasioned to the plaintiff thereby (The Common Law Library – No. 5 – Precedents of Pleadings – s 26 – Conspiracy) … [23] Hence, what the plaintiff needed to show was the existence of a combination of efforts of the alleged co-conspirators. In the pleaded case of the plaintiff, the allegation of conspiracy involves the whole investment scheme which was nestled not just in the agreement of 15

9.11.2012 but in the involvement and roles of the various defendants, especially the 1st defendant. In this regard, we found that the learned Judge had failed to take into account material evidence that clearly proved evidence of conspiracy on the part of the 1st defendant. [24] The plaintiff called witnesses who testified to this scheme and the involvement of the defendants. The plaintiff called first, one Kelvin Tong Teng Hoe [PW1], a director of a company called Extreme Supercars Sdn Bhd, which trades in international/imported and local used cars. It was this witness who first introduced the plaintiff to the 6th defendant having dealt with the 1st defendant through the 6th defendant. This witness testified on how the cars were to be imported by the 1st defendant. In fact, PW1 testified that there were other cars which had previously been imported by the 1st defendant under similar arrangements, that “that’s how trust were built and that’s why we started with this particular car” – see cross examination by the 6th defendant who conducted the trial himself; and a second round of cross-examination by learned counsel for the 1st and 2nd defendants. This witness provided important corroborative evidence of the existence of an arrangement involving the several parties as alleged by the plaintiff. Unfortunately, his material testimony was not taken into account at all by the learned Judge. [25] PW1 also testified that the 6th defendant, a nephew of the 2nd defendant had a proper office in the 1st defendant and that the staff of the 1st defendant referred to the 6th defendant as “the current manager” of the 1st defendant, that “he is the right person to talk to because he is the influential one and the person that can assist us in importing cars.” Monies were paid to the 6th defendant and that it was PW1’s understanding that the money will then be paid to the 1st defendant, 16 though how the 6th defendant would set about doing that, he would not know. Again, this testimony was relevant and material to the existence of not just an investment scheme agreement involving the 6th defendant, but involving the 1st defendant, without whose APs, cars, and premises, the whole scheme would not have been successfully enacted. [26] It would appear that the learned Judge believed the plaintiff, that there was a conspiracy to cheat and defraud him by the defendants. He only did not believe that the conspiracy involved the 1st, 2nd and 4th defendants. His lordship believed that it was only the 3rd and 6th defendants who had conspired to cheat and defraud the plaintiff. It would also appear that the learned Judge had accepted the testimony of the 2nd defendant, that he had no knowledge of this written agreement and that he had not received the monies paid by the plaintiff. The money was not paid to the 1st defendant but to the 3rd and 4th defendants. The 2nd defendant was only approached after the deal had gone sour. [27] The learned Judge seems to have overlooked that the whole scheme alleged by the plaintiff was about the import and sales of luxury cars with guaranteed returns and profits. This is evident when the 9.11.2012 agreement is examined properly: Global Ventures Network Sdn Bhd (815543-H) 9 November 2012 17-3, Jalan Mesra Niaga, Taman Mesra Batu 13 Jalan Cheras 43000 Kajang Selangor Attention: Mr. Ahmad Hanif Solhi bin Omar Dear Mr. Ahmad, 17 We hereby confirm the list of cars to be purchase through Panther Car Co. (Malaysia) Sdn Bhd as follow:- Costing and Profit a) Audi Q7 3.0 TDI (2011) x 2 units i) Car Cost: RM220,000 (£44,000 x 5) ii) AP & Shipping: RM45,000 iii) Duty: RM130,000 Total Cost; RM395,000 Expected selling price: RM440,000 (Margin RM45,000) per car 2 cars: RM220,000 x 2 = RM440,000 b) Audi A8 4.2 LWR i) Car Cost: RM210,000 (£42,000 x 5) ii) AP & Shipping: RM45,000 iii) Duty: RM174,000 Total Cost: RM429,000 Expected Selling Price: RM500,000 (Margin RM71,000) c) Aston Martin Rapide (2011) x 1 unit i) Car Cost: RM475,000 (£95,000 x 5) ii) AP & Shipping: RM45,000 iii) Duty: RM414,000 Total Cost: RM934,000 Expected selling price: RM1,050,000 (Margin RM116,000) d) Lamborghini Gallardo LP560 (2010) x 1 unit i) Car Cost: RM550,000 (£110,000 x 5) ii) AP & Shipping: RM45,000 iii) Duty: None Total Cost: RM595,000 Expected selling price: RM750,000 (Margin 155,000) e) Ferarri 458 x 1 unit i) Car Cost: RM775,000 ii) AP & Shipping: RM45,000 18 iii) Duty: RM480,000 Total Cost: RM1,300,000 Expected selling price: RM1,600,000 (Margin 300,000) The above list consist of total cost per unit of the car and the expected profit margin which you undertake are achievable. The total of the all the above