Jmc Ventures Sdn. Bhd. v Pathmarajah S/O Mylvaganam (W-01(NCvC)(W)-172-03/2022)

K. KALAIMALAR A/P K. KANNIAPPAN (No. K/P: 661229-10-6312)

PENGARAH TANAH DAN GALIAN ...RESPONDEN-RESPONDEN (Rayuan 173)

PENGARAH TANAH DAN GALIAN ...RESPONDEN-RESPONDEN GROUNDS OF JUDGMENT

These are the Grounds of Judgment of this Court in respect of two consolidated appeals filed by JMC Ventures Sdn Bhd ("JMC" or "the Appellant") against the decision of the learned Judicial Commissioner ("the learned JC") of the High Court of Malaya at Kuala Lumpur, handed down on 22 February 2022.

In Appeal No. W-01(NCvC)(W)-172-03/2022 ("Appeal 172"), the Appellant appeals against the dismissal of its claim in Suit No. WA- 22NCvC-705-10/2018 ("Suit 705") against the 1st, 2nd, 3rd and 4th Respondents, namely Pathmarajah s/o Mylvaganam ("Pathma"), Azlina binti Abdul Azis ("Azlina"), K. Kalaimalar a/p K. Kanniappan ("Kalai") and the Pengarah Tanah dan Galian Wilayah Persekutuan Kuala Lumpur ("PTG") respectively.

In Appeal No. W-01(NCvC)(W)-173-03/2022 ("Appeal 173"), the Appellant appeals against the dismissal of its counterclaim in Suit No. WA- 21NCvC-90-10/2018 ("Suit 90") against the 1st Respondent (Messrs Mazwan Pathma & Co., Pathma's Law Firm) and the 2nd Respondent (PTG).

After a careful consideration of all the submissions, the records of appeal and the grounds of the learned JC, this Court is of the view that the appeals are without merit and ought to be dismissed. These are our reasons.

Both suits arise from what the Appellant characterises as a fraudulent land transaction concerning a piece of vacant freehold land measuring approximately 1,743 square metres held under individual title known as Geran 79376, Lot 17, Seksyen 57, Tempat Jalan Raja Chulan, Bandar Kuala Lumpur ("Lot 17" or "the Property").

Sometime in early 2018, JMC, a company in the business of property development, was introduced by a property agent (PW1) to the opportunity of purchasing Lot 17. JMC was informed that the Property was being sold by one Ng Kee Wei bearing NRIC No. 560620-10-6427 ("the 1956 Ng Kee Wei"), who was represented by the law firm of Messrs Mazwan Pathma & Co. ("the Law Firm"), with Pathma as the solicitor in charge and Azlina as his partner. Kalai, the firm's clerk, assisted in the day-to-day conduct of the transaction.

The parties to the sale and purchase transaction were JMC as purchaser and the 1956 Ng Kee Wei as vendor. JMC engaged its own conveyancing solicitors, Messrs YC Pang, Chong & Gordon ("JMC's SPA Solicitors"). A Sale and Purchase Agreement ("SPA") dated 22 February 2018 was executed between JMC and the purported vendor, the purchase price being RM15,384,020.00.

The total deposit payable by JMC amounted to RM3,076,804.00 ("the Total Deposit"),paid to the Law Firm as stakeholder in two tranches:

RM307,680.40 (the earnest deposit) forwarded by cheque on 16 January 2018; and

RM2,769,123.60 (the balance deposit) forwarded by cheque on 5 February 2018, upon execution of the SPA.

The terms of the stakeholding, as set out in JMC's SPA Solicitors' letters dated 16 January 2018 and 5 February 2018, were that the Law Firm was not to release the Total Deposit to the vendor "until and unless" the SPA was duly executed by both parties.

The SPA contained a Condition Precedent in clause 3A, which required the rectification of the issue document of title ("IDT") to reflect the correct NRIC of the purported vendor. The Condition Precedent governed completion of the transaction, not the release of the deposit.

