KAC PROJECTS SDN BHD (dahulunya dikenali sebagai Kong & Associates Consultants Sdn Bhd) v 1. ) TETUAN HONG & FONG (JA-B52NCvC-49-05/2025)

1.

CHIN LIAN LAI (NO.K/P: 770607-01-6457) …DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 12)

This is an application for striking out application (Enclosure 12) by the first defendant under O.18 r.19(a) and (d) of the Rules of Court 2012(the ROC 2012).

On 25th November 2025, this Court allowed the application with costs of RM1,500.00.

The plaintiff is dissatisfied with the decision of this Court, and hence, they appealed against this Court's decision. 29/01/2026 16:36:05 JA-B52NCvC-49-05/2025 Kand. 48

The plaintiff is a private limited company. Its main business includes electrical supervision, consulting engineering, management, turnkey construction, EPCC solar supply, electrical installation testing, maintenance, commissioning, and fault investigation and repair.

The first defendant is a law firm, while the second defendant is a director and a registered shareholder of a company called Goodwill Division Sdn Bhd (Goodwill), which has been wound up.

Around 12.11.2012, the Plaintiff was appointed by Goodwill as the mechanical and electrical engineering consultant for the apartment development project known as D’Çarlton Seaview Residences.

The plaintiff claimed that the contract for the mentioned services totaled RM508,800, including the 6% government service tax.

The plaintiff also claimed that Goodwill only made payments of RM108,800 in stages and failed to settle the balance of

Ultimately, Goodwill was unable to pay the plaintiff the remaining balance. Therefore, the plaintiff claimed they had been pressured by Goodwill’s directors, specifically the second defendant and another director named Thong Moi Keong, who has since passed away, to accept an offer of a one-unit apartment as a contra payment, and that any refusal to accept the offer would put them at risk of not being paid. As a result, the plaintiff asserted they had no choice but to accept the offer.

Subsequently, a Sale and Purchase Agreement (S&P) and a Deed of Joint Agreement (DJA), both dated 22.3.2013, were prepared by the first defendant at the direction of the 2nd defendant and Thong Moi Keong. The plaintiff claimed that the S&P and DJA were intended to depict a legitimate sale and purchase agreement having taken place, even though the 2nd defendant knew that the documents were intended merely to conceal the contra agreement.

The plaintiff signed the S&P and the DJA after being informed by the first defendant that the unit had been mortgaged to Sabah Development Bank Berhad (SDB), as explicitly stated in the preamble of the S&P. The plaintiff also claimed that the first defendant advised that the 2nd defendant would redeem the apartment from SDB upon its completion. Additionally, the 2nd defendant and Thong Moi Keong also persuaded the plaintiff of the same.

Based on the advice given by the first defendant and the assurances provided by the 2nd defendant and Thong Moi Keong, the plaintiff believed what was said. The plaintiff claimed that until the winding-up of Goodwill on 4/2/2018, the apartment had not been redeemed, and the strata title had not been issued to the plaintiff. The receiver appointed for Goodwill demanded that the plaintiff pay RM360,000 to obtain the unit's strata title, but the plaintiff refused, stating that Goodwill had promised to pay. The plaintiff commenced an action against the 1st and 2nd defendants for professional negligence and conspiracy. C. STRIKING OUT APPLICATION

The first defendant filed the striking out application and raised the following arguments. According to the first defendant, firstly, they are solicitors acting for Goodwill to handle the Sale & Purchase transaction for the one-unit apartment. The booking form from Goodwill named the plaintiff as the buyer with a purchase price of RM400,000, and the plaintiff’s director, Goodwill director Thong Moi Keong (deceased), had signed the documents, fully understanding their contents and implications.

Subsequently, on 8.8.2013, the first defendant received an instruction from Goodwill to halt any works concerning the transaction until further instruction. Until the winding up of Goodwill on 2.4.2018, the first defendant claimed that no further instruction had ever been received from Goodwill for the said transaction.

Secondly, the plaintiff is not their client, and there is no contract or fiduciary duty between the plaintiff and the first defendant. In addition, the preamble of the Sale & Purchase Agreement clearly states that the apartment is charged to Sabah Development Bank Sdn Bhd (SDB). Thirdly, this action is filed more than 12 years after the Sale & Purchase Agreement was signed and is therefore time-barred.

The Plaintiff refuted the above allegations and averred that the First defendant had explained to the plaintiff that the signing of the Sale & Purchase Agreement was valid to settle the debt owed by Goodwill to the plaintiff, and the plaintiff believed the first defendant, as it is a law firm.

The Plaintiff also refuted the allegation that its claim is time-barred, citing that they only discovered fraud and conspiracy in 2023-2024 after receiving letters from the Receiver and Manager of Goodwill demanding payment.

It is also the Plaintiff’s claim that the first defendant is under a duty to ensure redemption and transfer of the property to the Plaintiff. D.

