R&A Trading (K.L.) Sdn. Bhd. v 1. ) Jiwa Rakyat Sdn. Bhd. (WA-22NCvC-247-04/2022)

JIWA RAKYAT SDN. BHD.

LIM AH LIM

CHAN YONG SIN

TETUAN ABDUL AZIZ RAHIM & CO. ….DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT Introduction 1. The Plaintiff is obviously a victim of fraud, having paid more than RM2.8 million to purchase land and receiving nothing in return.

The 4th Defendant (a firm of advocates and solicitors) acted for the 1st Defendant and also as stakeholders. All the Defendants had been sued in several civil suits brought by other victims of fraud and were held liable in those cases. The Defendants employed a similar modus operandi and been found liable for conspiracy to defraud, 21/10/2025 18:36:40 WA-22NCvC-247-04/2022 Kand. 143 with the 4th Defendant also liable for breach of stakeholder duties. It is safe to mention the said facts because the judgments of the learned judges in those cases had either been upheld by the Court of Appeal or became final due to no appeal being filed, and are in fact reported in the law journals.

As against the 1st Defendant, the issue is whether there was breach of contract. As against all the Defendants, the issue is whether there was a conspiracy to defraud the Plaintiff and additionally, as against only the 4th Defendant, whether they were entrusted to hold a total sum of RM814,342.30 as stakeholders, and if yes, whether they had breached their duties as stakeholders.

After a full trial of this civil suit was held, I decided that judgment ought to be granted in favour of the Plaintiff, including against the 4th Defendant. The 4th Defendant is the only party appealing. The details of the judgment granted, together with my reasons in extenso regarding the 4th Defendant, are as set out below. Background Facts 5. The 1st Defendant (subsequently wound-up) was the purported owner of land held under H.S.(D) 89073, PT 99589, Mukim Klang (“the said Land”).

The 2nd Defendant (Lim Ah Lim) and the 3rd Defendant (Chan Yong Sin) were at all material times directors of the 1st Defendant.

As mentioned above, the 4th Defendant (Messrs. Abdul Aziz Rahim & Co) were acting as solicitors for the 1st Defendant.

The Plaintiff entered into an Agreement to Purchase from the 1st Defendant a part of the said Land which was identified as “Parcel D” (“the said Property”). The agreed purchase price for the said Property was RM7 million.

In accordance with Clause 2 of the Agreement to Purchase, the Plaintiff made payment of deposit in the sum of RM1,000,000.00 to the 1st Defendant by way of two part-payments, as follows:-

Public Bank Cheque No. 035668 dated 9th November 2011 in the sum of RM140,000.00 (which was paid vide the Plaintiff’s Director, Mr. Yong Chao Foo @ Yong Jeng, on the Plaintiff’s behalf. There is evidence in the Common Bundle of Documents that he was subsequently reimbursed by the Plaintiff on 14th December 2011 via Public Bank Cheque No. 089463;

(ii) Public Bank Cheque No. 493198 dated 24th November 2011 in the sum of RM860,000.00. The 2 said payments shall be collectively referred to as “the Plaintiff’s Deposit”.

The parties executed a formal Sale & Purchase Agreement dated 10th February 2012 (“the SPA”) which states the total price is RM7 million and the balance RM6 million to be paid to 4th Defendant as stakeholders.

The salient terms of the SPA, starting at page 26 of the Common Bundle of Documents marked as “B1”, that are relevant to the Plaintiff’s claim and the 4th Defendant’s defence are as follows:-

Recital 1: The Defendant is the registered and legal owner of the said Land;

Recital 8: The 1st Defendant is represented by the 4th

Clause 1: The total sale and purchase price for the said Land is RM7,000,000.00;

Clause 2: The balance purchase price of RM6,000,000.00 ("the Balance Purchase Price") shall be payable to the 4th Defendant (who were the 1st Defendant’s solicitors) to be held by them as stakeholders, within three (3) months from the 1st Defendant's fulfilment of the conditions precedent ;