On 9 February 2018, the SPA was purportedly executed. On 17 April 2018, Pathma informed JMC's SPA Solicitors for the first time that he had disbursed the Total Deposit as follows:

RM1,366,804.00 in cash to his client (the purported 1956 Ng Kee Wei);

RM90,000.00 to Segaran a/I Venoo;

RM1,080,000.00 (in two tranches) to Mitz Luniques Sdn Bhd;

RM180,000.00 to Jeevithan a/I Manivannan (trading as Great Field Resources); and

RM360,000.00 to Yong Poh Shiong (trading as YPH Affordable Cooling Servicing).

Items (b) to (e) collectively represent RM1,710,000.00 disbursed to four third-party payees ("the 4 Payees") unknown to JMC. Pathma acted on a Letter of Authorization dated 9 February 2018 ("the Letter of Authorization"), purportedly signed by his client, authorising the said disbursements.

JMC thereafter discovered that the true registered owner of Lot 17 was in fact a different and much older Ng Kee Wei bearing NRIC No. 220806-105157, who was deceased ("the Deceased 1922 Ng Kee Wei"). The 1956 Ng Kee Wei was not the registered owner of Lot 17. JMC lodged a police report and filed Suit 705. In turn, the 1956 Ng Kee Wei filed Suit 90 against the Law Firm, JMC and PTG, claiming that he had no knowledge of and no involvement in the transaction. Suit 90 was consolidated and heard together with Suit 705.

During trial, and confirmed in written submissions, JMC abandoned its claims against the 1956 Ng Kee Wei. JMC then proceeded to press its claims solely against Pathma, Azlina, Kalai and PTG.

After a full trial conducted over four days in November 2021, the learned JC dismissed all of JMC's claims against Pathma, Azlina, Kalai and PTG and similarly dismissed JMC's counterclaim in Suit 90. The learned JC however allowed JMC's claim against the 4 Payees for conspiracy. JMC now appeals to this Court against the dismissal of its claims.

The Appellant raises essentially five grounds of appeal, which may be distilled into the following issues:

Whether the learned JC erred in dismissing JMC's claim for breach of stakeholder's duties and breach of trust against Pathma and Azlina by relying on the Letter of Authorization, a Part C document;

(ii) Whether the learned JC erred in dismissing JMC's claim for breach of warranty of authority by applying tort law principles instead of the contractual framework;

(iii) Whether the learned JC erred in dismissing JMC's claim for fraudulent misrepresentation against Pathma, Azlina and Kalai;

(iv) Whether the learned JC erred in dismissing JMC's conspiracy claim against Pathma, Azlina and Kalai following JMC's abandonment of its claim against the 1956 Ng Kee Wei; and

Whether the learned JC erred in dismissing JMC's negligence claim against PTG. D. ANALYSIS AND FINDINGS Issue (i): Breach of Stakeholder's Duties and Breach of Trust - The Letter of Authorization

The Appellant's primary complaint is that the learned JC erred in exonerating Pathma and Azlina for breach of stakeholder's duties and breach of trust by relying upon the Letter of Authorization, which the Appellant characterises as a Part C document that is, a document included in the agreed bundle but not formally admitted into evidence.

The learned JC found that the stakeholding obligation imposed on the Law Firm, as set out in JMC's own SPA Solicitors' letters of 16 January 2018 and 5 February 2018, was simply that the deposit was not to be released "until and unless" the SPA was executed. Those letters set out the condition precisely. The SPA was executed on 9 February 2018. Thereafter, in the learned JC's finding, the obligation to hold the monies in stakeholder ceased and the Law Firm was entitled to disburse the deposit. On this analysis, there was no breach of the stakeholding terms.

The Appellant argued that the deposit could only be released upon compliance with the Condition Precedent in clause 3A of the SPA, which required rectification of the IDT. The learned JC rejected this submission, and correctly so. The learned JC carefully examined the SPA and found that clause 3A governed the condition precedent to completion of the transaction and not the release of the deposit. The SPA itself does not make the release of the deposit contingent upon fulfilment of clause 3A. The release of the deposit was governed by JMC's own solicitors' letters, which spoke only of the execution of the SPA as the operative trigger. We are unable to improve upon the learned JC's analysis on this point.

