Mrcb Engineering Sdn Bhd v 1. ) Mac Construction Consultant Sdn Bhd (WA-22NCvC-221-05/2020)

KUDDUS CONSTRUCTION SDN BHD Company Registration No: 200701016342(774348-X) …DEFENDANTS JUDGMENT 20 (Enclosure 1) INTRODUCTION [1] This action is based on the tort of conspiracy to defraud or to injure the plaintiff when the defendants allegedly conspired to initiate false 25 adjudication proceedings under the Construction Industry Payment and Adjudication Act, 2012 (CIPAA) against the plaintiff, resulting in losses. 15/10/2024 08:19:08 WA-22NCvC-221-05/2020 Kand. 154 [2] At the end of a full trial and on a balance of probabilities, I find for the plaintiff, a final judgment was entered against the First Defendant and 30 I ordered as follows: - Prayer 30(i)(a) is not allowed, - Prayer 30(i)(b) (a.-b.) are allowed and for damages to be assessed, - Prayer 30(ii) & 30(iii), costs of RM25,000.00 against the First Defendant (D1), to be paid within 30 days from today. 35 [3] Aggrieved, the First Defendant (D1) filed this appeal. My reasons are as follows: BRIEF FACTS 40 [4] The salient facts gathered from the cause papers and the submissions filed are as follows:

4.1 Firstly, it is to be noted that on 22.04.24 (the first day for full trial), the Second Defendant (D2) failed to appear or appoint a solicitor concerning the present suit. I therefore ordered as follows:

Final judgment to be entered against D2.

Damages are to be assessed.

The counterclaim by D2 against the plaintiff is dismissed.

A global cost of RM10,000.00 was awarded to the plaintiff against D2 to be paid within 30 days from the order date.

D1’s application in seeking indemnity against D2 is allowed and a global cost of RM10,000.00 was awarded to D1 against D2.

4.2 The trial then proceeded between P and D1.

4.3 The witnesses at the trial are as follows: - 55

The Plaintiff’s witnesses:

PW1 Soh Lieh Sieng (Consultant Claim)

PW2 Tan Hui Sheng (P’s Vice President Contract and Commercial)

The First Defendant witness:

DW1 Leong Hong Kit (Construction Claim Consultant).

4.4 In a nutshell:

In 16.04.2015, D2 was awarded and duly appointed as a sub-contractor for the Ps structural and architectural works under the project: 65 “Proposed Construction of 30-storey Jland Tower at Komtar JBCC, Jalan Wong Ah Fook, Johor Baharu, Johore” (the said Project).

On 22.06.2015, P terminated D2.

D2 alleged that P had failed to pay the sum of RM3,676,452.44 for works completed.

On 06.06.2017, D2 was wound up via Winding up Petition No. WA-28NCC- 73-02/2017 taken by Woodland Roof Systems Sdn Bhd.

On 08.09.2017, D2 engaged the services of D1 as a Claims Consultant to take an adjudication proceeding under the Construction Industry Payment and Adjudication Act 2012 (CIPAA) against P without the required sanction 75 from the office of the Official Receiver.

A Notice of Adjudication dated 09.03.2018, resulted in an Adjudication Decision in favour of D2 being granted by the adjudicator.

P later discovered that D2 had already been liquidated during adjudication.

D2 later filed an action before the High Court to enforce the adjudication 80 decision it had secured against P.

4.5 P subsequently:

Applied to set aside the Adjudication Decision via an Originating Summons (OS 211) because D2 had no locus to initiate the adjudication proceeding.

D2 was already in liquidation and did not have the required sanction from the Official Receiver.

The High Court set aside the said adjudication decision.

4.6 P then filed the present suit against the defendants, claiming they had conspired to defraud it. 90 Agreed issues to be tried: [5] On 22.04.2024, the parties revised and agreed to the following issues:

Whether D1 knows D2 was wound up during the adjudication proceeding.

Whether D1, as the claim consultant, must inform P and the adjudicator of 95 the winding up status of D2.

Whether P has a valid cause of action (conspiracy to defraud) against D1. ARGUMENTS BY THE PARTIES I had duly considered the submissions of the respective parties. 100 [6] In a nutshell, P argued that:

6.1 D2 was appointed as the sub-contractor for the structural and architectural works for the said project:

After terminating the services of D2, D1 was engaged by D2 as the claim consultant to pursue CIPPA Adjudication proceedings 105 against P on payment issues.