Clause 4.1: The conditions precedent to be fulfilled by the 1st Defendant in summary are:-

to obtain sub-division of title for the said Land duly converted to commercial status;

(ii) to obtain approval from Lembaga Lebuhraya Malaysia for ingress and egress to and from the said Land;

(iii) to provide infrastructure (including road for ingress and egress to and from the said Land, drainage and motorbike lane), at the 1st Defendant's own cost; and

(iv) to provide boundary indication (collectively referred to as "the Conditions Precedent");

Clause 4.3: In the event the Conditions Precedent cannot be fulfilled by the 1st Defendant, the Plaintiff shall be entitled to:-

extend the time for the 1st Defendant to fulfil the

(ii) terminate the Sale & Purchase Agreement, whereupon the 1st Defendant shall refund to the Plaintiff all monies paid inclusive of interest thereon at eight-percent (8%) per annum;

Clause 11.1: If the 1st Defendant fails, refuses and/or neglects to observe or perform its obligations under the Sale & Purchase Agreement, the Plaintiff shall be entitled to:-

enforce the Sale & Purchase Agreement by way of specific performance; or

(ii) terminate the Sale & Purchase Agreement, whereupon the 1st Defendant shall refund to the Plaintiff all monies paid inclusive of interest thereon;

Clause 12.1: The 1st Defendant represents, warrants, undertakes and covenants, inter alia, that:-

the said Land is free from all encumbrances; and (ii) the 1st Defendant is not engaged in any legal action, proceeding or arbitration in respect of or relating to the said Land;

Clause 12.2: The 1st Defendant’s representations, warranties, undertakings and covenants in Clause 12.1 “shall continue to subsist for so long as may be necessary notwithstanding the sale and purchase herein and/or the termination” of the Sale &

Clause 13: In the event the Sale & Purchase Agreement is terminated, inter alia, due to the 1st Defendant’s breach of Clause 12, the Plaintiff is entitled to terminate the Sale & Purchase Agreement and the 1st Defendant shall refund to the Plaintiff all monies paid inclusive of interest thereon; and

Clause 18: Time is of the essence of the Sale & Purchase Agreement.

On 15th June 2012 the 1st Defendant wrote to request early release of an additional sum of RM1,000,000.00 towards the Balance Purchase Price. This request was repeated by the 4th Defendant on 18th June 2012 urging the Plaintiff to pay an additional RM1,000,000.00 even though the Conditions Precedent had yet to be fulfilled.

On 20th June 2012, the Plaintiff acceded to the said request. Its solicitors issued a letter to the 4th Defendant enclosing a Public Bank Berhad cheque No. 187231 for the payment of RM1,000,000.00 towards the Balance Purchase Price. This letter expressly stated that the payment was being made notwithstanding the 1st Defendant’s failure to fulfil the Conditions Precedent.

The Plaintiff and the 1st Defendant entered into a Supplemental Agreement dated 27th January 2014 (“the Supplemental Agreement”) for the sale and purchase of additional land (“the Additional Land”) following the subdivision of said Land.

The salient terms of the Supplemental Agreement are as follows:-

Recital (f): The Supplemental Agreement shall be read together with the terms of the Sale & Purchase Agreement (“by way of amplification and not in derogation thereof”);

Clause 1: The total purchase price for the Additional Land is RM1,717,000.00 which shall be delivered by the 1st Defendant to the Plaintiff “free from all encumbrances, caveats, squatters, disputes, or claims by any third party and with vacant possession”; and

Clause 4: The 1st Defendant acknowledges receipt of the Plaintiff’s advance part payment of RM550,000.00 towards the Balance Purchase Price.

Clause 4 of the Supplemental Agreement, which acknowledges receipt of the Plaintiff’s advance part-payment of RM550,000.00 towards the Balance Purchase Price, makes sense if it is read together with two letters from the 4th Defendant dated 6th and 20th January 2014 respectively. In those letters, they requested the Plaintiff to make further payment of an additional RM550,000.00 towards the Balance Purchase Price, to be payable in the 4th Defendant's name. This was intended to be an early release of further payment because the Conditions Precedent had yet to be fulfilled then.