As to the Appellant's second allegation that the deposit was wrongly disbursed to the 4 Payees instead of the vendor, the learned JC found that the Law Firm acted on a Letter of Authorization purportedly signed by the client, directing such payments. The Law Firm was following its client's instructions. The learned JC recognised that, with the benefit of hindsight, those payments formed part of a fraudulent scheme. However, the learned JC was satisfied that at the time, the Law Firm genuinely believed it was acting for the authentic Ng Kee Wei. This is a finding of fact grounded in the evidence, and we see no basis to interfere with it.

The Appellant submits that the Letter of Authorization, being a Part C document, was inadmissible hearsay and ought not to have been considered. We note the following:

The Letter of Authorization was placed in the common bundle (Part C) with the knowledge and participation of all parties;

JMC's own counsel referred the Letter of Authorization to Pathma during cross-examination, thereby engaging with its contents; and

Further, counsel for the 1956 Ng Kee Wei also cross-examined Pathma on the Letter of Authorization without objection.

The mere fact that a document is disputed does not render it inadmissible. Objection goes to weight, not admissibility, in the absence of a ruling by the trial court excluding the document. This proposition is supported by the Federal Court decision in Desa Samudra Sdn Bhd v Bandar Teknik Sdn Bhd & Ors [2012] 1 MLJ 729 where the Federal Court held as follows:- [39] The appellant seems to take the stand that the said minutes was not tendered in evidence (and hence the manner in which the question was posed). The respondents on the other hand argued that the said minutes in actual fact formed part of the agreed bundle at trial and was in fact extensively referred toby the parties at trial as D9-12. The respondents acknowledges that at trial, the appellant did object to the said minutes, but that the court merely noted down the objection and proceeded. At no point was it rules that the said minutes were inadmissible. Parties continued to refer to the minutes thereafter. [40] We therefore agree with the respondents' argument. In the law governing documentary evidence, as in oral evidence, three matters come to mind—relevancy, admissibility, and weight. They must be considered in that order. Only evidence which is relevant ought to be admissible. Irrelevant evidence should be rendered as inadmissible and the matter ends there. Now, relevant evidence which is rendered admissible is still subject to the element of weight. The court can either attach due weight to the evidence, or some weight, little weight, or no weight at all. Due regard must be given to the authenticity of the evidence, its source, its contents, and more importantly, the surrounding circumstances of the case. This is where contemporaneous evidence would come in handy. [41] Having considered the circumstances of the case, we are of the view that the said minutes were part of the agreed bundle of documents and were indeed referred to extensively by the parties. An objection was raised and noted at the outset, but at no point did the learned trial judge rule that the said minutes were inadmissible. The mere fact that a document is disputed or objected to does not by itself render the document inadmissible. Parties continued to refer to the minutes at trial as D 9-12. Hence, the appellant's approach to the question posed is a non-starter in actual fact. Emphasis added

In these circumstances, we find no error in the learned JC's consideration of the Letter of Authorization. The learned JC did not rely on the letter as establishing that it was genuine. The learned JC relied on it, together with all the evidence, to assess whether Pathma acted honestly and in accordance with his client's instructions at the material time. That was a proper exercise of judicial fact-finding.

We therefore find no merit in the Appellant's contention on this issue. The learned JC's dismissal of the claims for breach of stakeholder's duties and breach of trust is affirmed. Issue (ii): Breach of Warranty of Authority — Contractual vs Tortious Framework

The Appellant contends that the learned JC erred in dismissing the breach of warranty of authority claim by applying the principles of the tort of negligence, particularly by relying on Pushpaleela a/p R Selvarajah & Anor v Rajamani d/o Meyappa Chettiar and other appeals [2019] 2 MLJ 553 (FC). The Appellant argues that breach of warranty of authority is a contractual cause of action and should have been assessed under the Contracts Act 1950 and not under the tortious duty of care framework.

