The Commission Agreement is valid despite the plaintiffs not being registered estate agents, as it pertains to a share sale, not an estate agency practice under the Act.

Elaine Yap Chin Gaik JC:

Introduction

[1] The Plaintiffs' claim is for an introduction fee alleged to be payable by the Defendants jointly and/or severally based on an agreement signed between the 1st Plaintiff ("RML") and the 1st Defendant ("DKMY") on 13 October 2016 ("Commission Agreement"). The introduction fee related to the sale of all the shares of SSTwo Mall Sdn Bhd ("SSTwo") by the vendor, Asiamalls Sdn Bhd under a Share Sale Agreement dated 27 November 2017 ("SSA"). SSTwo was the registered proprietor and beneficial owner of land with a shopping mall erected thereon ("Property").

[2] The Commission Agreement provided for the payment of the introduction fee to RML which, calculated on the purchase consideration of RM176,300,000.00 in the SSA, was RM1,763,000.00 ("Introduction Fee"). As contemplated in the Commission Agreement, DKMY nominated the 2nd Defendant ("DKLC") to sign the SSA.

Issues For Determination

[3] DKMY did not pay the Introduction Fee to RML. The central issue in this case is whether the Commission Agreement is void because RML is not registered under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 ("VAEAPM Act"). However, the action was further complicated by various other issues.

[4] The Plaintiffs also sought declarations that the 2nd Plaintiff ("Lim") is the alter ego of RML, and that the 3rd Defendant ("Koek") is the alter ego of DKMY and DKLC whose veil of incorporation should be pierced. The reasons for these declarations were two-fold:

(a) the Plaintiffs sought an order that the Introduction Fee under the Commission Agreement should be jointly and severally paid by all the Defendants to the Plaintiffs.

(b) the Plaintiffs sought in the alternative, an order for payment of RM963,000.00, after setting off a personal loan sum of RM800,000.00 payable by Lim to Koek from the Introduction Fee ("Agreement to Set Off').

[5] In respect of the Agreement to Set Off, Koek had earlier sued Lim in Shah Alam Sessions Court Suit No: BA-B52NCC-55-03/2020 for recovery of the loan sum of RM800,000.00 ("Sessions Court Suit"). Lim resisted it on grounds that the loan had already been repaid by way of the Agreement to Set Off. This action was filed as a separate suit instead of a counterclaim in the Sessions Court Suit, and no attempt was made to consolidate the 2 actions.

[6] The Plaintiffs had in the course of this trial, re-ventilated the existence of the Agreement to Set Off which had been fully ventilated in the Sessions Court Suit that concluded on 22 October 2024 and was already pending a decision when this trial started, raising the undesirable spectre of inconsistent decisions.

[7] According to the Plaintiffs, the Agreement to Set Off was also raised here as a basis to claim for aggravated damages, the logic being that if the Agreement to Set Off exists, the friendly loan had been extinguished and accordingly, there would have been no basis for Koek to sue Lim, record a default judgment and commence bankruptcy proceedings based upon that loan sum.

[8] Other than the issue of illegality of the Commission Agreement, this Court also considered the following issues:

(a) Whether there was a variation to the Commission Agreement as contended by Koek in the alternative;

(b) Whether Lim has privity of contract to claim the Introduction Fee as the alter ego of RML (c) Whether liability for the Introduction Fee may be imposed on DKLC and Koek because Koek is the alter ego of both DKMY and DKLC;

(d) Whether the Plaintiffs are entitled to aggravated damages based on conduct of the Defendants in relation to the alleged Agreement to Set Off.

Analysis And Findings

Illegality

[9] The Defendants alleged that the Commission Agreement is in contravention of s 22C of the VAEAPM Act since neither RML nor Lim are registered estate agents. The fact that they are not registered estate agents under the VAEAPM Act is not disputed. According to s 22C(1)(d) of the VAEAPM Act, they are accordingly not entitled to the Introd