car total RM2,450,000. Payment paid on the 9th November 2012 rents through CIMB RM425,000 Balance RM2,025,000 to be paid. Thank you Yours Sincerely, To be confirmed, Lokman bin Dato’ Mohd Kamal Teh Ahmad Hanif Solhi b Omar 810616-06-5211 [28] It is undisputed that the plaintiff invested in the scheme, that he paid a total sum of RM2,450,000.00; but he received no cars and no returns. The person who approached the plaintiff with the scheme was the 6th defendant who claimed that he represented and had the ostensible authority of the 1st and 3rd defendants to be part of this investment scheme agreement. Now, not only did the 6th defendant not step forward to tell his side of the story or to deny the plaintiff’s allegations, although he conducted his own trial, the plaintiff’s allegations were found proved. There is no appeal by the 6th defendant. [29] According to the plaintiff’s claim, the 6th defendant is not a car salesman but a person authorised to speak and transact for the 1st and 3rd defendants. The investment scheme agreement saw at least one car imported and that was an Aston Martin imported for one Ramasamy before there were no further cars supplied. 19 [30] To counter the plaintiff’s case was the 1st and 2nd defendants’ version - in the words of the 2nd defendant, the 6th defendant was a “mere broker who introduced potential buyers for cars sold by the 1st defendant.” [31] On this, we find that the learned Judge had failed to consider that the 6th defendant was in fact related to the 2nd defendant, the Managing Director of the 1st defendant, that he had office space in the 1st defendant’s showroom, and that he was referred to as the “current manager” of the 1st defendant, that “he is the right person to talk to because he is the influential one and the person that can assist us in importing cars.” These seemingly innocuous factors were relevant and indicative of the role played by the 6th defendant in relation to the 1st defendant; that he was, in truth, and in reality, not a “mere broker who introduced potential buyers for cars sold by the 1st defendant” but someone who had a fairly substantial role to play in the 1st defendant. It is highly unlikely that such a “mere broker”, as described by the 2 nd defendant, would have been given the mandates and degree of authorisation to act on behalf of the 1st defendant as the 6th defendant did. [32] Although the 6th defendant was a broker, he had the mandate to sign as the 1st defendant’s representative and more significantly, as director in a sub-tenancy agreement dated 28.2.2013 to rent land or space on behalf of the 1st defendant for the purpose of the 1st defendant’s purposes. The land located at Centre Point Bandar Utama, Lot 125 Lebuh Bandar Utama, Petaling Jaya was rented for exhibition purposes by the 1st defendant – see pages 723 to 727 [exhibit P2]. This 20 document was not challenged at the trial. In fact, Mohd Yuzamil bin Mohd Yunus, a director of Piramid Azim Sdn Bhd, the main tenant with whom the 1st defendant sub-tenanted the land, testified as PW3. This witness testified that the land was tenanted for use as showroom space “for demo and exhibition”. [33] The plaintiff further tendered letters exchanged between the 1st defendant and the Malaysian Royal Customs Department, and with the Road Transport Department around the same period. These letters, written by Mohd Fazlan bin Ahmad Tarmuzi [DW2], who is the 2nd defendant’s son and a director of the 1st defendant, showed various arrangements made by the 1st defendant to use the land as sub-tenanted by the 6th defendant including seeking the permission of the Customs Department to take 20 of its cars from the licensed warehouse “for demo and exhibition” at that sub-tenanted place – see pages 680 to

This sub-tenanting of the land at Centre Point cannot be the act of a mere broker. According to PW3, the 6th defendant signed the tenancy agreement as the 1st defendant’s director and even paid the deposit for the rental. Although both DW1 [the 2nd defendant] and DW2 had no knowledge of this sub-tenancy agreement, it remains unchallenged and independent evidence of the role played by the 6th defendant; that the land rented and where the deposit was paid for by him for the 1 st defendant, was indeed utilised by the 1st defendant for the 1st defendant’s purpose and no other. [34] There is further evidence of the importance and role of the 6 th defendant in the 1st defendant in the letters sent by the 1st defendant to the Road Transport Department. In those letters, the 1st defendant 21 advised that the 6th defendant was its authorised representative in matters relating to the trade plates to be used for the cars on sale. [35] The status of the 6th defendant as ‘mere broker’ is further disproved by a letter dated 9.10.2012, signed by the 2nd defendant to the Immigration Department. In this letter, the 2nd defendant advised the Immigration Department that the 6th defendant is authorised to represent him in matters before the department – see page 721. [36] Further, the