James Foong JCA:

Introduction

[1] This is an appeal against the decision of the High Court in Malacca which allowed the respondents' application (the said application) dated 27 July 2004 to add the appellants as the 9th, 10th and 11th defendant respectively in this case. After hearing submissions, we unanimously allowed this appeal with costs here and below and ordered the deposit for this appeal to be refunded to the appellants. Our grounds are as follows:

Background

[2] The respondents are plaintiffs in this case. They were, together with some other third parties, totaling 37 in all, registered proprietors of undivided shares in a piece of land held under Grant no 2958 for lot 579 in the Mukim Ayer Panas in the District of Jasin Meleka (the said land). Intending to sell this said land to a company known as Astana Strategi (M) Sdn Bhd (Astana), they entered into a written sale and purchase agreement with Astana. Acting for the respondents and some of the registered proprietors in this sale was the legal firm of Ms Nordin & Phua. The partners of Ms Nordin & Phua at the material time were the appellants in this appeal. The solicitors for Astana were Ms Badaruzaman Chandran & Co (Ms Badaruzaman). The partners of Badaruzaman are the 6th and 7th defendant in this action.

[3] With the consent of all parties in this sale and purchase, the document of title to the said land was deposited with Ms Nordin & Phua pending the completion of the sale. Aside from this, all the registered proprietors had also executed respective memorandum of transfer of the said land in favour of Astana. These were deposited with Ms Badaruzaman who were authorized to only deal with them in accordance with the terms of the sale and purchase agreement.

[4] Upon the execution of the sale and purchase agreement, 10% of the purchase price was paid by Astana to the registered proprietors with the balance to be settled within 6 months from date of the agreement. According to the plaintiffs, Astana failed to pay the balance of the purchase price. Thereupon Ms Nordin & Phua had, on behalf of the respondents, written to Ms Badaruzaman to terminate the sale. Subsequently in 1996, the 1st to 5th respondents and one other co-proprietor of the said land engaged a different firm of solicitors, Ms Chelva R Suppiah (Chelva), to file an action in the High Court in Melaka bearing no. 22-13-1996 against Astana to rescind the sale and purchase agreement whilst the 6th and 7th respondents together with 2 other co-proprietors also in 1996 filed a different action against Astana in the Melaka High Court bearing no. 22-90-1996. From the appeal record, these suits were settled by consent between Astana and these respondents on 29 March 2000.

[5] In the meantime, according to the respondents, five co-proprietors of the said land (1st to 5th defendant in this case) and a middleman involved with the sale of the said land to Astana (the 8th defendant in this case) had, without the consent and knowledge of the respondents and in breach of trust, obtained the document of title to the said land from Ms Nordin & Phua. They then forwarded it to Ms Badaruzaman who used it together with the duly executed memorandums of transfer in their possession to effect a transfer of the said land to Astana. Once this was done, Astana charged the said land to Southern Finance Bhd as security for loan facilities.

[6] As a result of this, the respondents brought this action originally against the 1st to 8th defendants alleging primarily deprivation of their interests in the said land and against the 8th defendant for fraud. At the hearing of this case, the 3rd appellant was called as a witness. After his testimony, the respondents decided to add the appellants as defendants to this action. Initially, the respondent's application was without a proposed amended statement of claim indicating the allegations and claims against the appellants. It was subsequently amended to include such a document. The al