We acknowledge that breach of warranty of authority is indeed recognised as a contractual cause of action distinct from negligence in tort. The elements as articulated in G Balan a/l Govindasamy v Lee Moi Moi & Ors [2017] 6 MLJ 506 (CA) require: (a) an assertion of authority; (b) inducement by the assertion; and (c) that but for the assertion, the other party would not have entered the transaction.

However, we are of the view that even if the learned JC had applied the correct contractual framework, the outcome would not have been different, and the appeal on this ground must fail for the following reasons.

The critical third element requires that the Appellant would not have entered the transaction but for Pathma's warranty of authority. On the evidence before the learned JC, the terms of the transaction - the parties, the property and the price had all been agreed upon prior to Pathma and Azlina's involvement. Pathma and Azlina were engaged as solicitors for the vendor after the principal commercial terms had been settled. JMC's SPA Solicitors were then engaged to formalise what had already been commercially agreed.

It must be borne in mind that it is JMC's own SPA Solicitors who prepared the SPA, not the Law Firm. The Law Firm was acting for the vendor. In these circumstances, it is difficult to see how JMC can be said to have been induced by any warranty or assertion by Pathma and Azlina to enter the transaction in the first instance.

Further, it is a matter of public policy and professional reality that a solicitor who accepts instructions from a client does not thereby warrant that the client is who he says he is, or that the client is the genuine title holder of the property in question. As the learned JC correctly observed, a solicitor's obligation is to inspect the identity card and relevant documents, not to conduct a full investigation into the authenticity of his client's identity. To impose such a warranty categorically upon solicitors would be to impose an unreasonably onerous obligation and would be contrary to sound policy.

The dismissal of the breach of warranty of authority claim is upheld. Issue (iii): Fraudulent Misrepresentation

JMC alleges that Pathma, Azlina and Kalai fraudulently misrepresented that: (a) they were acting for the vendor and registered owner of Lot 17; (b) Lot 17 was for sale; and (c) the 1956 Ng Kee Wei was the vendor and registered owner of the Property.

The learned JC dismissed this cause of action on the basis that the third element of a misrepresentation claim that the representation must have been a material inducement to enter the contract was not satisfied. The learned JC found that the three principal elements of the transaction (parties, property and price) had already been agreed prior to Pathma and Azlina's involvement, such that JMC could not have been induced by them to enter into the SPA.

We agree with this analysis. The evidence established clearly that JMC had already settled the essential commercial terms of the purchase before the Law Firm took any active role in the transaction. The SPA terms were substantially negotiated between JMC and the real estate agent on one side and the vendor on the other. Pathma and Azlina entered the picture as conveyancing solicitors instructed to carry out the transaction.

The Appellant relies on Gran Gelato Ltd v Richcliff (Group) Ltd and others [1992] 1 All ER 865 (EWHC) for the proposition that inducement can still exist even where the principal terms are agreed. We do not dispute the principle, but the Appellant's difficulty is one of evidence. On the evidence before the learned JC, JMC did not demonstrate that Pathma's representations caused JMC to enter or remain in the transaction in a way that would not have occurred but for those representations. JMC's own director (PW5) could only testify in general terms that JMC would not have proceeded had it known the truth. However, this bare assertion, without more, does not dislodge the learned JC's finding that the transaction was essentially agreed before Pathma's representations were ever made.

As for Kalai, the learned JC's finding that she "simply took instructions" is a finding of fact which we accept. The Appellant urges this Court to find that Kalai made representations recklessly. However, there is a paucity of evidence that Kalai personally made any representations to JMC or JMC's solicitors in the manner required to establish fraudulent misrepresentation. The mere carrying out of administrative instructions does not, without more, amount to fraudulent misrepresentation. However, this issue is moot given that the appeal against Kalai had been discontinued.

The appeal on the misrepresentation claim is dismissed. Issue (iv): Conspiracy - The Effect of Abandoning the Claim Against the 1956 Ng Kee Wei

The most telling difficulty for the Appellant on this ground is its own decision during trial to abandon its claim against the 1956 Ng Kee Wei. JMC had pleaded that 1956 Ng Kee Wei induced JMC to enter into the SPA and that Pathma, Azlina and Kalai were his agents or co-conspirators in carrying out the fraud. By conceding and effectively pleading that 1956 Ng Kee Wei had no involvement in the transaction and had never met Pathma, Azlina or Kalai, JMC fundamentally undermined the very foundation of its conspiracy case.

