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2025 MarsdenLR 2670
HIGH COURT MALAYA SHAH ALAM
DATO SUHAIMY OTHMAN – Appellant
Versus
INFINITY TRUSTEE BERHAD & ANOR – Respondent
[Civil Suit No: BA-22NCVC-133-03/2022]
The doctrine of privity of contract prevents claims against parties not privy to an agreement, and misrepresentation must be proven to establish liability.
Headnote:(A) Contract Act - Section 74(1) - Breach of Subscription Agreements - Plaintiff claimed against Defendants for breach and misrepresentation regarding investments in the Short-Term Note issued by Asia Cornerstone - Court found that the Defendants were not parties to the agreements and thus not liable - Plaintiff failed to prove the existence of a binding contract or misrepresentation by the 2nd Defendant. (Paras 36, 44, 56)
(B) Privity of Contract - Doctrine states that only parties to a contract can enforce its terms - Plaintiff could not hold Defendants liable as they were not privy to the Subscription Agreements. (Paras 46, 56)
Facts of the case:
Plaintiff invested RM1,000,000 through Subscription Forms to Asia Cornerstone but alleged non-payment of interest, leading to claims against the Defendants who were not parties to the agreements. (Paras 11-32)
Findings of Court:
The Defendants were not liable as they were not parties to the agreements, and Plaintiff failed to prove misrepresentation or a binding contract with the Defendants. (Paras 56)
Issues: The main issues were whether the Defendants were parties to the agreements and whether the 2nd Defendant misrepresented the investment scheme to the Plaintiff. (Paras 36, 56)
Ratio Decidendi: The court ruled that privity of contract prevents the Plaintiff from claiming against parties not privy to the agreement, and the alleged misrepresentation was not proven. (Paras 44, 56)
Result: Claim dismissed with costs of RM15,000.00.
Introduction
[1] Plaintiff's cause of action against Defendants was for an alleged breach of Subscription Agreements between Plaintiff and Asia Cornerstone Asset Management Company Limited (Asia Cornerstone). Plaintiff further contended misrepresentation by the 2nd Defendant, resulting in Plaintiff investing in the scheme and not receiving payments as scheduled.
[2] After hearing witnesses from both parties, on the balance of probabilities, I have dismissed Plaintiff's claim with cost to the Defendants.
[3] Plaintiff has now appealed to the Court of Appeal, and my reasons are below.
The Parties
[4] Plaintiff is an individual engaged in various enterprises before his retirement and had participated in several investment schemes.
[5] Plaintiff and the 2nd Defendant have known each other for a period of time, as the 2nd Defendant's brother was previously employed by Plaintiff.
[6] The 1st Defendant is a trustee company incorporated in Malaysia, specializing in trust and fund-related matters.
[7] The 1st Defendant was appointed by Asia Cornerstone to act as a trustee, and the 1st Defendant's role was to facilitate the receipt of investment funds from investors in Malaysia and subsequently transfer these funds to Asia Cornerstone in Hong Kong.
[8] Asia Cornerstone was a licensed asset management company with the Securities and Futures Commission, the financial regulatory authority of Hong Kong.
[9] The 2nd Defendant was employed as a Relationship Manager with The Rain Maker Mgmt Sdn Bhd (Rain Maker). The 2nd Defendant's responsibilities included engaging with potential investors and promoting investment schemes.
[10] Rain Maker is a company incorporated in Malaysia that focuses on marketing and promoting investment schemes to potential investors in Malaysia. Asia Cornerstone appointed Rain Maker as its marketing agent in Malaysia to promote its investment products to potential investors.
Salient Facts
Plaintiff's Case
[11] Asia Cornerstone holds investments in MyFiziq Limited, a company listed on the Australian Stock Exchange, and to fund its investments, Asia Cornerstone issued a debt instrument known as the Short-Term Note.
[12] Rain Maker was the marketing agent for Asia Cornerstone and was tasked with seeking interested investors to subscribe to the Short-Term Note.
[13] On or around May 2020, the 2nd Defendant invited Plaintiff to subscribe to the Short-Term Note issued by Asia Cornerstone.
[14] During multiple meetings between the Plaintiff and the 2nd Defendant, the 2nd Defendant testified that she had adequately explained the details of the Short-Term Note to the Plaintiff.
[15] Subsequently, on 20 May 2020, Plaintiff, at his own will, signed a Subscription Form to subscribe to the Short-Term Note in the amount of RM150,000.00.
[16] The following day (21 May 2020), Plaintiff signed another Subscription Form to subscribe to the Short-Term Note in the amount of RM850,000.00, totalling RM1,000,000.00.
[17] The purpose of the Subscription Form was to authorize Asia Cornerstone to use, process, and disclose Plaintiff's personal information to any third party to facilitate the subscription request and for CTOS checking. This authorization is noted at the bottom of both Subscription Forms signed by the Plaintiff.
[18] On the day Plaintiff signed the Subscription Forms, Plaintiff also issued two cheques for RM150,000.00 and RM850,000.00, respectively, in favour of the 1st Defendant. The 2nd Defendant collected the cheques, and she handed them to Rain Maker to be credited into the 1st Defendant's bank account.
[19] After Plaintiff signed the Subscription Forms on 31 May 2020, he executed two Short-Term Note Subscription Agreements with Asia Cornerstone for the subscription of the debt instrument (the Agreements).
[20] The first agreement was for the subscription sum of RM150,000.00, and the second was for the sum of RM850,000.00.
[21] Undisputedly, the parties to the Agreements were the Plaintiff and Asia Cornerstone only. The 1st
