Meg Consult Sdn. Bhd. v Pme Consulting Engineers Sdn. Bhd. (WA-22NCvC-353-07/2020)

This is an action (“this Action”), where the Plaintiff sued to recovery his referral fee. In this Action, the Plaintiff premised on the existence of a concluded oral contract, under which the Plaintiff would introduce and procure the appointment of the Defendant as an engineering consultant in few projects, and the Defendant would pay the introducer/ referral fees as a return. 18/08/2025 11:30:56

The Plaintiff is a Mechanical and Electrical (“M&E”) Engineering Consulting firm. The director and main shareholder of the Plaintiff is Ir. Gan Choon Hock (“Ir. Gan”).

The Defendant is a company that provides engineering consulting services, led by two directors and shareholders, namely Ir. Neng Ka Tack (“Ir. Alex Neng”) and Ir. Chew Siang Meng (“Ir. Chew”).

In or about mid of 2010, the Plaintiff has introduced and referred the Defendant to Sunrise Berhad (“Sunrise”), the developer of a mixed development known as Solaris 3 (or Solaris Parq) at Lots 58688 & 58689, Changkat Hartamas, Kuala Lumpur (“the Project”) to undertake M&E works in respect of the Project.

The Plaintiff submitted the Defendant’s company profile and contact numbers to Sunrise for consideration and had made firm recommendations to Sunrise for the Defendant to be appointed as their M&E consulting firm. The Plaintiff also assisted the Defendant in submitting the fee proposals and construction budgetary to Sunrise.

Sometime between August 2010 to October 2010, the Defendant’s Ir. Alex Neng and Ir. Chew met with Ir. Gan at Sunway Pyramid, Selangor and proposed that (“the Alleged Oral Contract”): a) the Defendant undertakes the entire M&E works for the said Project inclusive of electrical works; b) the Plaintiff be purely paid a referral fee at 30% of the total professional fees chargeable in relation to the contract sum awarded and be paid to Ir. Gan instead of the Plaintiff; c) payment to Ir. Gan be made within 30 days upon the Defendant being paid by the employer of the Project;and d) the Defendant shall inform Ir. Gan/the Plaintiff each time payment of their progress fee is made by the employer as the M&E Works for the Project was now being taken up by the Defendant entirely.

The Plaintiff and Ir. Gan agreed to the aforesaid proposals and prepared the draft agreement and Board of Directors resolution for the Defendant’s perusal and forwarded the Draft Referral Agreement (“Draft Referral Agreement”) via email on 11.11.2010.

On 11.12.2010, the Defendant was successful in their bid to be appointed as the lead M&E Consultant firm for the Project wherein Sunrise through their wholly owned subsidiary, Ibarat Duta Sdn Bhd (“Ibarat Duta”) awarded the said contract to the Defendant for the sum of RM3,300,000.00 (“LA 2010”) based on the Plaintiff’s referral and assistance.

The Plaintiff averred that the Plaintiff, through Ir. Gan, was an integral part in securing the award to the Defendant and had provided the Defendant with technical and administrative assistance.

Upon receipt of their first progress claim from Ibarat Duta, the Defendant through Ir. Alex Neng informed Ir. Gan of the same and indicated the manner in which the Plaintiff should prepare their invoice to the Defendant in relation to the 30% referral fee based on the professional fee received.

The Plaintiff thereafter duly submitted their invoice no: S3/01 dated 01.12.2011 in the sum of RM42,456.15 to the Defendant vide letter dated 01.12.2011.

On or about 30.01.2012, the Defendant paid the Plaintiff the said sum of RM42,456.15 vide HLBB cheque no: 372852 (“the Cheque”) being 30% of the first progress payment received from the employer, Ibarat Duta in the amount of RM141,520.50.

The Plaintiff premised that the Defendant’s LA 2010 with Ibarat Duta was RM3,330,000.00. This was when Beca Carter Hollings & Ferner (SE Asia) Pte Ltd (a Singapore based company) (“Beca Carter”) was still the design consultant for the Project and the Defendant was the local submission party. However, when Beca Carter’s involvement ceased or was terminated on or about 24.09.2012, the Defendant took over the full scope for M&E works including as a design consultant.

Subsequent to the first payment of RM42,456.15, the Plaintiff claimed that the Defendant remained silent in relation to further payments based on the actual contract sum for the Project and amounts received by the Defendant thereto.

The Plaintiff was initially made to understand that full contract sum awarded to the Defendant for the Project was in the sum of approximately RM7,600,000.00. The Plaintiff is entitled to 30% of the payment(s) of said professional fee amounting to RM2,280,000.00 out of which the Plaintiff has only been paid RM42,426.15 leaving a balance sum of RM2,237,573.85.

The Plaintiff had through the Plaintiff’s solicitor’s letter dated 03.03.2020 demanded for payment of the said sum of RM2,237,573.85. However, the Defendant through their solicitor’s letter dated 11.05.2020 has denied all allegations in the demand.

It is undisputed fact that the Defendant was later awarded a fresh contract by Ibarat Duta for a sum of RM5,550,000.00 on 06.02.2013 for the Project (“LA 2013”).

Ibarat Duta has subsequently split the scope of work in respect of the Project between the Serviced Apartment Development (Plot A) and the Mixed-use Development (Plot B) and awarded the following M&E contracts to the Defendant: a) On 05.11.2015, the Defendant was appointed for the Serviced Apartment Development (Plot A) with a contract sum of RM 2,175,000.00 (“LA 2015”); and b) On 29.11.2018, the Defendant was appointed for the Mixed-Use Development (Plot B) with a contract sum of RM6,700,000.00 (“LA 2018”) (collectively referred as “the LAs”).

The Plaintiff vehemently argued that the Defendant’s appointments by Ibarat Duta on all the LAs were procured through the Plaintiff and/or Ir. Gan’s referral, recommendations and assistance.

Hence, the Plaintiff further contended that the Defendant owes the Plaintiff 30% of the sums awarded under the LA 2013 (for the amount subsequent to termination), the LA 2015 and the LA 2018 with a cumulative sum of RM2,714,970.00 (RM9,049,900.00 x 30%).

Based on the Alleged Oral Contract shown by terms in the Draft Referral Agreement prepared and sent by Ir. Gan via an e-mail dated 11.11.2010, the Plaintiff claimed for, inter alia:

the sum of RM2,714,970.00;

alternatively for a sum to be assessed by the court;

pre-judgment and post judgment interest on either (a) or

as the case may be; and

the costs of the action. The Plaintiff’s Case 22. The crux of the plaintiff's argument is that the Alleged Oral Contract, as shown by the Draft Referral Agreement, extended to and encompassed all M&E consultancy works done by the Defendant for LA 2013, LA2015 and LA2018 and hence make it eligible to the 30% referral fee claimed. The Defence 23. The Defendant’ main defence is that there was no oral contract formed as there was only written contract intended, with no acceptance by the Defendant.

The Defendant’s premise is that even if the oral contract was formed on terms evidence by Draft Referral Agreement, the Alleged Oral Contract on its true construction is limited to LA 2010, where the Plaintiff has been paid and that the Alleged Oral Contract has been discharged and terminated under clause 10.2, the moment LA 2010 was discharged and terminated.

Secondly, the Defendant premised that the Draft Referral Agreement if performed and enforced (as claimed as reliefs in this Action) would be in oppose of public policy or promote an object forbidden by law, so as to defeat statutory law and is thus void under Section 24 Contracts Act 1950.

