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Malayan Law Journal Unreported/2015/Volume/Merityield Sdn Bhd v Double House Marketing Sdn Bhd &
Ors - [2015] MLJU 2027 - 8 October 2015

[2015] MLJU 2027

Merityield Sdn Bhd v Double House Marketing Sdn Bhd & Ors
HIGH COURT (KOTA KINABALU)
STEPHEN CHUNG J
CIVIL SUIT NO. BKI-22-243/10-2012
8 October 2015

Marina Tiu (Chris Thian Vun Khong with her) (Yap Chin & Tiu) for plaintiff:

Roland Cheng (Roland Cheng & Co) for the first, second, third, fifth and sixth defendants.

Henri Cheu (Cheu Adnan & Razi) for the fourth defendant.

Stephen Chung J:

JUDGMENT

The Introduction

[1] These are two suits with a long and protracted history and which have been consolidated for trial. In this
trial the parties will be referred to as they are referred to in suit BKI-22-243/10-2012. The Plaintiff called
seventeen witnesses and the Defendants called four witnesses for the trial. The parties did not file any
agreed facts or agreed issues for trial.
[2] The Plaintiff has filed a 177 pages submission, the 1st , 2nd , 3rd , 5th and 6th Defendants have filed a 87
pages submission whereas the 4th Defendant has filed a 56 pages submission. In the submissions, the
Plaintiff set out what it thought were the issues for trial whereas the Defendants set out their own versions of
the issues for trial. I will not set out all these in this judgment. I have read and heard counsel on their
submissions and the authorities cited. Each party has put their own spin on the issues and the facts. I shall
deal with the issues based on the pleadings, the evidence adduced and the submissions made. This
judgment is to be read as a whole, any heading used is only for reference.
[3] During the trial counsel for the parties had cross-examined the witnesses extensively, especially on their
credibility and both sides had accused the other side of lying and not being truthful witnesses. Many were not
forthright in their testimonies including PW1, PW5, DW1 and DW3. The best way to determine the veracity
and credibility of these witnesses was to rely on their acts and deeds contemporaneous with the events and
against the contemporaneous documents and exhibits filed and used in the 3 trial instead of their subsequent
recollection or version of it for their own purpose or vested interests: see Tindok Besar Estate Sdn Bhd v
Tinjar Co. [1979] 2 MLJ 229. The parties have 6 filed numerous bundles of documents before and during the
trial. Many of these were agreed documents which were referred to. Many other documents which were not
agreed to, were referred 9 to, tendered and marked as exhibits.

The facts of these two suits

[4] I shall set out the facts and pleadings of these two suits. On evidence adduced, in particular based on the
agreed documents and documents marked as exhibits, in 1980, the Lands and Surveys Department offered
to alienate a parcel of land described as Country Lease 24536195 situated in the District of Kunak, Sabah to
Tingkayu Cooperative Land Development Society Limited (Tingkayu). The offer to alienate was extended.
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[5] On 12.1.2001 Tingkayu sold the land to the Plaintiff at a rate of RM300.00 per acre. In the sale and
purchase agreement exhibited in PBOD1, the Plaintiff had deleted or erased the sale price. This sale price
was disclosed in the supplementary agreement which was increased from RM300.00 to RM400.00 per acre.
The sale price however contradicted PW1 that it was at RM500.00 per acre in his witness statement. The
land title had not been issued and not registered in the name of Tingkayu and could not be transferred to the
Plaintiff at that time (see sale and purchase agreement, power of attorney and supplemental agreement
prepared by Messrs Lee & Aziz acting for the Plaintiff at pages 11 to 56 of PBOD1).
[6] On 18.5.2004, Tingkayu sold the same parcel of land to the 1 st Defendant at a rate of RM1,000.00 per
acre (see sale and purchase agreement at pages 57 to 77 of PBOD1). Messrs Sugumar & Co (Sugumar &
Co) acted for Tingkayu and Messrs Jeffrey Chu & Shirlin (JCS) acted for the 1 st Defendant in this sale and
purchase.
[7] At the material times there were many claimants or squatters who resided or cultivated the land claiming
portions of the land 3 as their native land. These resulted in Tawau Suit No. T(22) of 2008 which was referred
to in Recital (g) of the Deed of Settlement.
[8] Some six months later, on 17.11.2004, consent judgment was entered in favour of the Plaintiff against
Tingkayu in Suit K22-144-2004 to perform the sale and purchase and to transfer the land to the Plaintiff (see
pages 90 to 93 of PBOD1). On 12.7.2005 the Plaintiff sold the land to Mekagreen Plantation Sdn Bhd
(Mekagreen) for RM39,735,600.00 at a rate of RM12,000.00 per acre (see sale and purchase agreement at
pages 122 to 136 of PBOD1).
[9] On 28.9.2006 consent judgment was entered in favour of the 1 st Defendant against Tingkayu in Suit K22-
170-2006 to perform the sale and purchase agreement (see pages 154 to 155 of PBOD1). The Plaintiff found
out that Tingkayu attempted to transfer the land to the 1 st Defendant. On 16.10.2006 both the Plaintiff and the
1st Defendant lodged a caveat against the land to protect their interests in the land.
[10] On 28.11.2006 the Plaintiff sued Tingkayu, the 1 st Defendant and JCS (sued as a firm) as defendants in
respect of the land dealings in Sandakan High Court Suit SK22-217-2006.
[11] After a full trial, on 5.10.2009 the Plaintiff obtained judgment against Tingkayu, the 1 st Defendant and
JCS (see pages 167 - 168 of PBOD1). Mr Norbert Yap of Jayasuriya Kah & Co was counsel for the Plaintiff
and Mr Sugumar of Sugumar & Co was counsel for the Defendants. The 1 st Defendant and JCS had filed an
appeal against that decision to the Court of Appeal (see pages to 170 of PBOD1).
[12] Pending the appeal in the Court of Appeal, the Plaintiff and 1st Defendant agreed to settle the matter and
entered into the Deed of Settlement dated 3.12.2010 (the Deed) (see pages 175-181 of PBOD1). On the
same date two Memoranda of Undertaking were signed. The first memorandum was signed between Lim
Huck Leong who was a shareholder and director of the Plaintiff and Heiron Peter Gom (DW4) who was a
shareholder and director of the 1st Defendant. The second memorandum was signed between Lim Huck
Leong and Jaiti bin Lungkiau (PW8) and DW4 and Balinggi bin Lawadin (see pages 182-186 of PBOD1). On
the same date the Plaintiff issued a letter dated 3.12.2010 to the 1 st Defendant setting out some of the terms
in respect of the settlement (see pages 187 - 188 of PBOD1).
[13] Although the 4th Defendant practising under the name of JCS was an appellant in the Sandakan suit in
the Court of Appeal, he was not a party to the settlement signed. On 6.4.2011, the Plaintiff appointed JCS as
stakeholder in respect of the land title, deed of settlement, supplemental agreement and re-transfer share
forms (see pages 195-197 of PBOD1). On 29.4.2011 JCS accepted the appointment.
[14] On 11.4.2011 the Plaintiff and 1st Defendant entered into the Supplemental Agreement (Supplemental)
(see pages 198-201 of PBOD1) which was agreed as part of the settlement. It was stated and provided for in
the board resolution of the Plaintiff dated 5.4.2011.
[15] These agreements or arrangements were subject to a consent order to be entered in the Court of
Appeal.
[16] On 7.7.2011, by the consent order in the Court of Appeal, the parties agreed that the sale and purchase
agreement dated 18.5.2004 between Tingkayu and the 1st Defendant was valid, subsisting and enforceable;
that Tingkayu was to transfer the land to the 1 st Defendant; that the sale and purchase agreement between
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Tingkayu and the Plaintiff dated 12.1.2001 was set aside; and the High Court Order given on 5.10.2009 was
thereby also set aside (see pages 210 - 212 of PBOD1).
[17] On 10.10.2011, pursuant to the settlement, the 1st Defendant entered into a Deed of Settlement with
Mekagreen (see exhibit P2 at pages 29 - 34 PBOD3), the 1st Defendant gave a Letter of Undertaking to
pay RM9 million to Mekagreen (see exhibit P3 at page 35 of PBOD3) and the 1 st Defendant sold the land to
Gemisetia Sdn Bhd (Gemisetia) for RM72,842,000.00 at the rate of RM22,000.00 per acre (see exhibits P53
and P54 at pages 37 to 50 of PBOD3). This was increased to RM24,000.00 per acre in the Deed of Variation
dated 18.10.2011 (see pages 59 to 61 of PBOD3).
[18] On 25.10.2011 Tingkayu transferred the land to the 1 st Defendant. The 4th Defendant sent a letter dated
27.10.2011 to the Plaintiff setting out the actions to be taken. On 2.11.2011 the 1 st Defendant transferred the
land to Gemisetia. These two transfers were confirmed in the Plaintiff's letter dated 13.4.2012 (pages 228 -
229 of PBOD2).
[19] On 4.11.2011, two nominees of the Plaintiff i.e. PW5 (the 2nd Third Party) and one Flavia @ Viola
Benedict, who at that time were not shareholders or directors of the Plaintiff, and the two shareholders of the
1st Defendant entered into a Shareholders Agreement (see pages 217 to 219 of PBOD1) and subsequently a
supplementary agreement which was not dated but signed after 15.5.2012 (see pages 230 - 232 of PBOD1
and pages 273 - 275 of PBOD2). The two shareholders agreements were entered into after the Mekagreen
settlement and after the land had been sold and transferred to Gemisetia.

