Toh Lay Lian v Lieu Ang Ping & 6 Lagi (T-02(NCVC)(W)-942-05/2016)

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1 IN THE COURT OF APPEAL OF MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO: T-02 (NCVC)(W)-942-05/2016 BETWEEN TOH LAY LIAN … APPELLANT

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(1) This appeal revolves around the issue of an interest in a piece of land situated in Kuala Terengganu described as GRN 16376 Lot 4802, Mukim Bandar and claimed by the appellant who was the plaintiff in the High Court. The first and second respondents [first and second defendants] were the registered co-proprietors of the Iand. Way back on 14/05/1997, the co-proprietors entered into an agreement to sell the land to a company, Peranginan Teluk Marina Sdn Bhd for an agreed price of RM485,000.00. A 10% deposit of RM48,500.00 was paid but unfortunately the sale could not be concluded because an application by the Government of Malaysia (High Court Terengganu case No. 28-15- 2004) the company was wound up vide a court order dated 26/04/2005 and it was subsequently de-registered by the Companies Commission 4 Malaysia. In 2010, i.e.13 years after the execution of the agreement, the plaintiff, in her capacity as Director of the Peranginan Teluk Marina lodged a private caveat against the Iand pending the completion of the sale and to protect the company’s interest in it. She also filed an originating summons [OS No. 24-107-2010] against the co-proprietors. That action was filed on her behalf by Messrs Azman Wan Helmi & Associates (Messrs. Azman) whose partners were named as the 5th-7th defendants in the court below and are co-respondants in this appeal. It ended with a consent order [the OS consent order] entered into by the parties. The co-proprietors were represented by Messr. Wan Abd Muttalib & Co. (Messrs Wan) whose partners were named as the 3rd and 4th defendants in the court below and also the co-respondants in this court. In other words, the plaintiff not only sued the co-proprietors and their lawyers but also her own in a subsequent action which is the subject matter of this appeal and why that was so would only be clear upon a further narration of events that took place after the OS consent order. But first, a brief mention of the OS consent order is warranted. The OS consent order

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(2) The original sealed order of the court states that both the originating summons and the caveat be withdrawn. However, it was subsequently amended on 01/12/2013 on application by the plaintiff’s new advocate, 5 Messrs Wan Zainuddin and Co.(“Messrs Zainuddin”) and allowed by the Deputy Registrar. With the amendment, the agreement about the withdrawal of the caveat by the plaintiff was deleted and in its place, the plaintiff’s undertaking not to lodge another caveat on the land as well as a fresh term that the plaintiff or her agent be given the liberty to purchase the said land by paying the balance of the purchase price.

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(3) Prior to that amendment and after the OS consent order was recorded, a new buyer for the Iand came into the picture. That buyer was the plaintiff’s own nominee, LHW Building Management Co. Sdn. Bhd [“LHW”]. However that sale too was aborted. The reasons for that are as follows: LHW’s aborted sale The agreement entered into between LHW and the co-proprietors was dated 30/3/11 but a disagreement arose over the period upon which the balance of the purchase price was to be paid. Messrs. Wan informed Messrs. Azman that the co-proprietors agreed the payment be made within 7 days from 01/08/2012 but which LHW objected to. Thus, vide a letter dated 09/08/2012, Messrs Wan, on the instruction of its clients, the co-proprietors terminated the sale and purchase agreement. This led LHW to file a writ action, No. 22 6 NCVC-22-03-2012 [“LHW’s first writ action”] for specific performance of the sale and purchase agreement. LHW’s writ actions The co-proprietors through Messrs Wan filed a striking out application of LHW’s first writ action on the ground that there was no concluded contract between the parties. LHW then withdrew the said action with no liberty to file afresh. Despite that agreement, LHW filed another writ action i.e. case No. NCVC-58-10-2012 [LHW’s second writ action] later in the same year to declare that the agreement between LHW and the co-proprietors was still valid. A striking out application filed by the co-proprietors against LHW’s second action based on the earlier above-mentioned agreement not to file another action was allowed on 12/05/2013 and an appeal against that decision was dismissed by the Court of Appeal on 06/11/2013. An application for leave to appeal to the Federal Court against that decision was dismissed on 22/4/2014.

