Newlake Development Sdn Bhd v Zenith Delight Sdn Bhd (D1) (W-02(NCvC)(W)-184-01/2021)

ZENITH DELIGHT SDN BHD

KUMAR JASPAL QUAH & AISHAH

HOW CHEE HONG (STEVEN)

THIAN MUNG CHING (NO. K/P: 680408-10-5597) … RESPONDENTS [Dalam Mahkamah Tinggi Malaya Di Kuala Lumpur (Bahagian Sivil) Guaman Sivil No. 22NCvC-279-06/2014 Antara 04/03/2026 11:30:16 W-02(NCvC)(W)-184-01/2021 Kand. 172 S/N dYdByTf/mkKtjJWvuy6EPg Newlake Development Sdn Bhd … Plaintif (No. Syarikat: 262536-M)

Zenith Delight Sdn Bhd (No. Syarikat: 393185-D)

Kumar Jaspal Quah & Aishah (Sebuah Firma)

How Chee Hong (Steven) (No. K/P: 680728-10-6345)

Thian Mung Ching (No. K/P: 680408-10-5597) … Defendan-defendan Yang Diputuskan oleh Pesuruhjaya Kehakiman Mahkamah Tinggi Yang Arif Tuan Hakim Quay Chew Soon di Mahkamah Tinggi Kuala Lumpur pada 15hb Januari 2021] CORAM: AZIZAH HAJI NAWAWI, CJSS AZIZUL AZMI ADNAN, JCA MOHD FIRUZ JAFFRIL, JCA S/N dYdByTf/mkKtjJWvuy6EPg Table of Contents Introduction .......................................................................................... 4 Background Facts………...................................................................... 4 Findings of the Learned Judicial Commissioner (JC)........................... 7 • Issues……………………………………………............................. 7 • No Misrepresentation by the Defendants ................................... 8 • Contemporaneous Documents and Conduct ............................. 8 • Plaintiff's Witness’s Evidence .................................................... 9 • No Stakeholder Duty .................................................................. 9 • Settlement Agreement ............................................................... 11 Whether the Land could never be acquired for the Plaintiff's purposes…............................................................................ 12 No Negligence, No Duty of Care …………………………..................... 13 Alleged dishonest assistance by 4th Defendant................................... 14 Dealings with the Deposit………………................................................ 14 Summary of the Appellant’s Submission ….......................................... 15 Summary of the 1st & 4th Respondent’ Submission ……………………. 17 Summary of the 2nd & 3rd Respondent’ Submission …………………… 18 Issues For Determination .…................................................................ 19 The law ………….……………..…........................................................ 20 Issue: total failure of consideration by the Respondent........................ 25 Findings on Issue of Fraud and Fraudulent Misrepresentation …........ 29 Issue of whether D2 & D3 owed a duty of care and whether they were negligent ……………………………………………………….. 33 Findings on the Issue of Constructive Trust ........................................ 33 Findings on conspiracy to injure and defraud and dishonest assistance against the 1st and 4th Respondent ………….……….….…. 34 Conclusion …………………….............................................................. 35 S/N dYdByTf/mkKtjJWvuy6EPg GROUNDS OF JUDGMENT

The dispute between parties in this appeal concerns the sale & purchase of a land which never took place (for purposes of convenience the parties will be referred to in their original capacity at the court below). At the end of the day, despite paying RM9 million to a company which was said to have finalized the sale & purchase of the subject land from the actual land owners, the prospective purchaser i.e. the Plaintiff, walked away with nothing but losses. Eventually, this led to the Plaintiff filing a suit against the Defendants for multiple causes of action including fraud, fraudulent misrepresentation, constructive trust or breach of trust, breach of professional duty of care and implied retainer.

At the end of the trial, the learned JC dismissed the Plaintiff’s claims against all the Defendants. This led to the appeal before us.

Having reviewed the appeal record and submission of parties, we find that the learned JC did err in dismissing the Plaintiff’s claim. In view thereof, we allow this appeal and set aside the decision of the High Court premised on the reasons set out below.

The Plaintiff, a property development company wanted to acquire a piece of land held under Geran 4503, Lot 3910, Mukim Kuala S/N dYdByTf/mkKtjJWvuy6EPg Lumpur measuring 60,321.48 meters (‘the Land’) located in the vicinity of Old Klang Road.

It is an undisputed fact that the Plaintiff came to know about the Land from D3 (the managing partner of D2, a firm of advocates & solicitors). Initially, the Plaintiff’s proposed acquisition was handled by D2 and D3. Based on discussions between the Plaintiff’s Chairman (PW2) and D3, the latter advised the Plaintiff to purchase the Land through a company named Peak Ville Development Sdn Bhd (“Peak Ville”). Payments in the amount of approximately RM7.7 million were made by the Plaintiff to D2 towards the account of Peak Ville between 27.12.2010 and 8.7.2011.

This plan was however aborted, whereupon the Plaintiff took over as the purchaser. Peak Ville then notified D2 via letter that all payments made by Peak Ville as earnest deposit towards the purchase of the Land will be regarded as payments made by the Plaintiff.

Despite payment being made for more than a year, no sale and purchase agreement (“SPA”) was executed between the Plaintiff and D1 until 22.12.2011. Just before the execution of the SPA, D3 informed PW2 that both D2 and himself can no longer act for the Plaintiff due to conflict of interest. It was then proposed that Messrs Arizal Jailani & Co (“AJC”) become the solicitors for the Plaintiff.

Despite the lapse of several months, the transaction was not concluded. At a meeting on 19.6.2012, PW2 informed D3 that the Plaintiff does not wish to proceed with the Transaction as the S/N dYdByTf/mkKtjJWvuy6EPg issues with the Land Owners have yet to be settled. In an email dated 20.6.2012 to D3, it was said that PW2 has "suffered enough opportunity costs" as the Deposit has been tied up.