The Plaintiff's Complaints

[20] Subsequently the Plaintiff complained that the 1st Defendant had breached the terms of the settlement,
that the 4th Defendant had breached his undertakings as the stakeholder and that the Defendants conspired
to defraud the Plaintiff in unjustly enriching themselves which resulted in the Plaintiff suffering loss and
damages. In May, 2012, the Plaintiff claimed the sum due of approximately RM26 million based on
RM21,000.00 per acre which was pleaded in its Statement of Claim. In November, 2014, in its Re-Amended
Statement of Claim, the Plaintiff claimed the sum due of approximately RM47 million based on RM24,000.00
per acre.
[21] The first letter of complaint was dated 13.4.2012, referred to earlier. These issues are dealt with in this
judgment. PW1 on behalf of the Plaintiff lodged a police report on 18.7.2012 against the 4 th Defendant (see
pages 232 - 234 of DBOD2) who was cleared of any wrongdoing by the police via a letter dated 26.2.2013
from the Attorney General's Office (page 6 of DBOD13).
[22] On 14.3.2014 Charles Lee Vui Kui, a director and substantial shareholder of the Plaintiff, who resided in
Australia, lodged a police report against the 4th Defendant which resulted in many documents seized by the
police from the office of JCS. These documents are exhibited in PBOD3, PBOD4, PBOD5 and PBOD7. The
Plaintiff submitted that it only discovered the truths in 2014 after the police gave copies of the documents
seized from the office of JCS to the Plaintiff. In November, 2014, the Plaintiff applied to re-amend its
pleadings to include fraud and that the 4th Defendant was the common solicitor of the Plaintiff and the 1 st
Defendant.
[23] The Plaintiff contended that it did not know that the 1 st Defendant had sold the land to Gemisetia for
RM24,000.00 per acre. The Plaintiff complained that the Defendants had deliberately concealed the sale of
the land and the true purchase price of the land to Gemisetia, had induced the Plaintiff to agree to sell the
land at RM21,000.00 per acre only and had misrepresented or concealed the settlement sum with
Mekagreen.
[24] The 'Mekagreen Fund' was calculated at RM13,906,200.00 based on 20% of the purchase price at the
rate of RM21,000.00 per acre. It submitted that the reduction of its shares to the proceeds of sale from 60%
to 40% was entrusted by the Plaintiff to the 1st Defendant to utilize up to 20% to settle certain issues arising
inter alia a caveat lodged by Mekagreen. It was submitted that the Plaintiff did not surrender the 20% but it
was a trust fund with a mandate to the 2nd Defendant to use it and to account for it. The Plaintiff submitted
that it only found out in 2014 that on 28.9.2011 the 1st Defendant and Mekagreen had agreed to settle the
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Mekagreen issue for RM9,000,00.00 only and that the 1st Defendant had unjustly enriched itself by pocketing
the difference.
[25] The Plaintiff submitted that in the course of negotiations leading to the Deed, the 1 st Defendant through
the 2nd Defendant had induced the Plaintiff in November or December 2010 to appoint the 4 th Defendant as
the common solicitor and stakeholder in respect of the settlement and to prepare the Deed, the two
Memoranda of Undertaking and the letter of consent dated 3.12.2010. The Plaintiff submitted that this was
part of the scheme by the Defendants to defraud the Plaintiff.
[26] The Plaintiff submitted that between 28.3.2011 and 4.4.2011 the 1 st Defendant through the 2nd Defendant
had induced the Plaintiff through PW1 to accept the sale price to the buyer at RM21,000.00 per acre
because inter alia there were squatters and it would cost RM1,000,000.00 per acre to deal with the squatters
and adverse claims.
[27] The Plaintiff submitted that the 2nd Defendant represented to PW1 that it was difficult to find a buyer and
that the 1st Defendant was considering to transfer the land to a nominee company as part of a corporate
exercise if they were unable to find a buyer. The Plaintiff submitted that the Defendants deliberately
concealed the role of the 4th Defendant in the sale and purchase from the Plaintiff and the 4 th Defendant by
his silence was also guilty of fraudulent misrepresentation. It was submitted that had the Plaintiff been
informed of the facts, it would never have agreed to reduce the purchase price.
[28] The Plaintiff submitted it was an express or implied term of the settlement that the 1 st Defendant would
be solely responsible for the payment of the purchase price under the agreement with Tingkayu. It contended
that to protect its interest and proprietary rights, the 1 st Defendant was to transfer 60% of its shares to the
Plaintiff as security.
[29] The Plaintiff submitted that therefore it was entitled to 60% of the proceeds from the sale; that the
Defendants failed to pay the difference of RM5,959,800.00 and the Plaintiff's entitlements to the proceeds
including the retention sum of RM5,040,000.00. The Plaintiff claimed that it had suffered loss and damages
as a result and sued the Defendants for the loss and damages.

The Pleadings

[30] In its Re-Amended Writ and Re-Amended Statement of Claim in Suit BKI-22-243/10-2012, which
contained 65 pages, the Plaintiff sued the 1st to the 6th Defendants and inter alia set out the particulars of its
loss in paragraph 30 thereof (Encl. 199) as follows:
PARTICULARS
i. Unauthorised deductions:-
60% of 1% commission of RM 417,186.00
RM695,310.00
60% of payment to Tingkayu RM1,986,600.00
Berhad
Bonus for 2nd Defendant RM 400,000.00
ii. Concealed Price Difference/Non
Payment
Difference in selling price of
RM3,000.00
RM24,000.00 per acre PER ACRE
&
RM21,000.00 per acre, RM5,959,800.00
RM9,933,000.00 x 60%
Under clause (e) of 1st Letter of RM1,755,000.00
Exchange
Under clause (b) and (c) of 1st
Letter
of Exchange (Sugumar & Co Fund) RM3,311,000.00
iii. Funds Defrauded from RM4,906,200.00
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Mekagareen Fund
Total Loss: RM18,735,786.00

The Plaintiff's entitlements of RM18,735,786.00 were set out in paragraph 33 of Encl. 199.
[31] The Plaintiff prayed inter alia for a declaration against the 1 st , 2nd , 3rd , 4th , 5th and 6th Defendants jointly
and severally that they had acted in breach of their fiduciary duties; in the alternative, that they were
constructive trustees for the Plaintiff's entitlements of RM18,735,786.00; for a declaration that 1 st , 2nd , 3rd ,
4th , 5th and 6th Defendants were liable to account to the Plaintiff for the RM18,735,786.00 or such other sum
as the Court thinks fit on the ground of their breach of fiduciary duty/breach of trust or dishonest assistance
and/or unjust enrichment or knowing receipt; and for an order that the 1 st , 2nd , 3rd , 4th , 5th and 6th
Defendants pay to the Plaintiff the sum of RM18,735,786.00 or such other sum as the Court thinks fit.
[32] Further and or alternatively, the Plaintiff prayed for a declaration that the 1 st Defendant had committed
breach of the terms of the Settlement Agreement and the Mekagreen Fund and for damages for
RM18,735,786.00 or such other sum to be assessed by the Court or alternatively that the 2 nd , 3rd , 4th , 5th
and 6th Defendants had committed tortuous act of inducing the 1st Defendant's breach of the terms of the
Settlement Agreement and Mekagreen Fund.
[33] Further and or alternatively, the Plaintiff prayed for a declaration that the 4 th Defendant had committed
breach of terms of his Stakeholder Letters dated 29.4.2011 and 27.10.2011 and duties of care and skill and
for damages for RM18,735,786.00 or such other sum as the Court thinks fit.
[34] Lastly, the Plaintiff prayed for a declaration that the Shareholders Agreement is null and void for total
failure of consideration and/or on the ground of fraud and for an order that the Shareholders Agreement be
set aside.
[35] Arising from the disputes, JCS filed OS BKI-24-185/8-2012 for interpleader relief in respect of the
retention sum of RM5,040,000.00 held in its account against the Plaintiff, 1 st Defendant and Gemisetia.
Before this application was heard, the Plaintiff filed an OS BKI-24-191/8-2012 application against the 1 st and
4th Defendants for the release of the retention sum to be paid to the Plaintiff. Pursuant to a court order the
Plaintiff's OS application was converted into Suit BKI-22-6/1-2013, the retention sum was to await the
outcome of the trial and the interpleader application was withdrawn.
[36] In Suit BKI-22-6/1-2013 (Encl. 4), the Plaintiff sued the 4 th Defendant for a declaration that the 4th
Defendant has acted in breach of his duties as the stakeholder in refusing or failing to release the sum of
RM5,040,000.00 to the Plaintiff, for exemplary/aggravated damages against the 4 th Defendant and for a
declaration that the 1st Defendant was in breach of the Settlement Agreement. The Plaintiff prayed that the 4 th
and 1st Defendants jointly and severally released the sum of RM5,040,000.00 within 3 days from the date of
the court order.
[37] In both suits, the Defendants denied the Plaintiff's allegations and put the Plaintiff to strict proof thereof.
[38] In paragraphs 28A, 30 and 31 of the Re-amended Defence (Encl. 240) of the 1 st , 2nd , 3rd , 5th and 6th
Defendants, the said Defendants contended that the alleged unauthorized deductions were agreed to by the
Plaintiff, that the Plaintiff's entitlements were contrary to the agreements or consents of the parties and that
the Plaintiff had agreed that it was not entitled to any excess in the selling price above RM21,000.00 per
acre.
[39] In the Re-amended Defence of the 4th Defendant (Encl. 198), the 4th Defendant contended that the
Plaintiff has no reasonable cause of action against the 4 th Defendant in respect of the alleged breach of
fiduciary duty or breach of trust or dishonest assistance or that he was the common solicitor or a constructive
trustee for the Plaintiff's alleged new entitlement of RM18,735,786.00 or any other sum or liable jointly and
severally to account to the Plaintiff for the sum of RM18,735,786.00 or any other sum on the grounds of
conspiracy to defraud the Plaintiff.
[40] The 4th Defendant also denied that he was in breach of his contractual duty or liable for conversion or
that he had committed the tort of inducing a breach of the Settlement Agreement and the Mekagreen Fund
by the 1st Defendant.
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[41] In paragraph 26B of Encl.240, the 1st , 2nd , 3rd 5th and 6th Defendants contended that the Plaintiff's
entitlements under the Deed of Settlement and Supplemental Agreement amounted to RM25,923,229.76
only, not the alleged sum of RM47,248,430.00. They pleaded that after deductions and payments, the
Plaintiff had been overpaid RM9,857,898.70 which were calculated and set out in this paragraph 26B.
[42] In Suit BKI-22-243/10-2012 the 1st and 2nd Defendants filed an amended Counterclaim (Encl.250)
against the Plaintiff for declarations in respect of the sums pleaded in paragraphs 26B, 28A, 30 and 31 in
Encl. 240 and for an order that the Plaintiff pays damages including consequential loss for fraudulent
misrepresentation and breach of warranty of the Deed of Settlement, Supplemental Agreement, consents,
undertakings, confirmation, appointment and Consent Order.
[43] In the same suit, the 1st , 2nd , 3rd , 5th and 6th Defendants have filed a claim against the 1st and 2nd Third
Party i.e. PW1 and PW5 for declaratory orders and for indemnities. Similarly, the 4 th Defendant claimed to be
indemnified by the 1st , 2nd and 3rd Defendants for the damages claimed by the Plaintiff against the 4 th
Defendant (see Encl. 143).
[44] In Suit BKI-22-6/1-2013, the 4th Defendant filed a Counterclaim for damages against the Plaintiff for
malicious prosecution. The 1st Defendant had withdrawn its counterclaim against the Plaintiff in this suit
which is similar to the counterclaim filed by the 1st and 2nd Defendants in the other suit.

Did Defendants owe fiduciary duties or were constructive trustees of Plaintiff?

