Peh Swee Chin SCJ:

[1] Departing as we did, from the views held by the learned trial Judge in the instant case, while at the same time we were struck by the dearth of local reported cases on the legal points involved, we felt we ought to give our reasons in writing.

[2] The factual background may be compendiously stated as follows. Both defendants were at all material times directors of two companies viz. Moveland Properties Sdn Bhd (hereinafter Moveland Properties) and another company called Rotraco Sdn Bhd (hereinafter Rotraco). The first defendant was at all material times also an architect, being at the same time a partner in a firm of architects.

[3] In 1984, the plaintiff, a building contractor entered into a contract with each of the two companies separately for the construction in each case of 10 units of 3-storey buildings in the Batu Caves area and in both contracts, the 2nd defendant had signed for both companies, though the 1st defendant appeared to have stage-managed them.

[4] At the signing of the contract with Moveland Properties that is Moveland Properties Sdn Bhd, its full name was not used in the contr-act but a shorter name was used, viz. "Moveland Sdn Bhd.", with the word "Properties" from the full name of Moveland Properties missing therefrom. This missing word was the crucial factor in this case.

[5] Towards the end of 1986, the two companies were lagging behind in payment according to the tenor of certificates of payment, the plaintiff then filed two separate civil suits against the companies respectively, being Kuala Lumpur High Court Civil Suits T23-257-86 and T23-264-86 respectively with "Moveland Sdn Bhd" cited in one of the two actions, as the defendant.

[6] In early 1987, a search was made by the plaintiff at the Registry of Companies and plaintiff found there was no company registered as "Moveland Sdn Bhd". Plaintiff thought both the defendants had deceived it by making it sign a contract with a non-existing company. Plaintiff then lodged a report to the police to the same effect apparently but it was not produced in evidence. What action, if any, taken by the police was neither in evidence.

[7] Two letters were also written in 1987 pursuant to such discovery by the plaintiff to the President of the Board of Architects of Malaysia and as stated by PW1, a director of the plaintiff in evidence thus: "The main ground of complaint was that D1 was architect as well as developer for these works". "D1" refers to 1st defendant.

[8] Both the police report and the letters of complaint to the Board of Architects of Malaysia were not produced by the plaintiff, understandably, for the statement of defence filed by the defendants had pleaded illegality arising out of withdrawal of the complaints both to the Board and the police, with such withdrawal as consideration for the contract of guarantee signed by both defendants and for which they were being sued. The defendants did not produce them if they had them, because in part, apparently they elected not to call any evidence at the end of plaintiff's case and preferred to make a submission on the case there.

[9] To revert to some sort of chronology of our narrative, one Mr Terrence Oh, apparently at the request of the first defendant arranged for meetings and negotiations between the defendants and the plaintiff to mediate a settlement of the plaintiff's claims in the two civil suits, culminating in the signing of two documents on the same date, one a fairly elaborate agreement in the form of a letter addressed to both defendants and signed by two directors of the plaintiff (one of whom was PW1) with an acknowledgement at the foot of the letter signed by both defendants as directors on behalf of Moveland Properties and Rotraco respectively agreeing and undertaking to abide by the contents of the letter (hereinafter called the companies' agreement). The other document was also in the form of letter addressed to the plaintiff in which both defendants, jointly and s