By way of a letter dated 23.7.2013, a settlement was entered into between the Plaintiff and D1 ("Settlement Agreement"). Pursuant to the Settlement Agreement, the Plaintiff requested D1 to refund the Deposit within 1 month, failing which the Plaintiff will be allowed to withdraw its earlier termination of the SPA and assign its rights under the SPA to an unrelated third party. ln a letter dated 23.8.2013, D1 replied that it will not refund the Deposit and therefore the SPA is to be treated as revived. D1 demanded payment of a sum of RM6,093,252 within 7 days (pursuant to clause 2.1(i) of the SPA).

In a letter dated 24.8.2013 to D2, AJC confirmed that the Plaintiff's earlier termination of the SPA is now withdrawn and that the Plaintiff will assign its rights and interests in the SPA to an unrelated third party nominated by it. The nomination of said third party was subsequently confirmed by the Plaintiff vide a letter dated 11.9.2013 to D1. The nominated third party was a company named Utusan Mewah Sdn Bhd ("New Purchaser"). In an email dated 26.9.2013 to 03, PW4 said that D1's demand of RM6,093,252 must be negotiated with the New Purchaser.

As the Plaintiff failed to pay the sum of RM6,093,252.00 (in accordance with clause 2.1(i) of the SPA), D1 terminated the SPA vide a notice of termination dated 21.10.2013 to the Plaintiff. S/N dYdByTf/mkKtjJWvuy6EPg

Dissatisfied with the outcome of the transaction, the Plaintiff commenced legal proceedings against the Defendants for the following causes of action: a. Against the D1 for conspiracy to defraud and injure the Plaintiff by reasons of the unlawful means as pleaded in paragraphs 1 to 94 of the Statement of the Claim; b. Against D2 and D3 for breach of stakeholder duty of the monies paid towards the purchase of the Land, breach of duty of care and/or negligence; and c. Against the D4 is conspiracy to defraud and injure the Appellant and so the D4 is liable to account to the Plaintiff a constructive trustee on the ground of dishonest assistance in the breach of fiduciary duty by the D2 and D3.

The learned JC dismissed the Plaintiff’s claim against the Defendants with costs, resulting into the present appeal before us.

The learned JC’s findings on the issues at trial are reproduced in the following paragraphs: Issues: • whether there was any misrepresentation by the Defendants that the Land Owners have entered into a Back-to-back SPA with D1; and S/N dYdByTf/mkKtjJWvuy6EPg • whether D2 was holding the Deposit as stakeholder until D1 had entered into a Back-to-back SPA with the Land Owners.

The learned JC was of the view that there was no misrepresentation by the Defendants as the Plaintiff knew that D1 had not finalised the acquisition of the Land. Recital (i) of the SPA executed by the Plaintiff clearly stated that D1 is still in the midst of negotiating and finalising the purchase of the Land from the Land Owners. Moreover, numerous contemporaneous documents and the Plaintiff's witness’s own viva voce evidence also corroborated the same.

The learned JC found the following evidences showed that the Plaintiff knew that the SPA would not be a back-to-back SPA: a. The SPA in recital (i) indicate that D1 is in the middle of negotiation. b. Email dated 11.1.2012 to D3, where D3 informed PW3 that D1 had not entered into a back-to-back SPA with the Land Owners. c. The learned JC was of the view that the Plaintiff’s allegation for fraudulent misrepresentation by D1 are unfounded since the Plaintiff after discovering the facts above, proceeded S/N dYdByTf/mkKtjJWvuy6EPg with paying deposit amounting to RM758,182.75 on 4.1.2012 and entered into Supplementary Agreement on 13.3.2012.

The learned JC found that the Plaintiff's witness’s own viva voce evidence admitted that they understood Recital (i) of the SPA and that D1's negotiations with the Land Owners were still ongoing and that the Back­ to-back SPA had yet to be signed.

Based on the testimony of PW2 and PW3, the learned JC was of the view that the Plaintiff chose to enter into the SPA on its own free will because of the value-add offered by D1. The Plaintiff had a choice to purchase the Land from the Land Owners or D1. There was no fraud perpetrated on the Plaintiff when it made a commercial decision to sign the SPA. As business people, the Plaintiff was possibly motivated by the fact that the transaction was a good deal. The contemporaneous evidence, oral testimony as well as the Plaintiff's motive all point towards the fact that they knew that D1 had not acquired the Land from the Land Owner. Therefore, there was no fraudulent misrepresentation by the Defendants as alleged by the Plaintiff.

The Plaintiff alleged that D2 as a stakeholder shall not release the Deposit until a back-to-back SPA was signed between D1 and the Land Owners. S/N dYdByTf/mkKtjJWvuy6EPg

On this issue, the learned JC was of the view that there was no breach of stakeholder duty as the Deposit was never paid to D2 as stakeholder. The evidence from the Plaintiff’s witness’s testimony was contrary to the contemporaneous documents. The contemporaneous documents being the SPA, the Plaintiff's own letters of payments and internal emails indicated that they had agreed to the Deposit being released to D1 as and when it was paid to D2.

Clause 1 of the SPA corroborates D3’s version of events that there was no duty on D2 to hold the Deposit as stakeholder pending the signing of a Back-to-back SPA with the Land Owners.

The Plaintiff's own letters conveying payment of the Deposits (there were 7 payment letters in total) do not mention at all that the Deposit was paid to D2 as stakeholder.

The Plaintiff's internal memo (prepared by the Sales Manager) attached in an email dated 28.1.2011 from the Sales Manager to D3 showed that as early as that time, PW2 knew that the Deposits were to be (and indeed were being) paid over to D1.

