Court found no misrepresentation by Defendants, but ruled they breached their duty as stakeholders by improperly releasing funds, necessitating the return of USD 350,000.

JUDGMENT

Akhtar Tahir J:

Introduction

[1] The Plaintiff's claim against the Defendants is founded on a cause of action of misrepresentation and breach of contract.

[2] The Plaintiff is a limited liability company incorporated under SSM as a property development company whereas the Defendants are advocates and solicitor practicing as Messrs Kevin & Co ("the Defendants")

Brief Facts

[3] The Plaintiff was desirous of developing a piece of land at Lot 1908, Mukim Batu, Kuala Lumpur. In moving forward with this intention the Plaintiff was represented by its Managing Director Chai Kai Yue ("SP2").

[4] SP2 decided that the best way to move forward to develop the land was to enter a joint venture with the registered owner of the land Sun Kiara Properties Sdn Bhd.

[5] However the Plaintiff needed financing to carry out this joint venture and this is when a person called Kenneth Kuan Choon Hsuing (Kenneth) came forward and assured that he could secure financing of up to RM40 million.

[6] This promise to secure the financing was translated into writing by way of a letter of intent dated 4 May 2016 ("the agreement") prepared by the Defendants. By the agreement the Defendants were made stake holders of a sum of USD 350,000 to be paid by the Plaintiff as a pre - condition of the agreement.

[7] The Plaintiff duly deposited this sum of USD 350,000 into the Defendants account in 2 remittance.

[8] Relying on this agreement the Plaintiff directed the legal firm of Rule & Co to prepare a joint venture agreement with Sun Kiara Properties Sdn Bhd As their professional fees Rule & Co charged a fee of RM180,000.

[9] The joint venture agreement was executed between the Plaintiff and Sun Kiara Properties Sdn Bhd and as a deposit the Plaintiff remitted a sum of RM500,000 as a security to Sun Kiara.

[10] Apart from expending this sums of money the Plaintiff had also engaged Messrs K C Leng Architects to draw out the layout plan and paid a sum of RM30, 000 for the drawings.

[11] The said Kenneth failed to secure the financing of RM40 million as promised leading the Plaintiff unable to perform the joint venture agreement with Sun properties Sdn Bhd.

[12] As a result the Plaintiff not only lost the deposit of RM500, 000 which was forfeited as stated under the joint venture agreement but also suffered a loss of the RM180, 000 for the preparation of the joint venture agreement as well as the RM30, 000 paid to the architect.

[13] The Plaintiff then demanded a return of the stake holders money of USD 350,000 held by the Defendants but were informed by the Defendants that they had already released the money to the persons directed by Kenneth.

[14] The Plaintiff is now claiming for all his losses from the Defendants on the basis that it was the Defendants who had represented to the Plaintiffs that Kenneth had the capacity to fulfill his promise to secure the financing and base on this representation the Plaintiff had entered the joint venture agreement and suffered the losses.

[15] The Plaintiff also contended that the Defendants had breached their duty as stakeholders by releasing the USD 350,000 even though Kenneth had failed to secure the financing.

The Trial

[16] The parties led both oral and documentary evidence to prove their respective cases, The documentary evidence was contained in the Bundle of Documents, Agreed Statement of Facts and Issues to be tried. Oral evidence was in the form of testimony Cheu Teck Rule (SP1) and Chai Kai Yue (SP2) for the Plaintiff and Leng Wei Mun (SD1) on behalf of the Defendants.

The Issues

[17] From the evidence led there are 2 issues that could be distilled. The first is whether the Defendants had misrepresented to the Plaintiff as to the capability of Kenneth to secure the financing of RM40 million and second whether the Defendants had breached their duty as a stake holder for the sum of USD 350,000 by releasing the sum of money on the directions of Kenneth.

Misrepresentation

[18] The main document relied upon by the parties is the Letter of Int