Back
2014 MarsdenLR 68
COURT OF APPEAL PUTRAJAYA
OOI MENG KHIN – Appellant
Versus
AMANAH SCOTTS PROPERTIES (KL) SDN BHD & ORS AND OTHER APPEALS – Respondent
[Civil Appeals No: W-02(NCC)(W)-2368-10-2012 W-02(NCC)(W)-2402-10- 2012 W-02(NCC)(W)-2401-10-2012 & W-02(NCC)(W)-2369-10-2012]
A defendant can be liable for knowing receipt of funds if they have knowledge of suspicious circumstances but can avoid liability if they act as a mere conduit and do not benefit from the funds.
Headnote:(A) Contracts Act 1950 - Sections 183; Money Changing Act 1998 - Claims for recovery based on breach of fiduciary duty, knowing receipt, and tortious negligence - Plaintiffs discovered fraud involving unauthorized transactions totaling RM31 million linked to a rogue employee - Defendants (D1, D2, D4, and D5) claimed lack of knowledge regarding the transactions, with D7 being a commission agent for Genting Casino. Legal principles established include the duty to make reasonable inquiries when there are suspicious transactions, as per the concepts of knowing receipt and unjust enrichment. The court held that the learned trial judge was correct in concluding that D4 exhibited willful blindness regarding the source of the funds, while D7 was found not liable for knowing receipt as it acted as a mere conduit and did not benefit from the transactions. (Paras 1-2, 4, 10, 12-13, 25, 46-68).
Findings of Court:
Defendants D1, D2, D4, and D5 are liable for knowing receipt and are ordered to pay compensation. D7's appeal is allowed based on its lack of dishonest knowledge.
Issues: The primary legal questions involve the liability of defendants for knowing receipt and the appropriateness of the learned judge's findings.
Ratio Decidendi: Knowledge of suspicious circumstances creates a duty to inquire; however, D7 had no such knowledge regarding the source and acted accordingly.
Result: Appeals of D1, D2, D4, and D5 dismissed, with D7's appeal allowed.
| Table of Content |
|---|
| 1. overview of plaintiffs and defendants involved (Para 1 , 2 , 3) |
| 2. defendants' claims and defenses regarding liability (Para 4 , 5 , 6 , 7 , 8) |
| 3. court's findings against the defendants. (Para 9 , 10 , 11) |
| 4. understanding of knowing receipt in court. (Para 12 , 14 , 16) |
| 5. explanation of knowing receipt principle (Para 17 , 21 , 22 , 25 , 26) |
| 6. discussion of legal concepts involved in knowing receipt. (Para 18 , 19 , 27) |
| 7. no unjust enrichment found for d7's case. (Para 30 , 31 , 32 , 33) |
| 8. application and failure of d4's defense (Para 40 , 56) |
| 9. d4's liability established through knowing receipt. (Para 46 , 48 , 49 , 54) |
| 10. d5's liability underlined by transaction scrutiny. (Para 69 , 70 , 71) |
| 11. final judgment and cost orders (Para 72 , 73 , 74) |
[1] When a cheque meant to be paid to a client of the plaintiffs bounced upon its presentation for encashment at the bank, the plaintiffs carried out an internal audit to see what had gone wrong, such that the plaintiffs had not been able to honour the amount stated in the said cheque. In the course of such exercise, the team of internal auditors had uncovered that an amount totaling about RM31 million from the plaintiffs' coffers had gone missing. That amount had been concerned with some 173 unauthorised transactions of four various types of non-compliances with internal procedures of the plaintiffs. These unauthorised transactions had happened within the period spanning June 2009-December 2010. It was also established by the auditors that one Assistant Manager, by the name of Tee Poh Kun, with the Finance Department of the 1st plaintiff had been putting his hands into the plaintiffs' proverbial cookie jar to fund his own personal activities and had since absconded. The plaintiffs had then initiated legal actions against persons, both natural and juridical, who the plaintiffs alleged, had played their respective part in the financial fiasco, in the plaintiffs' quest to retrieve the monies that had been found to have been pilfered or siphoned off from them.
[2] The 1st plaintiff [P1] is Amanah Scotts Properties (KL), and at the material time was related to 2nd-9th plaintiffs. The 2nd plaintiff [P2] is Ascott Limited, Singapore. The 3rd plaintiff [P3] is Somerset Ampang, being the owner of Somerset Ampang. The 4th plaintiff [P4] is Liang Court (Malaysia). The 5th plaintiff [P5] is Amanah Ascott Management SB. The 6th plaintiff [P6] is Amanah Scotts SB. The 7th plaintiff [P7] is Ascott International Management (M) SB. The 8th plaintiff [P8] is the SSBC SB while the 9th plaintiff [P9] is Wisma Matex Sdn Bhd. Combined together, the plaintiffs were known as the Malaysian Cluster.
[3] The 1st defendant [D1] is Ooi Meng Khin, who was the Financial Controller of The Ascott Kuala Lumpur and of 1st plaintiff. The 2nd defendant [D2] is Lee Pak Keong who was the Deputy Director, Finance of The Ascott Kuala Lumpur and 1st plaintiff. The 3rd defendant [D3] is Tee Poh Kun, the Assistant Manager Finance of 1st plaintiff. The 4th defendant [D4] is Akbar Money Changer Sdn Bhd, a licensed money changer. The 5th defendant [D5] is NANJ Global Resources Sdn Bhd a general trader. The 6th defendant [D6] is Anjung Mekar Sdn Bhd [had since been wound up]. The 7th defendant [D7] is BP Galaxy Junket, a partnership appointed by Genting Berhad to be its Casino Junket or commission agent.
[4] When the trial started, there was a myriad of claims filed against the various above-named defendants. However, as against D1 and D2, the causes of action predicated upon allegations of fraud and conspiracy to defraud were however subsequently abandoned by the plaintiffs at the end of trial, before the learned trial judge. Also abandoned was the claim founded upon breach of fiduciary duty. So, what were left as against the D1 and D2 were only actions based on breach of employment contract to exercise reasonable skill and care or tortuous negligence. In essence, it was related to their performance of duty in their