There was only one (1) witness for the Plaintiff, while the Defendant has called upon two (2) witnesses during trial: a) Ir. Gan Choon Hock (PW1); b) Ir. Chew Siang Meng (DW1); and c) Ir. Neng Ka Teck (DW2) Issues to be tried 27. The issues to be determined by this Court, amongst others are as follows: a) Whether the meeting convened by Ir. Gan, Ir. Alex and Ir. Chew at Sunway Pyramid has formed a valid oral contract evidenced by the Draft Referral Agreement sent via the Plaintiff's email dated 11.11.2010; b) Whether Ir. Gan has made an effort to procure and secure the award of LA2013, LA2015 LA2018 for the Defendant; c) Whether the payment amounting to RM 42,456.15 of the Defendant to the Plaintiff is an acknowledgement through behaviour against the payment of 30% of the reference fee or an act of a good mark on the part of the Defendant (gesture of goodwill); d) In the event that a referral fee of 30% is agreed upon between the Plaintiff and the Defendant, whether the Defendant has been relieved of any obligation to pay the referral fee following the termination of the LA 2010; e) Whether the Plaintiff's claim or any part thereof is prevented by the principle of estoppel by laches and/or under the Limitation Act 1953 (“LA 1953”); and f) Whether the Plaintiff's claim or any part thereof is invalid on the grounds of enforcing an unlawful contract against the public policy for violating: i) Section 24 of the Contract Act 1950 (“CA 1950”); ii) Section 17A of the Malaysian Anti-Corruption Commission Act 2009 (“MACCA 2009”); and iii) Registration of Engineers Act 1967 (“REG 1967”) Decision and Findings of the Court 28. Having appraised the evidence and all witnesses put forward by all the parties and having considered the submissions by the learned counsels for both parties, upon careful examination, it is evident that the Plaintiff has failed to establish that the Draft Referral Agreement covered the subsequent LA 2013, LA 2015 and LA 2018. Besides, this arrangement is also against public policy. Herein are my reasons in detail.

It is the Plaintiff’s premise that it is entitled to the 30% referral fee for all LA 2010, LA 2013, LA 2015 and LA 2018 on the Project by virtue of the Alleged Oral Contract which subsequently led to the formation of the Draft Referral Agreement. However, for the reasons set out below, I do not agree with the Plaintiff. A. The Alleged Oral Contract 30. While all witnesses, namely PW1, DW1, and DW2, provide similar testimony that the Meeting in Sunway Pyramid did take place, the oral testimonies of DW1 and DW2 strongly contradicts PW1’s testimony on the existence and the terms of the Alleged Oral Contract.

It is important to acknowledge that the Plaintiff's case and cause of action for reliefs are not predicated on a written contract, but rather on the Alleged Oral Contract that is partially supported by the unsigned Draft Referral Agreement. 14 years has lapsed between the Meeting and the date of the trial.

In dealing with the approach in evaluating oral evidence, I am guided by the then Federal Court decision in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229 where Chang Min Tat FJ held at p.234: “For myself, I would with respect feel somewhat safer to refer to and rely on the acts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe his subsequent recollection or version of it, particularly if he is a witness with a purpose of his own to serve and if it did not account for the statements in his documents and writings. Judicial reception of evidence requires that the oral evidence be critically tested against the whole of the other evidence and the circumstances of the case. Plausibility should never be mistaken for veracity.”. [Emphasis added]

In other words, reference to the objective facts and documents to the witnesses’ motives, and to the overall probabilities can be of great assistance to the court in ascertaining the truth especially where there is a conflict of evidence (See Eastern & Oriental Hotel [1951] Sdn Bhd v Fernandez [1989] 1 MLJ 35).

It is to be noticed that during cross examination, neither DW1 nor DW2 were cross examined on their denials about the Meeting.

In fact, the Plaintiff failed to provide any alternative version put to them as required by the rule in Browne v Dunn applied locally with approval in YK Fung Securities Sdn Bhd v James Capel (FAR East) Ltd [1997] 2 MLJ 621 where Mahadev Shankar JCA at p.659 elucidated that in cases where the opponent has declined to present his essential and material case during cross-examination, it is evident that he believed the testimony was irrefutable. Dear Alex / Chew, Enclosed, please find the draft agreement and resolution for referral fee agreement, for your acceptance and preparation.

Another factor that undermines the existence of the Alleged Oral Contract, is the e-mail dated 11.11.2010 sent by Ir. Gan to Ir. Alex and copied to Ir. Chew. The excerpt of the email is reproduced herein:

The court is determined that the language employed in the said email contemplates a further act of the Defendant signing and accepting the Draft Referral Agreement and passing a directors resolution approving the entry into the contract on terms of the Draft Referral Agreement.

To put it differently, the language employed in the e-mail does not refer to a confirmation of the existence of the Alleged Oral Contract formed at the Meeting, or that the Draft Referral Agreement was purely to formalise the arrangement and agreement.

I find the case of Deutche Bank (M) Bhd v MBF Holdings Bhd [2015] 6 MLJ 310 of great assistance to our case herein, as Jeffrey Tan FCJ held that it is the intention of the parties as construed from the evidence and not the expression “subject to contract” which determines whether the parties are in negotiations (See also Ayer Hitam Tin Dredging Malaysia Bhd v YC Chin Enterprises Sdn Bhd [1994] 2 MLJ 754).

Applying the above principle to our case, the language employed in the said PW1's email contemplates a further act of the Defendant signing and accepting the Draft Referral Agreement and passing a directors resolution approving the entry into the contract on terms of the Draft Referral Agreement.

In other words, the e-mail does not refer to a confirmation of the existence of the Alleged Oral Contract created at the Meeting, or that the Draft Referral Agreement was purely to formalize the arrangement and agreement.

Even if the Plaintiff has established the Alleged Oral Contract as evidenced by the Draft Referral Agreement, this Court must still determine whether the terms of the Draft Referral Agreement extended to LA2013, LA2015, and LA2018, and consequently, whether the referral fee of 30% of the contract values for these respective awards is recoverable by the Plaintiff.

Therefore, for the Plaintiff to obtain the reliefs sought, the Plaintiff must establish that the Draft Referral Agreement, extends to and encompasses all M&E consultancy works done by the Defendant under LA 2013, LA2015 and LA2018.

The Plaintiff's argument for the recovery of referral fees is substantially premised on the following:

a construction of the Draft Referral Agreement as a whole and specifically by Recitals II and III read with Clauses 1.1 and 2.1; whereby Ir. Gan as introducer agreed to secure the appointment of the Defendant by Ibarat Duta to provide M&E consultancy services; and

that this is to give effect to the definition of the Project which is defined as “Proposed Mixed Commercial Development at Lot 58688 and Lot 58689 (Solaris 3) at Mukim Batu, Kuala Lumpur for Messrs. Ibarat Duta Sdn Bhd” at section 5 to the Draft Referral Agreement.

For the ease of reference, recitals II and III and clauses 1.1 and 2.1 of the Draft Referral Agreement are reproduced herein: “II. The Company has submitted a tender and/or bid for a project known as Proposed Mixed Commercial Development at lot 58688 and Lot 58689 (Solaris 3) at Mukim Batu, Kuala Lumpur for Messrs. Ibarat Duta Sdn. Bhd. (hereinafter referred to as the “said Project”) more particularly described in Section 5 of the Schedule from Ibarat Duta Sdn. Bhd. (hereinafter referred to as the “said Client”) for ___________project. III. The Company has agreed to appoint engage and employ the introducer to secure the award for and on behalf of the Company for the aid project. ...

1.1 The Company hereby appoints, employ and engage the Consultant and the Consultant hereby agree to the appointment upon the terms and conditions as hereinafter appearing. ...

2.1 In consideration of the appointment and services by the introducer, the parties hereby agree that the introducer shall be entitled to referral Fees and charges as described in Section 6 of the Schedule hereto (hereinafter referred to as “the referral Fees”) to be paid directly to the introducer. Section 5 of the Schedule: The Said Project: Proposed Mixed Commercial Development at lot 58688 and Lot 58689 (Solaris 3) at Mukim Batu, Kuala Lumpur for Messrs. Ibarat Duta Sdn. Bhd.”. [Emphasis added]

The Plaintiff interprets the Draft Referral Agreement by attributing a specific meaning to the term “project”, which encompasses various types of mixed construction of any kind on Lot 58688 and Lot 58689 (Solaris 3) located in Mukim Batu, Kuala Lumpur.

