Small Medium Enterprise Development Bank Malaysia Berhad v Propnex Realty Sdn Bhd (W-04(NCvC)(W)-362-09/2023)

the fact that the Letter of Intent dated 11.01.2021 (“LOI”) from Propnex to SME Bank was not signed by SME Bank, and had stated that the offer from George Kent to purchase the Property will lapse on 10.02.2021;

(ii) her finding that Propnex did not comply with rule 92(1) of the Valuers, Appraisers, Estate Agents Rules 1986 (PU(A) 64/1986)(“VAEA Rules 1986”);

(iii) her interpretation of the law that non-compliance of rule 92(1) of the VAEA Rules 1986 means that no estate agency contract exists between the estate agent and his client; and

(iv) her finding that there was no response or acceptance by SME Bank to George Kent’s offer to purchase the Property. [15] To determine whether the High Court was not plainly wrong in finding that a contract for estate agency did not exist between Propnex and SME Bank for the sale of the Property, this Court must answer these two questions: (i) whether non-compliance of rule 92(1) of the VAEA Rules 1986 means no estate agency contract exists between the estate agent and his client; and (ii) whether after the LOI was sent by Propnex to SME Bank, there was no response or acceptance by SME Bank to George Kent’s offer to purchase the Property. S/N kcogbGRsgUoOdwjJa5e0g

Does non-compliance of rule 92(1) of the VAEA Rules 1986 mean no estate agency contract exists between an estate agent and his client? [16] Rule 92(1) is in Part X: Code of Conduct and Ethics (Registered Estate Agent) of the VAEA Rules 1986. It reads:

Financial Obligations

A registered estate agent shall, for the protection of all parties, see that financial obligations and commitments regarding real estate transactions are in writing expressing the exact agreement of the parties and a copy of each such agreement shall be furnished to each party upon his signing such agreement. [17] Based on its natural and ordinary meaning, rule 92(1) of the VAEA Rules 1986 requires a registered estate agent to:

ensure that the financial obligations and commitments regarding real estate transactions are in writing; and

