RK Nathan J:

Facts

At all material times the plaintiff was a practising advocate and solicitor. Between 1981 to 1986 he was a legal assistant attached to the firm of L.S. Chua & Co, having its principal legal practice at Batu Pahat, Johore. The said legal firm had a fair share of conveyancing work within its portfolio. It acted for a number of housing developers, banks and financial institutions. It therefore handled matters relating to the sale and purchase of landed properties and the consequent financial work arising therefrom such as loan documentation and land charges. As a legal assistant the plaintiff handled the firm's conveyancing portfolio. One Kim Hiong Realty Sdn Bhd (the developer) was the registered proprietor of land on which was erected a unit of double storey semi-detached house, held under C.T. No. 1022 Lot 4396, Mukim Simpang Kanan, Batu Pahat, Johore (the said property). At that time the said property was charged to Public Bank Berhad (PBB). On 21 April 1983 the developer entered into a sale and purchase agreement in respect of the said property with Lim Liang Song and Tan Goi Kew (the purchasers). The purchasers obtained a loan of RM85,000 (the loan) from one Visia Finance Bhd (Visia), formerly known as Sim Lim Finance (M) Bhd, to purchase the said property. L.S. Chua & Co were engaged to prepare the sale and purchase agreement and the loan documentation, including the charge documents. The said legal firm then wrote three letters dated 27 September 1983, 4 October 1983 and 17 October 1983 respectively to Sim Lim Finance (M) Bhd. In these letters the said legal firm falsely represented that the said property had been discharged from PBB and that the same had been presented for registration. The said firm further requested that the said loan be released to it as stakeholder upon the firm's undertaking to refund whatever sums released (not exceeding the loan amount) in the event that the said charge could not be registered in Visia's favour for whatever reasons. These representations were totally untrue because the said property had in the meantime and unknown to Visia, been charged to Malayan United Finance Bhd (MUF) on 12 October 1983. On 18 October 1983 the loan was released to the developer on the strength of the representation contained in the three letters from L.S. Chua & Co. In fact in its letter dated 17 October 1983, the said firm had specifically stated that a charge in favour of Visia had been duly presented for registration. After the release of the said loan, L.S. Chua & Co failed to deliver the title deed and charge documents to Visia for safe-keeping. In the circumstances, Visia wrote to L.S. Chua & Co through its Batu Pahat Branch, requesting for the said documents. However it was informed by the said legal firm through its letter dated 5 July 1984 that the documents were still in the process of registration at the Johore Land Registry. Sometime in June 1986 the plaintiff left the firm of L.S. Chua & Co to start his own legal practice.

By a further three letters dated 6 March 1985, 26 June 1986 and 21 April 1987 respectively, L.S. Chua & Co in reply to Visia's requests for the said documents, continued to maintain that the title deed and charge documents had not as yet been returned from the Johore Land Registry. On 3 September 1988 the Johore Land Registry rejected the request to register the charge in favour of Visia on the ground that the document of title was not presented. Upon receiving the rejected documents, Visia then wrote to MUF requesting for the document of title but MUF refused to comply with the request stating that the redemption amount had not been paid. It was at this stage that a discharge of charge purportedly executed by MUF was then forwarded to MUF. The said discharge of charge was alleged to have been signed by one Goh Hock Chuan, the then Senior Manager of Loans of MUF. The said signature was attested by the plaintiff. Goh, who testified for the defendant as