Balia Yusof Wahi J:-

[1] In this suit, the plaintiff is claiming for the reliefs mentioned hereunder against the third defendant only. The plaintiff's claims against the rest of the defendants named in the suit have been disposed off and judgments have been obtained. The plaintiff brings the suit in his capacity as the public officer of the Malaysian Association of Travel and Tour Agents (MATTA), a society duly formed under s. 7 of the Societies Act 1966. The third defendant is a firm of public accountants. The reliefs sought by the plaintiff against the third defendant are as follows:-

(i) judgment for the sum of RM2,952,415.61;

(ii) further or in the alternative; damages to be assessed;

(iii) interest thereon at the rate 8% per annum from the date of judgment to the date of full settlement;

(iv) costs on a solicitor-client basis;

(v) such other or further orders as this Honourable Court thinks fit.

The Evidence

[2] The claim of the plaintiff against the third defendant is premised on the negligence of the third defendant in carrying out the audit of the society's account for the year ending 31 December 1997. The plaintiff called its only witness who was the President of the society for the year 1998/1999. At the Annual General Meeting of MATTA held on 27 June 1998, a lot of queries were raised by the members with regard to the account and it was not approved. At the said meeting the third defendant's representative, Mr Chew was present and informed the meeting that if the members required a project by project account, a special account would be prepared. Besides that, Mr Chew merely highlighted that if the accounts are not approved by the AGM, a penalty for late submission to the Inland Revenue Department will be imposed. It is to be noted that the due date for submission was in May but was extended to the end of June 1998. There was no indication whatsoever what the third defendant would do in response to all the queries raised by the members. The AGM concluded that an Extraordinary General Meeting would be held within six months to enable the accountant to re table the accounts.

[3] The Extraordinary General Meeting was held on 28 November 1998 and again Mr. Chew was present. More queries were raised by the members at the said EGM and still not answered. The accounts were again not approved and an investigative committee was set up as proposed by the members. Subsequently the investigative committee in its report disclosed that certain material transactions were not reflected in the financial statement of the accounts. Resulting from that the Management Committee of MATTA engaged the services of BDO Binder, a firm of Public Accountants to conduct investigative audit on the accounts. The BDO Binder report discovered unrecorded banking transactions and unrecorded bank accounts. There is no evidence to suggest that the third defendant in doing the accounts of MATTA had conducted that audit based on the books of accounts of MATTA. There were failures of the third defendant to check the book of accounts and to ascertain whether the bank accounts were inactive. The third defendant having done the accounts of MATTA since 1981 should have known and be familiar with the ATF and MITF accounts which constitute the main income of MATTA for the year 1997. These accounts were not available in MATTA's office and yet it raised no suspicion on the part of the third defendant. When queried about this matter at the AGM, the third defendant's agent merely responded by suggesting that if the members required such, a special set of accounts would have to be prepared. The report further stated that MATTA's income for 1997 was understated by approximately RM2,366,522 due to hidden transactions. For the MITF account it was revealed that there was a shortage of RM49,600. In respect of one particular bank account, the HSBC main, the BDO's finding disclosed receipts and payments of unknown nature and not substantiated by supporting documents