furnish each party with a copy of the agreement upon the said party signing the agreement. [18] The learned JC had cited the cases of Singham Sulaiman Sdn Bhd v Mega Palm Sdn Bhd [2014] 7 MLJ 476; [2013] CLJU 569; [2013] 2 AMCR 435, HC (“Singham Sulaiman”); and Baldah Toyyibah (Prasarana) Kelantan Sdn Bhd v Dae Hanhuru Infra Sdn Bhd and Another Appeal [2020] 5 MLJ 630; [2020] 5 CLJ 27, CA (“Baldah Toyyibah”) to decide that as SME Bank did not sign the LOI, the requirements in rule 92(1) VAEA Rules 1986 was not complied with, and for this reason found that there was no estate agency contract between Propnex and SME Bank. S/N kcogbGRsgUoOdwjJa5e0g [19] The facts in both Singham Sulaiman and Baldah Toyyibah can be distinguished from the facts in this instant case. [20] In Singham Sulaiman, the evidence shows that Dato’ CS Ong — the chief executive officer of Country Height’s property development division — merely informed the plaintiff’s deputy chairman and executive director, Sulaiman Mustafa, of the properties in the Country Heights group of companies that were available for sale — upon Sulaiman’s inquiry. The understanding was for Sulaiman to revert to Dato’ CS Ong if he had interested buyers for any of the properties of the group in order to take instructions on the sale price and to agree on the plaintiff’s fee. Neither Sulaiman nor the plaintiff reverted to Dato’ CS Ong to inform him that Mayland was an interested purchaser and to get instructions on the sale price of the lands. The evidence showed that the person who introduced the lands to Mayland was Tan Sri Lee Kim Yew of the Country Heights group of companies and not Sulaiman and/or the plaintiff. [21] In Baldah Toyyibah, the respondent brought an action against the appellant for breach of contract regarding the construction of the Kota Bharu-Kuala Krai Highway Project (“KBKK Highway Project”). The subject agreement in Baldah Toyyibah was the construction of a highway. It was not a contract for the provision of estate agency services. Therefore, neither the VAEAPM Act 1981 nor the VAEA Rules 1986 applied in Baldah Toyyibah. [22] Furthermore, the contract in Baldah Toyyibah, as evidenced by the letter of intent and the letter of acceptance, was made between the first appellant and the consortium members. This Court S/N kcogbGRsgUoOdwjJa5e0g determined that the respondent was not a member of the consortium at the time the contract was formed, as it had not yet been incorporated. We concluded that consensus ad idem could not have existed between the first appellant and the respondent, which did not legally exist when the agreement for the KBKK Highway Project was reached. [23] Whereas in this instant case, Propnex had informed George Kent of the Property being available for sale. It had also introduced George Kent as a purchaser of the Property to SME Bank. Ng Kok Kin (SSP-1) who at the material time was employed by George Kent, confirmed during the trial that Propnex had contacted him as regards the Property. Ng Kok Kin testified that he was informed about the availability of the Property for sale by either Bryan Yeo (SP-1) or Danny Gan (SP-2) of Propnex. [24] Phoon Yee Han (SSP-2) informed the trial court that he is a general manager in charge of the Chairman’s office in George Kent and is a director of Dynacare. He also testified that George Kent was informed by Propnex that SME Bank had a factory for sale, also that Propnex had introduced George Kent to SME Bank and had arranged for the site visit by George Kent of the Property. [25] Propnex had conducted two site visits to the Property, one by itself and the second with George Kent and SME Bank. Before sending the LOI to SME Bank, Propnex had visited the Property on 08.01.2021 (“1st site visit”). It had also arranged for a site visit of the Property by George Kent, together with representatives from SME Bank on 16.01.2021 (“2nd site visit”). Because the site visits were S/N kcogbGRsgUoOdwjJa5e0g during the Covid-19 pandemic and the Government’s Mandatory Control Order (MCO), Propnex had to seek permits from the relevant authorities to cross states from Selangor to Lumut, Perak, where the Property was located. [26] After the 1st site visit, Bryan Yeo of Propnex (“Bryan”)(“SP-1”) informed Mohd Razali Malek (“Razali”)(“SD-1”) of SME Bank of the visit by WhatsApp message. Razali replied to ask how was the visit and whether Propnex’s client was keen. Below is an excerpt of the Byran and Razali’s WhatsApp message: Friday, 08.01.2021 Bryan: Hi Razali, we already viewed the Factory. Thanks for the arrangement. Razali: Ok good to hear tht So how was it Did yr client keen Bryan: Potential, we need more support documents to present to management. Taken necessary photo and power supply. [27] The 2nd site visit of the Property took place on 16.01.2021. It was attended by George Kent’s chairman, Tan Sri Tan Kay Hock, Ng Kok Kin and Phoon Yee Han. Ng Kok Kin and Phoon Yee Han both testified during the trial that the persons from George Kent who visited the Property during the 2nd site visit was its Chairman, Tan Sri Tan Kay Hock and themselves. S/N kcogbGRsgUoOdwjJa5e0g [28] As regards its professional fees, Propnex had informed SME Bank, in writing, twice, that its estate agency professional fee is 3% of the selling price: the first time, on 04.01.2021 in a WhatsApp message sent by Bryan to Azzihha Azura Abd Aziz of SME Bank (“Azzihha”)(“SSD-1”) and the second time, on 11.01.2011 in the LOI. In the LOI, Propnex informed SME Bank in writing:

That Propnex had introduced and marketed the Property and the purchaser has “shown an interest in pursuing the matter further”, of which Propnex “will then assist in negotiating all terms and conditions”;

The purchaser who has shown an interest in purchasing the Property is George Kent;

The purchase price offered by George Kent is RM27,300,000.00. As the quoted selling price is RM28,500,000.00, Propnex “will try to achieve highest possible price” for SME Bank.

Propnex’s real estate professional fee of RM819,000.00.