The Defendant’s counsel argued that the Plaintiff's understanding is erroneous and that the Draft Referral Agreement, in its precise construction, exclusively and only applied to the Project in accordance with LA 2010. This assertion is supported by the following justifications. i. The Draft Referral Agreement shall remain Valid until its Expiry 48. First, Clause 10.1 of the Draft Referral Agreement mentioned that “This Agreement shall be valid and effective until the expiry of the said contract” and it is the Defendant’s premise that the use of the words “the said contract” can only be referrable to LA

2010.

The Plaintiff’s witness, PW1 testified during trial that the Draft Referral Agreement was drafted based on the Ibarat Duta’s Request for Fee Proposal dated 27.07.2010 (pp. 283 to 291 of Common Bundle (Vol.1), Encl.16) and the Defendant’s Fee Proposal dated 06.08.2010 (pp.440 to 448 of Common Bundle (Vol.2), Encl.17). [See NOP, p.33] Because your draft referral agreement merely refers to proposed mixed development but gives no further details, yeah? You’ve already agreed with me there are no details as to what is to be constructed. Correct. Ok. I put to you that the components referred to here in the proposal for fee, request for fee proposal which identifies what is contemplated to be constructed or erected on the land. Do you agree? Agree. Ok. Do you agree that at that time in July of 2010, this was what was contemplated as the Solaris 3 project? Yes. And I will put to you also that when you drafted the draft referral agreement and referred to the Solaris 3 project, this was what the three parties had in mind when they were discussing, when they had their discussion at Sunway Pyramid. We didn’t discuss in detail on components in detail but we discussed on the project - No, no, no, the point is, you had in mind, this was the project comprising of these elements. This is the project.

Hence, it is important to understand the true meaning of Clause 10.1. Since the Draft Referral Agreement was drafted and negotiated in 2010, the parties only refer the “said contract” to LA 2010. Therefore, the Plaintiff cannot extend the scope of the Draft Referral Agreement to cover LA2013, LA2015 and LA2018. ii. LA 2010 has been terminated 51. One of the Defendant’s crux points is that the LA 2010 has been terminated on 24.09.2012 and thus, the Draft Referral Agreement should not be extended to the other LAs.

In all candour, the Defendant averred that, notwithstanding the lack of documentation supporting the termination of LA 2010, Beca Carter, the design consultant, had its services terminated by a letter dated October 2011 (see to p.372 of the Common Bundle (Vol.3) (Encl.18)).

Consequently, Beca Carter had consented to the termination of their service as design consultants under LA 2010 based on the explicit language of the letter. Given that Beca Carter was a critical component of LA 2010, it is reasonable to conclude that the termination and discharge of Beca Carter's services as a design consultant would also result in the termination and discharge of the Defendant's services, and by extension, LA

I am in total agreement with the Defendant on this point. iii. Clause 10.1 of the Draft Referral Agreement 54. In relation to Clause 10.1 of the Draft Referral Agreement, the Plaintiff has asserted that LA2010, LA2013, LA2015, and LA2018 should be regarded as a unified entity, hence entitling the Plaintiff to the purported 30% referral fee for all four LAs.

However, according to the Defendant, each Letter of Award awarded to the Defendant has to be read and treated separately.

The Defendant has effectively demonstrated to the court that although the projects in question were associated with the same parcel of land, LA2010, LA2013, LA2015, and LA2018 each pertained to distinct projects and encompassed varying scopes of work. This is supported by the fact that the associated Letters of Award are not interconnected for there was no automatic reappointment of consultants for fresh awards.

The Plaintiff contended that once the Defendant manages to secure one contract or letter of award from Sunrise Bhd/Ibarat Duta, the Defendant will be automatically awarded with further and other letter of awards.

However, the Defendant refuted the claim and rejected the allegation about automatic reappointment of consultants, even in cases where the scope of work has changed per fresh letters of awards. The Defendant argues that such actions are inconsistent with current documentation and do not align with the probabilities of the case.

First, the Defendant is obligated to undergo a fresh bidding and tender procedure, as well as engage in renegotiations, for any new project or letter of award under consideration (See DWS1A

Secondly, the letter of award LA 2010 issued by Ibarat Duta explicitly indicated a clause which mentioned that Ibarat Duta possesses the authority to cease or terminate the letter of award in the event of non-performance.

The clause was again reiterated in the subsequent LA 2013, LA 2015, and LA 2018 agreements involving Sunrise/Ibarat Duta. Hence, the inference that there exists a reappointment specifically for “recurring” contracts is fundamentally implausible and contradictory to contemporaneous records.

In fact, the Defendant’s counsel has explicitly highlighted instances when consultants were not automatically reappointed notwithstanding modifications in the scope of their assignment:

in accordance with LA 2010 and the preceding letter of award issued on 16.1.2008, to TW Perunding Sdn Bhd (“TW Perunding”). If the testimony of PW1 regarding automatic reappointment is accurate, then it follows that upon TW Perunding's termination and discharge on

03.09.2009, TW Perunding should have been chosen as the M&E consultant; and

starting from LA 2013, for LA 2010, the M&E consultants were the Defendant, and Beca Carter was appointed as the design consultant. However, Beca Carter's involvement in the proposed development plans for LA 2013 was terminated.

These instances fortified the Defendant’s claim that its appointment as the M&E consultant for LA 2013, LA 2015 and LA 2018 is not automatic.

This Court observed that the Plaintiff did not challenge during cross examination of either DW1 or DW2’s testimonies that LA 2013, LA 2015 and LA 2018 involved and referred to different scope of works and the appointment of the Defendant is not automatic and a forgone conclusion after termination. Consequently, this Court has determined that the Defendant would not be assured of LA 2013, LA 2015, or LA 2018 solely for the reason that PW1 played a role in securing LA 2010. iv. Ir. Gan’s effort was restricted to LA 2010 65. According to the Defendant's counsel, Ir. Gan did provide some assistance. However, the specifics of his conduct and endeavours were not disclosed or introduced into evidence during the trial. Therefore, the Defendant has questioned and disputed the validity of the evidence that established the Plaintiff as the effective cause of the contract between Ibarat Duta and the Defendant under LA 2010, LA 2013, LA 2015 and LA 2018. In other words, the Plaintiff must subsequently demonstrate that Ir. Gan, was the effective cause of LA 2013, LA 2015 and LA

2018.

A thorough examination of the witness statement will reveal that Ir. Gan (PW1) did not provide any specifics regarding the manner, timing, or individuals through which he secured the appointment of the Defendant by Sunrise Berhad/Ibarat Duta as the M&E Consultant under LA 2010, LA 2013, LA 2015, and LA

2018.

During the trial, PW1 had mentioned the name of Mr. Cheah Ho Chee, also known as “Mr. Raymond Cheah”, as being instrumental in the appointment of the Defendant as the M&E Engineering consultant for the Project. Unfortunately, despite Mr. Raymond Cheah being on the Plaintiff's list of witnesses to be called and a subpoena issued against him, Mr. Raymond Cheah was never called as a witness.

It is to be noticed that LA 2010 dated 11.12.2010 for the Project (See p.348, Common Bundle (Vol.2) (Encl.17)) was signed by a director named Cheah Ho Chee, the same Mr. Raymond Cheah mentioned by PW1.

However, Mr. Raymond Cheah only executed LA 2010 for Ibarat Duta once. All the three (3) other Letters of Award were each executed by different persons from Ibarat Duta.