The principles of law on striking out are trite. The test is laid down in Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation (1993) 3 MLJ 36. The Supreme Court has held as follows: “The principles upon which the court acts in exercising its power under any of the four limbs of O 18 r 19(1) of the Rules of the High Court 1980 are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule, and the summary procedure can only be adopted when it can clearly be seen that a claim or answer is on the face of it ‘obviously unsustainable’. It cannot be exercised by a minute examination of the documents and facts of the case in order to see whether the party has a cause of action or a defence”.

no reasonable cause of action 20. The first defendant argues that the plaintiff has no reasonable cause of action against them because there is no contract or fiduciary duty between the plaintiff and the first defendant. The plaintiff refuted it by stating that the first defendant, through its solicitor, one Wong Tze Wei, had explained the SPA to them, and the plaintiff is under an obligation to bear liability under professional negligence, fraud, and conspiracy to defraud.

After considering the cause papers and the written and oral submissions of both parties, this court is of the view that the plaintiff’s claim against the first defendant should be struck out. The court's reasoning is recorded below.

First, this court is of the view that the plaintiff has no reasonable cause of action because there is no privity of contract between the plaintiff and the first defendant. The SPA was signed by the plaintiff and Goodwill, while the first defendant was the law firm that prepared it. This Court had perused the pleadings and found that the plaintiff heavily relied on the fact that the first defendant was the firm that prepared the SPA and thus should have advised the plaintiff.

In the case of Tsang Yee Kwan v Majlis Perbandaran Batu Pahat (2011) 8 CLJ 913, the Court of Appeal held as follows: “It is trite law that only the parties to a contract incur rights and obligations under the contract. This is known as the privity rule. The second defendant as a third party to the SPA is not a party to the contract and has not provided consideration for the contract but the second defendant as a third party has an interest in the performance of the contract. It has been a long established rule that only the parties to a contract could incur rights and obligations under it. This is described as the doctrine of privity and by this principle it simply means that third parties could neither sue nor be sued under a contract”.

limitation of time 24. The first defendant averred that the plaintiff’s claim is time-barred as the SPA was signed on 22.3.2013, whereas this action was only filed on 7.5.2025, 12 years later, exceeding the 6-year limitation stipulated in the Limitation Act 1953.

In response, the plaintiff stated that their action is not time-barred as the cause of action against the first and second defendant is premised on fraud and conspiracy to defraud, and their case falls under the exception of s.29(1) Limitation Act

The plaintiff also stated that the issue of fraud can only be resolved at a full trial, and that the application to strike out their case should therefore be dismissed. The plaintiff referred to s.29(1) Limitation Act 1953 which states: 29 Postponement of limitation period in case of fraud or mistake

Where, in the case of any action for which a period of limitation is prescribed by this Act, either-

the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; or

the right of action is concealed by the fraud of any such person as aforesaid; or

the action is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it: Provided that nothing in this section shall enable any action to be brought to recover, or enforce any charge against, or set aside any transaction affecting, any property which -

in the case of fraud, has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed; or

(ii) in the case of mistake, has been purchased for valuable consideration, subsequently to the transaction in which the mistake was made, by a person who did not know or have reason to believe that the mistake had been made.

This court is unable to agree with the plaintiff that its action is not a plain and obvious case suitable for striking out. Having read the plaintiff’s pleadings, this court is of the view that they do not disclose any particulars of the alleged fraud or conspiracy. There are no specific facts pleaded to show that Goodwill and the first defendant had an agreement to commit fraud or to conspire against the plaintiff, other than that the first defendant prepared the SPA and assured the plaintiff that everything was legal to settle Goodwill's debt to the plaintiff.

There is no evidence adduced to show that the plaintiff was denied independent legal advice, and no evidence to show that the execution of the SPA was done with coercion and with protest.

In addition, the plaintiff stated that they only knew of the alleged fraud when receiving letters from Managers and Receivers in August 2023. However, no letters were exhibited by the plaintiff. The plaintiff also stated that they had refused to pay the Managers and Receivers because they believe Goodwill is responsible, and this has been communicated to the Managers and Receivers, yet no evidence was adduced. This Court is of the view that the plaintiff had only made a bare assertion. In the case of SCEC Group (Malaysia) Sdn Bhd v Wong Siew Woon & Ors (2025) CLJU 6, Atan Mustaffa Yussof Ahmad J. held as follows: “[41] Having considered the submissions and the authorities cited, I am persuaded that this is an appropriate case for striking out the claim against D4 notwithstanding the general reluctance of the courts to deprive a litigant of his day in court. While the Court of Appeal in Dato' Ahmad Zahid and Sivarasa Rasiah cautioned against striking out where there are triable factual issues, that does not mean that a plainly hopeless claim must necessarily be allowed to go to trial. [42] Here, a close examination of the Plaintiff's pleadings reveals that it has not pleaded the essential facts to establish a reasonable cause of action against D4. The Statement of Claim contains only bare allegations of fraud, conspiracy and abuse of process without the necessary particulars to support those serious allegations. Crucially, as highlighted in D4's affidavit in reply in para 9.4, the Plaintiff has failed to adduce any evidence to satisfy the legal elements of its various causes of action. [43] Where fraud is alleged, as in this case with the fraudulent trading claim under Section 540, the Plaintiff is obliged to plead the particulars of fraud and adduce sufficient evidence to establish a prima facie case. It is not enough to simply make a bald assertion and then say the matter should go to trial. The court is entitled to scrutinise the pleadings and the evidence to determine if there is any substance to the claim before subjecting the defendant to a full trial. [44] I find that the Plaintiff's vague and unsubstantiated pleadings, devoid of particulars and unsupported by evidence, are plainly unsustainable. The mere hope that some evidence may turn up during trial to flesh out the bare allegations is not a sound basis to allow such a defective claim to proceed. Contrary to the Plaintiff's contention, this is not a case where the claim discloses some triable issue that warrants mature consideration at a full hearing. [45] Based on the foregoing analysis, I am satisfied that D4 has met the high threshold required for striking out under Order 18 rule 19(1)(a), (b), (c) and (d) of the Rules of Court 2012. The Plaintiff's claim against D4 discloses no reasonable cause of action, is frivolous and vexatious, and constitutes an abuse of the court process. The bare allegations of fraud, conspiracy and abuse of process, unsupported by properly pleaded particulars or evidence, cannot withstand scrutiny. While courts generally should not deprive a party of their day in court, allowing plainly unsustainable claims to proceed to trial would be contrary to the interests of justice and waste judicial resources…”.