The adjudicator could not release the adjudication decision due to non-payment of the adjudicator’s agreed fees by the Ds.

Fifteen months later (11.10.2019), the said fees were deposited with the Asian International Arbitration Centre (AIAC).

The Adjudication Decision, which was against P, was finally released on 05.07.2018.

The adjudication decision was served on P on 14.10.2019 to claim for payment.

P searched for D2's legal status and discovered that it had been 115 wound up by the Kuala Lumpur High Court on 06.06.2017 (Winding Up Petition No: WA-28NCC-73-02/2017).

P succeeded in taking action to set aside the adjudication order on 17.10.2019 in the Kuala Lumpur High Court WA- 24C-21 - 10/2019 (OS 211), with RM7,000.00 cost awarded.

D2 appealed to the Court of Appeal, but it was dismissed with a cost of RM10,000.00 to P (D2 did not file any appeal against the COA’s decision)

6.2 On 11.05.2020, P filed this proceeding against D1 and D2, which were 125 founded on the tort of conspiracy to defraud and injure P, claiming:

The Ds deliberately and intentionally concealed the wound-up status of D2 to P and the adjudicator in pursuing the adjudication proceeding without the legal sanction from the insolvency department. All the while, D1 deceived the adjudicator into 130 believing that D2 was financially solvent.

The Ds deliberately waited for the termination of the winding up order on 28.06.2019 to pay the total amount of the advance security deposit on 24.09.2019 for AIAC to release the adjudication decision.

D1 had conspired with D2 in initiating the adjudication proceedings. The evidence from D1 shows that the defendants have acted in concert to initiate false adjudication proceedings against P, resulting in losses to P.

P claimed that it had caused losses and damages. 140

6.3 For support, P cited (among others):

Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 5 MLJ, FC, where it was ruled that the standard of proof for conspiracy to defraud in a civil claim is on a balance of probabilities.

In Renault SA v Inokom Corp Sdn Bhd & Anor and other appeals [2010] 5 MLJ 394, CA where, it was observed that it is trite law that the agreement to injure must come first and is not limited to a signed and sealed agreement but any informal agreement, including a combination of efforts of the alleged co- 150 conspirators.

Manzer Medical Sdn Bhd & Ors v Bongsor Bina Sdn Bhd [2018] 6 MLJ 574, CA, where it was held that most of the time, the evidence of a conspiracy to defraud is proven by circumstantial evidence 155 6.4 It was alluded to at the trial:

D1 knew the wound-up status of D2 during the adjudication proceeding but elected to conceal it. Contrary to the stand taken by D1 that, he was unaware of it.

P argued that D1 had conspired with D2 to suppress that 160 information to mislead the Adjudicator and P, which would have affected the adjudication proceedings.

During the examination in chief and the cross-examination, DW1 confirmed that he knew of the legal status of D2 that was wound up on 05.07.2018: 165

A letter from the Insolvency Department expressly referred to the reference number used by D1 for D2 (MAC/2017/99/KCSB/02).

It supports an inference that D1 was aware of D2’s wound-up status on 05.07.2018 and subsequently wrote to the insolvency department to seek confirmation that D1 does not require sanction to initiate the 170 adjudication proceedings.

The Insolvency Department, vide letter dated 25.07.2018, replied that D1, as a claim consultant, does not require sanction from the liquidator to continue with the adjudication proceedings. The letter did not refer to D2.

Evidently, D1 was aware that D2 was wound up on 25.7.2018.

6.5 The Ds had conspired by acting in concert to defraud and injure P:

DW1, in his examination in chief, confirmed that until today, D2 had not paid the RM 5,000.00 as services for the adjudication 180 proceedings for the said project.

D1 received only RM 50.00 for the said project to conduct a company search:

D2 engaged D1 to institute six adjudication proceedings on a contingency basis.

D1 only received RM 50.00 from D2.

D2 did not pay the initial fees of RM5,000.00

The agreed fees between them are based on the success of the adjudication process.

DW1 claimed that D1 terminated D2 after knowing the status of D2.

DW1 confirmed that D1 was entitled to exercise its rights to recover its fees under clause 6(f) upon discovering that D2 was wound up but did not do so.

6.6 P further argued:

That D1 did not exercise Clause 6(f) because they knew that a wound-up company would be unable to pay the fee.