[45] I shall deal with the issues together because they were inextricably related. The Plaintiff claimed against
the Defendants including prayers (2)(i),(ii),(iii) and (iv) that they had acted in breach of the terms of the
settlement and their fiduciary duties and in the alternative, that they were the constructive trustees for the
Plaintiff's entitlements of RM18,735,786.00 and were liable to account and pay the said sum to the Plaintiff
on the grounds of their breach of fiduciary duty, breach of trust, conspiracy to defraud the Plaintiff or
dishonest assistance and or unjust enrichment or knowing receipt.
[46] The burden was on the Plaintiff to establish that the Defendants had acted in breach of the terms of the
settlement or their fiduciary duties or that they were the constructive trustees for the Plaintiff's entitlements
before the Defendants were liable to the Plaintiff to account in equity and tracing. Where the Plaintiff had
alleged fraud or fraudulent misrepresentation in a civil claim, the standard of proof is on a balance of
probabilities: standard of proof is on a balance of probabilities: Sinnaiyah & Sons Sdn Bhd v Damai Setia
Sdn Bhd [2015] 5 MLJ 1.
[47] The Plaintiff's complaints arose from the convoluted scheme of settlement agreed to by the Plaintiff and
the 1st Defendant which read like a jigsaw puzzle. Instead of entering into one deed of settlement or
agreement which should have set out all the terms of the settlement clearly, including responsibilities,
liabilities, the monies to be paid, the amount, by whom and to whom, the Plaintiff and the 1 st Defendant
decided to have several namely, the Deed of Settlement (Deed), two memoranda of undertaking, the letter
dated 3.12.2010, Supplemental Agreement (Supplemental), the Shareholders Agreement and the
supplementary shareholders agreement.
[48] The Plaintiff and the 1st Defendant had entered into the Deed and Supplemental only. The Plaintiff and
the 1st Defendant were not parties to the memoranda of undertaking and shareholders agreements. There
was no privity of contract between the Plaintiff and the 1 st Defendant in these several agreements. There was
also no privity of contract between the Plaintiff and the 2 nd , 3rd , 5th and 6th Defendants. Based on the
documents referred to, the Plaintiff and the 1st Defendant had authorized their directors or nominees to enter
into these several agreements. Under Recital (a) of the Deed, it was stated that the Deed was conditional to
the issues raised in the Letters of Exchange (Memoranda of Undertaking). These several documents
consisted of the settlement arrangements between the Plaintiff and the 1 st Defendant. Where the
arrangements between the parties were contained in several documents which were executed
simultaneously, all the documents should be read together to ascertain the intention of the parties: Mars
Equity Sdn Bhd v Tis'Ata'Ashar Sdn Bhd [2005] 1 CLJ 513.
[49] The crux of the Plaintiff's claim against the Defendants was that they had breached their fiduciary duties
and were constructive trustees for the Plaintiff. Was there any fiduciary between the Plaintiff and the 1 st , 2nd ,
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3rd , 4th , 5th or 6th Defendants? A fiduciary is someone who has undertaken to act for or on behalf of another
(i.e. a principal) in a particular matter in circumstances which give rise to a relationship of trust and
confidence. The principal has a legitimate expectation that the fiduciary will not act adversely to the interests
of the principal and is entitled to the single-minded loyalty of the fiduciary. This core liability has several
facets. A fiduciary must act in good faith; he must not make a profit out of this trust, he must not place himself
in a position where his duty and his interests may conflict; and he may not act for his own behalf or the
benefit of a third person without the informed consent of his principal. Where there is a contract between the
parties, a court is slow to impose a fiduciary relationship in a commercial setting because a commercial party
is unlikely to subordinate its own interests to those of another commercial party. If it is to exist at all, not every
breach of duty by a fiduciary is a breach of a fiduciary duty: see Bristol and West Building Society v Mothew
[1998] 1 Ch 1; ESPL(M) Sdn Bhd v Radio & General Engineering Sdn Bhd [2005] 2 MLJ 422.
[50] Although there is a contract between two parties in a commercial setting, it is possible for one party to
become a fiduciary arising from the commercial dealings where an agency exists or implied especially where
the other party is vulnerable to or at the mercy of the fiduciary holding discretion or power over that party. A
fiduciary relationship can be found on the facts and surrounding circumstances rather than on contract: Geh
Cheng Hooi v Equipment Dynamics [1991] 1 MLJ 293; Solid Investments Ltd v Alcatel Lucent (Malaysia)
Sdn Bhd [2014] 3 CLJ 73.
[51] In Barnes v Addy (1874) 9 LR Ch 244, 'if a stranger to a trust (a) receives and becomes chargeable with
some part of the trust fund or (b) assists the trustees of a trust with knowledge of the facts in a dishonest
design on the part of the trustees to misapply some part of a trust fund, he is liable as a constructive trustee'.
A distinction should be drawn between a constructive trust and a constructive trustee.
[52] What were the roles or obligations of the Plaintiff and the Defendants? The evidence showed that the
Plaintiff was incorporated in 1998. It could only act through its directors, servants, representatives, nominees
or agents. PW1, also the 1st Third Party, was the chief executive officer (CEO) of the Plaintiff and at all
material times had represented the Plaintiff and another associate company Borneo Profile Sdn Bhd in the
several transactions, court cases and in the negotiations between the Plaintiff and the 1 st Defendant in the
settlement which resulted in the deed of settlement and the consent order in the Court of Appeal.
[53] Although PW1 was not a shareholder or director of the Plaintiff, because he was a bankrupt, he was
responsible for the management of the Plaintiff and was involved in appointing or nominating directors, PW3
and PW5 to the Plaintiff's company. PW3 was previously the Deputy State Secretary of Sabah and PW5 was
previously the chief engineer of Sabah Electricity Sdn Bhd (SESB), also the 2 nd Third Party, who were
appointed consultants of the Plaintiff. PW5 was appointed in 2012. PW1 felt that PW3 and PW5 would be
useful to the Plaintiff in any dealings with the relevant government departments and agencies. In 2014 PW5
became a director of the Plaintiff.
[54] The 1st Defendant was incorporated as a company in 2003 with one Loi Lung Kiong as its main
shareholder and director, who resigned with two other directors on 3.7.2006. Two nominees were then
appointed as directors of the company (see exhibit 3 P133). On 9.3.2007 the 5 th and 6th Defendants were
appointed as directors and became the shareholders of the 1st Defendant (see pages 230 - 235 of DBOD8).
The 1st Defendant by a sale 6 and purchase agreement dated 31.7.2006 sold the said land to Syarikat
Cahaya Muda Perak Sdn Bhd (SCMP Sdn Bhd) (see exhibit P118). JCS acted for the 1 st Defendant and
Messrs 9 Michael Denis Tan & Co (MDT) acted for SCMP Sdn Bhd. In August 2010, this sale and purchase
was mutually agreed to be terminated.
[55] The 2nd Defendant was not a shareholder or director of the 1 st Defendant but had represented the 1st
Defendant in the several transactions and court cases. He was authorized by the 1 st Defendant and had
negotiated the settlement with the Plaintiff, the settlement with Mekagreen, the sale of the land to Gemisetia
and dealt with PW6 on the squatters on the land (see page 10 of PBOD3). The 3 rd Defendant was also not a
shareholder or director of the 1st Defendant; she was the wife of the 2 nd Defendant. Although the 3rd , 5th and
6th Defendants were authorized to negotiate on behalf of the 1 st Defendant with Mekagreen (see page 26 of
PBOD3), it was the 2nd Defendant who had negotiated and finalized the settlement with Mekagreen which
agreed to pay RM200,000.00 as commissions to the 2nd Defendant via the 3rd Defendant.

Any client-solicitor relationship between Plaintiff and 4th Defendant?

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[56] What were the roles of the 4th Defendant in these suits? The Plaintiff pleaded that the 4 th Defendant was
the managing partner or sole proprietor of JCS. The 4 th Defendant in his witness statement had testified that
he was an advocate practising in Sabah and the sole proprietor of his legal firm. In the ReAmended
Statement of Claim, the Plaintiff claimed that the 4th Defendant was appointed the common solicitor and
stakeholder for the Plaintiff and the 1st Defendant and therefore owed duties as a fiduciary to the Plaintiff. The
Plaintiff had subsequently referred to two letters dated 10.5.2012 and 16.5.2012, given to the Plaintiff by the
police submitting that these two letters confirmed that the 4th Defendant was acting for the Plaintiff and
applied to re-amend its pleadings that the 4th Defendant was the common solicitor of the Plaintiff and 1st
Defendant. The Plaintiff claimed that the 4th Defendant had breached his duties as such to the Plaintiff, citing
several authorities in particular the case of Datuk M Kayveas & Anor v Bar Council [2013] 7 CLJ 533.
[57] In the case just cited above, the appellants, both partners in a legal firm, were found guilty of misconduct
under s. 94(3)(o) of the Legal Profession Act 1976 by the Disciplinary Committee. The appellants did not
deny that they had breached their stakeholder obligation as solicitors in a sale and purchase agreement in
which the firm acted for the vendor and agreed to a consent judgment entered against them. They however
appealed against the decision of the Disciplinary Committee. Both the High Court and Court of Appeal
dismissed the appeal. Hence the appeal to the Federal Court. The Federal Court held that the breach of
undertaking was prima facie to be regarded as misconduct even if no dishonourable conduct was involved.
It was the breach and the breach alone that was the essence. In the judgment there was no specific finding
of whether they were fiduciaries or whether there was any breach of fiduciary duties.
[58] It was held that 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. The manner in which the funds are to be disposed of depends on the terms on
which they are held: Toh Theam Hock v Kemajuan Perwira Management Corporation Sdn Bhd [1988] 1 MLJ
116. In that case Hashim Yeop A Sani SCJ stated 'the crux of the matter therefore is whether the appellant
was a stakeholder or whether he was a solicitor acting for the plaintiffs at the time he received the 5%
deposit of the purchase price.' In that case the appellant was retained as solicitor by the respondent. If an
estate agent or solicitor, being duly authorized 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: Skinner v Trustee of
Property of Reed [1967] 2 ALL ER 1286.
[59] In an action against a solicitor by his client the question is whether a solicitor-client relationship exists. In
the absence of such relationship the 4th Defendant owes no duty as a fiduciary to the Plaintiff. It is for the
Plaintiff to prove the existence of such a relationship between them: see Rabiah Bee bte Mohamad Ibrahim v
Salem Ibrahim [2007] 2 SLR (R) 655; Gurbachan Singh s/o Bagawan Singh & Ors v Vellasmy s/o
Pennusamy & other appeals [2015] 1 MLJ 773.
[60] PW1 testified that during the negotiations the 2nd Defendant informed him that the 2nd Defendant had a
lawyer who knew him (PW1) and who could draw up the deed of settlement. He said during a meeting he
was shocked that the 2nd Defendant had brought the 4th Defendant to the meeting. He said he was angry
because the 4th Defendant had carried out numerous unlawful acts in preventing the Plaintiff from having the
draft title of the land. He said the 2nd Defendant made him and the 4th Defendant to reconcile and be good
friends. He said the 2nd Defendant then convinced him to accept the 4th Defendant as the common solicitor
and stakeholder for the settlement. He said on hind sight he believed it was part of their scheme to defraud
the Plaintiff.
[61] The evidence showed that PW11 was the Plaintiff's first choice as the stakeholder but he declined. PW1,
PW3, PW11, Lim Hup Leong and the Plaintiff at all material times knew that the 4 th Defendant had acted and
continued to act for the 1st Defendant in the several transactions, was a party in the Sandakan suit and an
appellant in the appeal in the Court of Appeal. They knew there would be conflicts of interests, yet the
Plaintiff agreed to appoint the 4th Defendant as the stakeholder in the settlement between the Plaintiff and the
1st Defendant. Similarly the 4th Defendant should not have accepted the appointment due to conflicts of
interests. That did not make him a fiduciary.
 Page 10