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(4) Before the dismissal of their leave application in the Federal Court, that is on 25/11/2013, LHW through Messrs Zainuddin applied to view the recording of the proceedings in the High Court on 30/03/2011 when the 7 OS consent order was recorded. That recording, according to the plaintiff shows a difference in the terms of the said OS consent order which had been agreed in that there was an undertaking by the plaintiff not to lodge a fresh caveat and that the plaintiff or her agent be given the liberty to buy the said land by paying the balance of the purchase price.

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(5) As alluded to earlier, an application was then made by the plaintiff to amend the OS consent order which was allowed. Following that amendment, on 08/12/2013 the plaintiff proceeded through Messrs Zainuddin to pay the balance of the purchase price of RM436,500.00 but which payment was rejected by the co-proprietors on account that the sale and purchase agreement have been terminated. That rejection moved the plaintiff to file, not immediately, but about 5 months later, i.e. on 07/05/2014 a writ of summons against the defendants the details of which will be mentioned shortly. However, before that, it is pertinent to note that vide a Gazette Notification No. 65 dated 05/01/2012, the Government of Terengganu acquired the said land and RM2.7 million was paid as compensation. Therefore, the first prayer of the plaintiff in her statement of claim is for an injunction to restrain the co-proprietors from claiming the compensation paid by the State Government, her second prayer is for the said compensation be paid to her by the co-proprietors as damages. As 8 against the lawyers, the 3rd and 4th defendants, she prayed that either severally or jointly, they pay her damages for fraud and conspiracy to defraud by concealing the actual term of the OS consent order with the intention to deny her the benefit from the said OS consent order and accordingly, ownership of the land. She also pleaded that the 3rd defendant as her fiduciary was negligent by not drafting the draft OS consent order based on the actual terms which have been agreed and using the original consent order to remove her caveat on the land which led to her suffering losses, not just the interest in and the compensation for the land but also legal cost from the High Court, all the way to the Federal Court.

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(6) In respect of the 5th -7th defendants, a sum of RM5 million was prayed as aggravated damages wherein the same accusation of negligence was levelled against them arising from the entry of the original consent order and also for breach of fiduciary duties.

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(7) For further certainty and clarity on the sequence of events which led to the filing of the plaintiff’s suit on appeal now, we would reproduce the chronology of events which have been agreed and produced at the trial. In this appeal it appears at pages 13-16 of the Additional Appeal Record 2 [RRT2]. 9 TARIKH

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(8) The co-proprietors pleaded, inter alia, that there was an agreement in principle that a new sale and purchase agreement between the plaintiff or her agent be executed and it was not an absolute right to purchase without going through a formal agreement. Given that the plaintiff was not agreeable to pay the balance of the purchase price within 7 days from 31/07/2011, the sale and purchase agreement was terminated. The plaintiff action was also barred by res-judicata and estoppel and they 12 denied that there were collusion, fraud or conspiracy with the other co-defendants.

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(9) The 3rd and 4th defendants amongst others, reiterated the fact pleaded above that a new formal sale and purchase agreement was to be executed and there was no concluded contract for the sale of the land at that material time when the OS consent order was made. They questioned whether they owed the plaintiff or her agent any fiduciary duty or duty of care and in turn accused the plaintiff of conspiracy to defraud by offering RM100,000.00 to the 3rd defendant as gratification to “perdayakan” the co-proprietors to agree on a division of the compensation for the land [50:50]. This offer was made through the plaintiff’s solicitor in LHW’s second suit.

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(10) The 5th and 7th defendants in their defence denied they were negligent in the conduct of the litigation which led to the OS consent order and pleaded that any losses suffered by the plaintiff in relation to the aborted sale and purchase agreement over the land was self-inflicted and that plaintiff was advised by them that she had no locus standi to lodge the caveat given that she was a director of a company which has been wound up. They further pleaded the facts which led to the OS consent order and contended that the sale and purchase agreement was aborted 13 due to disagreement over the timelines to pay the balance. Likewise they denied the allegation of fraud, collusion and conspiracy levelled by the plaintiff against them. It was also pleaded that the plaintiff together with two others came to their office and offered the 5th defendant gratification in order to say that the 3rd defendant had conspired with the plaintiff to commit fraud against her when preparing the draft OS consent order, which offer was rejected. All the defendants counter-claimed against the plaintiff for general, exemplary and aggravated damages arising from the matters pleaded in their defences.

