Back
2025 MarsdenLR 2146
HIGH COURT MALAYA KUALA LUMPUR
MOHD YUSOF BAJURI – Appellant
Versus
WARGA EDARAN SDN BHD – Respondent
[Civil Appeal No: WA-12BNCVC-159-12/2023]
Liability under the Partnership Act requires evidence of wrongful acts committed by partners in the ordinary course of business, which was not established in this case.
Headnote:(A) Partnership Act 1961 - Sections 11, 12 and 14 - Appeal against liability for wrongful transfers - The court held that liability under the Partnership Act requires wrongdoings to be committed by partners in the ordinary course of business. The court found a misapplication of the Act by the Sessions court, leading to erroneous liability; there was no evidence connecting the 6th defendant to the wrongful acts of employees of the plaintiff. (Paras 16-28)
(B) Liability of partners - Emphasized that partnership liability cannot be imposed without proof that partners acted in the firm's ordinary course of business; mere association does not suffice. (Paras 18 and 26)
Facts of the case:
The plaintiff, a property development company, claimed RM115,750 from the 6th defendant, a partner in the 3rd defendant firm TMY Resources, for funds wrongfully transferred without the plaintiff’s knowledge by employees of the plaintiff company. (Paras 4-10)
Findings of Court:
The Sessions court misapplied the law under the Partnership Act, resulting in wrongful imposition of liability against the 6th defendant due to lack of connection with the unauthorized transfers. (Paras 21-28)
Issues: Whether a partner is liable for acts of non-partners, and whether sufficient evidence was presented to establish liability against the 6th defendant. (Paras 2 and 12)
Ratio Decidendi: The appellate court found that the trial court erred in applying Partnership Act principles without establishing that any partner committed wrongful acts in the ordinary course of business, resulting in unjust liability. (Paras 18 and 54)
Result: Appeal allowed; decision of Sessions court set aside.
| Table of Content |
|---|
| 1. introductory facts regarding the parties and claims. (Para 1 , 4 , 5 , 10) |
| 2. issue of partner liability for co-partners' actions. (Para 2 , 22 , 26) |
| 3. final conclusion and order of the appeal. (Para 3) |
| 4. court analysis of partnership liability under law. (Para 16 , 19 , 20) |
| 5. criteria for establishing partnership liability. (Para 18 , 29 , 30) |
| 6. pleading requirements for fraud allegations. (Para 37 , 39 , 41 , 44) |
| 7. assessment of alleged admission of liability. (Para 48 , 49 , 52) |
Introduction
[1] In this judgment, the parties are referred to as they were before the trial court. This appeal was filed by the 6th defendant against the decision of the Sessions court after a full trial. The Sessions court had found the 6th defendant jointly and severally liable with the other defendants in respect of the plaintiffs claim for the sum of RM115,750.00. This amount represented half of the sum which had been wrongfully transferred from the plaintiff's account to the 3rd defendant's account.
[2] The key issue in this appeal was whether a partner could be held liable for wrongful acts committed not by his co-partners but by other persons who were not partners of the firm.
[3] Upon reviewing the evidence and considering the submissions, I found material misdirection of law which affected the findings of liability. Accordingly, the appeal had to be allowed.
Brief Background Facts
[4] The plaintiff was a property development company. The 1st defendant was employed as a sales executive while the 2nd defendant held the position of account executive in the plaintiff company.
[5] The 3rd defendant was a partnership firm known as TMY Resources which was engaged in the business of supplying stationery and providing tuition services. The 6th defendant was a partner in TMY Resources along with the 4th and 5th defendants.
[6] The dispute arose from transactions involving these parties, leading to the present appeal.
[7] Between 29 March 2012 and 21 March 2013, the 1st and 2nd defendants, who were employees of the plaintiff, unlawfully transferred a total sum of RM231,500.00 from the plaintiff's bank accounts to the account of TMY Resources. These transfers were carried out without the plaintiff's knowledge or consent.
[8] The misappropriated funds were transferred in three separate tranches. The first transfer, amounting to RM66,500.00 took place on 29 March 2012. The second transfer of RM85,000.00 was made on 6 September 2012. The final transfer of RM80,000.00 occurred on 21 March 2013.
[9] These unauthorized transactions formed the basis of the claim brought by the plaintiff against the defendants.
[10] Upon discovering these unauthorized transfers, the plaintiff commenced legal proceedings against all six defendants. The claim was based on the wrongful transfer of funds from the plaintiff's bank accounts without its knowledge or consent.
[11] On 9 March 2018, the 1st defendant entered into a consent judgment with the plaintiff. Pursuant to the terms of the judgment, the 1st defendant made payment of RM115,750.00 representing half of the total misappropriated sum.
[12] Following this partial recovery, the plaintiff proceeded with its claim for the remaining balance against the 6th defendant. The claim was brought on the basis that the 6th defendant, as a partner of TMY Resources, was jointly and severally liable for the wrongful receipt of the misappropriated funds.
[13] The 6th defendant subsequently filed a third-party notice against the other defendants, seeking to pass liability onto them. As the other defendants failed to enter an appearance or respond to the proceedings, the 6th defendant obtained a judgment in default against them.
[14] Thereafter, following a full trial the learned Sessions court Judge found the 6th defendant jointly and severally liable for the outstanding balance of RM115,750.00. The Sessions court also awarded interest and costs against the 6th defendant.
[15] Dissatisfied with the decision,