The said early release of RM550,000.00 was made by the Plaintiff via its solicitors’ letter to the 4th Defendant on 20th January 2014 enclosing two cheques, drawn as follows:-

a Public Bank Berhad Cheque No. 125317 in the sum of RM50,000.00 in favour of the 4th Defendant; and

a Public Bank Berhad Cheque No. 125318 in the sum of RM500,000.00 in favour of the 4th Defendant.

The 4th Defendant played an active part in repeatedly requesting further payments from the Plaintiff even though the Conditions Precedent had yet to be fulfilled. On 19th August 2016, the 4th Defendant wrote to request early release of an additional RM264,342.30 towards the Balance Purchase Price, allegedly being development charges payable to Majlis Bandaraya Shah Alam towards the said Property.

Yet again, the Plaintiff acceded to the 4th Defendant’s request. Its solicitors issued a letter dated 23rd August 2014 to the 4th Defendant enclosing Public Bank Cheque No. 221115 for payment of the sum of RM264,342.30 in favour of the 4th Defendant (as the 1st Defendant’s solicitors) towards the Balance Purchase Price. It was stipulated in the said letter that the payment strictly on the 4th Defendant's undertaking that the said sum shall be paid to Majlis Bandaraya Shah Alam with a condition that a receipt shall be forwarded thereafter to the Plaintiff.

Thus, the total monies held by the 4th Defendant, from the money paid by the Plaintiff to the 4th Defendant, amounted to RM814,342.30 (RM550,000.00 + RM264,342.30) towards the Balance Purchase Price pursuant to Clause 2.1(c) of the SPA.

The 1st Defendant failed to fulfil the Conditions Precedent despite having received a total sum of RM2,000,000.00 towards the said Property and the Additional Land from the Plaintiff. As mentioned above, the Plaintiff had also paid the 4th Defendant (as stakeholders) a total sum of RM814,342.30 and granted the 1st Defendant more than 30 extensions of time pursuant to Clause 4.3.1 of the SPA to fulfil the Conditions Precedent, between the period of 10th August 2012 (the 1st extension) and 9th November 2021 (the 37th extension of time). All these extensions of time were in writing, as could be seen the Common Bundle of Documents (page 80-116 of Bundle B1).

After the 1st Defendant continued to fail to fulfil the Conditions Precedent after the 37th extension of time, the Plaintiff through its solicitors issued a Notice of Termination and Letter of Demand dated 13th April 2022 and demanded from the 1st Defendant a refund of the sum of RM2,814,342.30 in accordance with Clause 4.3.2 and Clause 11.1(b) of the SPA read together with Recital (f) of the Supplemental Agreement (“the Plaintiff’s Notice of Termination”).

The Defendants failed to respond to the Plaintiff’s Notice of Termination. Could the Plaintiff have sued the 1st Defendant for specific performance of the SPA?

Now, could the Plaintiff have sued the 1st Defendant for specific performance of the SPA? The answer is an obvious NO. This is because the High Court had declared, in a court order dated 14th November 2017, that the transfer of the said Land by the predecessor-in-title, one Rimau Indah Sdn. Bhd. to the 1st Defendant was void ab initio. It was also ordered that the Issue Document of Title in the 1st Defendant’s name was to be cancelled, reverting the title to Rimau Indah Sdn Bhd.

The aforesaid order was issued by the High Court at Kuala Lumpur in Civil Suit No.22NCVC-709-12/2015 (“the 2015 Suit”). This means that the Defendants were well aware years earlier that the 1st Defendant had no right to be selling any part of the said Land.

I accept the Plaintiff’s evidence, that the Plaintiff had discovered the existence of the 2015 Suit and the said Court Order only after the 4th Defendant wrote to the Plaintiff’s solicitors on 17th December 2021 stating that the 4th Defendant was no longer representing the 1st Defendant, to be true.