During trial, Defendant’s witness, DW1, testified that Mr. Raymond Cheah was not involved in LA 2013, LA 2015 and LA 2018 (See DWS1A, Q&A 60 and Q&A 82).

Additionally, DW1 testified that Mr. Raymond Cheah had departed Sunrise Berhad in February 2018, substantially prior to the Defendant's submittal of the Fee Proposal on 25.09.2018 and the award of LA 2018 on 29.11.2018 (see DWS1B, Q&A 82A). The Plaintiff did not object to these testimonies during cross-examination, which was an ironic turn of events.

Therefore, the sole inference that can be drawn is that Mr. Raymond Cheah was not involved in LA 2013, LA 2015, or LA 2018 and would not have the authority to determine the Defendant's appointment as M&E Engineer Consultant, as he had departed Sunrise prior to the call for tender for Plot B (under

As for LA 2010, the absence of Mr. Raymond Cheah to provide evidence is significant because Mr. Raymond Cheah, who was identified as the officer of Sunrise Berhad/ Ibarat Duta responsible for the award of LA 2010, could have provided evidence regarding the efforts that Ir. Gan is alleged to have made to secure the appointment of the Defendant as M&E Consultants for the Project under LA 2010.

In conclusion, Mr. Raymond Cheah's testimony would serve as confirmation of Ir. Gan's effort to be the effective cause of LA

Regrettably, that was not the case herein.

Assuming that the Alleged Oral Contract was formed in the Meeting, the Defendant vehemently contended that the non-performance of the Plaintiff has discharged the Alleged Oral Contract, by reference to clause 1.2 of the Draft Referral Agreement which reads: “1.2 That the introducer shall at its own costs and expenses to secure the appointment and/or award of the said project in favour of the company.”.

This provision requires the Plaintiff to secure the said Project for the Defendant. The Draft Referral Agreement only referred to LA 2010 as “the Project”. The Plaintiff, if at all, could only be entitled to the referral fee for LA 2010. LA 2010, however, was subsequently terminated and this brought the Draft Referral Agreement to an end in pursuant to Clause 10.1.

Even if the Draft Referral Agreement extended to LA 2013, LA 2015 and LA 2018, the Plaintiff is by no means entitled to the referral fee as it has not established anything to show that it had performed its duty in assisting the Defendant to secure LA 2013, LA 2015 and LA 2018. This is fortified by the fact that no evidence led to the effect that the Plaintiff or PW1 performed its duty for LA 2013, LA 2015, and LA 2018.

The only contention for the Plaintiff is that the Plaintiff has effective caused the Defendant’s appointment. However, the Plaintiff had failed to call the relevant witness or tender any relevant evidence to support the contention.

The Plaintiff’s sole witness, PW1 had candidly testified that the Plaintiff was at the material time busy with huge development developed by See Hoy Chan Sdn Bhd, therefore PW1 did not have time to follow up what was exactly happened in the Project.

It was put to the PW1 that he had taken no steps to communicate with either DW1 or DW2 to which PW1's response was that PW1 trusted the Defendant and at the same time he was too busy with other projects.

It is submitted that the effect of such silence and inactivity by the Plaintiff and/or PW1 is evidence from which it may be inferred that the Plaintiff had intended either to terminate and discharge the Draft Referral Agreement or waive any rights the Plaintiff may have had regarding the referral fees.

In a Court of Appeal case of Takashimaya Construction & Development Sdn Bhd & Anor v My Influx Sdn Bhd and other appeals [2020] 6 MLJ 289, Zabariah Yusof JCA (later, FCJ) could not be clearer when she held that a prolonged period of inactivity may give rise to inferences that the contract is terminated by abandonment and/or that a party to a contract with knowledge of his rights chooses to do nothing can be treated as an irreversible election to waive rights.

Applying the principles above to our case herein, once LA 2010 had been terminated and the amount of RM 42,456.15, has been paid, the Plaintiff by its inaction for the next 8 years had by its conduct elected to waive its rights to recover any referral fees or to treat the Draft Referral Agreement as discharged and terminated by abandonment and effluxion of time. B. The Cheque 84. It is undisputed fact that upon receipt of their first progress claim from Ibarat Duta, the Defendant through Ir. Alex Neng informed Ir. Gan of the same and indicated the manner in which the Plaintiff should prepare their invoice to the Defendant in relation to the 30% referral fee based on the professional fee received.

The Plaintiff thereafter duly submitted the Invoice dated 01.12.2011 in the sum of RM42,456.15 to the Defendant vide letter dated 01.12.2011.

On or about 30.01.2012, the Defendant paid the Plaintiff the said sum of RM42,456.15 vide HLBB cheque no: 372852 being 30% of the first progress payment received from the employer, Ibarat Duta in the amount of RM141,520.50.

The Plaintiff argued that that contents of the Invoice clearly demonstrate the 30% referral fee agreed between parties as there was no reason for the Defendant to have paid a very odd figure of RM 42, 456.15 if at all it was meant to be a payment out of goodwill or a one-off payment.

The Defendant on the other hand asserted that it chose to pay the sum of RM 42,456.15, which is a date nearing Chinese New Year 2012, as a gesture of goodwill without any prompting from the Plaintiff (See DWS2, Q&A 75).

PW1 asserted that the original invoice was brought over to DW2 when PW1 collected the Cheque on 20.01.2012. During cross examination, PW1 testified that the Plaintiff's said invoice attached to PW1’s email on 05.12.2012 was a copy of the original invoice. However, the court find that this explanation is inconsistent with contemporaneous documents (See electronic messages between Ir. Gan and Ir. Alex at pp. 586 & 587 of Common Bundle (Vol.2) (Encl.17)).

The reason being, the Defendant would have acknowledged receipt and affixed the Defendant's seal acknowledging receipt on the original invoice on 20.01.2012 in the course of business, and a copy would have been returned to Ir. Gan if he had in fact conveyed the invoice.

However, the Invoice generated did not exhibit this stamp. Likewise, the purported “scanned” copy of the Invoice, which was sent via email on 05.12.2012, would have served as a “copy” and would have indicated the Defendant's acknowledgement.

I concur with the Defendant's assertion that the electronic communications of Ir. Alex do not pertain to the loss of an original invoice or the request for a “copy” of the invoice in question. In the same vein, Ir. Gan's messages are particularly replete with the phrase “I’ll prepare and send to you,” which suggests a present intention to generate the invoice, despite the fact that it is a future action. The language of this phrase does not suggest that the Invoice was already in existence or was being sent.

Clearly, the language employed cannot refer to sending a copy but an invoice that would come into existence after Ir. Alex’s last message dated 04.12.2012. The Plaintiff did not produce or tendered any evidence in Court to prove that the Plaintiff’s invoice dated 01.11.2011 was not a back-dated invoice.

Ir. Gan responded by stating that he has a problem and has lost all data or messages stored in the phone. Consequently, no evidence can be presented to disparage or refute Ir. Alex’s phone messages (See NOP, pp.59).

Further, an examination of the Defendant's payment voucher date 19.01.2012 (See p. 591 of Common Bundle (Vol. 2) (Encl. 17), shows that the payment was not made with reference to an invoice number, which in the usual course of business would be reflected as such. If the Invoice was passed to Ir. Alex at the time of the collection of the Cheque, the payment voucher would have a notation of the invoice number for the purpose of the Defendant's audit.

Therefore, the Defendant argued that the exchange of contemporaneous electronic messages, particularly Ir. Gan's message, must result in a single inference and conclusion, that is, the Plaintiff's invoice was not in existence and, as a result, backdated from 23.11.2012 to 04.12.2012, when the exchange of electronic messages took place.

Additionally, the Defendant contended that an offer must precede the subsequent sequence of events, which is the acceptance of the offer, in order to establish a contract. This raises the question of whether the Defendant's singular and unilateral act of paying RM 42,456.15 on 19.01.2012 in the name of the Plaintiff and accompanied by the Defendant's payment voucher dated 19.01.2012 constitutes an offer for the Plaintiff to replace Ir. Gan as a contracting party.

