A fiduciary must act in loyalty to their principal; civil claims involving fraud adhere to the balance of probabilities standard.

Preliminaries

[1] For convenience, we heard this appeal together with Civil Appeal No: S-02-388-02-2014 (the second appeal) as they arose from one civil action in the court below under Suit No KK-22-153 of 2011. Both appeals were therefore related and involved the same parties besides the same common core of facts. We propose to give reasons for our decisions with respect to both appeals in one common judgment. The appeals concern three fiduciaries namely the 1st appellant, Diana Lai and Lau Siew Chiang (the 1st and 2nd defendants in the court below), who were found to have been in breach of their fiduciary duties for having abused their positions of trust and confidence, by hijacking and diverting three parcels of land known as the Merpati Lands and the Trust Land out of the nine parcels of land that they were entrusted to purchase for the 1st respondent. The transaction was transacted in the most unusual manner in that the actual buyer and seller never met directly. Instead, the transaction was entirely and exclusively in the hands of the 1st appellant, Diana Lai and Lau Siew Chiang to undertake and complete it for the 1st respondent qua the purchaser. It was from this unusual and unique position that the 1st appellant, working in concert with Diana Lai and Lau Siew Chiang had hatched up a fraudulent scheme to divert from the transaction the Merpati Lands and the Trust Land. Unlike the usual land scams which are committed by the use of forged transfer documents and legal instruments, the scam here was distinctly most creative. It was executed by manipulating the transaction through web of deceptions and corporate manoeuvres to give the impression that the transfer of the Merpati Lands and the Trust Land to Merpati Bernas Sdn Bhd, the 6th defendant in the court below (Merpati Bernas) was, legal and above board. Hence the 1st respondent only became aware that they had been deceived of the Merpati Lands and the Trust Land almost six years later when in February 2011, it was discovered that the 7th defendant namely Makinsa Sdn Bhd was seen building shophouses and not residential homes on part of the Trust Land.

[2] We may necessarily mention at this point that in the High court, the respondents as the plaintiffs commenced the above-mentioned suit against:

(a) the 1st, 2nd and 3rd appellants in this appeal, inter alia, for a breach of fiduciary duty and recovery of the sum of RM1,910,616.35;

(b) the 2nd and 3rd appellants in this appeal for the recovery of the Trust Land;

(c) Merpati Bernas in the second appeal for the recovery of the Merpati Lands; and

(d) the 7th defendant in the court below namely Makinsa Sdn Bhd for the disgorgement of profits paid to the 2nd and 3rd appellants.

[3] On 14 February 2014, the learned High court Judge had found the 1st appellant, Diana Lai and Lau Siew Chiang, in breach of their fiduciary duties and in furtherance of their deceitful act, diverted the Merpati Lands and the Trust Land to Merpati Bernas. The High court further found that the Trust Land was later diverted to the 1st appellant and then to the 2nd and 3rd appellants, the two sons of the 1st appellant. The learned judge had also held that Merpati Bernas was holding as a constructive trustee, the Merpati Lands for 1st respondent and that the 2nd and 3rd appellants were holding the Trust Land as constructive trustees also for the 1st respondent.

[4] The learned judge thus allowed all of the respondent's claims as prayed against all the appellants, Diana Lai, Lau Siew Chiang and Merpati Bernas save the 7th defendant which had entered into a consent judgment with the respon