D1 deliberately waited and continued to act for D2 until the termination of the winding-up order.

Then D1 paid the advance security deposit to AIAC to deliver 200 the adjudication decision.

Since 05.07.2018, D1 knowing the status of D2, did nothing for fifteen (15) months.

D1 refused to inform the adjudicator and P of D2's insolvency status and waited for the termination of the winding-up order 205 because D1 is aware that if the adjudication decision favours D2, P will have to pay D2. The money will be in the pool of assets of the liquidator or the official receiver, where no one can touch it, including D1 for his agreed contingency fees.

At Q&A 26, DW1 asserted that D2 refused to engage a lawyer 210 because a claim consultant imposes a lower rate than lawyers.

During the cross-examination, DW1 confirmed that his fees upon success for the said project are RM 545,189.81. D1 had a vested financial interest in the adjudication award.

D1 paid for and collected the adjudication decision on 11.10.2019 215 only after the winding-up order's revocation.

Four days later, on 14.10.2019, the Ds first demanded the adjudicated amount against P. 220

6.7 D1 holds a law degree and is a qualified Adjudicator in AIAC:

D1 would have legal knowledge and know that a legal sanction is required from the liquidator for a wound-up company to initiate any proceeding: In HLE Engineering Sdn Bhd v HTE Letrik Bumi JV Sdn Bhd [2015] 2 MLJ 661, CA, it was observed that prior 225 sanction from the liquidator must be obtained once the winding-up order was pronounced.

Throughout the adjudication proceeding, D2 failed to obtain any sanction from the liquidator.

D1 then decided to conspire with D2 to conceal that D2 was wound 230 up so that the Adjudication decision would not be void and D1 could obtain more fees from the adjudication decision.

D1’s intention not to exercise Clause 6 (f) to recover the fee upon knowing that D2 was wound up and despite receiving only RM50.00 for the entire adjudication indicates a concerted effort to 235 conceal the material information

In their evidence, PW1 and PW2 confirmed that a consultant must conduct basic checks to verify their client’s status before accepting an appointment. This ensures due diligence, professional responsibility, the viability of paying the bills, and the authenticity 240 of their engagement.

D1’s intentional withholding of material information had facilitated the adjudication process under false pretences. It amounts to a conspiracy with D2 to defraud the Adjudicator and P. The withholding of material information shows D1 is dishonest and has 245 the intention to recover his fee from the adjudication decision after the termination of the winding up order: SV Beverages Holdings Sdn Bhd & Ors v Kickapoo (M) Sdn Bhd [2008] 4 MLJ 187.

6.8 P further argued that a conspiracy consists not merely of the intention of two or more but of the agreement of two or more to do an unlawful 250 act or a lawful act by illegal means. The Ds conspired and agreed to conceal the insolvent status of D2 to proceed with the adjudication decision to injure P. In the circumstances, P submitted that they had proven their case and discharged the required burden. The claim ought to be allowed with costs. 255 [7] In a nutshell, D1 argued that:

7.1 D1 is:

Only a construction claim consultant specialising in providing 260 consultancy services such as contract management and representing clients under CIPAA.

It is not a law firm offering legal services, and DW1 is not a qualified lawyer under Malaysian law. 265 7.2 D1 claimed to have been appointed by a Letter of Engagement dated 08.09.2017, where it proposed to pursue the CIPAA proceedings for D2 subject to an agreed fee structure. D1 argued that:

There’s no legal requirement to conduct a company search on D2.

DW1 admitted that D1 did not carry out due diligence (such as a 270 company search) on D2, who was D1’s client at the material time and not the opponent.

A company search is for the address of the opponent in an adjudication, which is essential for D1 to perform the service of required documents under Section 38 of CIPAA 2012.

D1 did not provide legal advice on court proceedings or other legal issues save for CIPAA-related issues to D2. Neither was it involved in any court proceedings between D2 and P.

7.3 P has been:

Unclear in its claim against D1 on the tort conspiracy to defraud or 280 injure whether it is a ‘lawful means’ conspiracy or ‘unlawful means’ conspiracy: Deepak Jaikishan a/l Jaikishhan Rewachand & Anor v Intrared Sdn Bhd (previously known as Reetaj City Centre Sdn Bhd and formerly known as KFH Reetaj Sdn Bhd) & Anor [2013] 7 MLJ 437.