The Plaintiff was to discover more bad news about the Defendants. It turned out that the 1st Defendant, the 2nd Defendant, the 3rd Defendant and the 4th Defendant were jointly and severally sued in High Court at Kuala Lumpur Civil Suit No. WA-22NCVC-187- 04/2017 (“the 2017 Suit”) in respect of the same parcel of land as the said Property and the Additional Land.

In a judgment dated 28th December 2018 in the 2017 Suit, Faizah J (now JCA) found the Defendants liable, as follows:-

the 1st Defendant, the 2nd Defendant and the 3rd Defendant had committed the tort of unlawful means conspiracy against the plaintiff therein and were ordered to pay RM625,000.00; and

the 4th Defendant had committed the tort of negligence and was ordered to pay RM100,000.00.

There turned out to be yet another suit filed at the High Court at Kuala Lumpur in year 2019. It was Civil Suit No. WA-22NCVC-961- 12/2019 (“the 2019 Suit”) wherein the 1st Defendant, the 2nd Defendant, the 3rd Defendant and the 4th Defendant were jointly and severally sued by a purchaser by the name of Cendana Bina Sdn. Bhd for conspiracy to defraud and for breach of stakeholder duties against the 4th Defendant. The subject matter of the conspiracy to defraud was also part of the said Land.

In the 2019 Suit, the 1st, 2nd and 3rd Defendants entered into a consent judgment with the plaintiff there. Mohd Nazlan Mohd Ghazali J (now JCA) was the trial judge who heard that plaintiff’s claim against Messrs. Abdul Aziz Rahim & Co (the 4th Defendant herein). On 30th November 2021, after a full trial, Justice Nazlan allowed Cendana Bina Sdn. Bhd’s claim against the 4th Defendant for conspiracy to defraud and breach of stakeholder duties, and ordered the 4th Defendant to pay to the Plaintiff the total sum of the deposit paid and lost by the Plaintiff as damages, in the sum of RM2,293,434.00 together with interest and costs.

In the sale and purchase agreement dated 22nd April 2014 made between Cendana Bina Sdn. Bhd and the 1st Defendant for the sale of part of the said Land, the 4th Defendant represented the 1st Defendant. Likewise, in all its sale and purchase transactions, the 4th Defendant had been the solicitors for the fraudulent vendor, i.e. the 1st Defendant that was controlled by the 2nd and 3rd Defendants.

Further, I find that the sale and purchase agreement contains a misrepresentation that the 1st Defendant is the registered and beneficial owner of part of the said Land that was offered for sale to the purchaser, that the said Land is free from encumbrances, caveats, squatters, disputes or claims by any third party and that there were no legal proceedings involving the 1st Defendant and/or the said Land.

It is clear as daylight that those representations, albeit false ones, were made by the Defendants – with the 4th Defendant acting as the 1st Defendant’s solicitors – for the purpose of convincing the other purchasers to pay up substantial sums of money. For example, in the 2019 Suit, they managed to convince Cendana Bina Sdn. Bhd paid a total deposit of RM2,293,434.00 to the 1st Defendant.

Thus, it is safe to conclude from the facts gleaned from the 2015 Suit, the 2017 Suit and the 2019 Suit that the same modus operandi was employed by the Defendants in the other transactions. Be that as it may, it is still necessary for this Court to evaluate the evidence in this case to determine if the sum of RM814, 342.30 paid by the Plaintiff to the 4th Defendant were indeed stakeholder monies towards the Balance Purchase Price. Whether the 4th Defendant were holding the sum of as stakeholders 34. This became a non-issue during the trial due to two reasons. First, both witnesses who testified on behalf of the 4th Defendant, namely Puan Marni binti Ibrahim and Encik Suhaimi bin Baharudin, admitted that the SPA was prepared by the 4th Defendant and the sum of RM814, 342.30 was received by the 4th Defendant as stakeholders pursuant to the SPA.