[62] Although PW1 had testified that he was induced by the 1 st or the 2nd Defendant to appoint the 4th
Defendant as part of the scheme to defraud the Plaintiff, the appointment of the 4 th Defendant as the
stakeholder was not made by PW1 but by the board of directors of the Plaintiff. It should be noted that the
Plaintiff did not previously plead any fraud or conspiracy or fraudulent intentions in the Sandakan suit against
JCS or against the 4th Defendant.
[63] On evidence adduced, the Plaintiff and the 1st Defendant had entered into the Deed on 3.12.2010.
Pursuant to clause 3.2 of the Deed, it was mutually agreed that all resolutions, approvals and consents under
clause 2 be placed under the care of a firm of solicitors acting for the buyer of the said land (referred to as
'the stakeholder') and the appointment of the stakeholder would be mutually agreed to by the Plaintiff and the
1st Defendant.
[64] Between 3.12.2010 to 5.4.2011, PW1, the Plaintiff and its board of directors had ample time to consider
and seek advice whether to appoint the 4th Defendant or otherwise. Based on their knowledge of the 4 th
Defendant's involvements in the transactions, the Plaintiff should have appointed someone else as the
stakeholder. However, on 5.4.2011, the Plaintiff held a board of directors meeting and by a resolution agreed
to appoint JCS as the stakeholder (page 195 of PBOD1).
[65] By a letter dated 6.4.2011 the Plaintiff appointed JCS as the stakeholder in the settlement between the
Plaintiff and the 1st Defendant. In the letter the Plaintiff requested JCS to confirm that it would comply with the
requirements as stakeholders pursuant to the Deed and Supplemental and to register the land from the
owner (Tingkayu) to the 1st Defendant after the Plaintiff had delivered the land title to JCS (see pages 196-
197 of PBOD1).
[66] By a letter dated 29.4.2011 the 4th Defendant accepted the appointment as the stakeholders for both the
Plaintiff and the 1st Defendant and agreed to comply with the role and responsibility as the stakeholders to
attend to the various duties and acts stipulated in the Deed and Supplemental. The 4 th Defendant further
undertook as stakeholders (1) to hold the land title in his custody and not part with possession or effect any
transfer until he received a written notification of the bank's letter of undertaking; (2) to hold the retransfer of
the share documents in his custody and not to release the same to the 1 st Defendant until he received a
written notification of the bank's letter of undertaking; and (c) to be accountable in the event of any breach
of undertakings on his part. These were amended in the letter dated 27.10.2011 from the 4 th Defendant to
the Plaintiff.
[67] Based on the Deed, the board resolution and the three letters referred to above, the Plaintiff had
appointed the 4th Defendant and the 4th Defendant had accepted the appointment as the stakeholder.
Reading these documents, there was no mention and the Plaintiff did not specifically appoint the 4 th
Defendant as its solicitor or the common solicitor of the Plaintiff and the 1 st Defendant. As stated above,
under clause 3.2 of the Deed, the Plaintiff and the 1 st Defendant had agreed to appoint the 4th Defendant as
the stakeholder also acting for the buyer of the land, which subsequently turned out to be Gemisetia.
[68] In a stakeholder situation, there are two separate contracts. The first was between two principals, in this
case between the Plaintiff and the 1st Defendant to settle their dispute and to appoint a stakeholder to hold
certain money or property awaiting the outcome of the dispute between them. The second contract was a
tripartite contract involving the Plaintiff, the 1st Defendant and the 4 th Defendant where they appointed the 4th
Defendant as the stakeholder to keep the money or property until the events happened and then to pay to
one or both in accordance to the terms of his appointment and his undertakings. If the occurrence of the
event is disputed, the stakeholder may (i) interplead and pay the money into court, (ii) retain the money
pending the resolution of the dispute, or (iii) take the risk of paying one party: see Manzinilla Limited v Corton
Property and Investments Ltd & Ors [1996] EWCA Civ 942.
[69] In this case there were three levels of contract i.e. there was a third contract involving the buyer. Under
clause 3.2 of the Deed the Plaintiff and the 1st Defendant agreed that the stakeholder would be acting for the
buyer of the land. Under this contract the stakeholder also had to keep the money to the order of the buyer,
namely Gemisetia. The terms of clause 3.2 were clear. The Plaintiff agreed to it and had acted on it to
appoint the 4th Defendant as the stakeholder as such. The Plaintiff did not plead or challenge that it was null,
void or inapplicable.
 Page 11

[70] Although the 4th Defendant was an advocate or solicitor, on the facts and circumstances of this case the
Plaintiff did not appoint the 4th Defendant as its solicitor or as the common solicitor for the Plaintiff and the 1 st
Defendant. The 4th Defendant was never and did not act as the solicitor for the Plaintiff. The 4 th Defendant
was appointed and acted as the stakeholder only and not as the common solicitor for the Plaintiff and the 1 st
Defendant.
[71] In respect of the two letters dated 10.5.2012 and 16.5.2012, these letters were written to Messrs Lind
Willie Wong & Chin (LWCC) who were acting for HSBC Bank. These letters were in reply to queries made by
LWCC prior to release of the loan to pay the balance of the purchase price to the vendor of the land and the
'Direct Payment Party' which was a requirement of the bank that the direct payment party be represented for
the payment be released. The 4th Defendant's statement that he was acting for the 'Direct Payment Party'
was not and could not be true. However the Plaintiff and the Direct Payment Party at all material times did
not rely on this representation as the basis of its claims against the 4 th Defendant as their solicitor or common
solicitor. The Plaintiff only amended its pleadings in November, 2014, shortly before trial, that the 4 th
Defendant was the common solicitor. That was the first time that the Plaintiff has claimed as such. The
Plaintiff did not sustain any loss in 2014 arising from this allegation.
[72] This was confirmed in subsequent Plaintiff's letters dated 21.5.2012 and 29.5.2012 which referred to the
4th Defendant as the stakeholder only and never as its solicitor or the common solicitor. Similarly in the letter
of complaint dated 13.4.2012 the Plaintiff did not refer to the 4 th Defendant as its solicitor or common solicitor.
For the reasons given in this judgment, there was no client-solicitor relationship between the Plaintiff and the
4th Defendant. Any claims by the Plaintiff against the 4th Defendant and any obligations of the 4th Defendant
would be under the terms of his appointment and his undertakings as a stakeholder and not as a solicitor of
the Plaintiff.

Did the 4th Defendant owe any duty of care to the Plaintiff?

[73] The Plaintiff went on to assert that the 4th Defendant owed a duty of care and skill to the Plaintiff,
including to disclose to the Plaintiff all or any facts or matters within the knowledge of the 4 th Defendant and
to protect the Plaintiff's entitlements. Based on the Plaintiff's pleadings, the Plaintiff had confused and lumped
together the Plaintiff's claim for negligence against the 4 th Defendant with the Plaintiff's claim against the 4 th
Defendant as a common solicitor and fiduciary. As stated above, the Plaintiff had failed to establish that there
was a client-solicitor relationship between the Plaintiff and the 4 th Defendant. The Plaintiff did not appoint the
4th Defendant as its solicitor or common solicitor.
[74] The question is whether the 4th Defendant owed any duty of care and skill to the Plaintiff as the
stakeholder. As the stakeholder the 4th Defendant was required to hold the money or property according to
the terms of his appointment and undertakings pending the outcome of the dispute or event. There was no
duty on the 4th Defendant to advise or to protect the Plaintiff in his capacity as a stakeholder although he was
a solicitor by profession. The 4th Defendant was acting for the 1st Defendant and the buyer namely Gemisetia
as their solicitors. Based on evidence adduced, the Plaintiff knew of this and that the 4 th Defendant was not
the solicitor of the Plaintiff. The Plaintiff normally sought advice from PW11. The Plaintiff did not rely on the 4 th
Defendant for advice in the transactions and the 4th Defendant did not assume any responsibility towards the
Plaintiff except as the stakeholder. As stated above the 4th Defendant had filed an interpleader in respect of
the retention sum.
[75] Any loss suffered by the Plaintiff arising from the settlement between the Plaintiff and the 1 st Defendant
or from the Mekagreen settlement or from the sale of the land to Gemisetia could not reasonably be
foreseeable as a consequence of what the 4th Defendant did or failed to do as the stakeholder except what
were due to the Plaintiff under the terms of the settlement. The Plaintiff had filed a complaint to Sabah Law
Association (SLA) and there is a pending disciplinary inquiry under the Sabah Advocates Ordinance. That is
a separate issue. In all the circumstances of this case and for the reasons given in this judgment, it would not
be just and reasonable to impose a duty of care and skill on the 4 th Defendant: see The Co-operative Central
Bank Ltd v KGU & Associates Sdn Bhd [2008] 2 CLJ 545; CIMB Investment Bank Bhd v Ernst & Young &
Another Appeal [2014] 6 CLJ 438.

Did the 4th Defendant prepare the settlement documents as part of the scheme?
 Page 12

[76] The Plaintiff had alleged that the settlement documents were prepared by the 4 th Defendant as part of
the scheme whereas the Defendants alleged that it was prepared by PW11 who was an advocate of Messrs
Lee & Aziz, the nephew of PW1 and the brother of Charles Lee Vui Kui. Both PW11 and the 4 th Defendant
denied that they prepaid the documents. None of the documents set out who actually prepared them. It was
stated in clause 8 of the Deed that the parties agreed that they were the joint-makers of the deed and no
adverse presumption would be made against any party who had drawn up the deed. The Deed, two
memoranda of undertaking and the letter were signed on 3.12.2010. The Supplemental was signed on
11.4.2011.
[77] During the negotiations and drafting of these several documents, the Plaintiff, PW1, PW3, PW8 and Lim
Huck Leong had ample time and ample opportunities to seek legal advice or had access to legal advice from
PW11 or from Mr Norbert Yap who was their counsel before the Plaintiff appointed Razak & Associates to
appear on behalf of the Plaintiff in the Court of Appeal (see page 207 of PBOD1) or from any lawyers before
they entered into or signed these documents.
[78] None of them had complained that they did not have legal advice or were not allowed to take the
documents or drafts to be read or explained or to be explained by their lawyers to them. At the time of signing
the documents in the office of JCS, PW3 was present. He did not complain that he did not read or was not
allowed to read the documents before they were signed or that these document were not correct or did not
represent the terms of the settlement. PW8 and Lim Huck Leong did not complain that they were prevented
from reading or not allowed to read before they signed the documents.
[79] In any event they had agreed, signed and entered into the agreements or arrangements. It was not
pleaded and it was not submitted that they were illiterate, could not read, did not understand or were not
allowed to read the documents when they were signing the documents. They did not testify or complain that
during the signing of the documents that the 4th Defendant had misrepresented or influenced or induced them
to sign the documents.
[80] The evidence showed that on the same day that the documents were signed, the Plaintiff had issued the
letter on its letterhead dated 3.12.2010 which was to be part of the settlement. This letter was not prepared
or written by the 4th Defendant or JCS. These terms came from the Plaintiff. This letter established that the
Plaintiff had set out and agreed to the terms of settlement and that the Plaintiff's letter was part of the terms
of settlement. This letter and clause 8 of the Deed had contradicted the Plaintiff's allegations that the 4 th
Defendant had prepared these documents and in preparing these documents were part of the scheme to
defraud the Plaintiff. There were no truths in these allegations.

Did the Defendants induce the Plaintiff into the settlement?

[81] PW1 then testified that the 2nd Defendant had forced his hands into agreeing into the terms of settlement
because they knew that he had problems with the land transactions in the Land Office and had problems
dealing with one Lee Chun Khiong who was then the Deputy Director of Lands and Surveys whom PW1 said
had full control over the registration and removal of caveats and registration of land titles. PW1 said the 2 nd
Defendant knew that Lee Chun Khiong did not like him and was a partner of the 2 nd Defendant in some
business.
[82] He said during one meeting with the 2nd Defendant who called Lee Chun Khiong via telephone, the 2 nd
Defendant passed the phone to PW1. PW1 said during the telephone conversation Lee Chun Khiong told
him to work closely with the 2nd Defendant and he (Lee Chun Khiong) would lift all obstructions on his land
deals and would make sure the transfer of the land to the buyer would be done promptly. The alleged
telephone conversation was hearsay and could not be used to substantiate the Plaintiff's allegations against
the Defendants.
[83] The Plaintiff chose not to call or subpoena Lee Chun Khiong as a witness although the Plaintiff had
subpoenaed PW7, PW10, PW12 of Mekagreen who subsequently prepared a witness statement, PW13 of
Gemisetia, PW15, PW16 and PW17 of SCMP Sdn Bhd. PW2 of MDT, who prepared the sale and purchase
between the 1st Defendant and Gemisetia and was involved in the sale of the land to SCMP Sdn Bhd, was
 Page 13

also subpoenaed but only to produce some documents. The Plaintiff chose not to call him or examine him as
a witness. PW2 would be able to clarify some of these issues.
[84] PW12 testified that his legal firm Messrs Kadir, Andri & Partners had a good teams of advocates who
could advise and assist the Plaintiff in the appeal in the Court of Appeal or in the negotiations with the 1 st
Defendant. PW1 testified that he , Lim Huck Leong and his brother, who is the father of PW11 and Charles
Lee, were getting old and had heart problems. He said he did not want the uncertainties of the appeal and
decided to settle with the 1st Defendant.
[85] The Plaintiff did not plead undue influence or that there was unequal bargaining position between the
Plaintiff and the 1st Defendant. Any important decision of the Plaintiff would be made by its board of directors
(see witness statement of PW8). PW8, Lim Huck Leong and or Charles Lee Vui Kui did not complain that
they were forced to make the decisions by the 1st or 2nd or 4th Defendant. There were no merits in the
Plaintiff's allegations that the Defendants had forced or induced PW1 or the Plaintiff into the terms of
settlement.