Also cited is the Federal Court decision in Letchumanan Chettiar Letchumanan Chettiar Alagappan @ L Allagappan (sebagai pelaksana wasiat/executor kepada SL Alameloo Achi alias Sona Lena Alamelo Acho, si mati) & Anor v Secure Plantation Sdn Bhd [2017] 5 CLJ 418, FC that observed fraud, in the 290 contemplation of a civil court of justice, may be said to include all acts, omissions, and concealments which involve a breach of a legal or equitable duty, trust or confidence, justly reposed, and are harmful to another, or by which an undue or unconscientious advantage is taken of another. Fraud, in all cases, implies a wilful 295 act on the part of anyone whereby another is sought to be deprived of what he is entitled to by illegal or inequitable means.

D1, also cited s.17 of the Contracts Act 1950, where in fraud, the general rule is that mere silence or non-disclosure would not constitute fraud. However, there are circumstances where such 300 silence can constitute fraud, such as when there is a fiduciary relationship, partnership, or insurance contract.

In SCK Group Bhd & Anor v Sunny Liew Siew Pang & Anor [2010] 2 MLRA 541, CA, it was observed that the tort of conspiracy is not constituted by the conspiratorial agreement 305 alone. There must also be an unlawful object, or, if not in itself illegal, it must be brought about by unlawful means. There must be a co-existence of an agreement with an overt act causing damage to the plaintiffs.

In CIMB Bank Berhad v Veeran Ayasamy [2015] 5 MLRA 603, 310 CA, it was observed that the element of fraud or conspiracy must be proved by clear, compelling and convincing evidence. There can never be fraud or conspiracy where the intent to deceive does not exist. 315 7.4 D1 argued that P failed to establish that there was an agreement between the Ds to injure P.

7.5 P failed to provide any documentary evidence to support damages allegedly suffered because of the fraudulent acts of D1. Aggravated 320 damages are only given as additional compensation where there is an injury to the feelings of P that is caused or as a result of exceptional conduct of the Ds. The conduct must be a highhanded or malicious act or done oppressively. Mere wrongful conduct is not sufficient. There must be something exceptional in the act that was done.

7.6 D1 argued concerning the letter from the insolvency department:

DW1, in his evidence, claimed that he only became aware of the legal status of D2 on 25.07.2018 when D2’s director, Encik Amzad, showed DW1 the Insolvency Department letter dated 330 25.07.2018 addressed to the Adjudicator.

DW1 said that D1 did not write to the Insolvency Department at the material time.

An adverse inference should be drawn against P since they failed to call Noraisha Sim Binti Zulkarnaian Sim from the Insolvency 335 Department Malaysia to explain the Insolvency Department letter dated 25.07.2018.

P’s argument that the Insolvency Department’s letter referencing “MAC/2017/99/KCSB/02/F9” cannot be taken to mean that D1 had written to or liaised with the Insolvency Department. Had D1 been 340 aware of the insolvency of D2, it would have advised D2 to seek legal advice from a solicitor.

The issue that D1 had a vested interest in the outcome of the adjudication cannot stand as it was not pleaded. 345 7.7 D1 submitted:

The Adjudication proceedings commence when the Payment Claim is issued (05.02.2018) and conclude when the Adjudication Decision is pronounced (05.07.2018) by the adjudicator. There was no legal requirement for D1 to conduct a company search on 350 D2 or even P.

There are no statutory requirements under CIPAA or the AIAC rules/regulations for solvency search before commencing adjudication proceedings.