A further bit of evidence which made it conclusive that the monies received by the 4th Defendant from the Plaintiff was stake monies is Clause 2.1(c) of the SPA. This contractual clause expressly states that the Balance Purchase Price of RM6,000,000.00 shall be payable to the 4th Defendant as stakeholders within three (3) months from the 1st Defendant's fulfilment of the Conditions Precedent. A screenshot of the said Clause 2.1(c) is shown below:

In Beyond Hallmark Sdn. Bhd. v. Leong Tuck Onn & Anor [2018] MLJU 2051, Nordin Hassan J (now FCJ) ruled that monies paid to a law firm (of the 1st defendant in that case) were stake monies. His Lordship’s finding was based on an admission from a witness who was from the law firm, which effectively “demolished” any arguments to the contrary. Just as in our present case, in that case, the 1st defendant’s law firm was also involved in drafting the agreement in question. The relevant passages from the judgment of Justice Nordin Hassan are as follows: "[21] Most importantly, the 1st defendant who was involved in the drafting of the MOA and thereafter witnessed the signing and execution of the MOA, admitted that the RM10.56 million is to be held by MNL as stakeholder. [22] Aside from the plaintiff's evidence, this admission by the 1st defendant, demolished any contention that MNL is not the stakeholder for the said RM10.56 million. The 2nd defendant's submission that MNL only acted as agent for the vendor under the MOA run counter the oral and documentary evidence as well as the clear admission by the 1st defendant. [23] In regard to the admission by the 1st defendant that MNL received the RM10.56 million as stakeholder, its weight is high, especially made by the 1st defendant in this case who was in charge of transaction on behalf of the MNL. In the case of Esso Malaysia Bhd v Hills Agency (M) Sdn Bhd & Ors [1994] 1 MLJ 740, the judge said this : "Admissions are the strongest evidence possible and even a wrong construction of a document will be assumed to be correct in view of the admission. In the privy Council case of Australian Widows' Fund Life Assurance Society Ltd v National Mutual Life Association of Australasia Ltd 13, Lord Parker of Waddington delivering in judgment of the Board at p 641 said...."

Thus, I find that the admissions made by both witnesses who are/were partners in the 4th Defendant, when read together with Clause 2.1(c) of the SPA, led to the conclusion that the sum of RM814,342.30 was indeed paid to and received by the 4th Defendant as stake monies, i.e. to be strictly held by the 4th Defendant as stakeholders.

The partners in the 4th Defendant law firm must surely have been aware that stakeholders are trustee who must guard the stake monies zealously. It is trite that solicitors holding funds as stakeholders act as trustees while awaiting the event that would determine to whom the stake monies are to be released to. Jeffrey Tan FCJ in Datuk M Kayveas & Anor v. Bar Council [2013] 5 MLJ 640 held as follows: "[31] In our system of conveyancing, 'the word 'stake' is in common parlance used to apply to any money to be disposed of in accordance with what may happen in future: and whoever is in possession of the money is often described as a stakeholder. The manner in which the money is to be disposed of depends on the terms on which it is held' (Toh Theam Hock v Kemajuan Perwira Management Corporation Sdn Bhd [1988] 1 MLJ 116 per Hashim Yeop A Sani SCJ, as he then was, delivering the judgment of the former Supreme Court). 'Solicitors who hold funds which are paid to them as stakeholders hold those funds as trustees for the client, whose property the funds remains at all times. Such funds are not held in a contractual or quasi-contractual capacity' (Halbury's Laws of England (4th Ed), Reissue vol 44(1) para 126). '... the obligations arising under a solicitor's undertaking go beyond contractual effect. They are obligations which a solicitor has a professional duty, as well as a contractual duty, to observe' (Bentley and another v Gaisford and another [1997] 1 All ER842, at p848perSir Richard ScottV-C).When solicitors hold funds as stakeholders, they hold those funds as trustees and not in a contractual or quasi-contractual capacity (see Alimand Computer Systems Ltd v Radcliffes & Co, (1991) Times, 6 November, QBD). 'If an estate agent or solicitor, being duly authorised in that behalf, receives a deposit 'as stakeholder', he is under a duty to hold it in medio pending the outcome of a future event. He does not hold it as agent for the vendor, nor as agent for the purchaser. He holds it as trustee for both to await the evidence: see Skinner v The Trustee of Property of Reed and Others [1967] 2 All ER 1286 at p 1287; [1967] Ch 1194 at p 1200) per Cross J. Until the event is known, it is his duty to keep it in his own hands; or to put it on deposit at the bank ...' 'Once a solicitor holds money in trust for his client or any other party for a purpose, it does not matter whether the amount is sufficient to be utilised for that purpose. The money remains to be in trust' (Selvaratnam a/l Vellupillai v Dr Jayabalan Karrupiah [2009] 1 MLJ 794 per Zaki Azmi CJ, delivering the majority judgment of the court). Therefore, it is beyond argument that a stakeholder is a trustee and that the breach of a stakeholding term is not just a breach of undertaking but also a breach of trust."