This Court refers to the case of Ooi Swee King v Standard Chartered Saadiq Berhad (2025) CLJU 1934 where it was held by the High Court, in O.18 r.19 application, ‘While it is trite that allegations of fraud generally warrant ventilation at trial, mere bare assertions without sufficient factual foundation or evidentiary support do not justify a full hearing, as underscored in CCM Chemicals Sdn Bhd v. Wan Muhamad Ibrisam’(emphasis added).

Even assuming there is fraud, the plaintiff’s case does not fall under the exception of s.29(1) of the Limitation Act 1953 because the plaintiff could with reasonable diligence discovered it. Clause 2(3) of the SPA stated that Goodwill should have issued a redemption statement to the plaintiff. Second, it is undisputed that the plaintiff had received vacant possession of the unit for many years. The plaintiff should have further inquired whether the unit is free of any charge. Third, Goodwill was wound up on 2.4.2018; the plaintiff should have inquired with SDB about the status of the unit they received from Goodwill.

Time limitation must be strictly adhered to as under the Limitation Act 1953, the time barred is absolute. In the case of Muhamad Saarani & Anor v Norruhadi bin Omar & Ors

CLJU 370, V.T Singham J. held that: “[4] This court is of the considered view that the period of limitation statutorily prescribed has to be strictly adhered to and cannot be relaxed or departed on the ground of equitable consideration. The provision of s. 6 (1)(a)of the said Act are mandatory in nature. This court has no discretion or inherent powers to condone the delay if the action is filed beyond the prescribed statutory period of limitation or if the cause of action is barred by limitation unless the matter is covered by any of the exceptions which is not the case in the present case. Therefore, this court has not only the power but also the duty to consider as to whether the action is time barred, and if it is found to be time barred, the court is duty bound to strike out the action”.

In conclusion, this Court is minded that O.18.r.19 of the ROC 2012 can only be used in cases which are plainly and obviously unsustainable. The fact that there is an allegation of fraud and conspiracy does not, in itself, mean that O.18 r.19 of the ROC 2012 should not be used, as the allegations in this case are merely bare assertions. This is the time when the plaintiff must adduce all the evidence they have to resist this application and to show their case has a chance of success, but this was not done. In the case of Pengiran Othman Shah Pengiran Mohd Yussof & Anor v Karambunai Resorts Sdn Bhd & Ors (1996) 1 CLJ 527, the Court of Appeal held that: “The discretionary power to dismiss an action summarily under O. 18, r. 19 and under the inherent jurisdiction of the Court is a drastic power which should only be exercised in plain and obvious cases, as the effect of the exercise of such a power is to shut out the plaintiff altogether from pursuing his claim. Tractor (M) Bhd. v. Tio Chee Hing [1972] CLJU 157; [1972] 1 LNS 157[1975] 2 MLJ 1. Whether a case is plain or obvious does not depend upon the length of time it takes to argue the case but that when the case is argued on the affidavit evidence available, it becomes plain and obvious that the case has no chance of success”.

This Court would also like to refer to the case of Hamzan Hamzah v Dr. Ahmad Zul Fikri Mohamad (2025) MLJU 237, where it was held that the court ‘has the duty to ensure that only meritorious cases with reasonable cause of action to be brought to a full trial in order to save valuable judicial time’(emphasis added).

In conclusion, this Court finds that the case of the plaintiff against the first defendant is plainly and obviously unsustainable and ought to be struck out. Dated 29 January 2026 -sgd-SUHAILY BINTI SAMSUDIN JUDGE SESSIONS COURT JOHOR BAHRU JOHOR To the parties’ solicitors: For the plaintiff : Sritharan a/l K Govindan (Messrs G.K. Sritharan & Co) For the first defendant : Ina Shafina binti Sahimi (Messrs. Hong & Fong)