A Letter of Offer dated 22.6.2011 from Peak Ville ("Peak Ville Offer Letter'') stated that the Deposit (or portion thereof which was paid up to that time) was a non-refundable deposit paid to D2 and to be paid to D1.

The Settlement Agreement showed that there was an express admission by the Plaintiff that it had paid the Deposit to D1. S/N dYdByTf/mkKtjJWvuy6EPg

The Settlement Agreement is valid and binding - this was never an issue in the trial. The circumstances leading to, and the Plaintiff's conduct when entering into, the Settlement Agreement seems inconsistent with the Plaintiff's allegations of fraud. It is to be noted that the Settlement Agreement was entered into after the SPA had been terminated.

The learned JC noted that PW2 & PW3 are seasoned developers with vast knowledge and experience in property development. The learned JC found that when the Plaintiff entered the Supplemental Agreement neither the Plaintiff nor its solicitors AJC proposed to change the terms of the Supplemental Agreement which was signed on 13.3.2012, more than 3 months after the discovery of the alleged deceit. In fact, in its termination letter dated 19.7.2012, the Plaintiff did not raise fraudulent misrepresentation but instead said that the SPA was terminated due to the fact that 'time is of the essence'. In a letter dated 24.10.2012, D2 (on behalf of D1) had disputed the refund of the Deposit on the ground that the SPA was unlawfully terminated unilaterally by the Plaintiff.

The learned JC was of the view that the Settlement Agreement in effect subsumed and superseded all previous disputes between the Plaintiff and D1. The Plaintiff's pleaded case did not include any averment warranting the setting aside of the Settlement Agreement. There was no relief prayed to set aside the Settlement Agreement. As such, the Plaintiff cannot now revive its complaint when they have agreed to settle the matter. S/N dYdByTf/mkKtjJWvuy6EPg

The learned JC was of the view that the reason for the Plaintiff's termination of the SPA was not due to any fraud perpetrated by the Defendants but it felt the Deposit was tied up in the transaction for too long and it wanted to utilise the Deposit for alternative projects. This is evident from emails between PW4 to D3, the Plaintiff to D2, AJC to D2 (an email dated 20.6.2012, a letter dated 19.7.2012, a letter dated 27.9.2012, a letter dated 22.10.2012, and a letter dated 29.1.2013.

The learned JC was of the view that the fact that the Plaintiff opted in the Supplementary Agreement that they had the right to assign all their rights and interests in the SPA to the New Purchaser. The Plaintiff had treated the SPA as a valid contract as it could be assigned to a third party. The Plaintiff is therefore estopped from claiming that there was fraud or fraudulent misrepresentation which can vitiate the SPA. Whether the Land could never be acquired for the Plaintiff's purposes

The Plaintiff's alleged that since the Land "could not or could never by acquired for their purposes", D3 had practiced deceit upon the Plaintiff for the sole purpose of extracting the Deposit when D3 knew all along that the Transaction was a defunct exercise.

The learned JC found that the Plaintiff has failed to prove the allegation for the following reasons: S/N dYdByTf/mkKtjJWvuy6EPg a. The Plaintiff failed to call the Land Owners to testify as regards to willingness to sell the Land. The Plaintiff only used the testimonies in the Criminal Trial to show that the Land Owners refused to sell the Land, which rejected by the learned JC because it was hearsay, obtained for the purpose to discredit the witnesses and was not subjected to cross-examination. b. D1 had sent a letter dated 10.9.2012 to Amanah Raya (owner of ½ share of the Land at the material time) offering to purchase the Land. By way of an email dated 18.9.2012, D3 sought a meeting with Amanah Raya to discuss the aforesaid offer. There is no contrary evidence to show that Amanah Raya was not interested in negotiations. c. Owners of the land sent email and notes that indicated that their interest to sell the land. No Negligence, No Duty of Care

The Plaintiff alleged that D2 and D3 owed duty of care to the Plaintiff.

The learned JC disagreed and was of the view that there was no duty of care in the part of D2 and D3 because in the SPA, AJC was stated as the solicitor for the Plaintiff. In addition, the evidence adduced during the trial shows that the Plaintiff was duly advised by its solicitors AJC prior to the execution of the SPA, but did not follow the advice proffered by them. S/N dYdByTf/mkKtjJWvuy6EPg Alleged dishonest assistance by 4th Defendant

The Plaintiff alleged that D4 dishonestly assisted in breach of trust or fiduciary duty.

On this allegation, the learned JC found that since D2 and D3 were not holding the Deposit as stakeholder, there was no relationship of trustee-beneficiary between D2 and D3 with the Plaintiff. As there was no trust or fiduciary relationship exist between the Plaintiff with D2 and D3, hence, there could not be any breach of trust or fiduciary duty. The learned JC found that no evidence that D4 had received the Deposit or any part of it therefore, the dishonest assistance, which is accessory liability, of D4 does not arise at all.

On this issue, the Plaintiff’s application to admit D2’s office account bank statements and client’s account bank statements from December 2010 to February 2012 was allowed at the High Court. The evidence showed that the Deposit was paid to D1. The learned JC opined that the Plaintiff must prove that the Deposit was paid to D2 as stakeholder and D2’s duty was stated in the SPA.

The evidence further showed that the Deposit was paid to various third parties between the period of January 2011 and November 2012 in accordance with letter dated 23.12.2010 from D1 to D2. These payments included to Alex Lai of Messrs. Lai & Partners and D2 for professional fees. D3 and D4 could not recall the third S/N dYdByTf/mkKtjJWvuy6EPg parties and no documentation was produced to substantiate the payments.

The learned JC disagreed with the Plaintiff’s argument that there should be adverse inference against D3 for failure to produce the evidence of the third parties. The learned JC was of the view that manner which the deposit utilised or released was not part of the pleading therefore, such argument/ complaint should not be considered as parties were bound by their pleading.