Conspiracy requires a combination of persons acting in concert to injure another by unlawful means or with intent to injure. Where JMC has conceded that 1956 Ng Kee Wei was an innocent party who played no role whatsoever, the identity of the actual person who masqueraded as Ng Kee Wei to deal with Pathma becomes critical. JMC's complaint was premised on a particular set of conspirators. That complaint collapsed upon JMC's own concession.

The Appellant argues that its pleadings were sufficient in the alternative and that the abandonment of the claim against 1956 Ng Kee Wei did not cause its conspiracy claim against Pathma, Azlina and Kalai to fall. We cannot accept this. The pleadings, read in their totality, did not set up a case where Pathma, Azlina and Kalai were alleged to have been the primary or sole conspirators acting entirely independently of 1956 Ng Kee Wei. The conspiracy pleaded was fundamentally linked to 1956 Ng Kee Wei's participation as vendor. Once that participant was removed from the equation, the pleaded conspiracy ceased to make legal sense.

The Appellant also points to what it characterises as an internal inconsistency in the learned JC's decision namely, that while dismissing the conspiracy claim against Pathma and Kalai, the learned JC allowed the claim against the 4 Payees. We acknowledge the confusion in this result. However, the learned JC was not wrong. The 4 Payees received monies that were disbursed from the Total Deposit without authorisation from JMC. Their liability in conspiracy rests on a factual foundation that the receipt of JMC's money was under suspicious circumstances. That stands independently of the broader question of who orchestrated the fraud. The dismissal of the conspiracy claim against Pathma and Kalai was premised not on a factual exoneration of them but on the particular pleading deficiency identified above.

There was also a notable weakness in JMC's evidence. PW4, JMC's own SPA solicitor, admitted under cross-examination that she did not know the legal elements of conspiracy and that substantial portions of her witness statement had been prepared by JMC's solicitors rather than given from her own knowledge. This adversely affected the credibility of a significant portion of JMC's evidence on conspiracy. The learned JC had undertaken an extensive exercise in considering this fact. We do not wish to disagree with his evaluation and finding on this as it is exclusively within the trial judge's domain to determine credibility and reliability of a witness at trial.

We find no error in the learned JC's dismissal of the conspiracy claim against Pathma, Azlina and Kalai. Issue (v): Negligence Against PTG

The Appellant's claim against PTG was that it was negligent in failing to correct the information on the register relating to the registered owner of Lot 17. The Appellant argued that PTG had power under section 380(1) of the National Land Code ("NLC") to rectify the register on its own accord and negligently failed to do so.

The learned JC dismissed this claim, finding that PTG had no power to unilaterally correct the register. We agree. Section 380(1) of the NLC must be read in its proper statutory context. The register of titles is a document of public trust and its integrity is protected by strict legislative safeguards. The power to correct or rectify register entries is not an open-ended administrative discretion to be exercised on PTG's own initiative in the absence of a court order or other formal process. To hold otherwise would be to expose the register to the risk of unilateral and potentially erroneous alterations, which would undermine the indefeasibility regime that forms the bedrock of the Torrens system in Malaysia.

We are not persuaded that the learned JC's construction of the statutory provision was erroneous. The dismissal of the negligence claim against PTG is affirmed.

We also note, without making it a determinative issue, the learned JC's observation on the Appellant's extensive use of the conjunction "and/or" throughout the Statement of Claim. The learned JC's criticism was not without foundation. The pervasive use of "and/or" created genuine ambiguity in the pleadings as to whether each defendant's liability was being asserted jointly, severally, or in the alternative. This ambiguity had practical consequences for the way in which the trial was conducted and the way in which witnesses were cross-examined. Whilst we do not dismiss the appeal solely on this basis, we observe that proper and unambiguous pleading is not a mere technicality but is fundamental to the administration of justice and to ensuring that each party understands the precise case it has to meet.