D1 does not owe a duty/duty of care to P (being the opponent) or 355 the adjudicator. D1 only owe a duty of care to D2 to fulfil its contractual obligations. In the circumstances, D1 asks that P’s claim be dismissed with costs on a full indemnity basis as a measure of justice against this frivolous and vindictive litigation. 360 THE LAW [8] Conspiracy to Defraud and the burden of proof 8.1 The Federal Court in Sinnaiyah & Sons v Damai Setia [2015] 5 MLJ, 365 held that in civil fraud, the burden of proof is only on a balance of probabilities: [49] With respect, we are inclined to agree with learned counsel for the plaintiff that the correct principle to apply is as explained in In re B (Children). It is this: that at law, there are only two standards of proof, 370 namely, beyond reasonable doubt for criminal cases, while it is on the balance of probabilities for civil cases. As such, even if fraud is the subject of a civil claim, the standard of proof is on the balance of probabilities. There is no third standard. And ‘(N)either the seriousness of the allegation or the seriousness of the consequences should make 375 any difference to the standard of proof to be applied in determining the facts’. ... [52] We, therefore, reiterate that we agree and accept the rationale in In re B (Children) that in a civil claim, even when fraud is alleged, the civil 380 standard of proof, that is, on the balance of probabilities, should apply. ... [53] Accordingly, despite the reaffirmation of the law on the issue in Yong Tim v Hoo Kok Cheong, we hold that it is no longer the law in this country. Similarly, the principles pronounced in Ang Hiok Seng and Lee 385 You Sin v Chong Ngo Khoon, despite applying the civil standard to a certain extent, are also no longer the law. Hence, the disapproval of Lau Kee Ko in Ang Hiok Seng is no longer relevant. The Tort of Conspiracy 390 8.2 In Renault SA v Inokom Corp Sdn Bhd & Anor [2010] 5 CLJ 32, the Court of Appeal set out the four ingredients for proving the tort of conspiracy to injure, as follows:

an agreement between two or more persons;

(ii) the agreement is for the purpose of injuring another;

(iii) acts done in execution of that agreement resulted in damage to the other;

(iv) damage resulted. In respect of an agreement between two or more persons, KN Segara JCA 400 said (in paragraph 33 of the Judgment): "It is clear that the very first element to be shown must be an agreement between two or more persons for the purpose of injuring Inokom and Quasar. 'Agreement' is not limited to a signed and sealed agreement but any informal agreement, including a combination of efforts of the alleged co-conspirators. 405 After that, it has to be shown or at least alleged that acts were done in execution of that agreement which resulted in damage to Inokom and Quasar. In this case, the acts done would have to be unlawful, namely, the alleged false representation made by Renault to Inokom and Quasar as to the level of Investment Inokom and Quasar will have to make for the Kangoo project”.

8.4 In Manzer Medical Sdn Bhd & Ors v Bongsor Bina Sendirian Bhd [2018] 1 LNS 897, the Court of Appeal held the evidence of conspiracy to defraud does not always consist of direct evidence. In fact, more often than not, if not most of the time, it is proven by inferences to be 415 drawn from circumstantial evidence that was adduced before the Court.

8.5 Standard of Honesty: The Privy Council held in Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 All ER 333, PC that:

It is the objective test to be adopted in determining the standard of honesty.

The ‘subjective’ element in the combined test only meant that the person’s knowledge of the transaction had to be such as to render his participation contrary to normally acceptable 425 standards of honest conduct. FINDINGS [9] I have examined all-cause papers, the evidence at the trial, and the parties' submissions in the present suits. 430 9.1 Considering my observations in the totality of the evidence and my observations in the parties' respective arguments in light of the law in various aspects of paragraph [8] above.

9.2 In addition, it is my considered view that from the totality of the evidence that P has on a balance of probabilities established its claim 435 against D1, as set out in the SoC.

9.3 I am guided by the Court of Appeal in Guan Teik Sdn Bhd v Hj Mohd Noor bin Hj Yakob & Ors [2000] 4 MLJ 433, CA that the Court must not only weigh such evidence on a balance of probabilities but also consider the surrounding circumstances and evaluate contemporary 440 documents that may tend to establish the truth or otherwise of a given fact. [10] The Federal Court ruling in Lai Fee & Anor v Wong Yu Vee & Ors [2023] MLRA 495, FC, held that fraudulent matters cannot be expected. The law does not expect people to arrange their affairs 445 because others may commit fraud. Parties engaged in negotiations to enter into a commercial commitment conducted themselves on the foundation of honesty, good faith, and fair dealing. That foundation was essential to commerce, which depended critically on trust. In Ong Leong Chiou & Anor v Keller (M) Sdn Bhd & 2 Ors [2021] 450 MLJU 393, FC, observed that in pleading fraud, it suffices if the salient facts pointing to fraud or equitable fraud have been set out in the pleading. The standard of honesty, as outlined in the Privy Council’s decision in Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 All ER 333, PC, provides further foundation 455 for this conclusion. The objective test is the standard to be adopted in determining honesty. This test ensures that the person's knowledge of the transaction is such that his participation is not contrary to normally acceptable standards of honest conduct.

