JUDGMENT

Ahmad Maarop JCA:

[1] This judgment concerns two related appeals - Rayuan Sivil No. W-03-179-2005 (the first appeal) and Rayuan Sivil No. W-03-180-2005 (the second appeal). Both appeals arose out of the suit filed by the plaintiffs (the appellants before us in both appeals) in the Civil Suit No. S1-22-538-2001, against the first and the second defendant (the first and the second respondent respectively before us).

[2] The case pleaded by the appellants against the respondents in substance is as follows. Both the appellants were at all material times involved in the building and construction industry. The principal business of the first respondent at all material times was building industry. The second respondent was at all material times the Executive Chairman of the first respondent. Between the period from or on about 18 April 1995 to 7 May 1996, the first respondent was commissioned by the Jabatan Kerja Raya (JKR) for the building and construction of four government projects (the said projects). Because the first respondent was facing cash flow problems, the second respondent sought the help of one Dato' Dr. Nik Hussain Abdul Rahman (Dato' Nik Hussain) to assist in completing the said projects. Dato' Nik Hussain was the corporate representative of the first and the second appellants. As a result of a series of meetings between the second respondent and Dato' Nik Hussain, an understanding was reached that the second appellant would effectively take over the first respondent's role in the said projects. The takeover would be fronted by the first appellant as it was a bumiputra company. It was also agreed that to all intents and purposes, the first respondent would publicly remain as the contractor appointed for the said projects. It was also agreed that a sum of RM10,260,399.48 was to be paid to the second appellant for the works it was to undertake. The second appellant commenced works. At the outset, the second respondent was compelled by circumstance to deal with third party contractors who were originally engaged by the first respondent which had sum due and owing to them. The second appellant requested funds from the first respondent to settle the debts. However, the first respondent, through the second respondent, requested the first appellant to advance the sums on the understanding that these sums would be repaid. Consequently, and with the knowledge and consent of the first and the second respondents, a sum of RM1,200,000 was advanced by the first appellant. The second appellant used the sum to settle outstanding debts to the said third party contractors. The appellants also claimed from the respondents a sum of RM2,216,404.68, which the appellants said was expended by them on the said projects. Claim for this sum was made by the appellants to the first respondent from time to time. The appellants alleged that sometime in February 1998, the first respondent appointed contractors to replace the second appellant and/or the first appellant. The appellants contended that that constituted repudiation of the agreement between the first respondent and the appellants. By their solicitors' letter dated 30 April 2001, the appellants accepted the repudiation and termination of the said agreement. Further, or in the alternative, the appellants averred that the first respondent was to hold monies received from JKR for the benefit of the second and/or the first appellant and to that end, the first respondent was all material times, a constructive trustee of the appellants over the said monies. The appellants prayed for an order that the first and the second respondents jointly and severally pay general damages to them. Alternatively, the appellants prayed for an order that the first and the second respondents jointly and severally, pay the sum of RM2,216,404.68 to the second appellant, and the sum of RM1,200,000 to the first appellant.

[3] As against the second respondent, the appellants averred that the second respondent had