The gist of the Appellant’s plaint on the errors committed by the learned JC is summarized as follows: i. Wrong application of the parole evidence rule; ii. The learned JC was wrong in concluding that the Newlake was aware of the fraud practiced upon them (oxymoron). The Settlement Agreement was part of the fraud and not a settlement of the fraud practiced. iii. The learned JC erred in confining the Plaintiff’s case to 1 single act of misrepresentation i.e. the fact that back to back agreements have been signed between the Vendors and D1, whereas the Plaintiff’s case was premised on a series of misrepresentation (see paragraph 27 of Enc 107); Para xxi at page 21 on the fact that the monies paid by Newlake will bear % is extremely important; S/N dYdByTf/mkKtjJWvuy6EPg iv. The was failure in appreciating the contemporaneous documents; v. The was failure in evaluating the oral testimony of Zenith’s witnesses (in so far as the transaction with the Vendor’s are concerned). In other words, there was no finalized agreement. Non-disclosure was apparent; vi. failure to appreciate the terms of the SPA. Under Clause 9.1, in the event of non-registration the monies must be refunded, Warranty that Zenith is fully authorize to sell the Property; vii. blatant failure to look at the money trail. Monies were dissipated from the moment in went into D2’s account; viii. Wrong approach in dealing with the issue of the Settlement Agreement despite its purpose being explained by Thian of Zenith (see Enc 35 at page 34). The SA was in fact a sham orchestrated by D3. ix. Failure to call the land owners. Why should the Plaintiff be placed with the burden to call them. After all, at all material times, the Respondents were the party representing that the transaction between the Vendors & D1 were being finalized; x. The learned JC erred in failing to consider the relationship of trust and confidence between Newlake, D3 and D2. At the time the SPA was executed. Newlake had paid a sum of S/N dYdByTf/mkKtjJWvuy6EPg RM8.2 million to D2 and D3. Hence, there was indeed an implied retainer; xi. The purpose of the payment was specifically mention in Newlake’s e-mail dated 15.2.2012 (see Enc. 17 pg 2466). D3 at all material times never dispelled Newlake’s notion that the monies were still D3’s client’s account (see para 97 of Enc 107); xii. The JC erred in dealing with the issue of the non-refund of the RM9 million paid to ‘Zenith’; and xiii. There was total failure of consideration (not pleaded in the SOC or raised in the Memorandum of Appeal) Summary of the 1st & 4th Respondent’ Submission

It is the 1st and Respondent’s case that: i. the learned JC was correct in his finding that there was no misrepresentation, tort of deceit, conspiracy to defraud or to injure the Appellant. The Plaintiff had already known that there was no back to back agreement 5 days after the execution of the SPA. Yet, they continue to pay a further sum of RM800k. The Plaintiff also knew that there were a number of problems related to the land i.e. caveats, squatters etc. Further, the agreement was not terminated due to fraud but due to Plaintiff’s claiming that they have suffered opportunity lost. Even the NOD dated 29 Jan 2013 does not mention fraud. S/N dYdByTf/mkKtjJWvuy6EPg ii. There was no evidence that the landowners did not agree to sell the Land. iii. There was valid and binding Settlement Agreement; iv. The evidence given at the criminal trial cannot be used in the civil proceedings before the JC. The Plaintiff had also failed to call the landowners to testify in Court. Hence, the Plaintiff had failed to discharge the onus of proof. v. D1 and D4 did not owe a fiduciary duty to the Plaintiff. Therefore, the tort of dishonest assistance does not come into play. vi. There was no conspiracy to defraud and to injure the Plaintiff.

In addition, the lack of particulars on conspiracy to injure and defraud and dishonest assistance against the 1st and 4th Respondent in relation breach of trust and fiduciary duty renders the Statement of Claim flawed and defective. Summary of the 2nd & 3rd Respondent’ Submission

In essence, the 2nd and 3rd Respondents contended that the learned JC’s key findings contained no appealable errors. These key finding are listed below: i. There was no misrepresentation that D1 had entered into a back to back agreement with the Vendors. This is premised S/N dYdByTf/mkKtjJWvuy6EPg on the fact that this fact was clearly stated in the SPA and the Plaintiff’s own witnesses’ (both PW2 and PW3) admission that they knew of this fact. ii. The monies paid to D2 were not as stakeholder sum. iii. The Settlement Agreement was entered into after the Plaintiff had discovered the fraud. That puts an end to the allegation of fraud. As the Plaintiff did not apply to have the Settlement Agreement set aside it is still subsisting, valid and binding. iv. There was no professional negligence committed by both D2 and D3. In view of the fact that the Plaintiff was represented by AJC in the transaction, the JC was correct to find that there was no duty of care between them and the Plaintiff. The Plaintiff had no satisfied the three requirements to prove a case of professional negligence namely: foreseeability, proximity and public policy.

In summary, there are 5 issues raised by the Appellant: i. Whether there was a total failure of consideration by the Respondent which disentitles them to forfeit the RM9 million plus paid by the Plaintiff to D1 via D2? ii. Whether the Defendants have committed fraud and/or fraudulent misrepresentation on the Plaintiff? S/N dYdByTf/mkKtjJWvuy6EPg iii. Whether the 2nd and 3rd respondents owed a professional duty of care to the Appellant? iv. Whether R2 and R3 owed a fiduciary relationship to the Appellant and had committed breach of trust? v. Whether there exists implied retainer on R2 and R3? OUR DECISION The law on Fraud

Fraud is set out in S.17 of the Contracts Act 1950 (Tab 5 of PBA1) which states as follows:- “17. “Fraud” includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:

the suggestion, as to a fact, of that which is not true by one who does not believe it to be true;

the active concealment of a fact by one having knowledge or belief of the fact;

a promise made without any intention of performing it;

any other act fitted to deceive; and

any such act or omission as the law specially declares to be fraudulent.” S/N dYdByTf/mkKtjJWvuy6EPg

In so far as, the standard of proof for fraud in civil cases is concerned, the Federal Court in Sinnaiyah & Sons Sdn Bhd v. Damai Setia Sdn Bhd [2015] 5 MLJ 1 FC held that it is on a balance of probabilities.