The settlement

[86] As stated above, the Plaintiff and the 1st Defendant had entered separate sale and purchase agreement
with Tingkayu in respect of the land. Although in the Deed the Plaintiff and the 1 st Defendant had represented
and warranted that they had not entered into any sale of the land to a third party, both had in fact sold the
land to third party for a profit. The disputes which arose resulted in court cases and then in the settlement
and consent order in the Court of Appeal. In the settlement, the Plaintiff and the 1 st Defendant agreed that the
land would be sold by the 1st Defendant to a buyer and the proceeds of sale would be paid to the Plaintiff and
the 1st Defendant in accordance to the terms and conditions of the settlement.
[87] To put the settlement and sale of the land to the buyer in perspective, in 2001 the Plaintiff had bought
the land from Tingkayu and sold it to Mekagreen in 2005 for a profit. In 2004 the 1 st Defendant bought the
land from Tingkayu and sold the land to SCMP Sdn Bhd in 2006 for a profit. After the Plaintiff had obtained
the judgment in the Sandakan High Court on 5.10.2009 against Tingkayu, the 1 st Defendant and JCS, it had
the upper hand and should have and could have proceeded to complete the sale to Mekagreen since PW1
had testified that the Plaintiff must honour its agreement with Mekagreen and bearing in mind the testimony
of PW12. For many months the Plaintiff did not do anything about it before the 1 st Defendant had obtained a
stay of the judgment on 9.7.2010.
[88] After the 1st Defendant had obtained the stay, the Plaintiff and the 1st Defendant entered into
negotiations to attempt a settlement. At about that time the 1 st Defendant and SCMP Sdn Bhd had mutually
agreed to terminate the sale and purchase and this was no longer an issue or impediment to the settlement.
The Plaintiff and Mekagreen had not terminated their sale and purchase and the Plaintiff had to deal with this
issue.
[89] However, the Plaintiff agreed that the land be transferred to the 1 st Defendant and that the sale of the
land to a buyer be effected by the 1st Defendant and the proceeds of the sale to be paid to the Plaintiff and
the 1st Defendant in accordance to the settlement. Obviously both the Plaintiff and 1 st Defendant had realized
that the value of the land had increased tremendously and both could profit further if the land was to be sold
to a new buyer at the new valuation. This was a business deal between the Plaintiff and the 1 st Defendant.
Both were motivated by greed or profit.
[90] Since the Plaintiff had agreed for the land to be sold to a new buyer, the Plaintiff would have to terminate
the sale and purchase and compensate Mekagreen. It had to be dealt with and settled before the sale to the
new buyer be effected. The evidence showed that the Plaintiff or PW1 did not inform Mekagreen about the
settlement with the 1st Defendant or Tingkayu or that the Plaintiff was no longer able to sell the land to
Mekagreen but kept quiet about these. In July, 2011 Mekagreen discovered the settlement and lodged a
caveat against the land on 27.7.2011. This was after the consent order in the Court of Appeal on 7.7.2011.
PW12 insisted specific performance of the sale and purchase agreement. Subsequently the Plaintiff
requested the 1st Defendant, in particular the 2nd Defendant, to deal with the Mekagreen issue and squatters.
These issues were connected to the Plaintiff's alleged entitlements as pleaded.
 Page 14

Plaintiff claimed 60% of the proceeds and a trust of 20%

[91] Was the Plaintiff entitled to 60% of the proceeds of the sale? Although the Plaintiff pleaded and
submitted that it was entitled to 60% of the proceeds of the sale, this was not stated or provided in the Deed.
These were not referred to or contained in the 1 st memorandum of undertaking. This ratio of 60:40 was only
stated in the 2nd memorandum of undertaking.
[92] In the Supplemental dated 11.4.2011, the Plaintiff and the 1 st Defendant agreed to vary the Deed to
provide security to the Plaintiff to ensure that it would be paid its 60% shares of the proceeds of sale. In
clause 1, the 1st Defendant agreed to transfer 60% of its shares to the Plaintiff subject to the Plaintiff having
no right whatsoever on matters pertaining to the management and business of the 1 st Defendant and to
simultaneously execute all transfer forms in escrow to return the said shares to the 1 st Defendant after the
bank had furnished a letter of undertaking to pay the Plaintiff its shares of the proceeds from the sale of
the land. This was merely to secure the payment of the proceeds of the sale of the land to the Plaintiff
pending the bank's letter of undertaking. Although the Plaintiff alleged that there was a corporate exercise,
this did not amount to any corporate exercise. These shares were not transferred to and not registered in the
name of the Plaintiff because the Plaintiff had changed its position on the shares to be transferred.
[93] Some seven months later, on 4.11.2011, by the Shareholders Agreement, the Plaintiff decided that the
shares, as security, be issued and allocated to PW5 and Flavia including payments of the proceeds of the
sale to PW5 and Flavia, as the direct payment party as the nominees of the Plaintiff instead to the Plaintiff.
No explanation was given by the Plaintiff why the proceeds could not be paid to the Plaintiff and why to be
paid to the nominees bearing in mind they were not the shareholders or directors of the Plaintiff. This raised
the question whether the Plaintiff was concealing the proceeds of the sale, whether it was an attempt to
evade or avoid tax and whether it came with clean hands.
[94] In the Shareholders Agreement the Plaintiff agreed that the Plaintiff's 60% shares to the proceeds of the
sale had been reduced to 40%. These 40% shares were not transferred to and registered in the name of
PW5 and Flavia because subsequently in the Supplementary Shareholders Agreement the Plaintiff
requested that the Plaintiff's 40% shares, as security, be issued and allocated to PW5 only instead of PW5
and Flavia. These changes were made at the request of the Plaintiff which delayed the transfers of the
shares to the Plaintiff or its nominees as security. The Plaintiff applied to set aside this Shareholders
Agreement.
[95] PW5 testified that he and Flavia were asked by PW1 to attend at the office of the 4 th Defendant to sign
certain documents. He said he asked the 4th Defendant three times about the agreement and he said the 4 th
Defendant each time assured him that they were correct and it represented the agreement between the
Plaintiff and the 1st Defendant. PW5 said the 4th Defendant had misrepresented and induced them to sign.
PW3 was present. Before they signed the agreement they did not telephone or confirmed with PW1 about
the contents of the agreement and whether they should sign or otherwise. PW3, PW5 and Flavia could read
and understood the contents. They did not complain that they were not allowed to read or could not
understand the agreement. Although the Plaintiff complained that for many months it asked but was not given
a copy of the document signed, the Plaintiff did not produce any letter stating it had complained and was not
given a copy of the document signed.
[96] At the material times the Plaintiff never complained that it did not appoint PW5 and Flavia as its
nominees or as its 'direct payment party.' The Plaintiff did not complain that it did not agree to appoint PW5
as its eventual sole nominee and 'direct payment party'. PW3 testified that Flavia had resigned as a nominee
and a 'direct payment party'. PW5 had received the proceeds of the sale as the nominee of the Plaintiff. The
Plaintiff did not complain that the contents of the Shareholders Agreement and the supplementary
shareholders agreement were not correct or not true or were fabricated by the 4 th Defendant. The Plaintiff
never applied to set aside the supplementary shareholders agreement. There was no basis for the Plaintiff to
set aside the Shareholders Agreement.
[97] However the Plaintiff contended that the purported reduction from 60% to 40% were entrusted by the
Plaintiff to the 1st Defendant to utilize up to 20% to settle certain issues arising inter alia a caveat lodged by
Mekagreen and that the Plaintiff did not surrender the 20%. The Plaintiff submitted that the 20% was a trust
fund with a mandate to the 2nd Defendant to use it and to account for it.
 Page 15

[98] Pursuant to the two letters dated 12.9.2011 and 30.9.2011 from the Plaintiff, the Plaintiff agreed that the
Plaintiff's 60% shares to the proceeds of the sale had been reduced to 40% and it meant that the 1 st
Defendant was entitled to 60% of the proceeds of the sale. This agreement by the Plaintiff to reduce its
shares to the proceeds of sale from 60% to 40% was also reflected in the Shareholders Agreement dated
4.11.2011 and in the supplementary shareholders agreement. Clause 3 of the Shareholders Agreement
contradicted the Plaintiff's contention that 'up to 20% was to be utilized by the 1 st Defendant to settle the
Mekagreen issue'. On the evidence adduced, the Plaintiff had agreed to reduce its shares of the sale
proceeds from 60% to 40%.
[99] PW1 had met PW12 on 24.9.2011 to try to resolve the dispute with Mekagreen. PW1 and the Plaintiff
knew that they had to settle and compensate Mekagreen. The Plaintiff agreed initially to set aside 10% out of
the initial 60% of the proceeds of sale for this purpose. PW12 of Mekagreen had testified that he and Dr
Edmond had initially asked for RM20 million as compensation to settle with Mekagreen. This sum would
exceed the 20%. Subsequently Mekagreen agreed to reduce it to RM14 million. This was the reason why the
Plaintiff had agreed to increase the 10% to 20%. PW1 instead of negotiating with PW12 requested the 2 nd
Defendant to negotiate with PW12 so that the 9 compensation would not exceed the 20%. The Plaintiff had
deducted this sum from its entitlements as shown in page 265 of PBOD2.
[100] On the facts, the 1st Defendant at the request of the Plaintiff, in particular the 2 nd Defendant, had
negotiated with Mekagreen and was at liberty to negotiate the settlement on the best available terms that it
could obtain. In the event the settlement with Mekagreen exceeded the 20%, the 1 st Defendant would be out
of pocket. In the event the settlement was within the 20%, the 1 st Defendant was entitled to keep the
difference. The evidence showed that after negotiations, PW12 agreed to come down from RM14 million and
agreed to settle at RM9 million.
[101] Since the Plaintiff had requested the 1st Defendant to negotiate the settlement with Mekagreen, it
wanted to ensure that Mekagreen would not make any further claims against the Plaintiff or PW1 upon the
settlement. This was provided in clause 5.5 of the Mekagreen settlement agreement. Clearly this was with
the knowledge of the Plaintiff otherwise the Plaintiff would be worried about the terms of the settlement or
whether any further claims against the Plaintiff or PW1 by Mekagreen.
[102] Since there was a contract between the Plaintiff and Mekagreen and the Plaintiff knew that the 2 nd
Defendant had negotiated with PW12 of Mekagreen, there was nothing to prevent the Plaintiff or PW1 from
making enquiries from PW12 or Dr Edmond or Mekagreen or from the 2 nd Defendant about the terms of the
settlement but did not do anything about it. The Plaintiff had received its shares of the proceeds of the sale of
the land. This could only come about after the Mekagreen settlement. For many months the Plaintiff did not
ask about the settlement with Mekagreen and kept quiet about it. The Plaintiff did not allege that Mekagreen
or PW12 had conspired with the Defendants to conceal the terms of the settlement or to injure or unjustly
enrich themselves. Based on the facts and circumstances of the case, the conclusion was that the Plaintiff
knew of the Mekagreen settlement and there was no evidence of any concealment or unjust enrichment by
the Defendants.

Was there a corporate exercise?