Based on the evidence and the law set out above, I agree with the submissions of learned counsel for the Plaintiff that the 4th Defendant bears a legal obligation to hold the Stake monies in trust, subject to fulfilment of the Conditions Precedent by the 1st Defendant.

Despite knowing that the 1st Defendant had failed – and in fact was wholly unable – to fulfill the Conditions Precedent, the 4th Defendant had released the Stake monies to third parties and thereby committed breaches of their fiduciary duties as stakeholders.

There were apparent contradictions in the evidence of both witnesses who testified on behalf of the 4th Defendant. In an affidavit affirmed in the past by Puan Marni binti Ibrahim (a partner in the 4th Defendant law firm), she had deposed that the sum of RM814,342.30. She stated in her affidavit that:

RM154,000.00 was paid to Inland Revenue Board for and on behalf of 1st Defendant;

RM355,000.00 was paid to Hartamont Management Sdn. Bhd. -- an unrelated third party;

RM40,575.00 was utilised by the 4th Defendant towards their own legal fees; and

RM264,342.30 was paid to Laman Realiti Sdn. Bhd (an unrelated third party).

Surprisingly, in her witness statement, Puan Marni binti Ibrahim testified that the sum of RM814,342.30 was paid out as follows:

RM550,000.00 was paid to Hartamont Management Sdn. Bhd (an unrelated third party); and

RM264,342.30 paid to Laman Realiti Sdn. Bhd (an unrelated third party).

The new version in Puan Marni’s witness statement appeared to have been drafted to be consistent with the contents of Encik Suhaimi’s witness statement.

It was quite troubling to note, during cross-examination of Puan Marni, that she admitted to have followed Encik Suhaimi’s instructions even after he was adjudicated a bankrupt and had ceased to be a partner of the law firm (the 4th Defendant).

In any event, there is no doubt that the 4th Defendant's own evidence confirmed that the Stake monies were released to third parties without fulfilment of the Conditions Precedent or authorisation by the Plaintiff.

In attempting to justify paying out the stake monies, the 4th Defendant sought to rely on a letter dated 24th January 2014 from the 1st Defendant alleging a "mutual understanding" between the Plaintiff and the 1st Defendant for the release of RM550,000.00.

I wholly agree with learned counsel for the Plaintiff that upon closer examination impugned letter lacks credibility and should be disregarded by this Court for the following reasons:

The letter identifies the Purchaser as "R n A Engineering & Tradings Sdn Bhd (224933-A)" – a completely different name and company number from the actual Plaintiff herein which is

The letter bears the signature of "Lim Ah Ling (Director)" – a different name from the 2nd Defendant herein (who is Lim Ah Lim (a director of the 1st Defendant); and

The letter fails to provide any particulars regarding the alleged "mutual understanding" with the Plaintiff.