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(11) The plaintiff filed her replies to the defences and defences to the counter-claim which basically denied the allegations made against her. As against the co-proprietors she stated that the original timeline agreed for payment of the balance of the purchase price was 60 days. She insisted that there was concealment of the actual terms of the original OS consent order and that the 3rd-5th defendants’ intention were to unilaterally terminate the agreement by putting forth unreasonable conditions and unjustly enriching themselves together with the co-proprietors with the compensation money. 14

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(12) As against the 5th-7th defendant, she inter alia, pleaded that Peranginan Marina was not wound-up but de-registered, that their defence as well as that of the other defendants were mere denial and the allegations against her were fabricated. As for their counter-claims, she pleaded that the defendants have no cause of action against her and put them to strict proof thereof. The Trial

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(13) Altogether 32 issues for trial were agreed by the parties which are reproduced at pages 8-12 of Additional Appeal Record No. 2 [RRT2] but which would not be produced verbatim in this judgment. Instead the summary are as follows: i. whether the defendant have, in recording the original OS consent order conspired and committed fraud against the plaintiff which have caused losses to the plaintiff. ii. Whether the 3rd defendant had breached his fiduciary duty towards the plaintiff and was negligent in his duty when he withdrew the plaintiff’s caveat based on the original OS consent order, thereby causing losses to the plaintiff including the deposit of RM48,500.00 and the litigation cost at all levels of the courts. 15 iii. Whether the 4th defendant as a partner in Messrs Wan at that material time was also liable based on the fraudulent and negligent action of the 3rd defendant. iv. Whether the 3rd defendant as the 1st and 2nd defendant’s advocate was responsible towards the plaintiff who was at that material time represented by another advocate, the 5th defendant. v. Whether the 5th defendant breached his fiduciary duty towards the plaintiff by conspiring and in cohort with the 1st and 2nd and 3rd defendant. vi. Whether the original OS consent order was amended according to the law. vii. Whether the plaintiff has the right to claim the compensation awarded for the acquisition of the land as special damages. A total of 12 witnesses testified at the trial – 7 for the plaintiff and 5 for the defendants. At the conclusion thereof, the learned High Court Judge found, after laying out the pertinent facts and the chronology which led to the recording of the original OS consent order and the subsequent failed attempt to conclude a new sale and purchase agreement for the land, decided that it was the plaintiff’s own fault which contributed to that failure for not agreeing to the timeline to pay the balance of the purchase price. His Lordship held that there was no conspiracy to commit fraud on the 16 plaintiff by the 1st, 2nd and 3rd defendants which resulted in the failure to enter into a new sale and purchase agreement. The elements of conspiracy as held in Repco [M] Sdn. Bhd. v Tan Poh Falt & Ors [2013] 7 MLJ 408 were not proved, according to His Lordship. The learned High Court Judge also held against the plaintiff on her failure to lodge a police report against the 3rd and 5th defendants, if it were true that there was conspiracy to commit fraud against her as alleged and she did not even lodge any report to the Bar Council against the 5th defendant if it were true that he had acted against her rights and interest.

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(14) The learned High Court Judge also found that the plaintiff’s claim was barred by res judicata because there were two earlier actions on the same cause of action. Lastly, His Lordship held that the plaintiff had failed to provide any proof to support the RM 5 million aggravated and exemplary damages claimed by her. The Appeal

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(15) Essentially the findings of the learned High Court Judge was disputed by the plaintiff on the ground that these were made without giving due weight to relevant considerations whilst taking into account irrelevant ones, that these considerations were wrong in law and made without judicial appreciation of the facts. 17

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(16) As rightly identified in the written submission of learned counsel for the plaintiff, the core issue is the amended OS consent order and the absence of the term that the plaintiff or her agent be at liberty to purchase the said land in the said order. That omission according to her amounts to a fraudulent misrepresentation to the plaintiff that she would have to renegotiate the terms of the fresh agreement. However, in our view the fallacy of this argument is that as shown from the chronology of the case, even before the OS consent order was amended, the plaintiff did through her nominee, LHW agree to enter into a new sale and purchase agreement and although it was a new agreement, LHW only needed to pay the balance of the purchase price. However due to disagreement over the period to pay the balance (7 days from the date of the new agreement as requested by the 1st and 2nd defendant through the 3rd defendant but 60 days as requested by LHW through the 5th defendant), that agreement was terminated. Since there was never any dispute that LHW was the plaintiff’s nominee, the new term in the amended OS consent order has been fulfilled even before that order was amended. So where lies the conspiracy to defraud as alleged by the plaintiff? With the same consideration in mind, even if the 5th defendant was careless in not ensuring that the exact terms of the OS consent order was recorded, nevertheless, such want of care did not cause her to suffer any losses. It 18 must be made clear that it was never disputed that LHW was a nominee of the plaintiff. In fact in LHW’s first suit it was pleaded at paragraph 3 thereof that the plaintiff herein was its director (see page 792 of the Core Bundle of Document).