George Kent’s offer will lapse after 10.02.2021. [29] Under cross-examination, Ng Kok Kin (SSP-1) confirmed that George Kent was looking for a factory to accommodate its venture into the glove making business. He testified that Dynacare was an associate company of George Kent formed for the purpose of its glove making business. Phoon Yee Han (SSP-2) confirmed that Dynacare was a newly set-up special purpose joint venture company between S/N kcogbGRsgUoOdwjJa5e0g George Kent and Johan Holdings Berhad, and that George Kent owns 40% of shares in Dynacare. [30] SME Bank after receiving the WhatsApp messages from Propnex and LOI, forwarded further information relating to the Property. Azzihha and Razali of SME Bank attended the 2nd site visit with Bryan and Gan of Propnex together with the representatives from George Kent. [31] Considering the facts of this case and rule 92(1) of the VAEA Rules 1986, we find the learned JC erred in holding — based on rule 92(1) and the cases of Singham Sulaiman and Baldah Toyyibah — that SME Bank's failure to sign the LOI meant there was no consensus ad idem to appoint Propnex as estate agent for the Property sale. [32] Her Ladyship failed to appreciate that rule 92(1) of the VAEA Rules 1986 requires that a registered estate agent to state the financial obligations in writing, which Propnex did: initially in its WhatsApp message of 04.01.2021 to Azzihha, and subsequently in the LOI. [33] Furthermore, the learned JC did not take into account that, pursuant to rule 92(1) of the VAEA Rules 1986, a registered agent is obligated to provide the other party with a copy of the signed agreement only after the latter has executed the agreement. In this instance, as SME Bank had not signed the LOI, Propnex was not in breach of the requirement to furnish SME Bank with a copy of the signed LOI. S/N kcogbGRsgUoOdwjJa5e0g [34] Additionally, the learned JC did not sufficiently consider that the letter of intent in Baldah Toyyibah pertained to the construction of a highway and therefore was not subject to the VAEAPM Act 1981 or the VAEA Rules 1986. Furthermore, Her Ladyship did not take into account the fact that, in Singham Sulaiman, the plaintiff’s fee was neither communicated orally nor in writing to the defendant, and the plaintiff did not introduce the available lands for sale to the purchaser, which contrasts with the circumstances of the present case. [35] Here, Propnex was one who introduced the Property to George Kent. Additionally, Propnex facilitated the introduction between George Kent and SME Bank as a prospective purchaser, and communicated the LOI to SME Bank, detailing both the offered purchase price and the agency's professional fees. Furthermore, Propnex coordinated with SME Bank to arrange a site visit to the Property by George Kent. These collective efforts ultimately resulted in the acquisition of the Property by Dynacare, an associate company of George Kent, which will utilize the Property for its glove manufacturing operations. [36] Phoon Yee Han (SSP-2), who was Dynacare’s signatory in the sale and purchase agreement between Dynacare and SME Bank for the purchase of the Property (“SPA”), testified that the SPA was the result of a series of negotiations starting from when Propnex introduced George Kent to the Property until the completion of the transaction. [37] The fact that SME Bank “ghosted” Propnex after the 2nd site visit by not letting it be involved in the meeting on 18.01.2021 with George S/N kcogbGRsgUoOdwjJa5e0g Kent and not informing it of the on-going negotiations between SME Bank and George Kent for sale and purchase of the Property until Razali’s reply to Bryan’s WhatsApp query on 22.03.2021, does not mean there was no consensus ad idem reached by the SME Bank and Propnex on the appointment of Propnex as estate agent for the sale of the Property. [38] Furthermore, rule 92(1) of the VAEA Rules 1986, expressly states that the requirement for the financial obligations to be in writing is “for the protection of all parties”. It does not state that without the written agreement, there is no estate agency contract between the parties. Moreover, rule 92(1) is in Part X: Code of Conduct and Ethics (Registered Estate Agent), which regulates the conduct and ethics of registered estate agents; not the validity of estate agency contracts. [39] Importantly, the learned JC’s determination that non-compliance with rule 92(1) of the VAEA Rules 1986 impacted the formation and validity of the estate agency contract between Propnex and SME Bank is inconsistent with the Federal Court’s decision in Wong Siew Choong Sdn Bhd v Anvest Sdn Bhd [1999] 3 MLJ 577; [1999] 3 CLJ 738; [1999] 3 AMR 3345. [40] The Federal Court in Wong Siew Choong considered whether non-compliance by an estate agent with rule 93(2) of the VAEA Rules 1986 would invalidate an estate agency agreement. The Court determined that rule 93(2), which is also in Part X of the VAEA Rules 1986, concerns the professional conduct of estate agents. It held a breach of this rule may subject the registered estate agent to disciplinary action, but does not impact the formation or validity of the S/N kcogbGRsgUoOdwjJa5e0g contract. Chong Siew Fai CJ (Sabah Sarawak), delivering the judgment of the Federal Court, stated: On the question of breach of r 93(2) of the Valuers, Appraisers and Estate Agents Rules 1986 by the estate agent, we agree that r 93(2) relates to the professional conduct of an estate agent, a breach thereof would render it liable to punishment. On the facts and the circumstances of this case, we agree with the Court of Appeal that the breach would not affect the formation and validity of the contract. [41] Pursuant to the principle of stare decisis, the High Court as well as this Court is bound by the decisions of the Federal Court. Accordingly, we find that the learned JC fell into error and was plainly wrong in finding that Propnex’s purported non-compliance of rule 92(1) of the VAEA Rules 1986 affected the formation and validity of an estate agency contract between the parties. In doing so Her Ladyship failed to follow the decision of the Federal Court in Wong Siew Choong as regards the non-compliance of the rules in Part X of the VAEA Rules 1986. [42] Additionally, it is a settled principle of contract law that a contract can be evidenced in writing, orally or by conduct of the parties. Statutory provisions relating to the appointment and authority of agents and sub-agents are contained in Part X of the Contracts Act