With reference to pleaded Appellant’s above cause of action, misrepresentation is set out in S.18 of the Contracts Act 1950:- “18. “Misrepresentation” includes-

the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

any breach of duty which, without an intent to deceive, gives an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him; and

causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.”

The Court of Appeal decision case of Sim Thong Realty Sdn Bhd V Teh Kim Dar @ Tee Kim [2003] 3 MLJ 460 provides guidance with regard to the general rule that the burden is on a representee to show that the misrepresentation induced him to enter into the contract as follows: S/N dYdByTf/mkKtjJWvuy6EPg “It is clear from s 19(1) that it reproduces the English common law whereby a misrepresentation, whether innocent or fraudulent, would entitle the innocent party to rescind a contract. The Explanation to s 19(1) enacts the common law requirement that the misrepresentation must induce the contract. Now we think that we should say a word about this point. It has to do with the onus of proof. As a general rule, the burden is on a representee to show that the misrepresentation induced him to enter into the contract (see Kuppuswami Chettiar v Arumugam Chettiar AIR 1967 SC 1395. But this general rule should not be taken too far. … Now, it is trite that the expression ‘misrepresentation’ is merely descriptive of a false pre-contractual statement that induces a contract or other transaction. But it does not reflect the state of mind of the representor at the relevant time. The state of mind of the representor at the time he made the representation to the representee varies according to the circumstances of each case. It may be fraudulent. It may be negligent. Or it may be entirely innocent, that is to say, the product of a mind that is free of deceit and inadvertence (see Abdul Razak bin Datuk Abu Samah v Shah Alam Properties Sdn Bhd). Put another way, a misrepresentation is innocent ‘where the representor believes his assertion to be true and consequently has no intention of deceiving the representee.’ (Chesire & Fifoot, Law of Contract (6th Ed)). It is the particular state of mind of the representor that determines the nature of the remedy available to the representee. So, if the misrepresentation is S/N dYdByTf/mkKtjJWvuy6EPg made fraudulently, then the representee is entitled to rescission and all damages directly flowing from the fraudulent inducement. The relevant law governing the measure of damages for fraudulent misrepresentation is set out in the judgment of Lord Denning MR in Doyle v Olby (Ironmongers) Ltd [1969] 2 All ER 119.”

The subsequent Court of Appeal decision in Victor Cham & Anor v. Loh Bee Tuan [2006] 5 MLJ 359 the Court of Appeal at p.366 explained the elements of fraudulent misrepresentations as follows:- “[13] Fraudulent misrepresentation comes under the tort of deceit. To succeed in his claim, the respondent in this case needs to establish that he had acted in reliance on the fraudulent misrepresentation and that the representation was false. He further needs to establish that the first appellant had made those statements knowingly or recklessly without caring whether it was true or false. And that as a result of reliance on such representations, the respondent had suffered damage.”

To illustrate further, in Top Glove Corp Bhd & Anor v. Low Chin Guan & Ors [2018] 1 LNS 1652 (HC) at para [71], Wong Chee Lin JC (later HCJ) summarizes the five (5) elements of fraudulent misrepresentation:- S/N dYdByTf/mkKtjJWvuy6EPg i. There must be a representation of fact made by words or by conduct and mere silence is not enough. ii. The representation must be made with knowledge that it is false i.e. it must be willfully false or at least made in the absence of any genuine belief that it is true or recklessly i.e. without caring whether his representation is true or false. iii. The representation must be made with the intention that it should be acted upon by the claimant, or by a class of persons which will include the claimant, in the manner which resulted in damage to him. iv. The claimant acted upon the false statements. v. The claimant has sustained damage by so doing. The law on Constructive Trust

We next set out in summary the principles applicable thereto. Constructive trust arises by operation of law irrespective whereby the trustee acquires property for the benefit of the beneficiary, and making it unconscionable for him to assert his own beneficial interest in the property there was a total failure of consideration by the Respondent Kayveas v See Hong Chen & Sons Sdn Bhd & Ors [2014] 4 MLJ 64 and Toh Fong Cheng & Ors v Pang Choon Kiat & Ors [2020] CLJU 2123 para 68). S/N dYdByTf/mkKtjJWvuy6EPg Issue: total failure of consideration by the Respondent

We decline to deliberate on this issue as the same was not pleaded in the Plaintiff’s Statement of Claim. Similarly, this issue was also not raised in the Appellant’s Memorandum of Appeal.

The law on pleadings and the requirement to state a party’s ground of appeal in the Memorandum of Appeal is trite. The following cases deal with both these issues at length.

In Pengusaha, Tempat Tahanan Perlindungan Kamunting, Taiping & Ors v Badrul Zaman bin PS Md Zakariah [2018] 12 MLJ 49, the Federal Court held as follows: “[29] While it is true that the Court of Appeal can consider a point not expressly taken in the memorandum of appeal or argued in the court below based on the broad wording of s 69(4) of the Courts of Judicature Act 1964 and r 18(2) of the Rules of the Court of Appeal 1994, this is subject to the overriding discretion of this court to do justice. Where the justice of the case requires a departure from the rule that parties should be bound by the grounds in the Memorandum of Appeal, the court may allow a new point to be argued. See Luggage Distributors (M) Sdn Bhd (‘The factors for and against the admission of the new point must be weighed on a balance to see where the justice of the case lie’). See also Cheow Chew Khoon v Abdul Johari bin Abdul Rahman [1995] 1 MLJ 457; Mohd Azam Shuja & Ors v United S/N dYdByTf/mkKtjJWvuy6EPg Malayan Banking Bhd [1995] 2 MLJ 851 (‘The question whether effect should be given to a point raised for the first time … is one of discretion and the court can consider it in the interests of justice’).”