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(17) As for the allegation of negligence and breach of fiduciary duty against the 3rd and 4th defendants, as rightly pointed out by their counsel before us by citing this court’s decision in Hiap-Taih Welding & Construction Sdn. Bhd. & Anor v Boustead Pelita Tinjar Sdn. Bhd. [formerly known as Loagan Bunut Plantation Sdn. Bhd] [2014] 5 MLJ 576, they owe her no duty of care since they were acting for the co-proprietors. We were in total agreement with their counsel’s submission and this consideration applies to the 5th defendant as well. In actual fact the 3rd defendant proceeded to take action in compliance with what was actually agreed, which was to give the plaintiff’s nominee, LHW the right to purchase the land by paying the balance of the purchase price which the plaintiff was supposed to pay. It is to be noted that it was never agreed by the parties in the amended OS consent order on the timeline to pay the balance so that the timeline still remained at large and as pointed out earlier, it was the disagreement over that timeline that caused the failure to conclude the agreement which then led to its termination. 19 The Repco’s Case

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(18) The other major complaint of the plaintiff was with regard to the application of the ratio in Repco [M] Sdn. Bhd. v Tan Toh Falt & Ors [2013] 7 MLJ 408 by the learned High Court Judge. In his grounds at paragraph 56 page 38 thereof which is found in the Additional Appeal Record, the learned High Court Judge reproduced paragraphs 59 and 62 of the cited case which reads as follows: “[59] In order to establish a conspiracy to defraud …, the plaintif must establish that “there must be an agreement or combination of two or more with the common intention to effect an unlawful purpose or to do a lawful act by unlawful means resulting in damage to the plaintiff … [62] The Supreme Court case of Chu Choon Moi v Ngan Siew Tin

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(1986) 1 MLJ 34 states as follows: We agree that fraud whether made in civil or criminal proceeding must be proved beyond reasonable doubt and cannot be based on suspicion and conjecture. Proof beyond reasonable doubt does not mean proof beyond the shadow of doubt. The degree of proof need not reach certainty but it must carry a high degree of probability. What it means is that the evidence adduced is such that the court or 20 a prudent man considers its existence probable in the circumstances of the case.”

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(19) The plaintiff’s counsel submitted that the application of Repco’s case (supra) by the learned High Court Judge was erroneous because the later decision of the Federal Court in Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd (2015) 7 CLJ 584 held that the standard of proof for fraud in a civil claim is on a balance of probabilities and not beyond reasonable doubt. With respect, the learned High Court Judge’s reproduction of paragraph 59 of Repco’s case (supra) was not on the standard of proof for fraud in a civil case but the elements to prove such a claim. We say so because after quoting that two paragraphs from the cited case, His Lordship said this:

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(20) The last issue which the appellant canvased before us was that of res judicata. The learned High Court Judge was of the view that the withdrawal of LHW’s first suit and the striking out of LHW’s second suit which was affirmed by this court and for which leave to the appeal was not granted by the Federal Court attracted the application of the doctrine. The fact that these suits were not filed personally under the plaintiff’s 22 name but that of her nominee, that the subject matter in both actions was the purchase of the same parcel of land or that these actions were filed before the OS consent order was amended may not, singularly or collectively, be so strong a reason to prohibit her from filing or continuing with her own action. However, it simply cannot be denied from the face of her pleading that her cause of action against the defendants, jointly or severally here, was premised on the allegations of fraud, collusion, conspiracy and breaches of fiduciary duty of care. Therefore to tie her hands with the doctrine of res judicata would not be appropriate because going by what was held by the Supreme Court in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189, res judicata is “ … not confined to the issues which the court is actually asked to decide, but covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be stated in respect of them”. It is obvious that these allegations could not have been pleaded at the time the LHW suits were filed. 23 Nonetheless, the plaintiff’s successful opposition to the application of the doctrine does not affect the outcome of this appeal on the considerations made of the earlier grounds and upon which her appeal was dismissed. Dated: 1 Ogos 2018 RHODZARIAH BINTI BUJANG Judge Court of Appeal Malaysia Putrajaya Note : This copy of the Court’s Grounds of Judgement is subject to editorial revision 24 Parties appearing: For the Appellant :