[103] Although the Plaintiff submitted that the 1st or 2nd Defendant had represented that it was considering to
carry out a corporate exercise, this was not provided in the Deed or Supplemental between the Plaintiff and
the 1st Defendant. There was no mention of any corporate exercise or the appointment of any director or
transfer of shares or of any re-structuring of any company which involved or concerned the Plaintiff. The only
mention of a corporate exercise was in the Deed of Settlement dated 10.10.2011 between the 1 st Defendant
and Mekagreen. This was after the Plaintiff and the 1 st Defendant had entered into the Deed dated
3.12.2010, after the Plaintiff had on 4.4.2011 agreed for the land to be sold at RM21,000.00 per acre and
after the consent order in the Court of Appeal on 7.7.2011. There was no complaint by the Plaintiff that the
Defendants had misrepresented or induced the Plaintiff to enter into the settlement because of the corporate
exercise. There was no complaint by PW12 or Mekagreen that they had been induced or cheated to enter
into the settlement.
 Page 16

[104] In any event the Plaintiff had pleaded that the 1 st Defendant was considering to transfer the land to a
nominee company as part of a corporate exercise if the 1 st Defendant was unable to find a buyer. The
evidence showed that the 1st Defendant had found a buyer, namely Gemisetia, and there was no necessity
for any corporate exercise. This purported corporate exercise did not mislead or induce the Plaintiff into the
settlement or the Mekagreen settlement.
[105] The bank's letter of undertaking dated 16.11.2011 was issued shortly after the land was sold to
Gemisetia on 10.10.2011. After the bank had issued the letter of undertaking to the nominees of the Plaintiff,
the security in respect of the 40% had expired, became redundant and there was no necessity to transfer the
40% shares to PW5. There was never any 'trust' in respect of the 40% shares or 20% 'entrusted'. Although
the Plaintiff had referred to the Mekagreen Fund, it did not adduce evidence of any trust or trust fund or trust
account or for it to be set up.

Any trust?

[106] The Plaintiff did not plead any other trust or constructive trust. Referring to the several agreements or
documents and the evidence adduced, the Plaintiff did not refer to any specific document or facts which
provided for any trust or any intention to create any trust or which set up any trust between the Plaintiff and
the Defendants. There was also no reference to any constructive trust or constructive trustees. There was no
evidence of any express, implied or constructive trust or any intention to create any such trust between the
Plaintiff and any of the Defendants. There was no evidence of the 'three certainties' in respect of a trust in
this trial: see Yeong Ah Chee v Lee Chong Hoi & Anor [1994] 3 CLJ 20; Perman Sdn Bhd & Ors v Europena
Commodities Sdn Bhd & Anor [2005] 4 CLJ. There was no evidence of any trust fund set up for the 20% or
the 40%. Based on the documents referred to and the facts of the case, there was no express trust or implied
trust or constructive trust between the Plaintiff and the Defendants.
[107] The Plaintiff did not lead any evidence of any trust or trust account or trust fund set up for the proceeds
of the sale of the land on behalf of the Plaintiff and or the 1 st Defendant. The evidence showed that the buyer
(Gemisetia) had obtained the loan from HSBC Bank to finance the purchase of the land and the proceeds of
the loan would be paid by the bank through its solicitors LWWC. The loan was not paid into any trust or trust
account or trust fund set up on behalf of the Plaintiff and or the 1 st Defendant or the buyer. The difference
between the sale price and the bank loan, which was paid by the buyer via MDT to JCS as the stakeholder,
was paid into a client's account of JCS as required under the rules of Sabah Advocates Ordinance. The
evidence showed that some of these were paid as advances to the Plaintiff.
[108] On evidence adduced, there was no trust or trust fund in respect of any monies due to the Plaintiff or
belonging to the Plaintiff except the retention sum of RM5,040,000.00 which is the subject matter of the
interpleader. The Defendants did not receive any money from any trust fund belonging to the Plaintiff and
there was no evidence that they or any of them had knowingly dealt with any such money from any trust fund
belonging to the Plaintiff. There was no evidence that they or any of them had dishonestly dealt or misapplied
any such money from any trust fund belonging to the Plaintiff. There was no evidence that the 4 th Defendant
had assisted the other Defendants or vice versa as such.
[109] Referring to the four accepted categories in which the courts presume the existence of a fiduciary
relationship, in this case there was no evidence that the Defendants or any of them were the directors or
shareholders of the Plaintiff or that they were in solicitors-client relationships with the Plaintiff or there was a
agent-principal relationship or were partners of the Plaintiff in a business. The Plaintiff did not plead and the
Defendants did not undertake to act for or on behalf of the Plaintiff so that there were agent-principal
relationships between them. On the evidence, the Plaintiff was not vulnerable to or was at the mercy of the
Defendants. The settlement between the Plaintiff and the 1 st Defendant was a business deal. Based on the
facts of the case and on the authorities referred to, there was no fiduciary between the Plaintiff and the
Defendants and they were not constructive trustees of the Plaintiff.

Any conspiracy or concealment of the sale and sale price to Gemisetia?

 Page 17

[110] The Plaintiff complained that it did not know of the sale to Gemisetia and that the Defendants had
deliberately concealed the sale price of the land sold to Gemisetia. The Plaintiff submitted that the 1 st
Defendant, the 4th Defendant and Gemisetia had concealed the sale and the sale price by entering into five
agreements in respect of the sale in order to conceal the real sale price. The Plaintiff contended that the
Defendants had induced the Plaintiff to agree to sell the land at RM21,000.00 per acre whereas it found out
in 2014 that the land was sold at RM24,000.00 per acre. Reading the Deed there was no mention of any
consent required for the 1st Defendant to sell the land to a buyer or to state the agreed sale price or the time
frame to sell the land. Instead, these were contained in the letter dated 3.12.2010 from the Plaintiff, on the
same date of the Deed and the two memoranda of undertaking signed.
[111] In this letter dated 3.12.2010 (see pages 187-188 of PBOD1), the Plaintiff stated that it agreed to give
consent to the 1st Defendant to sell the land at RM22,000.00 per acre for a period of three months. In the
event the 1st Defendant could not secure the buyer, the Plaintiff and the 1 st Defendant were at liberty to find a
buyer on a 'first come first served basis'. In paragraph (c) of the letter, it stated that if the land was sold in
excess of the agreed sale price of RM22,000.00, the 1 st Defendant, its agents or nominees were entitled to
the excess provided that the 1st Defendant, its agents or nominees would pay the tax involved, if any.
Paragraph (d) stated that in the event the 1st Defendant failed to secure a buyer within the three month
period, the other terms in the Deed would remain binding.
[112] This three month period was extended to 3.7.2011 by a letter dated 28.3.2011 from the Plaintiff (see
page 193 of PBOD1 and page 78(ii) of DBOD1) and the Plaintiff by another letter dated 4.4.2011 agreed to
reduce the sale price to RM21,000.00 per acre (see page 194 of PBOD1).
[113] Although the consent and time frame for the 1 st Defendant to sell the land up to 3.7.2011 had expired,
after this date the 1st Defendant had sold the land to Gemisetia. There was no objection or complaint by the
Plaintiff that the 1st Defendant was not authorized or not allowed to sell the land to a buyer or to Gemisetia or
to the sale price or that the sale was unlawful, void or voidable or to be terminated. Based on the evidence, in
fact the Plaintiff had agreed to the sale at RM21,000.00 per acre and requested for its 40% shares to the sale
proceeds be paid to its eventual single nominee PW5. At the material times there was no complaint of any
fraud, fraudulent misrepresentations or inducement in respect of the sale at RM21,000.00 per acre although
it knew of the sale to Gemisetia (see page 228 and pages 265 to 270 of PBOD2).
[114] The evidence showed that the letter dated 12.9.2011, signed by Lim Huck Leong, as a director of the
Plaintiff, who had subsequently passed away, had made reference to a tele conversation between PW1 and
the 2nd Defendant on the same date. This letter was written about six months after the letter of extension
dated 28.3.2011 and two months after the extended date of 3.7.2011. The letter confirmed that the Plaintiff
authorized the 1st Defendant to utilize up to 10% of the sale proceeds at RM21,000.00 per acre for the
settlement of nominated expenses as agreed vide the tele-conversation and that the authorization was
irrevocable and enforceable until the complete settlement. The 10% were increased to 20% by the letter
dated 30.9.2011 signed by Lim Huck Leong. The nominated expenses were not set out in these letters.
[115] These terms were reflected in a letter dated 27.10.2011 written by JCS which referred to the Plaintiff's
40% and agreed sale price of RM21,000.00 per acre. This letter was written after a meeting between PW1
and PW3 with the 4th Defendant of JCS on 25.10.2011, after the consent order in the Court of Appeal and
after the sale of the land to Gemisetia. The Plaintiff submitted that it merely acknowledged this letter and did
not agree with the contents. The Plaintiff however did not as soon as possible send any letter to complain
about the contents of this letter. The 40% and the sale price at RM21,000.00 per acre were confirmed in the
Shareholders Agreement dated 4.11.2011.
[116] Up to this date there was no complaint by the Plaintiff or by PW1 or PW3 or PW5 or PW8 or Lim Huck
Leong that the Defendants had made fraudulent misrepresentations to them or had concealed the sale price
or the time frame to sell the land or the squatters problems or the nominated expenses or the identity of the
buyer.
[117] Under clause 5.1 of the Deed, it was agreed that the 1 st Defendant was to sell the land to a buyer
subject to a condition precedent that the buyer was to pay 'a said sum of money', as provided in 'the letters of
exchange' (the memoranda of undertaking), out of the proceeds of sale, to be paid to the Plaintiff and the 1 st
Defendant upon execution and registration of the transfer and the buyer was required to irrevocably
 Page 18

authorize the stakeholder to distribute the sale proceeds to the Plaintiff and 1 st Defendant in accordance to
the letters of exchange or memoranda of undertaking.
[118] The evidence showed that in March, 2011 Gemisetia was interested to buy the land and paid earnest
money of RM800,000.00 to secure the land to prevent other potential buyers from purchasing the land. The
1st Defendant could not enter into a sale and purchase agreement with Gemisetia because the settlement
between the Plaintiff and the 1st Defendant was subject to the consent order to be obtained in the Court of
Appeal.
[119] From 18.3.2011 onwards Gemisetia had paid the deposit and part-payments towards the sale price.
The Plaintiff on several occasions asked the 1st Defendant for advances and had received several payments
totalling in the sum of RM1,355,000.00 out of the proceeds of the sale (see page 260 of PBOD2). Based on
the Plaintiff's pleadings and documents referred to, it was not in dispute that the Plaintiff had received several
sums amounting to RM1,355,000.00, from as early as on 25.3.2011. These advances were paid out of the
deposits or proceeds of the sale of the land to Gemisetia. The Plaintiff was happy to accept the advances
and kept quiet about where the payments came from.
[120] By a letter dated 18.4.2011, the Plaintiff confirmed that upon receipt of the deposit, the said sum would
be utilized firstly for the expenses required to effect registration of the transfer of the land to the 1 st
Defendant. This was one month after Gemisetia had paid the deposit of RM800,000.00 for the land on
18.3.2011 and which was then paid as the advances to the Plaintiff. This confirmed that the Plaintiff was
aware that the land had been agreed to be sold to Gemisetia.
[121] In clause 2(2)(g) of the sale and purchase agreement between the 1 st Defendant and Gemisetia, it was
agreed that a sum stated in section 2(f) in the Third Schedule be paid to the 'Direct Payment Party' directly
on the completion date and pursuant to a letter of undertaking from the bank which provided the loan to
Gemisetia for the purchase of the land. This sum stated in section 2(f) in the Third Schedule amounted to
RM32,918,600.00 based on the purchase price of RM22,000.00 per acre. The names of Che Sit Bong @
Chu Sit Bong (PW5) and Flavia @ Viola Benedict as the 'Direct Payment Party' were stated in the Fourth
Schedule. This was reflected in the Shareholders Agreement and supplementary shareholders agreement
signed by them on behalf of the Plaintiff.
[122] The HSBC letter of undertaking dated 16.11.2011 was addressed inter alia to PW5 and Flavia, who
were the nominees of the Plaintiff. This was part of the arrangements between the Plaintiff and the 1 st
Defendant in the settlement. The heading of this letter referred to the Sale and Purchase Agreement dated
10.10.2011 and the Supplementary Agreement dated 31.10.2011 with Gemisetia as the purchaser of the
land. This letter of undertaking and the sequence of events referred to above confirmed that the Plaintiff
knew of the sale of the land to Gemisetia. The terms of the sale and purchase between the 1 st Defendant and
Gemisetia reflected the settlement between the Plaintiff and the 1 st Defendant. If it did not know earlier, as it
alleged, it knew on or after 16.11.2011.
[123] The Plaintiff did not call an officer from the bank that the bank did not send the letter to the Plaintiff or
its nominees or that the bank had concealed about the sale and the loan to Gemisetia. The Plaintiff's letter
dated 13.4.2012 confirmed that it knew of the sale and transfer of the land to Gemisetia. Again in the
Plaintiff's statement (pages 265 to 270 of PBOD2) the Plaintiff in May 2012 knew of the sale to Gemisetia.
There was no substance to the Plaintiff's contention that it did not know of the sale to Gemisetia or the sale
price and that it only found out about it in 2014 after being provided with the documents by the police.
[124] Under the Deed and several documents, there was nothing to prevent the Plaintiff from asking or
making enquiries to the 1st Defendant or 2nd Defendant or 4th Defendant or PW2, or even to Gemisetia, on the
sale of the land or the identity of the buyer or the sale price or whether the sale was successful or within the
3 month period or extended 3 month period, bearing in mind that the Plaintiff had agreed for the land to be
sold at RM22,000.00, then reduced to RM21,000.00 per acre and that the 1 st Defendant was entitled to the
excess.
[125] The evidence showed that by a letter dated 25.3.2011, a third party offered to buy the land at
RM26,000.00 per acre from the Plaintiff (see pages 191 - 192 of PBOD1). The Plaintiff should have sold the
land at that price to the third party, there would be no necessity to give the extension vide the letter dated
28.3.2011, the Plaintiff would have profited from that sale and there would be no dispute between the Plaintiff
 Page 19