Similarly, in the case of Anas Construction Sdn Bhd V. JKP Sdn Bhd & Another Appeal [2024] 2 CLJ 665, the Federal Court held as follows: “[44] The concept of natural justice is well-settled that parties must be given the right to be heard before a decision is made. A judge should not decide on an issue which was not pleaded, and it is not the duty of the court to create a cause of action under the guise of doing justice. This court in Pacific Forest Industries Sdn Bhd & Anor v. Lin Wen-Chih & Anor [2009] 6 CLJ 430 reiterated this principle as follows: [16] The court also decides a case after considering the evidence adduced by each party and documents produced by them. Neither party should be taken by surprise. Even in respect of law, whether it is the court at first instance or the appellate court, judges rely heavily on the submissions put forward by the respective counsel. A good counsel is one who produces authorities to support the statement of law he is relying upon. The authorities can be in the form of reported judgments, textbooks, or even published law articles. In fact, according to etiquette, he is supposed to even bring to the attention of the S/N dYdByTf/mkKtjJWvuy6EPg court authorities which favour his opponent's case. Of course, in such an instance, he would then distinguish the facts of the case before the court to the case in the authority. It is therefore dangerous and totally unadvisable, for the court, on its own accord, to consider any point without reliance on any pleadings or submission by counsel appearing before them. If the learned judge thinks there are any points which are relevant to the case before him and which was not raised by either party, it is his duty to highlight that to the parties before him. He must then give an opportunity for both parties to further submit on that particular point. There have been instances where a judge may already form some opinion on certain issues, legal or otherwise, but after hearing submissions and views expressed by a party, he may conclude differently. [17] The effect of a judge making a decision on an issue not based on the pleadings and without hearing the parties on that particular issue would be in breach of the latin maxim audi alteram partem, which literally means, to hear the other side, a basic principle of natural justice.” (emphasis added) [45] The same principle was acknowledged by this court in Dato' Tan Chin Woh v. Dato' Yalumallai V Muthusamy [2016] 8 CLJ 293 and further said this: S/N dYdByTf/mkKtjJWvuy6EPg “[21] It is thus clear that whenever the court proposes to consider a fresh issue which the court considers pertinent to the case before it, it should give the parties the right to make submissions on the proposed issue before arriving at its finding. This is fundamental in the adversarial system that we practice in this country.” (emphasis added) [46] Further, on the concept of natural justice, Tengku Maimun CJ in Maria Chin Abdullah v. Ketua Pengarah Imigresen & Anor [2021] 2 CLJ 579; [2021] 1 MLJ 750 at p. 746 (CLJ); p. 825 (MLJ) said this: “[188] In simpler terms, natural justice which encapsulates the twin concepts of nemo judex in causa sua (the rule against bias) and audi alteram partem (the right to be heard), are integral features of a written constitution which protects fundamental liberties. Both rights are equally important but for the purpose of this judgment, particular emphasis is given to the right to be heard. On that right, Bhagwati J observed in Maneka Gandhi that 'the soul of natural justice is fair-play in action and that is why it has received the widest recognition throughout the democratic world'. (emphasis added)” S/N dYdByTf/mkKtjJWvuy6EPg

Based on the principles on the law of fraud and fraudulent misrepresentation as set out at paragraphs 44 to 49 above, we are of the considered view that the JC erred in confining the Plaintiff’s case to 1 single act of misrepresentation i.e. the fact that back to back agreements have been signed between the Vendors and D1; and that both PW2 and PW3 of the Plaintiff knew that there was no back-to-back SPA executed between D1 and the Vendors.

Our scrutiny of the appeal records shows that the Plaintiff’s case was premised on a series of misrepresentation:

the landowners had agreed to sell when in fact that the transaction was far from being finalized;

price for the land was RM155 per square feet (later RM180 per square feet);

payment of a sum of monies fundamentally required by the landowners to be used for purposes of subdivision, conversion of land use and eviction of squatters, and crucially;

that if Newlake does not pay the money immediately, Newlake would lose the chance to buy the land; and

In reply to PW3’s e-mail dated 15.2.2012 reminding D3 that the monies were paid by the plaintiff to his client’s account S/N dYdByTf/mkKtjJWvuy6EPg and interest continues (see Enc. 17 at p. 2464), D3 replied confirming that the monies will bear interest (see Enc. 17 at p. 2465) when in fact the monies we already paid to unknown third parties unrelated to the Vendors. A sum of RM3.57 million was also paid out by D3 to D2’s office account).

We are of the view that the learned JC erred by failing to appreciate the contemporaneous documents in particular the SPA itself which warrants that D1 was fully authorized to sell the Land, when it in fact had no authority to do so. The learned JC erred by equating the word ‘finalising’ meant that D1 had authority to sell and that the Plaintiff was fully aware of this fact. Post execution of the SPA, the learned JC failed to take congnisance of the fact that D3 had continued to represent to the Plaintiff’s officers that he was finalizing the sale between the Vendors and D1 soon, when the deal was far from being finalized as the Land was owned by more than one party.