It must be noted that the Defendant must express in clear language that it sought the change of contracting parties and the Plaintiff to be substituted for and in place of Ir. Gan as a contracting party before an offer could be accepted. Absent of any offer, there can be no acceptance.

It is trite law that in order for two parties to establish a contract through the exchange of promises, where the promise of one party serves as the consideration for the promise of the other, it is essential that the intention of each party be in agreement, even if the intention communicated does not accurately reflect the actual state of mind of the parties involved (See Deutche Bank (M) Bhd v MBF Holdings Bhd [2015] 6 MLJ 310).

It is to be noticed that, the sum of RM42,456.15 in the Defendant's payment voucher is expressed to be for ‘consultation fees’. There is no indication by its language that there is an offer to change of the Plaintiff in place of Ir. Gan as a contracting party.

Hence, the backdated invoice cannot be an offer which was accepted by the Defendant by its conduct in effecting payment of RM 42,456.15.

It is argued that the payment on 19.01.2012 occurred approximately 14 months after the Draft Referral Agreement was included in the email dated 11.11.2010 and sent to the Defendant.

It is difficult to define and refer to fourteen (14) months as a reasonable period of time to signify assent. Therefore, it is contended that the mere act of payment cannot be considered an affirmation of the unsigned Draft Referral Agreement.

It is the finding of the court that with the absent acceptance within reasonable time, there can be no oral contract on terms as evidenced by the unsigned Draft Referral Agreement.

Illegality Even if this Court make an express finding that there is sufficient evidence to establish a contract for the Draft Referral Agreement, the Defendant contended that the Draft Referral Agreement is a void contract and unenforceable for illegality under Section 24 CA 1950 read with the REG 1967 and the REG Regulations 1990 as amended

Further, the Defendant also contends that the effect and consequence of payments under the Referral Agreement would be forbidden by Section 17A of the MACC.

In response, the Plaintiff alleged that:

the Defendant’s Statement of Defence did not specifically pleaded illegality;

the Defendant’s solicitor’s letter dated 11.05.2020 (pp. 434-435 of the Common Bundle B, Vol.2) failed to raise illegality; and

Reg 27 and 27A of Regulations 1990 as well as Section 17A of MACC 2009 are not relevant and not applicable in the present case.

It is undisputed fact that the Ir. Gan (PW1) and Ir. Chew (DW2) and Ir. Alex (DW1) are all registered under Board of Engineers Malaysia under the REG 1967, and therefore they are obligated to comply with Reg 27 and 27A of Regulations 1990. Similarly, both the Plaintiff and the Defendants carry on an engineering practice and are registered with the Board of Engineers as such under Section 7A of REG1967.

It is apt to note that REG1967 was amended via Act A662 which came into force on 16.01.1987, to give power for the Board of Engineers to promulgate regulations to better regulate the engineering profession under Section 26 of the REG 1967.

By virtue of Section 26 of the REG 1967, REG Regulations 1990 were enacted and amended from time to time, the most recent being revised in 2015 via P.U. (A) 173 dated 31.07.2015 and has come into force on 1.1.2022. Thus the parties here being registered member of the Boar of Engineers are bound by all provision therein.

The court will now determine whether the Draft Referral Agreement has violated public statutes, specifically the REG 1967 and REG Regulations 1990 in our present case.

It is imperative to initially determine the nature of the payments to be made, whether under the Alleged Oral Contract or under the unsigned Draft Referral Agreement and its objectives.

Further, the object in the construction of documents is to ascertain the true intentions of the parties objectively as manifested by the language they have employed in the document and not by their subjective intentions. Further, regard to the factual background known to the parties when the contract was made is always permissible to ascertain the parties’ intention.

I echo the judgment of Gopal Sri Ram JCA (as he then was) in Glamour Green Sdn Bhd v AmBank Bhd & Ors and another appeal [2007] 3 CLJ 413 where he held that the meaning of the agreement is to be discovered from the words they have used and read in the context of the circumstances in which they made the agreement (See also Bank of Credit and Commerce International SA v Munawar Ali [2001] 2 WLR 735 & Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98).

To put it differently, the court's function is concerned with the ascertainment, not what the promulgators of the instruments meant to say, but the meaning of what they have said and the court has no power to improve the document it is called upon to interpret (See SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464 & Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597).

In carrying out this function, the Court may have regard to the factual matrix or background known to the parties but subjective intentions of the parties are to be disregarded as per Zainun ALI FCJ in SPM Membrane (supra): “[46] This objective approach to interpretation is the ‘ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation which they were at the time of the contract’ (K Lewison, The Interpretation of Contracts (5th Ed, 2011), Sweet and Maxwell, at p 1.03).”. [Emphasis added]

Now, it is imperative to note that the function of recitals is to state facts and the background which provides the setting to which the parties are contracting and is to be contrasted with the operative part which regulates the binding obligations of the agreement. (See Tan Fong Guan & Ors v Malayan Banking

However, recitals can also have the effect of giving rise to binding obligations as delivered by Gopal Sri Ram JCA in Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLJ 719 at pp.746 & 747: “It is a cardinal rule in the interpretation of contracts that recitals may be taken into account as an aid to construction and this is all the more so where there is ambiguity in the document. Further, in an appropriate case, the court may construe a recital as carrying with it an obligation to carry into effect that which is recited.”. [Emphasis added]

It is also well established in the Apex Court case of Chooi Siew Cheong v Lucky Height Development Sdn Bhd & Anor [1995] 1 MLJ 513 that the courts in construing a document or agreement does not read specific clauses in isolation but has regard to the document as a whole (See also SPM Membrane (supra)).

Therefore, the court must adopt a comprehensive approach to the interpretation of the Draft Referral Agreement and no clause is to be interpreted or used in isolation.

Upon reviewing the Draft Referral Agreement in its entirety, recitals I, III, and the operative part of clauses 1.2, 2.1, and 3, it is evident that the Draft Referral Agreement intends for the introducer, Ir. Gan, to make an effort to secure the Defendant's appointment and/or an award as a consultant to provide engineering services on the basis of its bid/tender for the project. In exchange, the Defendant will pay the introducer referral fees in the amount of 30% of the project value.

In the same vein, a perusal of the terms of the Alleged Oral Contract as pleaded in Re-amended Statement of Claim and PWS1 (Encl.63) clearly has a similar and identical object as expressed above.

After defining the purpose of the unsigned Referral Agreement, the court will now address the public laws that prohibit and restrict the actions specified in the Draft Referral Agreement. Firstly, section 26 of REG 1967.

For the ease of reference, the relevant excerpt of provisions Reg 27 and 27A are reproduced herein: “27. A registered Engineer shall not —

canvass or solicit professional employment;

offer any gift or other valuable consideration, or pay a commission or brokerage fee in order to secure professional employment;

except as permitted by the Board, advertise in any manner or form in connection with his profession; or

provide professional engineering services to any person, unless the scope of such services are clearly defined in a written agreement between both parties; or

offer, give, solicit or receive, either directly or indirectly, any contribution which may be reasonably construed as having the effect of intent to influencing the award of a contract.

An Engineering consultancy practice shall not —

canvass or solicit to provide professional engineering services except as permitted by the Board;

offer any gift or other valuable consideration, or pay a commission or brokerage fee in order to provide professional engineering services;

except as permitted by the Board, advertise in any manner or form any advertisement in connection with the engineering profession;

provide professional engineering services to any client, unless the scope of the services are clearly defined in a written agreement between both parties; or

offer, give, solicit or receive, either directly or indirectly, any contribution which may be reasonably construed as having the effect of intent to influencing the award of a contract.”. [Emphasis added]

Clearly, the substance and effect of the above is to forbid, prevent and prohibit activity that extends to any payment by the Defendant of monies, which any judgment in favor of the Plaintiff would compel, towards commission or brokerage fee or referral fees to provide engineering services, which is the true object of the unsigned Draft Referral Agreement. Such prohibition, just as the prohibition of touting in legal profession, is not uncommon in all professional industries or arenas. The illegality of this arrangement is thus obvious to this Court.