and the 1st Defendant on the sale and sale price to Gemisetia. There would be no complaint that the 1 st or 2nd
or 4th Defendant had concealed the sale or the sale price to Gemisetia.
[126] Shortly before the trial, the Plaintiff had applied to re-amend its pleadings to include Gemisetia as a
defendant for conspiracy to defraud the Plaintiff. I have dismissed these amendments but have allowed other
extensive amendments in that application. The Plaintiff did not at that time appeal against that decision and
did not apply for a stay of the trial pending appeal to the Court of Appeal. The Plaintiff had elected not to
proceed with the claims against Gemisetia and had subpoenaed PW13 of Gemisetia as its witness.
[127] In a tort of conspiracy, there must be a co-existence of an agreement with an overt act causing damage
to the Plaintiff. The Plaintiff must establish an agreement between the 1 st , 2nd , 3rd , 5th and 6th Defendants
with the 4th Defendant for the purpose of injuring the Plaintiff and acts done in execution of that agreement
which resulted in damages to the Plaintiff: SCK Group Bhd & Anor v Sunny Liew Siew Pang & Anor [2010] 9
CLJ 389. On a balance of probabilities, on the evidence adduced and for the reasons given in this judgment,
the Plaintiff has failed to prove the tort of conspiracy against the Defendants.

Plaintiff's entitlements

[128] In respect of the Plaintiff's entitlements set out in paragraph 33 of the Re-Amended Statement of Claim,
the Plaintiff's entitlements were calculated based on the purchase price of RM24,000.00 per acre. The
Plaintiff never asked for the land to be sold at RM24,000.00 per acre. As stated above, the Plaintiff had
initially asked for it to be sold at RM22,000.00 per acre but agreed for the price to be reduced to
RM21,000.00 per acre and that the 1st Defendant was entitled to keep any excess above RM21,000.00. This
sum of RM21,000.00 was confirmed in the Plaintiff's statement at page 265 PBOD2. The Plaintiff's
entitlements, if any, should be calculated based on RM21,000.00 per acre only. Further, as stated above, the
Plaintiff had agreed to reduce its 60% of the proceeds of sale to 40%. Any calculation of the Plaintiff's
entitlements would be based on 40% instead of 60%. PW9 stated that the Plaintiff had no record of the
Plaintiff's projected entitlements. Therefore the Plaintiff's entitlements based on RM24,000.00 per acre and
60% of the proceeds of the sale of the land could not be sustained.
[129] Although the 4th Defendant has referred to RM1.4 million, the 1st Defendant had referred to RM1.41
million and the Plaintiff has referred to RM1,572,248.40. Based on pages 263 and 265 of PBOD2, the
advances amounted to RM1,355,000.00. There was no mention of the sum of RM1.4 million or RM1.41
million or RM1,572,280.40 in pages 263 and 265 of PBOD2 or in its entitlements in paragraph 33 of its Re-
Amended Statement of Claim. The Plaintiff did not claim for these sums in its pleadings.
[130] Reading paragraph 33 of the Re-Amended Statement of Claim, the Plaintiff had agreed to deduct
RM9,000,000.00 for the Mekagreen settlement, RM1,000,000.00 paid to the illegal squatters and the
advances of RM1,355,000.00 it had received from the proceeds of the sale of the land. The Plaintiff did not
set out its claim for any refund of the sum of RM4,906,200.00 from the alleged Mekagreen Fund to be paid
by the 1st Defendant to the Plaintiff in paragraph 33. The Plaintiff had agreed to deduct the sum of
RM13,906,200.00 (see page 265 of PBOD2). This contradicted the Plaintiff's claim for the loss of
RM4,906,200.00 in paragraph 30 therein.
[131] The Plaintiff submitted that the 1st Defendant was solely responsible for the payment of the purchase
price under the agreement with Tingkayu. The Plaintiff submitted that it was entitled to the sum of
RM3,311,130.00 and the sum of RM1,755,000.00 by referring to the first memorandum of undertaking. In
paragraph 30 of the Re-Amended Statement of Claim the Plaintiff also claimed a sum of RM1,986,600.00.
This sum was calculated based on 60% of RM3,311,130.00 and amounted to a double claim. However it was
not claimed as the Plaintiff's entitlements in paragraph 33.
[132] Reading the Deed, there was no provision express or implied that the 1 st Defendant was solely
responsible for the payment of the purchase price under the agreement with Tingkayu. The 'said sum of
money' referred to was provided for in clause (a) of the first memorandum of undertaking which referred to a
sum of RM1,755,000.00 set out in clause (e) Schedule 1 for payment of the land premium, cess and land
rent to secure the land (see page 150 PBOD1). This was subject to verification and acceptable by Tingkayu.
 Page 20

[133] Clause (b) provided that the 1st Defendant at the request of the Plaintiff was to retain any available sum
refunded by Sugumar & Co from the sum of RM3,311,130.00 for the purpose of reimbursing the Plaintiff. In
clause (c) the 1st Defendant undertook to secure the release of the sum referred to in clause (b) and it went
on to say that failure to pay the Plaintiff in clause (e) Schedule 1 within the stipulated period would be
deemed a fundamental breach of the Deed. Clause (c) is to be read together with clause (a) and clause (b)
i.e. to retain any available sum refunded by Sugumar & Co. and subject to verification and acceptable to
Tingkayu. The sums of RM1,755,000.00 and RM3,311,130.00 were subject to any refund and to be verified
by Tingkayu.
[134] By a letter dated 6.7.2011 (which should be 6.1.2011), JCS had written to Sugumar & Co. for refund of
the RM3,311,130.00 but by a letter dated 10.1.2011 Sugumar & Co. advised that they were unable to agree
with the matters set out in the letter of 6.1.2011. By a letter dated 3.6.2011, Tingkayu confirmed that the sum
to be refunded to the Plaintiff amounted to RM1,730,000.00 only out of the said sum of RM3,311,000.00, with
a balance of RM1,580,900.00 to be paid to Tingkayu for the purchase of the land (page 206 of PBOD1).
There was no mention of the sum of RM1,755,000.00 or RM1,986,600.00 to be paid to the Plaintiff in this
letter.
[135] In the letter dated 18.4.2011, the Plaintiff agreed that the expenses to effect the transfer of the land to
the 1st Defendant as well as payment for the full settlement of whatever balance of purchase price due to
Tingkayu be paid out of the proceeds of the sale of the land. The evidence showed that the 4 th Defendant 6
had spoken to PW1 about the payments, which was confirmed in the letter dated 15.5.2012 (pages 273 - 275
of PBOD2) and PW1 had agreed for RM3,311,000.00 to be deducted. The Plaintiff did 9 not include this sum
in page 265 of PBOD2 as its entitlements. This contradicted the Plaintiff's contention that it was entitled to
RM3,311,000.00.
[136] There was no complaint by the Plaintiff on the amount to be refunded to the Plaintiff. This was again
confirmed in a letter dated 4.11.2011 from Tingkayu (pages 220 - 221 of PBOD2). Again there was no
complaint by the Plaintiff. The land was transferred to Gemisetia on 2.11.2011. The evidence showed 18 that
the sum of RM1,730,000.00 was paid to the Plaintiff on 8.11.2011, within the stipulated 7 day period (page
127 of DBOD7). This sum was not stated in the Deed or the memoranda of undertaking. The Plaintiff did not
complain that this payment was wrong or not correct or outside the stipulated time. Again, in the Plaintiff's
first letter of complaint dated 13.4.2012, the Plaintiff did not complain that the Defendants had failed to pay
the sums of RM1,755,000.00, RM3,311,000.00 and or RM1,986,600.00 to the Plaintiff or was entitled to
these sums. There were no merits on the submissions. These contradicted the Plaintiff's claim to the loss of
these three sums in paragraph 30 or its entitlements in paragraph 33 of its Re-Amended Statement of Claim.
[137] The Plaintiff also claimed for refund or loss of unatuhorized deductions of RM417,186.00 being 60% of
1% commission of RM695,310.00 and RM400,000.00 being bonus for the 2 nd Defendant. Clause 3.5 of the
Deed provided for all incidental costs and disbursement for the registration of the land from Tingkayu to the
1st Defendant and the subsequent disposal of the land by the 1 st Defendant including agent's fee of 1% of the
sale price to be paid out of the proceeds of the sale. This 1% amounted to RM695,310.00 based on the sale
price of RM21,000.00 per acre. The land was sold by the 1st Defendant and was entitled to the agent's fee of
1%. The Plaintiff did not sell or found the buyer and was not entitled to the 1% agent's fee or 60% thereto.
The Plaintiff was not entitled to the sum of RM417,186.00.
[138] In respect of the bonus of RM400,000.00, the 2nd Defendant pleaded that PW1 had verbally promised
him the bonus and prayed for a declaration that the sum of RM400,000.00 be deducted from the proceeds of
the sale as a gift to the 2nd Defendant for his efforts in the Mekagareen settlement and the sale of the land to
Gemisetia. This bonus was not provided for in the settlement documents. This was an alleged verbal
promise. As stated above both PW1 and the 2nd Defendant were not forthright in their testimonies. There was
no letter or MSM message which confirmed this verbal promise to pay RM400,000.00 to the 2 nd Defendant.
Although the 2nd Defendant had set out this at page 263 of PBOD2, the Plaintiff did not agree to this as a
bonus (see pages 265 to 270 of PBOD2). On a balance of probabilities, the 1 st and 2nd Defendants have
failed to establish that PW1 had promised to pay the bonus of RM400,000.00 or that the 2 nd Defendant was
entitled to the sum of RM400,000.00. This sum is to be refunded and paid to the Plaintiff by the 2 nd Defendant
upon the expiry of thirty days from the date of this judgment with interest at 5% per annum calculated from
9.7.2012 where a payment was made to the 2nd Defendant on that date (see page 1 of PBOD3).
 Page 21