learned Judge failed to have regard to the fact that the import and sales of the luxury cars could not have come to pass unless and until there was an entity with the APs. Without the APs, there would have been no imported luxury cars to begin with. The only entity in this arrangement with the APs is the 1st defendant. The 3rd defendant, a company dealing with luxury cars, did not have the requisite APs. It became finally, the conduit for the receipt of monies paid by the plaintiff. [37] We cannot agree with the learned Judge that the plaintiff was wrong in assuming that the 6th defendant was an authorised representative of the 1st defendant because the 6th defendant had an office space in the 1st defendant’s showroom in Ampang. It was the learned Judge’s view that the plaintiff ought to have made separate or independent inquiries as to the 6th defendant’s status and capacity in relation to the 1st defendant. Because the plaintiff failed to do so and in the absence of any evidence to the contrary, the 6th defendant could not be said to be an authorised agent or representative of the 1st defendant, to the extent that the 6th defendant may enter into agreements on behalf of the 1st defendant. The learned Judge found the pleadings and the 22 evidence “devoid of any such apparent authority. In the circumstances, the plaintiff’s argument of agency would necessarily fail.” [38] With respect, we disagree. Given the various pieces of evidence as alluded to above and the evidence of PW1 who had testified on the existence of such arrangements, it was reasonable for the plaintiff to have reached the assumptions and conclusions as he did about the 6 th defendant. As mentioned, the 6th defendant was no ordinary “mere broker” but was one related to the 2nd defendant, given substantial mandates and was quite involved in the running and management of the 1st defendant, matters which are generally left to the directors of a company and not a “mere broker”. The 1st defendant’s bank statements showed substantial payments to the 6th defendant. These payments go beyond payments or transactions ordinarily conducted and involving a mere part-time employee or broker. These payments included an advance of a substantial sum of money to London. [39] The plaintiff had further shown that the cars to be imported were in fact imported through the APs applied for and held by the 1st defendant and applied for by the 2nd defendant – see page 744 to 746 of the Record of Appeal. [40] We find that the learned Judge had erred when he found that the 6th defendant lacked authority to act for the 1st defendant. Based on the evidence as cited above, there is ample evidence to find that the 6 th defendant had apparent and ostensible authority to act for the 1 st defendant such as to bind the 1st defendant to the 6th defendant’s deeds and actions – see the Federal Court’s decision in Chew Hock San & Ors v Connaught Housing Development Sdn Bhd [1985] 1 MLJ 350. 23 In this case, the Federal Court applied the English Court of Appeal’s decision in Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd & Another [1964] 1 All ER 630 where the distinction between an actual and an apparent or ostensible authority was adequately explained. For the purpose of the present appeals, it is the Court’s remarks on ostensible or apparent authority which are of relevance: An “apparent” or “ostensible” authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the “apparent” authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract, it is irrelevant whether the agent had actual authority to enter into the contract. In ordinary business dealings the contractor at the time of entering into the contract can in the nature of things hardly every rely on the “actual” authority of the agent. His information as to the authority must be derived either from the principal or from the agent or from both, for they alone know what the agent’s actual authority is, all that the contractor can know is what they tell him, which may or may not be true. In the ultimate analysis he relies either upon the representation of the principal, that, apparent authority, or upon the representation of the agent, that is, warranty of authority. The representation which creates “apparent” authority may take a variety of forms of which the commonest is representation by conduct, i.e., by 24 permitting the agent to act in some way in the conduct of the principal’s business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal’s business has normally “actual” authority to entire into. [emphasis added] [41] The various acts undertaken by the 6th defendant in the present appeals amount to representations by conduct which bind the 1st defendant. These acts done by the 6th defendant support the contention that there was apparent or ostensible authority given to the 6th defendant in relation to the plaintiff’s claim. [42] We further found that the learned Judge had not put any stock to the meeting between the plaintiff, his father [PW5] and the 2nd defendant held after the plaintiff had confronted the 2nd defendant claiming for a refund of his investments. The learned Judge failed to take into regard that there was never any denial by the 2nd defendant of the existence of the investment scheme agreement or even of the 6th defendant’s actions, or that he and thereby the 1st defendant did not seek to distance themselves from the 6th defendant’s actions. Instead, there was admission by the 2nd defendant who told the plaintiff that he would “settle this”; but nothing was done. There was also no police report lodged by the 1st and 2nd defendants. Such conduct and action or omission is not consistent with the claim of absence of knowledge of the scheme or the involvement of the 1st defendant. 