None of the provisions in Part X require that the appointment of an agent or sub-agent be in writing or evidenced in writing. In KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd [1996] 1 MLJ 233; [1996] 2 CLJ 611; [1996] 1 AMR 839, CA, Gopal Sri Ram JCA (as he then was) said: S/N kcogbGRsgUoOdwjJa5e0g In the first place, the law does not require that an agency or sub-agency agreement must be in writing. See Bowstead & Reynolds on Agency (17th Ed) at p 55 et seq. Further, Part X of the Contracts Act 1950, which contains the relevant provisions on agency does not contain any requirement that the appointment of an agent or sub-agent has to be in writing or be evidenced in writing. Hence the appointment may be express or implied, that is to say, it may be gathered from the facts and circumstances of a case and from the conduct of the parties: see, Kuchwar Lime & Stone Co v Dehri Rohtas Light Railway & Co Ltd AIR 1969 SC 193. [Emphasis added] [43] Tan Cheng Han SC in his book, Law of Agency , Academy Publishing, 2010 states: Agency created by agreement can arise expressly or impliedly by the words and conduct of the principal and agent. The creation of an agency relationship is not limited to express words used. Like other contractual arrangements, a relationship of principal and agent can be implied from circumstances. [Emphasis added] [44] Therefore, for the above reasons, we find that the answer to the question of whether non-compliance of rule 92(1) of the VAEA Rules 1986 means no estate agency contract exists, is in the negative.