Retention sum and squatters problem

[139] The last item in the Plaintiff's alleged entitlements is the sum of RM5,040,000.00 being squatters
retention sum retained by the 4th Defendant which was the subject matter of an interpleader application and a
subsequent court order for it to be retained by court appointed stakeholders pending the outcome of this trial.
This retention sum was referred to in the bank's letter of undertaking dated 16.11.2011.
[140] The evidence showed that pending settlement and prior to the Deed signed on 3.12.2010, the Plaintiff
on 20.11.2010 authorized a Tan Che Chuan (TCC) to carry out harvesting, transporting and selling of palm oil
fruits and conducting security services within the compound of the land. After the Deed had been signed, on
the said TCC 'sublet his authorizations' to Zainal Abidin (PW6) in consideration of PW6 being entitled to 10%
of the gross profits gained from the sales of the crops harvested from the designated area. This was
increased to 25% as provided in a 'three party contract' dated 2.9.2011 signed between the Plaintiff, TCC and
PW6 (see pages 6 - 8 of PBOD5), barely two months after the consent order in the Court of Appeal.
[141] The land was transferred to the 1st Defendant on 25.10.2011 and to Gemisetia on 2.11.2011. By a letter
dated 17.2.2012, the Plaintiff agreed and authorized the 1 st Defendant to utilize a sum of RM1,000,000.00
from the proceeds of sale of the land to defray the costs to remove the squatters. By a letter dated (page 225
of PBOD2) to the 1st Defendant, PW6 stated that after the consent order in the Court of Appeal he and his
group no longer had any claim to the land under the three party agreement and requested to be paid the
RM1,000,000.00. Out of the RM1 million to be utilized, the 2 nd Defendant had paid PW6 RM500,000.00 only.
The Plaintiff did not plead and did not ask for the remaining RM500,000.00 to be refunded. PW6 is not a
party in these suits.
[142] The 1st and 2nd Defendants have pleaded and prayed for a declaration that the 1 st Defendant was
entitled to deduct RM1 million to engage security to prevent illegal squatters from reentry and illegal
harvesting. Based on the letter dated 13.3.2012, if PW6 was to be believed, there was no squatter in the land
at that time and the 1st and 2nd Defendants had agreed to pay PW6 for his service in evicting squatters,
bearing in mind the land had been transferred to Gemisetia on 2.11.2011.
[143] On a balance of probabilities, the 1st and 2nd Defendants had failed to establish that there were
squatters or there were squatters who refused to leave the land or that they had evicted these squatters after
13.3.2012. There was no agreement between the Plaintiff and the 1 st or 2nd Defendant to employ DW2 and
Chin Yoke Chee (the brother of the 2nd Defendant) to provide the security services or for the fee of RM1
million. The 1st or 2nd Defendant did not ask or counterclaim against the Plaintiff to pay this sum of RM1
million or part thereof to the 1st or 2nd Defendant. There was no basis for it and no basis for the declaration.
[144] By a letter dated 2.5.2012, Gemisetia requested the 4 th Defendant for a sum of RM5,280,000.00 to be
retained based on an estimate of 120 acres of the land being still occupied by squatters (page 262 of
PBOD2). The 1st Defendant by a letter dated 3.5.2012 requested that the sum of RM5,040,000.00 instead of
RM5,280,000.00 be retained. PW13 and the 1st Defendant had failed to establish that there were still
squatters in the land who had occupied the land after 13.3.2012. Based on two site visits, on 16.12.2011 and
11.1.2012, there was no report of squatters in the land (see PBOD7). Any squatters who entered the land
after 13.3.2012 were the responsibilities of Gemisetia.
[145] On 12.6.2012 the Plaintiff asked for the sum of RM5,040,000.00 to be released to the Plaintiff. The
Plaintiff wrote further letters dated 13.6.2012 and 19.6.2012 for the said sum to be released. As stated
above, pursuant to clause 3.2 of the Deed, Gemisetia had a say on the release of the proceeds of the sale
pending the squatters problem to be solved. The evidence showed that PW1 had spoken to PW13 of
Gemisetia on the phone on 13th and 15th June 2012 and they agreed that RM3,000,000.00 out of the
retention sum be paid to the Plaintiff (see page 302 of PBOD2) and the balance to be paid to MDT on behalf
of Gemisetia. This balance sum would be dealt with after a joint inspection of the squatters' problem. This
again confirmed that the Plaintiff knew that Gemisetia was the buyer of the land.
[146] As stated above, based on the dispute between the Plaintiff and the 1 st Defendant and on the other
hand with Gemisetia, the 4th Defendant had correctly filed the interpleader pending the outcome of the
dispute. Subsequently the court had made the order that the retention sum be kept pending the outcome of
this trial. The 4th Defendant had not done anything wrong in refusing to pay this sum to the Plaintiff.
 Page 22

[147] Up to the end of the trial the Plaintiff and Gemisetia have failed to carry out a joint-inspection of the
squatters problem. Since the land has been transferred to Gemisetia, it has possession and management of
the land. Gemisetia is not a party in these suits and has not filed any claim against the Plaintiff or the 1 st and
4th Defendants in respect of the sum of RM5,040,000.00. The conclusion to be drawn is that there was no
longer any squatters problem. This sum is to be released to the Plaintiff by the court appointed stakeholder
upon the expiry of 30 days from the date of this judgment.

Claims for Indemnity

[148] For the reasons given in this judgment, the Defendants have not sustained any loss or damages
arising from the claims of the Plaintiff in paragraph 30 or paragraph 33 or any other paragraphs of its Re-
Amended Statement of Claim except what sums were due to the Plaintiff under the settlement. There is no
need for them to be indemnified. The Third Party claim against the 1 st and 2nd Third Party i.e. PW1 and PW5
is accordingly dismissed. Similarly, the 4th Defendant's claim for indemnity against the 1st , 2nd and 3rd
Defendants is dismissed. With no order as to costs for both applications for indemnity and no order for costs
to PW1 and PW5.

Counterclaim of 1st and 2nd Defendants

[149] In respect of the Counterclaim of the 1st and 2nd Defendant, although the Defendants pleaded that the
Plaintiff had been overpaid more than RM9 million, the 1 st and 2nd Defendants did not claim for this sum to be
paid to the 1st Defendant. Instead the 1st and 2nd Defendants prayed for the declarations sought. Based on
the evidence adduced and for the reasons given in this judgment, there is no basis for the declarations
sought in prayers a, c, d, e, ea, eb, ec, ed, ee, ef and eg set out in the Counterclaim of the 1 st and 2nd
Defendants. These declarations sought are refused. The declaration sought in prayer b is granted. The 1 st
Defendant had received this sum since 2012 and any claim for interest on this sum is refused.
[150] In respect of prayer (f) in the Counterclaim of the 1 st and 2nd Defendants, they have failed to establish
that the Plaintiff had made fraudulent misrepresentation and breach of warranty of the settlement documents
and that they have suffered consequential loss as a result.

4th Defendant's claim for malicious prosecution

[151] In suit BKI-22-6/1-2013, the 4th Defendant counterclaimed against the Plaintiff for damages in respect
of a wrongful and malicious prosecution of this action against the 4 th Defendant. The 4th Defendant testified
that PW1 had on more than one occasion threatened to destroy his legal firm. The 4 th Defendant submitted
that the Plaintiff and PW1 had brought this action in bad faith with ulterior motive to destroy 4 th Defendant's
business and reputation as an advocate. In his written submission the 4 th Defendant stated that he intended
to withdraw his Counterclaim. However he has not done so.
[152] In an action for the tort of malicious prosecution, the 4th Defendant had to prove he was prosecuted at
the instance of the Plaintiff or PW1 who had acted maliciously and without reasonable or probable cause and
that the proceedings had terminated in his favour: see Taib bin Awang v Mohamad bin Abdullah & Ors
[1983] 2 MLJ 413. The claimant should among other things show that he was prosecuted by the Plaintiff, that
is to say, that the law was set in motion against him on a criminal charge: see Jaafar Mohd Khalid v Hong
Leong Bank Berhad [2013] 8 CLJ 869.
[153] As stated above, on 18.7.2012 PW1 had lodged the police report against the 4 th Defendant. In the
police report the Plaintiff complained that the 4th Defendant had deducted the sum of RM5,040,000.00
without its proper and lawful authorization and had wrongfully retained the sum. The Plaintiff stated that it
had demanded the 4th Defendant to return the sum but failed to do so. It went on to say that the 4 th Defendant
had dishonestly deducted the sum deliberately to deprive the Plaintiffs from its money and had conspired
with the 1st Defendant to cheat the Plaintiff and had committed criminal breach of trust.
[154] As stated above, the police had cleared the 4 th Defendant of any wrong after the investigation. The
police investigation based on the police report lodged by Charles Lee is still pending. The 4 th Defendant was
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never arrested or charged for any offence and there isn't any proceedings which has terminated in his favour.
Based on the facts and pleadings, the 4th Defendant did not come within and did not establish that he had
been maliciously prosecuted by the Plaintiff.
[155] The 4th Defendant did not tender any medical report that he had suffered stress and high blood
pressure and required medication as a result. He also did not produce any evidence of any loss in his
business or practice as a result of the malicious prosecution.
[156] He has not pleaded abuse of process as a cause of action: see Grainger v Hill [1838] 4 Bing NC 212;
Malayan Building Society Bhd v Tan Sri Ungku Nazaruddin bin Ungku Mohammad [1998] 2 MLJ 425. The 4th
Defendant has failed to prove his case against the Plaintiff for malicious prosecution.

Conclusion

[157] For the reasons given in this judgment, the Plaintiff's claims in prayer (1), prayer (2)(i), (ii), (iii), (iv), (v),
(vi), (vii), prayer (2A)(i), (ii), (iii), (iv), prayer (2B)(i), (ii), (iii), prayer (2C)(i), (ii), (iii), prayer (2D)(i), (ii), (iii),
prayer (3)(i), (ii) and prayer 4 are dismissed except as stated above, the 2 nd Defendant shall pay the sum of
RM400,000.00 to the Plaintiff upon the expiry of thirty days from the date of this judgment with interest at 5%
per annum calculated from 9.7.2012 until full payment.
[158] In respect of the retention sum of RM5,040,000.00, the subject matter of the interpleader and Suit 22-
6/1-2013, this retention sum is to be released to the Plaintiff by the court appointed stakeholders upon the
expiry of thirty days from the date of this judgment together with any interest thereon, if any. The Plaintiff's
suit in BKI-22-6/1-2013 is hereby dismissed with no order as to costs.
[159] On the question of costs, the Plaintiff has submitted a bill of costs and submitted on the costs to be
paid to the Plaintiff. The 1st , 2nd , 3rd , 5th and 6th Defendants and the 4th Defendant did not file any bill of costs
and did not submit on the costs to be paid. The Plaintiff has failed to prove its case in its claim of
RM18,735,786.00 except for the sum of RM400,000.00. Similarly, the 1 st and 2nd Defendants have failed in
their Counterclaim against the Plaintiff except for prayer b. The 4 th Defendant's claim against the Plaintiff has
been dismissed. Based on the facts and circumstances of this trial, each party is to bear their own costs.
[160] The costs for security held by counsel for the Plaintiff and counsel for the 4 th Defendant in a interest
bearing deposit be released to the Plaintiff upon the expiry of thirty days from the date of this judgment.