Fraudulent misrepresentation and misappropriation of funds in a joint venture investment led to personal liability of the Defendant.

Introduction

[1] This case concerns a purported project in which the Defendant, then the sole director of SH Land Sdn Bhd (SH Land), approached the Plaintiffs in August 2012 with an opportunity for a commercial and residential development project in Gua Musang, Kelantan (the Project). What is striking is that the project investment was structured as a potential joint venture involving Kebawah Duli Yang Maha Mulia Sultan Kelantan Sultan Muhammad v. (Sultan Kelantan), presenting what initially appeared to be a legitimate business proposition. A draft Joint Venture Agreement (JVA) and a land office letter created a facade of credibility, carefully designed to inspire confidence and trust.

Background And Transaction Structure

[2] The 2nd Plaintiff made three payments totalling RM5 million to S.H. Land's CIMB account between November 2012 and February 2013. According to Dennis Tow (PW-2) in his testimony, the funds were explicitly meant for premium payments, quit rent, and development expenses, not JVA payments to the Sultan. While the transaction was structured as a loan to SH Land, both witnesses emphasise that their understanding was based primarily on oral agreements and representations about the intended use of funds.

[3] Out of the RM5 million, RM4.5 million was allocated as a loan for project development, and RM500,000.00 was allocated for share transfer. The payments were made eventually to SH Land as follows:

(i) RM1,000,000.00 was paid on 30 November 2012 vide RHB Cheque No 000635 into SH Land's CIMB account bearing the number 0311-0004290-05-6 (the CIMB Account);

(ii) RM2,000,000.00 was paid on 21 December 2012 vide RHB Bank Telegraphic Transfer to the CIMB Account; and

(iii) RM2,000,000.00 was paid on 5 February 2012 vide the RHB Bank Cheque No 000809 to the CIMB Account.

[4] The common intention of the 1st and 2nd Plaintiffs, and SH Land, is that RM4.5 million was for the Project, and RM500,000.00 was for the transfer of shares in SH Land from the Defendant to the 1st Plaintiff. The share transfer was perfected via Form 32A dated 11 June 2013

Monitoring And Oversight

[5] To oversee the Project, the 1st Plaintiff and 2nd Plaintiff nominated the 3rd Plaintiff as both the director of SH Land and their representative in SH Land. Subsequently, SH Land and the Defendant appointed the 3rd Plaintiff as the director on 3 January 2013 under a resolution dated 3 January 2013. On 30 January 2013, SH Land issued another resolution, adding him as a signatory to the CIMB Account.

[6] His role was to monitor project progress and ensure proper use of funds. He attended initial meetings with the Defendant and witnessed presentations about land acquisition and development plans. However, subsequent attempts to obtain project updates met with unclear or no responses from the Defendant. Despite making the payments, the Plaintiffs did not receive any updates on the Project or the JVA and were not informed about the use of the RM4.5 million already paid by the Plaintiffs for the Project.

[7] Problems arose when the 3rd Plaintiff sent an email to SH Land's company auditor in October 2014, raising several concerns, including that the land had not been transferred, proper documentation was lacking, and RM4.5 million had been incorrectly recorded in the accounts. No positive response was received from the auditor.

[8] Being left in limbo, the Plaintiffs initiated the filing of Suit 627 (WA- 22NCvC-627-09/2018), where a Judgment in Default (JID) was obtained against SH Land o