The learned JC further erred when he invoked the presumption of adverse inference under S.114(g) of the Evidence Act 1950 against the Plaintiff for the non calling of the owners to testify in support of their case that there was no finalized transaction between them and D1. This approached was totally ignorant of the testimony of PW1, Mr Ang, the lawyer who acted for the Low and Lim families. PW1 testified that he acted for the landowners (see Enc 7, page 346) and that he never had dealings with Steven How’s firm, nor Zenith (see Enc 7, page 347). Steven How also never approached him to broker a deal to sell the land: (see Enc 7, page 347). In his S/N dYdByTf/mkKtjJWvuy6EPg testimony, PW1 confirmed that Steven How never approached his client with regards to the said land (see Enc 7, page 349). Note that PW-1 was a subpoena witness who has nothing to do gain from the outcome of this case. This in our considered opinion, is sufficient for the Plaintiff to discharge the evidential burden of proving both fraud and fraudulent misrepresentation.

We are also of the view that the learned JC approach in dealing with the issue of the Settlement Agreement was wrong as the purpose of the same had clearly been explained by Thian of Zenith (see Encl. 35 at page 34). “WHL You have, yes? Now it says here in paragraph 2, We have a (12:21:34AM inaudible) proposed to yourself, do remit us RM9.6million being refund of monies paid to us to you towards the purchase price of the property, pursuant to the above (12:21:41PM inaudible) as sale and purchase within one month from date of this letter, failing which you allow us to withdraw the said termination (1:21:46PM inaudible) and property as late as 23.07.2013. As late as 23.07.2013, you are still talking about negotiations, but we already know the negotiations, at least with John Lim has already collapsed on the 07.12.2011, which was about one, yes, more than, more than one and a half years ago, there was no such negotiations anymore. No more already, do you agree? Based on this one. S/N dYdByTf/mkKtjJWvuy6EPg THIAN Disagree. WHL You disagree? And would you agree that whatever settlement or revival between the Plaintiff and the First Defendant is premised on the fact that the Plaintiff thought all the RM9 million purchase price was actually paid directly to the First Defendant. That’s the premise of this so-called settlement, would you agree?

The SA was in fact a sham orchestrated by D3. In this regard, the learned JC gave too much emphasis on the existence of the Settlement Agreement entered between parties without acknowledging the fact that the discovery of the fraud was post the execution of the Settlement Agreement.

Looking at the terms of the Settlement Agreement, it can clearly be seen from the wordings in paragraph 2 of the letter that the Appellants in fact did not know that almost the entire sum paid to D2 had already been dissipated by D2 thru D3 prior to the execution of the SPA. Such late discovery is something which is foreseeable under the law as envisaged under Section 29 of the Limitation Act 1949 which provides the limitation period in cases of fraud only begins to run from the date the fraud was discovered. S/N dYdByTf/mkKtjJWvuy6EPg Issue of whether D2 & D3 owed a duty of care and whether they were negligent

With reference to this issue, we find that the learned JC erred in finding that there was no a breach of duty of care by D2 and D3 as against the Plaintiff.

Our finding is supported by the fact that both D2 and D3 had given advice and acted for the Plaintiff well before the SPA was executed on 22.12.2011 with a sum of approximately RM8.2 million paid into D3’s client’ s account for the sole purpose of acquiring the Land. Yet, the entire sum of monies were paid out by D3 for purposes other than for the acquisition including a sum of RM3.57 million into his firm’s office account and for purposes not connected to the land. D3's explanation that the rest of the monies were paid out on the unproven instructions of Alex Lai (who had since passed away) still does not exonerate the fact that it was paid out for purposes not connected to the Land.

Even if we are wrong to conclude that the monies were stakeholder monies as there were no instructions for the same to be held as stakeholder monies, we are of the considered view that D2 and D3 were in a fiduciary relationship with the Plaintiff, thus giving rise to the presumption of a constructive trust over the monies paid by the Plaintiff to D2 and D3. These sums of monies were only to be used for the Plaintiff’s purpose of acquiring the subject Land. The act of D2 and D3 paying out the monies for purposes other than towards S/N dYdByTf/mkKtjJWvuy6EPg the acquisition of the subject Land, was in breach of such trust. Findings on conspiracy to injure and defraud and dishonest assistance against the 1st and 4th Respondent

On this issue, we are unable to agree with counsel’s submission that the lack of particulars on conspiracy to injure and defraud and dishonest assistance against the 1st and 4th Respondent in relation breach of trust and fiduciary duty renders the Statement of Claim flawed and defective.

Whilst the Statement of Claim did not have headings described of the particulars on conspiracy to injure and defraud and dishonest assistance against both the 1st and 4th Respondents, the narration of facts including the detailed timelines as presented in the Statement of Claim were sufficient to enable the 1st and 4th Respondent to mount a defence, which they did successfully in the High Court. In any event, the 1st and 4th Respondents could have easily sought for further better particulars before the trial commenced. At this juncture, it is too late in the day for such argument to be mounted at the appeal stage. In the case of Eagle One Investment Ltd. & Ors v Asia Pacific Higher Learning Sdn. Bhd. [2020] MLJU 28 (CA), it was held as follows: “[31] We have considered the facts and issues and were of the opinion that the defendants, by raising these issues only at the appellate level, were actually trying to appeal on issues that have never been earlier pleaded nor deliberated upon. The defendants, in doing so, in fact is creating or S/N dYdByTf/mkKtjJWvuy6EPg inventing a new defence. It caught the plaintiff off-guard and had deprived the plaintiff the opportunity to make known its case in full as questions in relation to locus were never directed to its witnesses and such issues were never raised in the course of the full hearing. The focus of the witnesses were also directed and intended or devised to respond to the averments in the narrative of the defendants’ defence. In addition, it has also created a great disadvantage to the plaintiff as the documents that were tendered before the High Court only dealt with the issues raised in the defendants’ defence.”

Based on the evidence given by both D3 and D4, it is without a doubt that the actions of D3 in deceiving the Plaintiff via PW2 and PW3 could not have successfully been achieved, had it not been for the cooperation of D4.