25 [43] We are of the unanimous view that all these pieces of material and relevant evidence were more than sufficient to find evidence of conspiracy not just of the 3rd and 6th defendants but also of the 1st defendant. The learned Judge ought to have weighed all the above evidence against that which was led by the defendants before he reached his conclusion in the manner that he did. Had he properly evaluated and weighed the material and relevant evidence that we have discussed above, his lordship would have reached quite a different conclusion and decision. Consequently, the claim against the 1st defendant ought to have been allowed. [44] For all the reasons set out above, we unanimously found merits in the plaintiff’s appeal. There was sufficient evidence before the learned Judge to find that the claim as pleaded and to infer that the 6th defendant had the ostensible authority to act for the 1st defendant, who we did not find to be some innocent party to the whole investment scheme. The learned Judge was plainly wrong in reaching the conclusions that he did in respect of the 1st defendant. [45] As for the claim against the 3rd defendant, we are in full agreement with the learned Judge that there is more than sufficient evidence to support the plaintiff’s contention that the 3rd defendant had a very definite role in the whole conspiracy. The monies were paid into the 3 rd defendant’s account by the plaintiff and such monies were paid pursuant to the investment scheme agreement. Such payments were properly accounted for by the plaintiff. PW6, the plaintiff himself had actually testified that he had prepared the payments in the 1st defendant’s name but was asked to change that to the 3rd defendant’s, a company where the 6th defendant’s sister [the 4th defendant] as its director. The 6th 26 defendant had also admitted to such receipt and purpose as claimed by the plaintiff. [46] We further agree with the reasons reached by the learned Judge that in respect of the 3rd defendant, this defendant was put on inquiry when the large sums were paid in; that it had a duty to inquire and return the monies. When it failed to so, it was reasonable for the learned Judge to conclude that the 3rd defendant knew that the monies were intended for the investment scheme agreement which the 3rd defendant had conspired with the 6th defendant to put in place in order to cheat and defraud the plaintiff. [47] Consequently, the learned Judge was fully justified and correct in rejecting the 3rd defendant’s contention that the monies were intended for investment in some development of land in Bandar Enstek, Nilai. Negeri Sembilan. Conclusion [48] Accordingly, the appeal by the plaintiff against the 1st defendant is allowed and the appeal by the 3rd defendant is dismissed. The decision of the learned Judge in respect of the 1st defendant is set aside and judgment in the terms pleaded at paragraph 26(ii) together with interest at the rate of 5% per annum from today to the date of realisation is entered against the 1st defendant. 27 [49] We further ordered costs of RM5000.00 subject to the payment of allocator fee to be paid to the plaintiff. The respective deposits are further to be refunded to both the plaintiff and the 3rd defendant. [50] The decision of the learned Judge is accordingly varied. Dated: 7 December 2017 Signed by (MARY LIM THIAM SUAN) Judge Court of Appeal, Putrajaya Malaysia 28 Counsel/Solicitors W-02(NCVC)(W)-2119-12/2015 For the appellant: Aiznin Sairi bin Sulaiman (Tajul Anuar bin Zubairi with him) Messrs Ramli, Shahrir & Tajul No. 31.3, Jalan PJS 11/28B Bandar Sunway 47500 Subang Jaya Selangor Darul Ehsan For the respondent: David Gurupatham (Wan Azmir bin Wan Majid, Nor Hazira Abu Haiyan & Deepa Mogan with him) Messrs Hafarizam Wan & Aisha Mubarak P.O. Box 38, Suite 13A Level 13, Menara Dato’ Onn Jalan Tun Ismail 50480 Kuala Lumpur W-02(NCVC)(W)-182-01/2016 For the appellant: David Gurupatham (Wan Azmir bin Wan Majid, Nor Hazira Abu Haiyan & Deepa Mogan with him) Messrs Hafarizam Wan & Aisha Mubarak P.O. Box 38, Suite 13A Level 13, Menara Dato’ Onn Jalan Tun Ismail 50480 Kuala Lumpur For the respondent: Ramesh s/o N. Puranachandran (Nur Sazarina bt Said with him) Messrs Ramesh Yum & Co. 67, Jalan Medang Serai Bukit Bandaraya Bangsar 59100 Kuala Lumpur