The 1st Defendant’s witness Mr.Loh Kok Choy (DW2) testified under cross-examination that he prepared the impugned letter. He was visibly embarrassed to have mis-spelled his own mother’s name and quickly said that it was his staff who prepared that letter. Whether it was DW2 himself or his staff, the fact remains that the Plaintiff did not consent to the release of the RM550,000.00 without fulfilment of the Conditions Precedent. The 4th Defendant may not rely on a letter that purportedly recorded the Plaintiff’s consent without verifying it with the Plaintiff or its solicitors. If the 4th Defendant had really relied on the impugned letter, they had done so at their own peril. The following excerpt from the Notes of Evidence shows that DW2 – who claims to be an architect trained in a university – did not even notice that his mother (the 2nd Defendant) ’s name was mis-spelled. “YA: How do you spell your mother's name? DW2: Lim Ah Lim. YA: How do you spell it? DW2: L.I.M. A.H. L.I.M. YA: You look at this letter. DW2: Oh aiyoo.

The Supreme Court in Toh Theam Hock v. Kemajuan Perwira Management Corporation Sdn. Bhd [1988] 1 MLJ 116 had long reaffirmed the legal principle that solicitors holding stake monies may only release such funds when the stakeholding terms are satisfied. Hashim Yeop A Sani SCJ made it amply clear with his following words: "But the respondents entered into a contract in the form of a sale and purchase agreement wherein the respondents agreed to abide by the terms of the agreement with regard to the 5% of the purchase price to be paid to their solicitors as stakeholder which was to be paid only on the production of a Certificate of Fitness for Occupation of the premises. This provision in the contract was also in compliance with the provision in the 1970 Rules. We do not think that the respondents should be allowed to resile from what they had contracted; and their instructions to the appellant to place the deposits into fixed deposit account should not under the circumstances be made binding on the appellant. It was a clear term of the contract that the respondents were not entitled to the deposit until the Certificate of Fitness was issued. The respondents as a party were not competent to unilaterally alter the terms of the contract."

To quote from Toh Theam Hock (supra), “It was a clear term of the contract that the respondents were not entitled to the deposit until the Certificate of Fitness was issued.” Likewise in our present case, the 1st Defendant was not entitled to receive any part of the stake monies held by the 4th Defendant pursuant to Clause 2.1(c) of the SPA until the Conditions Precedent are fulfilled.

In the circumstances, there is no doubt that the 4th Defendant ought to be held liable to repay the Plaintiff the stake monies amounting to RM814,342.30. Whether the 4th Defendant ought to be liable together with the other Defendants for conspiracy to defraud the Plaintiff 52. The law on conspiracy to defraud was restated in Malayan Banking Bhd. v. Sparrows & Arrows Sdn. Bhd. (in liquidation) & Ors [2022] 2 MLJ 889, outlining three elements that a plaintiff must satisfy, as follows:

an agreement between two or more persons;

for the purpose of injuring the plaintiff; and

acts done in the execution of that agreement resulted in damage to the plaintiff.

As for the standard of proof to prove conspiracy to defraud, it is on the balance of probabilities. This was clarified in Sinnaiyah & Sons Sdn. Bhd. v. Damai Setia Sdn. Bhd [2015] 5 MLJ 1 where Chief Justice Richard Malanjum CJ (as he then was) clarified with the following words: "[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, 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 in 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 nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts'."

It was admitted by both witnesses for the 4th Defendant that the SPA was drafted by them – meaning that they drafted Clauses 12.1(g) &

of the SPA giving representations, warranties, undertakings and covenants by the 1st Defendant that:

the said Land is free from all encumbrances; and

(ii) the 1st Defendant is not engaged in any legal action, proceeding or arbitration relating to the said Land.

Those representations in Clauses 12.1(g) & (i) of the SPA were misrepresentation because a land title search of the said Land reveals that two private caveats existed on the Register Document of the said Land at the date of the SPA on 10th February 2012; lodged by Laman Realiti Sdn. Bhd. On 1st December 2011 and by Petronas Dagangan Berhad on 18th January 2012 respectively.