(ii) After the LOI was emailed by Propnex to SME Bank, was there no response or acceptance by SME Bank to George Kent’s offer to purchase the Property? [45] The learned JC made a finding of fact that there was no response or acceptance by SME Bank of the offer made by George Kent in LOI. Her Ladyship in para. 17 of her grounds of judgment said: S/N kcogbGRsgUoOdwjJa5e0g

As such, in the absence of a duly executed LOI, the Respondent cannot be made liable to pay the fees as claimed by the Appellant. In this regard, the court agrees that the LOI had lapsed, effectively expired and became automatically null and void when there was no response or acceptance of the purchase offer from the Respondent to George Kent. Obviously, there was no contracts in writing as required under Rule 92(1) of VAEAR. [Emphasis added] [46] For the reasons discussed in Issue (1)(i) above, we find that Her Ladyship had committed a material error of the law by holding that rule 92(1) of the VAEA Rules 1986 requires that an estate agency agreement be in writing. The express provisions in rule 92(1) is that a registered agent shall see that the financial obligations and commitments regarding real estate transactions be in writing. It does not state that an estate agency agreement must be in writing in order to be valid and enforceable. Her Ladyship also failed to take into account that the law of contract does not require that an agency agreement to be in writing and can be implied from the conduct of the parties and circumstances of the case. [47] Additionally, the learned JC was wrong to find that because SME Bank did not sign the LOI, SME Bank cannot be liable for Propnex’s estate agency fees. Whether SME Bank is liable for the estate agency fees does not depend on whether it signed the LOI or not. It depends on whether, from the facts and circumstances of the case and by the conduct of the parties, there exists an estate agency agreement between SME Bank Propnex: see Part X of the Contracts Act 1950; KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd (supra). S/N kcogbGRsgUoOdwjJa5e0g [48] Furthermore, the learned JC was wrong to conclude that there was no response or acceptance of George Kent’s purchase offer by SME Bank. The facts show that there was response by SME Bank to the offer. Phoon Yee Han (SSP-2) testified there were numerous meetings between SME Bank and George Kent after the site visit to the Property on 16.01.2021 to negotiate the price and the terms of the sale of the Property from SME Bank to George Kent’s associate company, Dynacare. [49] Also, as confirmed by Razali to Bryan the Property was sold to George Kent. Below is an excerpt of the WhatsApp conversation between Razali and Bryan on 22.03.2021, 05.04.2021, 12.04.2021 and 14.04.2021: Monday, 22.03.2021 Bryan: Good evening Razali, is the lumut factory stil open for sale? I have another Glove maker looking Razali: Evening Bryan. I’m sorry. george kent is buying actually. Now pending conclusion of SPA terms. Bryan: Ok, let us know if you need further assistance and waiting your update. Monday, 05.04.2021 Bryan: Hi Razali, I read the news that Gkent already make announcement about the acquisition of the Lumut Factory. Congratulations of selling the factory. Razali: Congrats to our Legal Dept. Not me. Our Legal ttook over the process S/N kcogbGRsgUoOdwjJa5e0g Bryan: How can we claim the referral fee for this case ya? Monday, 12.04.2021 Bryan: Hi Razali, let me know when you free to talk ya? Thanks Wednesday, 14.04.2021 Razali: Hi bryan .. sorry for not able to talk due to my busy schedule since im No longer in charge of FM… with regards to the referral fee, why don’t u write to us n detail out justification for the referral fee since the sales alrdy concluded. The we can putforth the request subject to our mngmt approval. Thanks Bryan: Thank Razali for your feedback. I will write to you organisation for the matter. [50] Furthermore, the sale and purchase agreement dated 29.03.2021 between SME Bank and the purchaser, Dynacare — an associate company of George Kent that was specially incorporated for its glove making business to be carried out at the factory on the Property — for the purchase price of RM27,300,000.00 (which was the price offered by George Kent in the LOI) is the best evidence that there was acceptance of George Kent’s offer by SME Bank. Findings on Issue (1) [51] Accordingly, based on the above analysis of the facts and circumstances of this case and the conduct of parties, we find that there exists a contract for estate agency between Propnex and SME Bank in respect of the sale of the Property. S/N kcogbGRsgUoOdwjJa5e0g [52] We further find that Propnex had informed SME Bank in writing of its professional fees of 3% of the purchase price in the WhatsApp message dated 04.01.2021 and the LOI. The said fee is in accordance with the Seventh Schedule, item C.1 of the VAEAR Rules 1986, which provides that the maximum fees for estate agency for the sale or purchase of land and buildings is 3%. [53] Therefore, we find that the learned JC was plainly wrong in making a finding of fact that there was no contract for estate agency between Propnex and SME Bank in respect of the sale of the Property Issue (2): Whether Propnex was the effective cause of sale of the Property to Dynacare? [54] Raja Azlan Shah CJ (Malaya) (as he then was) in Chew Teng Choeng & Anor v Pang Choong Kong [1981] 1 MLJ 298; [1983] CLJ (rep) 86, FC said the following with regards to estate agents’ remuneration: The law to be applied is therefore the law of estate agents. Where the agency contract provides that the agent earns his remuneration upon bringing about a certain transaction, he will be entitled to such remuneration if he is the effective, not necessarily the immediate cause of the transaction being brought about. Whether there is a sufficient connection between his act and the ultimate transaction must be ascertained from the facts of the case. " The effectiveness of the agent's work is a matter of inference from the evidence " per McGregor J in Sushames v.Cumming [1962] NZLR 920 at p. 925. Where the agent can show that some act of his was the causa causans of the transaction (Tribev. Taylor [1876] 1 CPD 505, 510) or was an efficient cause of the sale (Miller v. Radford [1903] 19 TLR 575), he is entitled to his agreed remuneration. [Emphasis added] S/N kcogbGRsgUoOdwjJa5e0g Findings on Issue (2) [55] Based on the facts and circumstances of the case, we agree with the learned High Court JC that Propnex was the causa causans — the effective cause of the sale of the Property by SME Bank to Dynacare. [56] Counsel for SME Bank submitted that Propnex only introduced George Kent to SME Bank. However, as this point was not pleaded in SME Bank's defence nor addressed to Propnex’s witness during the trial, it is not open for SME Bank to raise it for the first time at the appeal at the High Court and again before us. [57] We find that available facts and conduct show that Propnex was involved beyond the introduction of George Kent to SME Bank. Propnex's involvement was the effective cause to the sale of the Property to Dynacare, an associate company of George Kent established for glove manufacturing at the Property. Conclusion [58] Upon thorough review of the evidence and relevant laws, we respectfully find that the learned JC’s determination — specifically, that no contract of estate agency existed between Propnex and SME Bank concerning the sale of the Property — was plainly wrong. For this reason, appellate intervention in the decision is warranted. S/N kcogbGRsgUoOdwjJa5e0g