In the midst of oral submission, the Court has requested for clarification on the effect of a contract which was subsequently found to be illegal in light of the English case of Patel v Mirza [2016] UKSC 42. Counsels from both the Plaintiff and Defendant had then filed their respective supplementary submissions to the court.

The Plaintiff averred that even if the Draft Referral Agreement is to be considered illegal under common law, the court should apply the approach of illegality under Patel v. Mirza (supra):

instead of asking whether the contract should be regarded as tainted by illegality, the question is whether the relief claimed should be granted;

applying the trio considerations, the court ought to proceed directly to determine whether relief should be granted, and for public policy reasons the outcome could be that the contract can be enforced to give claim for the recovery of money for the benefit received by the Defendant.

The Plaintiff heavily relied on the developments in the United Kingdom led by the decision in Patel v Mirza (supra), where UK Supreme Court had dealt with the issue of whether a contract allegedly tainted with illegality will be enforced or if restitution of benefits conferred under it will be allowed.

In Patel v Mirza (supra), Mr. Patel transferred sums total of £620,000 to Mr. Mirza for the purpose of betting on the price of RBS shares, using advance insider information which Mr. Mirza expected to obtain from RBS contacts regarding an anticipated government announcement which would affect the price of the shares.

Mr. Mirza’s expectation of a government announcement proved to be mistaken, and so the intended betting did not take place, but Mr. Mirza failed to repay the money to Mr. Patel despite promises to do so. Mr. Patel thereupon brough the action for the recovery of the sums which had paid. The claim was founded on various causes of action including contract and unjust enrichment.

The Supreme Court in considering whether a contract allegedly tainted with illegality will be enforced or if restitution of benefits conferred under it will be allowed, is whether public policy requires the court to refuse relief to the claimant in the particular circumstances.

In his extensive analysis, Lord Toulson has detailed a three-fold approach in addressing the matter (at para. [101]):

considering the underlying purpose of the prohibition which has been transgressed and whether that purpose would be enhanced by denial of the claim;

considering conversely any other relevant public policies which may be rendered ineffective or less effective by the denial of the claim; and

keeping in mind the possibility of overkill unless the law is applied with some due sense of proportionality (“Trio Considerations”).

It was held in Patel v Mirza (supra) that Mr. Patel was entitled to the return of the money. The policy underlying the rules which made the contract between Mr. Patel and Mr. Mirza illegal would be stultified if Mr. Patel’s claim in unjust enrichment was allowed.

The Supreme Court further held that after examining the policy underlying the statutory provisions about insider dealing, the Court concluded that there was no logical basis why considerations of public policy should require Mr. Patel to forfeit the moneys which were never used for the purpose for which they were paid.

The Plaintiff averred that the new legal position on the defence of illegality decided in Patel v Mirza (supra) should be applied to our case herein, which the claimant will not be impeded from enforcing his claim to property solely because it was paid to perform an illegal act, unless the claim would be in violation of relevant public policy or it would be disproportionate to allow him to recover.

The Plaintiff brought the court’s attention to the 2 other Supreme Court cases that applied the decision in Patel v Mirza, namely, Grondona v Stoffel & Co [2021] 2 All ER 239 and Henderson (a protected party, by her litigation friend the Official Solicitor) v Dorset Healthcare University NHS Foundation Trust [2021] 2 All ER 257.

It is important to note that the nature of the claims in these cases were either for the recovery of some property, which had passed into the hands of a fellow wrong doer (Patel v Mirza), and is founded on restitutionary principles or unjust enrichment or to maintain a claim for loss and damages (Grondona v Stoffel (supra) and Henderson(supra)) arising from illegal or prohibited conduct.

Besides, it is to be noted that the Trio Considerations referred to in Patel v Mirza (supra) applies only to common law illegality. Even then, Patel v Mirza (supra) should not be regarded as the first step or, to put it another way, the only step in the process of evaluating the defence of illegality.

Furthermore, it is apt to highlight that Henderson (supra) is of great relevance to the present case, where Lord Hamblen has expressly recognized the application of the Trio Considerations in Patel v Mirza only to common law illegality and not to statutory illegality as well as the difference between common law illegality and statutory illegality.

It is the Defendant’s contention that the initial inquiry should be whether the statute explicitly or implicitly addresses the consequences of the illegality when the source of the illegality is statutory. In cases where the statute does not explicitly or implicitly address the impact on the claim in question, it is necessary to consider common law illegality. The Defendant referred this court to the Lord Burrows’ article on “The Illegality Defence after Patel v Mirza” at The Professor Jill Poole Memorial Lecture 2022, to support its contention.

It is imperative to point out that the Defendant in our present case has not filed any counterclaim before this court. The Defendant merely asserts that the Draft Referral Agreement cannot be enforced on the basis of statutory illegality, specifically the REG 1967 read with the Regulations 1990, specifically Regs 27 and 27A of Regulations 1990.

Hence, the Court is not obligated to determine whether the Defendant is entitled to compensation for loss or for the recovery of property in accordance with the fact pattern as applied to the law. Thus, Patel v Mirza is of no relevance here.

Additionally, it is important to note that the UK Supreme Court's reasoning in Patel v Mirza (supra) suggests that the Trio Considerations have been confounded and treated as integral to the doctrine of illegality when addressing the illegal or unlawful conduct that arises from common law illegality.

The next issue to be determined is, therefore, whether Patel v Mirza has any application to statutory illegality as in our case. The Defendant posits that the Trio Considerations in Patel v Mirza, as per Lord Toulson, do not apply when the allegation of invalidity is raised to impeach a contract and is based on statutory illegality: “[109] The courts must obviously abide by the terms of any statute, but I conclude that it is right for a court which is considering the application of the common law doctrine of illegality to have regard to the policy factors involved and to the nature and circumstances of the illegal conduct in determining whether the public interest in preserving the integrity of the justice system should result in denial of the relief claimed. I put it that way rather than whether the contract should be regarded as tainted by illegality, because the question is whether the relief claimed should be granted”. [Emphasis added]

I am of the view that, in light of Lord Hamblen's reiteration that Patel v Mirza is not the starting point, in the event of a breach of a statutory provision that is used to establish the illegality in order to impugn or impeach a contract, Section 24 (a) and (b) of the CA 1950 must be implemented at the very least, without the need to invoke the Trio Considerations outlined in Patel v Mirza. The reason being Section 24 (a) and (b) of the CA 1950 regulate and control the illegality that results from a breach of the provisions of a statute, as well as the implications of a contract being void for statutory illegality. This would fall under the category of statutory illegality when Section 24 (a) or (b) of the CA 1950 is applicable. This is also as per the ambit of Sections 3 and 5 of the Civil Law Act 1956.

The Plaintiff further submitted that the principles in Patel vs Mirza (supra) have been adopted and applied in the Apex Court case of Liputan Simfoni Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd [2019] 4 MLJ 141 (See also Public Bank Bhd v Ria Realiti Sdn Bhd [2021] 4 MLJ 537, Tan Keen Keong @ Tan Kean Keong v Tan Eng Hong Paper & Stationery Sdn Bhd & Ors and Other Appeals [2021] 3 MLJ 914, Pang Mun Chung & Anor v. Cheong Huey Charn [2018] 8 CLJ 663).

It is this Court’s view that the issue here is not about whether Patel v Mirza (supra) had been adopted and applied in our Courts. Rather, the main focus here is whether it is applicable in our present case.