10.1 Cases will be decided on the legal burden of proof being discharged. 460 In Johara Bi bt. Abdul Kadir Marican v. Lawrence Lam Kwok Fou & Anor [1981] 1 MLJ 139, FC observed that it was all a matter of proof and that until and unless the plaintiff has discharged the burden on a balance of probabilities, it does not shift to the defendant. I have duly considered the plaintiffs' arguments, which, amongst others, are in 465 paragraphs [6] above. In a nutshell, the present case revolves around a claim founded on the tort of conspiracy to defraud or injure P, where the Ds conspired to initiate false adjudication proceedings against P, resulting in P claiming to have been injured by the fraudulent act of the Ds: 470 The event timeline in paragraph 4.4, amongst others, showed that:

Approximately three months after being wound up, on 08.09.2017, D2 engaged the services of D1 as a Claims Consultant to take an adjudication proceeding CIPAA against P without the required 475 sanction from the office of the Official Receiver: HLE Engineering Sdn Bhd v HTE Letrik Bumi JV Sdn Bhd [2015] 2 MLJ 661, CA.

That fact and the fact that D2 was already in court-ordered liquidation was never disclosed to the adjudicator and P. It would have altered the course of the adjudication proceeding 480 had the Ds elected to be honest and forthcoming about it. It was only discovered after the conclusion of the adjudication proceeding when the Ds attempted to enforce the adjudication order.

The Ds purposely withholding the release of the adjudication 485 decision until the winding-up order against D2 had been successfully revoked by the High Court. I cannot accept D1 feigning ignorance over this. The Ds deliberately waited for the termination of the winding-up order on 28.06.2019 to pay the total amount of the advance security deposit on 24.09.2019 so that 490 AIAC could release the adjudication decision.

As seen in paragraph [7] above, D1's bare and suggestive evidence at the trial does not support his denial. The Ds deliberately concealed this material fact of the wound-up status of D2 to P and the adjudicator in pursuing the adjudication 495 proceeding without legal sanction or approval from the insolvency department.

The Federal Court in Letchumanan Chettiar Letchumanan Chettiar Alagappan @ L Allagappan (sebagai pelaksana wasiat/executor kepada SL Alameloo Achi alias Sona Lena 500 Alamelo Acho, si mati) & Anor v Secure Plantation Sdn Bhd [2017] 5 CLJ 418, FC ruled that fraudulent conduct may be said to include all acts, omissions, and concealments which involve a breach of a legal or equitable duty, trust or confidence, are harmful to another, or by which an undue advantage is taken of another. It 505 is trite law that parties must be truthful and forthcoming with the material facts and circumstances to facilitate a just decision. As a professional, D1 has a duty to be honest and responsible in matters of law and fact. In the circumstances, the Ds had conspired by acting in concert to defraud and injure P vis-à-vis the 510 adjudication proceedings.

I do not doubt that, from the facts, the agreed fees (RM 545,189.81) between the Ds are grounded on a contingency or success basis. In the circumstances, D1 had a vested interest in the outcome of the adjudication proceedings. It would suggest 515 that D1 had financed the CIPAA adjudication proceedings after only receiving RM50.00 for the company search and nothing else after that. An agreement that is champertous in nature would not hold in Malaysia.