[59] Accordingly, we allow Propnex’s appeal in Appeal 355 and dismiss SME Bank’s appeal in Appeal 362. The order of the High Court that the payment of Propnex’s services is by way of quantum meruit is set-aside. [60] It is ordered that SME Bank pay Propnex an estate agency fee of RM819,000.00, which constitutes 3% of the Property's purchase price of RM27,300,000.00. Propnex’s claim for 6% SST on the estate agency fee, amounting to RM49,140.00, is not allowed, as this sum was not specified in the WhatsApp message of 04.01.2021 or in the LOI. [61] Interest at the rate of 5% of the judgment sum from the date of judgment until full settlement. [62] For Appeal 355, costs in the sum of RM30,000.00 here and below, subject to allocatur. [63] For Appeal 362, costs in the sum of RM20,000.00 here and below, subject to allocatur. Dated: 25 August 2025 -sgd- (FAIZAH JAMALUDIN) JUDGE COURT OF APPEAL MALAYSIA S/N kcogbGRsgUoOdwjJa5e0g COUNSELS: APPEAL NO.: W-04(NCvC)(W)-355-09/2023 APPEAL NO.: W-04(NCvC)(W)-362-09/2023 For the Appellant: Lai Yee Fan Wong Yin Mei [Messrs PW Tan & Associates] For the Respondent: Amelda Md Din Abu Haziq bin Abu Talib [Messrs Amelda & Partners] For the Appellant: Amelda Md Din Abu Haziq bin Abu Talib [Messrs Amelda & Partners] For the Respondent: Lai Yee Fan Wong Yin Mei [Messrs PW Tan & Associates] S/N kcogbGRsgUoOdwjJa5e0g