In Liputan Simfoni (supra), an imposter of the plaintiff applied for the issuance of the title in its favour and proceeded to enter into a sale of the land to the 2nd defendant, who got onto the register. The 2nd defendant in turn entered into a second sale agreement to sell the land to the 1st defendant. The imposter lodged a caveat claiming non-payment of the purchase price from the 2nd defendant, which caveat was removed on the application of the 1st defendant. The 3rd defendant (Land Office) at the request of the imposter lodged a registrar's caveat on the land which prevented the 1st defendant, who had by then presented the Memorandum of Transfer, but was prevented from getting onto the register.

Meanwhile, pending the completion of the 2nd SPA, the fraud was discovered, and steps were taken by the true owner to recover the land by suit in court and other steps that included, a meeting held by the Land Office to investigate the complaints of fraud, attended by the plaintiff, true owner, the 1st defendant and 2nd defendant, thus imposing on the 1st defendant knowledge of the plaintiff's claims to the land.

Clearly, on this fact pattern, the 2nd defendant's title was a defeasible one under Section 340 (2) (a) of the National Land Code 1965 (the NLC 1965), the 2nd defendant's title having been obtained by fraud or misrepresentation. The 1st defendant's title could only be saved from impeachment if, the 1st defendant could establish that the 1st defendant was a bona fide purchaser for value under the proviso to Section 340 (3) of the NLC 1965.

Amongst the questions for which leave was given by the Federal Court, was, first, whether the 1st defendant was a bona fide purchaser, when it had knowledge of the plaintiff's adverse claims to the land before the 1st defendant was subsequently and very much later registered as the proprietor. Second, which shall be of relevance to our present case, whether the 2nd SPA was invalid for want of proper stamping and non-payment of the appropriate and correct Real Property Gains Tax.

In the first place, the Federal Court, having found that the relevant time in assessing whether the 1st defendant was a bona fide purchaser for value, is the entire period leading up to the registration of the title in the 1st defendant's name. The fact of presentation is insufficient and that the 1st defendant by attending the meeting with the Land Office and the plaintiff had the necessary knowledge of the plaintiff's adverse claim to the land, thereby disqualifying the 1st defendant from being a ‘bona fide purchaser’.

This being the finding of facts affirmed by the Federal Court, it was therefore unnecessary to go on any further to deal with whether the 2nd SPA was invalid for illegality and to adopt Lord Touldson's judgment in Patel v Mirza (supra).

Hasan Lah FCJ in Liputan Simfoni (supra) was essentially determining whether title could pass under an illegal contract and whether a breach of the Stamp Act and Real Property Gains Tax Act had a sufficient nexus to the 2nd SPA. This determination was made in light of United Malayan Banking Corp Bhd v Pekeliling Triangle Sdn Bhd [1991] 2 MLJ 559 and the principle that the Stamp Act 1948’s object is to “tax documents and not transactions”.

Indeed, the Stamp Act and Real Property Gains Tax Act do not contain explicit provisions for invalidating contracts for avoidance. The court when encountered with such unstamped document can always use its power under Section 53 of the Stamp Act to impound the document and send it for stamping (see, Chai Shan Foo v Tai Ooi Cheng [2021] CLJU 2706). The non-stamping of the document would not in itself trigger any illegality under the Stamp Act. Unlike our present case when there is an obvious statutory illegality, there is no statutory illegality in Liputan Simfoni. Consequently, I am of the opinion that Liputan Simfoni is distinguishable from our present case.

It is to be noticed that, as highlighted earlier, Lord Toulson himself (at [109] acknowledged that the policy-based approach propounded applies only to common law illegality and not to statutory illegality:

Meanwhile in Pang Mun Chung (supra), two (2) observations must be made. Firstly, it is to be noticed that the contention of illegality by the 1st defendant was founded on the transaction between the parties being a sham and thus being opposed to public policy i.e: common law illegality was invoked, with no breach of statutory provision being alleged.

Secondly, once the sale agreement was not found to be opposed to public policy, the defence of illegality failed and there was no longer any need to consider the Trio Considerations in Patel v Mirza. The pronouncement of the Court of Appeal on the adoption of Patel v Mirza was unnecessary for the decision and obiter. Hence, the court find that these cases of Liputan Simfoni(supra) and Pan Mun Chung(supra) should be distinguished from our present case.

The Defendant has cited the recent case of Mahmood bin Ooyub v Li Chee Loong and another appeal [2020] 6 MLJ 755 to support its case, where the Court of Appeal had heard three appeals together involving moneylending transactions that were disguised as sale and purchase of properties. Findings were made that the actions were in fact illegal moneylending transactions in breach of the Moneylenders Act 1951.

In dealing with whether the moneylenders were entitled to restitution, the Court of Appeal first referred to the Singapore Court of Appeal decision in Ochroid Trading Ltd and another v Chua Siok Lui (Trading as VIE Import & Export) [2018] 1 SLR 363; [2018] SGCA 5 which had considered whether Patel v Mirza was to be applied to permit restitution on a contract found to be unenforceable for being an illegal moneylending transaction.

Lee Swee Seng JCA (as his Lordship then was) in delivering his judgment did not apply the Trio Considerations having found that Section 15 of the Moneylenders Act 1951, made express provision that all moneylending agreements by an unlicensed moneylender was unenforceable.

As the Moneylenders Act 1951 by Section 15 made express provision for moneylending agreements by an unlicensed moneylender was unenforceable, though the Court of Appeal did not say so, this was an instance of statutory illegality referred to in Patel v Mirza to which the Trio Considerations did not apply.

In another case of D r H K Fong Brainbuilder Pte Ltd v. SG-Maths Sdn Bhd & Ors [2021] 1 CLJ 155, the defendant inter alia raised as a defence to the action that the Master License Agreement 2013 (MLA 2013) comes within the meaning of a franchise under the Franchise Act 1998 (FA1998). Further, that the plaintiff and 1st defendant had breached Section 6(1) and Section 6A (1) of FA 1998, which were imperative and mandatory provisions by the non-registration of the franchise under the FA 1998, and thus the MLA 2013, and the supporting guarantee and power of attorney were void for illegality under the CA 1950. These contentions were accepted by the learned High Court Judge and affirmed by the Court of Appeal.

It is to be observed that this is a case of statutory illegality and the Court of Appeal had recognised that where illegality is raised to impugn or impeach a contract, reference to and the application and consideration of Section 24 CA 1950 is mandatory (See also Golden Wheel Credit Sdn Bhd v Siah Teong Din [2021] 12 MLJ 589, Sofia binti Yusof v PV Power Engineering Sdn Bhd [2024] 1 AMR 522).

Based on the above cases, it is determined that where the statutory illegality is relied on under Section 24 (a) and (b), the Trio Considerations in Patel v Mirza have no application.

On another note, the Plaintiff in cross examination of DW2 has sought to raise the issue that the REG Regulations 1990 was not expressly pleaded, by which O.18 r.8 of the Rules of Court 2012 (“ROC 2012”) requires particulars to be pleaded and thus cannot be relied upon as a ground to vitiate the Draft Referral Agreement, whether it be in writing or orally created on the grounds of illegality.

The Defendant's counsel responded by asserting that a straightforward interpretation of O.18 r. 8 of the ROC 2012 does not indicate or imply that the pleading of a public statute that is relied on by the party whose pleading seeks to raise it is a requirement. Rather, the language in r. 8 is “or any fact showing illegality”. I am in total agreement with the Defendant’s counsel on this point.

The Defendant has in its Re-Amended Statement of Defence (Encl.39) raised the illegality of the Draft Referral Agreement for breach of the REG 1967. Therefore, the Plaintiff has not been and is not being taken aback.

The Defendant’s counsel argued that, in any event, the REG1967 and the REG Regulations 1990 are enacted in the public interest and therefore strict compliance and adherence is essential to comply with and to perform the duties in conformity with the Act.