Champerty Agreement is an agreement between two parties 520 wherein one party is the party to a legal suit (litigant) and the other party has no connection to the legal suit (third party), and the third-party finances/assists the legal suit in view of sharing/obtaining the litigation proceeds with the litigant. It promotes conflict of interests, and the paramount consideration is the money, not in the client's 525 interest. In Amal Bakti Sdn Bhd & Ors v Milan Auto (M) Sdn Bhd & Ors [2009] 6 CLJ 153, Hamid Sultan held that it is trite that courts will not entertain a champerty agreement or any similar arrangements on grounds of public policy and held as follows: “[11] The 2nd defendant complains that the 1st plaintiff's right by way of deed 530 of assignment is void as there is no assignable cause of action from KLCS to the 1st plaintiff and has given number of grounds in the submission which I tend to agree with. It will be sufficient if I deal with the issue relating to champerty agreement. In this case the 1st plaintiff had paid RM1 ringgit only with a view of obtaining a larger sum through litigation taking into 535 consideration the 1st plaintiff is not the original purchaser and has suffered no loss whatsoever. It is trite that court will not entertain champerty agreement or its like on public policy grounds etc. The learned authors of Chitty on Contracts, 13th edn, vol 1, p 1120 make the following observations:- Champerty has been defined as "an aggravated form of maintenance: 540 and occurs when the person maintaining another stipulates for a share of the proceeds of the action or suit or other contentious proceedings where property is in dispute. For champerty there must not only be interference on the suit but there must be the added factor of a division of the spoils. There is an obvious relationship between maintenance and champerty, 545 you cannot have the latter without the former but "there can still be champerty even if the maintenance is not unlawful". In Giles v. Thompson, Lord Mustill was of the opinion that champerty as it related to an agreement by a solicitor to accept payment of his fees measured as a proportion of the damages recovered by his client survived largely as a 550 rule of professional conduct. While there undoubtedly have been significant changes in the rules relating to fee arrangements between solicitors and their clients which now permit arrangements which previously would have been champertous, it is suggested that it would be going too far to treat the rule as being merely one of professional conduct. 555 It is no justification for a champertous agreement that the contracting parties are related by blood. The question arises whether the court can enjoin would suggest not. Where the plaintiff relies on a champertous assignment to sue, the action would be enjoined not, however, because of the champerty as such but because it is not possible to assign a cause 560 of action. Our Contracts Act is pari materia to the Indian Contracts Act and the Privy Council has held that an agreement champertous according to English law was not necessarily void in India, it must be against public policy to render it 565 void (see Bhagwat Singh v. Debi Dayal Sahu [1908] 35 IA 48). The policy is regarded as part of the law of "justice equity and good conscience". In Goculdas v. Lakshimidas [1879] 3 Borm. 42, it was held in a suit brought by the assignee to have the compromise declared void on the ground of fraud that suit was not maintainable, as the assignment was effected with a view of 570 litigation, and was therefore, champertous in nature.”

10.2 The Federal Court in Johara Bi bt. Abdul Kadir Marican v. Lawrence Lam Kwok Fou & Anor [1981] 1 MLJ 139, FC ruled that it was all a matter of proof and that until and unless the plaintiff has discharged the 575 onus on her to prove her case on a balance of probabilities, the burden did not shift to the defendant. I hold that the plaintiff has discharged its burden of proof on the balance of probabilities. [11] In the circumstances, the burden now shifts to D1 to establish its 580 defence and negate P's claim. D1’s position in canvassing for its defence in paragraph [7] above is untenable. I believe it cannot exonerate them from the P’s claim. I find no merit in the defence and remain unpersuaded by D1’s bare assertions, which, amongst others, are:

D1 never intentionally concealed the wound-up status of D2 to any party. The facts do not support the bare assertion.

D1 is not obligated to disclose the status of D2 to any part in the adjudication proceedings.

D1 acknowledged that it represented D2 in the CIPAA 590 proceedings but did not know of any sanction letter from the Insolvency Office or a stay on the winding-up order against D2.

D1 maintains that it only acted as a claim consultant appointed to represent D2 in the CIPAA proceeding, whose duty ended when the CIPAA decision was delivered. 595 [12] Therefore, grounded on the above authorities, in answering the three issues posed by the parties:

Does D1 know D2 was wound up during the adjudication proceeding? 600 Affirmative.

Does D1, as the claim consultant, have a duty to inform the winding up status of D2 to the Plaintiff and the adjudicator? Affirmative.

Does P have a valid cause of action (conspiracy to defraud) 605 against D1? Affirmative CONCLUSION [13] In light of the foregoing and after closely scrutinising and examining all 610 evidence adduced before me, on a balance of probabilities, it is my considered judgment that P has succeeded in proving its claim and, accordingly I allowed P’s claim, as follows:

Prayer 30(i)(a) is not allowed,

Prayer 30(i)(b) (a.-b.) are allowed. Damages to be assessed.

Prayer 30(ii) & 30(iii), costs of RM25K against D1, to be paid within 30 days from today. 620 Dated 14.10.2024 625 (HAYATUL AKMAL ABDUL AZIZ) JUDGE HIGH COURT OF MALAYA WILAYAH PERSEKUTUAN KUALA LUMPUR 630 Counsels: Chew Jia Ying 635 Messrs Rajesh, Chew & Ho Counsel for the Plaintiff K Sheela T Vinayaka Das together with Cik Prebina Levan Messrs Sheela Vinayaka & Co 640 Counsels for Defendant 1