Based on our observation, one could have easily looked at the present case from a helicopter point of view. In other words, follow the money trail. It would have then be easily discovered that not a single cent of the monies paid by the Plaintiff to D2 and D3, was utilized for purposes of acquiring the land. As a matter of fact, even the terms of the SPA (if valid), only allowed D1 to forfeit a sum of RM6.092 million to be forfeited by D1, in the event the SPA was terminated due to default of the Plaintiff. Yet the Defendants herein, forfeited the entire sum paid of more than RM9 million without any justification. Despite this being one of the issues to be tried (see S/N dYdByTf/mkKtjJWvuy6EPg Encl. 6 at page 171), there was no deliberation or finding by the learned JC on it.

In our view, the SPA was purely a device used by D3 to stop the Plaintiff’s barrage of enquiries on the status of the acquisition of the subject Land. From there on, it was just a way to prolong the return of the RM9 million paid by the Plaintiff. We conclude so as the monies paid by the Plaintiff was almost entirely dissipated to parties totally unconnected with the acquisition almost 1 year before the SPA was executed. The fact that D3 was stalling for more than 1 and a half month to reply to the AJC’s letter dated 24 Aug 2013 (page 209 Encl. 30) can clearly be seen from his late reply of 21st Oct 2013 (page 210 Encl. 30): ARIZAL JAILANI & CO Date : 24th August 2013 MESSR KUMAR JASPAL QUAH & AISHAH Dear Sirs Sale and Purchase Agreement dated 22nd December 2011 (“SPA”) We refer to the above-captioned matter, the duly accepted Letter of Settlement dated 23rd July, 2013, issued by our Client to your Client, and our letter to you dated 14th August, 2013. We note that your Clients have failed to pay the Settlement Sum of RM9,600,000.00 only, to us as Stakeholders, by the 23rd August, 2013, in accordance with the terms and conditions of the Letter of Settlement dated 23rd July, 2013. S/N dYdByTf/mkKtjJWvuy6EPg In the circumstances, the termination of the SPA, is hereby withdrawn and the parties reverted to the position prior to the termination of the SPA. Our Client shall within 8 months from today, exercise their right pursuant to Clause 22 of the SPA, to nominate a wholly unrelated third party to assign their rights and interests in the SPA to continue and complete the sale and purchase of the Property, so that our Client can recoup whatever they have paid to your Client from part of the sales proceeds thereof. Please take note of the issues and conditions that your Clients may or shall need to comply and satisfied as stated in our letter dated 14th August 2013. We shall forward to you, the Letter of Nomination, nominating the third party purchaser, once we receive instructions from our Client. …. ZENITH DELIGHT SDN BHD 21 October 2013 Newlake Development Sdn Bhd Dear Sirs, RE: SALES AND PURCHASE AGREEMENT DATED 22 DEC 2011 We refer to the above and all your solicitors’ email to our solicitors up to date. Please note that we do not agree with all the contents of the emails from your solicitors thus far. We write to advise that pursuant to the revival of the above agreement, there is no changes or waiver in the terms and conditions of the agreement except for that your have requested that your rights to the agreement are to be assigned to a third party subject to our approval of nominee nominated. S/N dYdByTf/mkKtjJWvuy6EPg As such pursuant to the said agreement, you are supposed to pay us the amount of RM6,093,252.00. You complained that the time given to you are insufficient and time is no more of the essence. We do not agree. At all times we have been requesting for payment. You did not pay us. Not that we did not asked. Then you terminated the agreement unilaterally. In any event three months has passed from the date of signing the settlement and yet no payment from you. There are still no payment. The date you suppose to pay was on 13th September 2013. A reminder was sent to you on 25th September 2013. But still no payment. Therefore, were are terminating the agreement. We will therefore forfeit all the money you have paid. However, we do give you a final chance. If you do pay up within 3 days from today we will consider reviving the agreement. In respect of the nominee nominated, if the agreement is revived kindly provide us the following for us to evaluate the credibility of the nominee: a) Profile of the company and directors b) Last 3 years audited accounts of the company We will let you know our approval within seven days from the date of receipt of the payment and from the date of receipt of the documents whichever is later. Thank you.

As the SPA was premised on fraud and fraudulent misrepresentation, it is voidable and liable to be rescinded. The monies paid by the Plaintiff under the terms of the SPA should be returned to the Plaintiff. S/N dYdByTf/mkKtjJWvuy6EPg

In the upshot, we hereby allow the appeal and set aside the decision of the High Court. Accordingly, were hereby allow the reliefs prayed for by the Plaintiff as prayed for in the Statement of Claim dated 6 June 2014.

Given the background of the case, the multiple causes of action involved and the manner wherein fraud and breach of trust was practiced on the Appellant in this case, we hereby order for costs to be at RM200,000-00 against each set of the Respondents herein subject to allocatur. Dated: 2 January 2026 -Sgd- (MOHD FIRUZ BIN JAFFRIL) JUDGE COURT OF APPEAL MALAYSIA PUTRAJAYA S/N dYdByTf/mkKtjJWvuy6EPg Counsel for the Appellant:

Dato’ Dr Gurdial Singh Nijar 2. Abraham Au Tian Hui 3. Wong Hin Loong 4. Lee Shao Wei [Messrs HL Wong Soh & Co. (Kuala Lumpur)] Counsel for the 1st and 4th Respondents:

Lee Kian Yuan [Messrs NEKOO] Counsel for the 2nd and 3rd Respondents:

Wong Hok Mun 2. Eng Kar Wei 3. Nur Syahmina binti Zainal Abidin [Messrs Shermal (Kuala Lumpur)] S/N dYdByTf/mkKtjJWvuy6EPg