The Respondents filed an application to admit further evidence in the form of the Sessions Court's order of 30 November 2022 acquitting and discharging Pathma from all criminal charges, and the grounds of judgment of the Sessions Court.

For the purposes of these appeals, this Court has not found it necessary to rely upon the outcome of the criminal proceedings. We observe, as the Appellant correctly submitted, that the civil causes of action and the criminal charges involve different elements and different standards of proof. Pathma's acquittal in the criminal proceedings does not, of itself, determine the civil liability issues before this Court. We have reached our conclusions in these appeals on the basis of the civil evidence and submissions alone.

We must make mention of section 43 of the Evidence Act 1950. It generally bars using findings of fact from one case in another, making criminal convictions often inadmissible as evidence in subsequent civil lawsuits. See Hollington v F Hewthorn & Co Ltd [1943] KB 587; Datuk S. Nallakaruppan & Ors v Datuk Seri Anwar bin Ibrahim and other appeals [2015] 4 MLJ 34.

In the circumstances, no further ruling on the application to admit fresh evidence is required.

It is well established that an appellate court will not disturb findings of fact made by a trial court unless those findings are plainly wrong, against the weight of the evidence, or the trial court has failed to appreciate the evidence before it: see Ng Hoo Kui & Anor v Wendy Tan Lee Peng [2020] 10 CLJ 1 (FC). The decision of the learned JC was not in any manner plainly wrong.

Further, where a trial court has had the benefit of hearing and observing the witnesses and evaluating their credibility at first hand, an appellate court should be slow to interfere with the trial court's assessment of credibility and the weight to be accorded to the evidence.

For all the reasons stated above, we find that the learned JC's decision was well-reasoned, grounded in a thorough evaluation of the evidence and correct in law. The Appellant has not demonstrated that the learned JC committed any error of law or fact that would warrant appellate intervention. The learned JC's findings were neither plainly wrong nor against the weight of the evidence. We see no basis to disturb the decision.

We sympathise with the position of JMC. It is plain that JMC was the victim of an elaborate fraud perpetrated by persons who impersonated the true registered owner of Lot 17 and that, as a result, JMC suffered a very substantial financial loss. That fraud was reprehensible. However, the question before this Court is not whether a fraud was perpetrated, but whether the specific defendants before this Court Pathma, Azlina, Kalai and PTG bear civil liability for that fraud. On the evidence and the law, we are not satisfied that those defendants bear such liability in the manner pleaded by JMC.

Accordingly both appeals are dismissed and the decision of the High Court is affirmed.

The Appellant shall pay costs of both appeals. To the 1st and 2nd Respondents in Appeal 172 the cumulative sum of RM30,000 and in Appeal 173 to the 3rd and 4th Respondents in the sum of RM30,000 respectively, both payments subject to allocator. Tarikh: 8 Mei 2026 W+fv AHMAD FAIRUZ BIN ZAINOL ABIDIN Hakim Mahkamah Rayuan Malaysia For Appeal W-01(NCvC)(W)-172-03/2022 For the AppellantMessrs Peter Ling & Co.

Peter Douglas Ling

Edwin TanFor the 1st & 2nd RespondentsMessrs. Gunaseelan & Associates

T. Gunaseelan

Keshvinjeet Singh SidhuFor the 3rd RespondentMessrs Darshan S.Sandhu & AssociatesFor the 4th RespondentAttorney General's Chambers, Malaysia

Siti Badariah binti Mohd Yusoff

Norazlin binti Mohamad YusoffFor Appeal W-01(NCvC)(W)-173-03/2022For the AppellantMessrs Peter Ling & Co.

Peter Douglas Ling

Edwin TanFor the 1st RespondentMessrs. Gunaseelan & Associates

T. Gunaseelan

Keshvinjeet Singh SidhuFor the 2nd RespondentAttorney General's Chambers, Malaysia

Siti Badariah binti Mohd Yusoff

Norazlin binti Mohamad Yusoff