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2023 MarsdenLR 643
COURT OF APPEAL PUTRAJAYA
MUHAMMAD ZAHIR SANJAY ABDULLAH – Appellant
Versus
INNOSEVEN SDN BHD & ANOTHER APPEAL – Respondent
[Civil Appeal Nos: W-02(IM)(NCVC)-1543-08/2022 & W-02(IM)(NCVC)-1662-09/2022]
A stakeholder must fulfill contractual obligations, and failure to do so constitutes a breach of fiduciary duty, justifying summary judgment.
Headnote:(A) Relevant laws: Evidence Act 1950 - Sections 91 and 92; breach of contract principles - Summary judgment granted for breach of Joint Venture Agreement (JVA) and trustee duties. (Paras 29, 41, 52)
(B) Key legal principles: A stakeholder must adhere to duties imposed by agreement; failure to comply constitutes breach. (Paras 47, 48)
(C)
Facts of the case:
The plaintiff entered a JVA with the first defendant, who failed to procure a cleaning services contract, leading to a claim for the return of RM750,000. (Paras 3, 4, 22)
(D)
Findings of Court:
The first defendant breached the JVA by not procuring the contract and improperly retaining funds. (Paras 29, 39) (E)
Issues: Whether there were triable issues justifying a full trial, including claims of fraud and misrepresentation. (Paras 28, 30) (F)
Ratio Decidendi: The court found no merit in claims of fraud as the plaintiff's claim was based solely on breach of contract, affirming that summary judgment was appropriate. (Paras 32, 35) (G)
Result: Appeals dismissed, with costs awarded to the plaintiff. (Paras 6, 54)
| Table of Content |
|---|
| 1. summary judgment for rm750,000 awarded. (Para 1 , 2 , 3 , 4 , 5) |
| 2. final decision and affirmation of summary judgment. (Para 6 , 39) |
| 3. background facts of the joint venture agreement. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27) |
| 4. appellants' grounds of appeal against summary judgment. (Para 28) |
| 5. court's reasoning on breach of contract and summary judgment. (Para 29 , 30 , 31 , 32 , 33 , 34 , 36 , 37 , 38) |
| 6. court's findings on the second defendant's appeal. (Para 40 , 41 , 42 , 44 , 46 , 51 , 52 , 54) |
Introduction
[1] These two related appeals are appeals by the appellants (defendants) against the summary judgment for the sum of RM750,000.00 together with interest and costs entered by the respondent (plaintiff) against the appellants.
[2] The appellant in Appeal 1543 is the second defendant in the suit at the High Court. The appellant in Appeal 1662 is the first defendant. The second defendant is a solicitor acting for the first defendant in a Joint Venture Agreement (JVA) between the respondent and the first defendant.
[3] The respondent alleged that the first defendant had breached the JVA for its failure to procure the Cleaning Services Contract. The respondent terminated the JVA. As against the second defendant, the respondent alleged that the second defendant had breached his duties as a trustee when he refused to return the said sum of RM750,000.00 to the respondent. Instead, out of the sum of RM750,000.00, the second defendant had released the sum of RM720,000.00 to the first defendant and he retained RM30,000.00 to himself as legal fees.
[4] The respondent's claim against the appellants is for the refund of the sum of RM750,000.00 which was given by the respondent to the second defendant as a stakeholder pending the first defendant's procurement of the Cleaning Services Contract for the respondent.
[5] The respondent applied for a summary judgment. The learned High Court Judge found there were no triable issues and allowed the respondent's application.
[6] We heard and unanimously dismissed both appeals on 15 June 2023.
[7] For ease of reference, in this judgment, we shall refer the parties as plaintiff and defendants.
Background Facts
[8] On 13 May 2019, a Joint Venture Agreement (JVA) was executed between the plaintiff and the first defendant with the following terms agreed between the parties:
(a) Clause 1 of the JVA
The first defendant shall register and/or cause to be registered the plaintiff with Petronas as a cleaning services provider and procure the Cleaning Services Contract from KLCC subject to certain terms and conditions contained therein.
(b) Clause 1 (a) of the JVA
The contract period shall be for 5 years (with an option to renew for a further 3 years) which results in a total of 8 years.
(c) Clause 1 (b) of the JVA
The related area for cleaning is the Outside of KLCC Mall of approximately 900,000 square feet and the first defendant shall ensure that the rate for the said services shall not be less than RM1.90 per square feet per month.
(d) Clause 1 (c) of the JVA
The first defendant undertakes to ensure that the Cleaning Services Contract is procured and executed by the parties (the plaintiff and KLCC) within 4 months from the date of this letter and/or date of acceptance by the plaintiff.
(e) Clause 1 (d) of the JVA
The registration fees for registration for vendor services with KLCC and/or Petronas of RM38,000 has been paid by the respondent, which Big Blue duly acknowledged receipt of the same.
(f) Clause 2 of the JVA
The respondent shall immediately upon execution of the JVA, deposit the sum of RM750,000.00 into the account of Messrs Muhammad Zahir, solicitors for Big Blue according to the details set out therein. These monies shall be released to Big Blue immediately upon execution of the Cleaning Services Contract by the parties.
[9] On 17 May 2019, the plaintiff's solicitors forwarded a MBB Cheque No