As mentioned above, the High Court had declared on 14th November 2017 that the transfer of the said Land by Rimau Indah Sdn. Bhd to the 1st Defendant was void ab initio and also ordered the cancellation of the Issue Document of Title in the 1st Defendant’s name, reverting the title of the said Land to Rimau Indah Sdn Bhd. In other words, the 1st Defendant ceased being the registered proprietor of the said Land. However, instead of disclosing the truth to the Plaintiff, the Defendants deliberately concealed this fact from the Plaintiff and obtained 37 extensions of time under Clause 4.3.1 of the SPA to fulfill the Conditions Precedent, up till year 2021. In other words, the Defendants were dishonestly seeking further extensions of time between November 2017 and year 2021 after the aforesaid Order.

It is significant that the 4th Defendant were the 1st Defendant's solicitors and recipient of extension letters, and they were the same solicitors who were actively representing the other Defendants in the 2015 Suit, the 2017 Suit, and the 2019 Suit. Thus, how could they feign ignorance and seek to be exonerated? The partners of the 4th Defendant were working ‘hand in glove’ with the Defendants since the drafting of the SPA, and also in the other transactions which are the subject matter of the other civil suits.

The Defendants, including the 4th Defendant, must have agreed to use the said Land as the subject matter for entering into sale and purchase agreements with multiple purchasers, including the Plaintiff here, for the purpose of causing them to pay over money as part-payments for the purchase of part of the said Land. The 1st Defendant controlled by the 2nd and 3rd Defendants, would not have been able to perpetuate the fraud without the active participation of the 4th Defendant.

In the circumstances, this Court holds that the Plaintiff has proven, on a balance of probabilities, that the acts carried out by the 4th Defendant pursuant to their agreement with the other Defendants resulted in loss and damage to the Plaintiff, quantifiable at RM2,814,342.30. In other words, this Court finds that all three elements set out in Malayan Banking Bhd (supra) have been proven to justify a finding of conspiracy to defraud against the Defendants, jointly and severally. Conclusion 60. This Court ought to grant judgment for the Plaintiff on both the breach of stakeholders duties and the conspiracy claims.

The Plaintiff’s prayer in paragraph 36(e)(i) and (ii) of the Amended Statement of Claim (Enclosure 83) are allowed, for the Declarations that the 4th Defendant breached its stakeholder duties owed to the Plaintiff in respect of the Stake monies and that the 4th Defendant is in breach of trust in respect of the same. This is justified as the 4th Defendant had paid out the stake monies to unrelated third parties as well as appropriating some of it for their legal fees. Counsel for the Plaintiff: Edward Kuruvilla (Nereen Kaur Veriah & Edel Silva with him). SOLICITORS FOR THE PLAINTIFF: MESSRS ATMA SINGH VERIAH & CO. Advocates & Solicitors No. 54, Jalan SS21/1, Damansara Utama, 47400 PETALING JAYA, SELANGOR. Counsel for the 2nd & 3rd Defendant: Mohammad Sofi bin Othman. SOLICITORS FOR THE 2nd & 3rd DEFENDANT: MESSRS SOFI OTHMAN & CO. Advocates & Solicitors 06-04-20, Sri Melaka, Batu 4, Jalan Cheras, 56000 CHERAS, KUALA LUMPUR. Counsel for the 4th Defendant: Hanif Idris SOLICITORS FOR THE 4th DEFENDANT: MESSRS HANIF IDRIS & ASSOCIATES Advocates & Solicitors 40-1 (Level 1) Jalan Telawi, Bangsar Baru, 59100 KUALA LUMPUR.

Beyond Hallmark Sdn. Bhd. v. Leong Tuck Onn & Anor [2018] MLJU

2051.

Datuk M Kayveas & Anor v. Bar Council [2013] 5 MLJ 640.

Toh Theam Hock v. Kemajuan Perwira Management Corporation Sdn. Bhd [1988] 1 MLJ 116.

Malayan Banking Bhd. v. Sparrows & Arrows Sdn. Bhd. (in liquidation) & Ors [2022] 2 MLJ 889.

Sinnaiyah & Sons Sdn. Bhd. v. Damai Setia Sdn. Bhd [2015] 5 MLJ 1.