There is no scope for the operation of estoppel as claimed by the Plaintiff. The Defendant added that REG 1967 is a public statute which can attract the application of Section 24 of CA1950: Norman Disney & Young v Affifi Hj Hassan [2011] 1

It is trite law that illegality need not be pleaded. An important exception to the strict rule that in civil cases, the parties’ pleadings are binding on them, is that of illegality. This principle is envisaged in the Federal Court case of Merong Mahawangsa Sdn Bhd & Anor v Dato’ Shazryl Eskay bin Abdullah [2015] 5 MLJ 619 FC, where Jeffery Tan FCJ held: “[35] Clearly, therefore, courts are bound at all stages to take notice of illegality, whether ex facie or which later appears, even though not pleaded, and to refuse to enforce the contract.”.

I am also guided by the judgment in Privy Council case of Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd [1989] 1 MLJ 457, where Lord Oliver of Aylmerton rendered a remarkable judgment at p. 461 (para. F-H): “lt is well established as a general principle that the illegality of an agreement sued upon is a matter of which the court is obliged, once it is apprised of the facts tending to support the suggestion, to take notice ex proprio motu and even though not pleaded (see eg Edler v Aueback [1950] 1 KB 359) for clearly, no court could knowingly be party to the enforcement of an unlawful agreement.”. [Emphasis added]

Based on the above principle, once the illegality is brought to the attention of the court from the evidence or documents tendered, the court must consider the plea of illegality even though it is not pleaded (See also Lim Kar Bee v Duofortis Properties (M) Sdn Bhd [1992] 2 MLJ 281, Palaniappa Chettiar v Arunasalam Chettiar [1962] MLJ 143 & Chai Sau Yin v Liew Kwee Sam [1962] 28 MLJ 152).

It is trite law that the court is obligated to take cognisance of any illegality, even if it has not been pleaded, as long as all relevant facts are present and no new evidence is required (see Merong Mahawangsa Sdn Bhd & Anor v Dato’ Shazryl Eskay bin Abdullah [2015] 5 MLJ 619).

Also, the Defendant claimed that the purported 30% referral fee has equivalent value to “commissions”. Therefore, if the purported 30% referral fee exists and is acknowledged, it would be subject to the provisions of Section 17A (1) of the MACC

I have no qualm but to agree with the Defendant again, on this.

The Plaintiff further questioned that if there is indeed any element of illegality why the Defendant did not demand the sum of RM42,456.15 to be returned. The Defendant’s counsel rebutted by stating that the payment of RM42,456.15 to the Plaintiff was never a referral fee. This argument is supported by the Defendant’s Payment Voucher dated 19.01.2012 (p. 591 of the Common Bundle Vol. 2) (Encl.17) which has clearly stated the said payment is for “Consultancy Fee”.

Not only that, the Defendant also denied the Plaintiff’s allegation that the electronic messages between PW1 (Ir. Gan) and DW2 (Ir. Alex) (See pp. 586 & 587 of Common Bundle Vol.2) (Encl.17) are not relevant or immaterial.

This court is of the view that the electronic messages and PW1’s email dated 05.12.2012 attaching the back-dated Invoice dated 01.11.2011 are equally important and has to be read together to prove that:

the Defendant’s payment was not an act or conduct to accept or confirm the Draft Referral Agreement nor any variation to the Draft Referral Agreement;

the Defendant’s payment was not intended to be a payment for “referral fee” as alleged in the back-dated invoice; and

the reason the Defendant did not and need not demand the sum of RM42,456.15 to be returned or to file a counterclaim on that effect.

Conclusion In a nutshell, this Court dismiss the Plaintiff's claim, finding that the alleged oral contract, evidenced by the Draft Referral Agreement, did not extend to LA2013, LA2015, and LA2018. The court determined that the Draft Referral Agreement only applied to LA2010, which was terminated.

Furthermore, and most crucially, I find the agreement to be against public policy, as it violated the Registration of Engineers Act 1967 and its regulations, which prohibit paying of referral fees to secure professional engineering services. This is strictly an illegal contract prohibited under Section 24 of the Contracts Act 1950.

The Plaintiff’s claim is hereby dismissed with cost. Date: 15th August, 2025 ----------------------------------------------------------------- DR JOHN LEE KIEN HOW @ MOHD JOHAN LEE JUDGE HIGH COURT MALAYA KUALA LUMPUR FOR THE PLAINTIFF: GABRIEL DANIEL & SABRINA CHU SOO WOON MESSRS. PAUL ONG & ASSOCIATES ADVOCATES & SOLICITORS FOR THE DEFENDANT: JOSLYNE DELANO GOONTING, VISWANATHAN SHANMUGAM, LUM MAY LAN & TAN YI WEN MESSRS. YI WEN & CO ADVOCATES & SOLICITORS Table of Authorities Cases Ayer Hitam Tin Dredging Malaysia Bhd v YC Chin Enterprises Sdn Bhd [1994] 2 MLJ 754 Bank of Credit and Commerce International SA v Munawar Ali [2001] 2 WLR 735 Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597 Chai Sau Yin v Liew Kwee Sam [1962] 28 MLJ 152 Chooi Siew Cheong v Lucky Height Development Sdn Bhd & Anor [1995] 1 MLJ 513 Deutche Bank (M) Bhd v MBF Holdings Bhd [2015] 6 MLJ 310 Dr H K Fong Brainbuilder Pte Ltd v. SG-Maths Sdn Bhd & Ors [2021] 1 CLJ 155 Eastern & Oriental Hotel [1951] Sdn Bhd v Fernandez [1989] 1 MLJ 35 Glamour Green Sdn Bhd v AmBank Bhd & Ors and another appeal [2007] 3 CLJ 413 Golden Wheel Credit Sdn Bhd v Siah Teong Din [2021] 12 MLJ 589 Grondona v Stoffel & Co [2021] 2 All ER 239 Henderson (a protected party, by her litigation friend the Official Solicitor) v Dorset Healthcare University NHS Foundation Trust [2021] 2 All ER 257 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98 Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd [1989] 1 MLJ 457 Lim Kar Bee v Duofortis Properties (M) Sdn Bhd [1992] 2 MLJ 281 Liputan Simfoni Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd [2019] 4 MLJ 141 Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLJ 719 Mahmood bin Ooyub v Li Chee Loong and another appeal [2020] 6 MLJ 755 Merong Mahawangsa Sdn Bhd & Anor v Dato’ Shazryl Eskay bin Abdullah [2015] 5 MLJ 619 Norman Disney & Young v Affifi Hj Hassan [2011] 1 CLJ 210 Ochroid Trading Ltd and another v Chua Siok Lui (Trading as VIE Import & Export) [2018] 1 SLR 363; [2018] SGCA 5 Palaniappa Chettiar v Arunasalam Chettiar [1962] MLJ 143 Pang Mun Chung & Anor v. Cheong Huey Charn [2018] 8 CLJ 663 Public Bank Bhd v Ria Realiti Sdn Bhd [2021] 4 MLJ 537 Sofia binti Yusof v PV Power Engineering Sdn Bhd [2024] 1 AMR 522 SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464 Takashimaya Construction & Development Sdn Bhd & Anor v My Influx Sdn Bhd and other appeals [2020] 6 MLJ 289 Tan Fong Guan & Ors v Malayan Banking Bhd [1974] 1 MLJ 33 Tan Keen Keong @ Tan Kean Keong v Tan Eng Hong Paper & Stationery Sdn Bhd & Ors and Other Appeals [2021] 3 MLJ 914 Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229 United Malayan Banking Corp Bhd v Pekeliling Triangle Sdn Bhd [1991] 2 MLJ 559 YK Fung Securities Sdn Bhd v James Capel (FAR East) Ltd [1997]