Shaik Daud Ismail JCA:

This appeal is from the decision of the High Court, which had, on 24 March 1998, entered judgment for the respondent. The respondent is a body incorporated under the Trustee (Incorporation) (F.M.) Ordinance 1952, while the appellant are merchant bankers.

The gist of the respondent's claim against the appellant is that, the appellant's officer had represented and induced the respondent to make monetary investment in a company called Texsyn Fibres Industries Sdn. Bhd. (the company) resulting in a loss. The respondent claim damages in the sum of RM401,200. It is the contention of the respondent that they were induced into making the investment by the representations made by the officer of the appellant. The respondent allege that the appellant's officer made three basic representations, one positively in writing while the other two can be inferred from the oral and documentary evidence given to the respondent. The first direct representation was that the directors of the company had guaranteed a dividend of 24% per annum for each share for a period of three years, which representation is contained in a letter of offer dated 8 November 1974 sent to the respondent. The second representation was that the company was a respectable company and the third was that the company was of sound financial standing.

According to the amended statement of claim, the company solicited the services of the appellant as merchant bankers, to procure bumiputra purchasers of certain shares in the company. According to the evidence of one Tan Sri Abdul Aziz, the respondent's chairman, that one day in 1974 one Mohamed Tajuddin, the Corporate Finance Officer of the appellant, phoned him to ask whether he was interested in investing in the company. He said Mohamad Tajuddin also told him that the company was a very large concern with a paid up capital of RM20 million with prominent personalities from Malaysia, Hong Kong and Taiwan on its board. Following this Tan Sri Abdul Aziz received a letter dated 8 November 1974 from Mohamad Tajuddin, bearing the letterhead of the appellant. As this letter is the central issue in this claim, we think it pertinent to reproduce it in extenso.

PrivateMIMB & ConfidentialMalaysian International Merchant Bankers Berhad

November 8, 1974

Sirs,

Sales offer of 2.75 million shares of Texsyn Fibre Industries Private Limited Texsyn Fibre Industries Private Limited.

Texsyn Fibre Industries Pte Ltd., an industrial company offers for sale 2.75 million shares to Bumiputras.

Herewith attached information regarding the said company for your kind consideration.

Important particulars regarding this offer are as follows:

1. shares offered for sale (amounting to 2.75 million) is 12 1/2% of the grand total of the ordinary shares of the said company.

2. Price of each share has been fixed at $1.33.

3. The directors guarantee a dividend payment of 24% per year per share for three consecutive years from the date of purchase of this offer.

The guarantee is given on a personal undertaking only.

4.Any reduction in dividend payment shall be borne by the guarantors.

If the company makes profit exceeding the minimum dividend guaranteed for any one year within the 3 years, then share holders are required to pay back the said reductions to the guarantors.

5.Annual dividend assured gives an understanding that cash dividend paid from the trade profit of the company (inclusive of Bonus Dividend) but excluding the capitalisation of surplus of revaluation of the said company's assets.

6. The guaranteed dividend cannot be transferred from the initial purchasers to the subsequent buyer.

The sales terminate the offer at the time of transfer.

7. Those genuine buyer of this shares are offered free airline tickets to visit the company plant at Prai.

If this offer is attractive, please contact us as soon as possible.

Then we shall arrange for a meeting between our directors and you.

Sincerely,

Mohd. Tajuddin

Apart from the above letter