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2025 MarsdenLR 6045
HIGH COURT MALAYA KUALA LUMPUR
MOHD YUSOF BAJURI – Appellant
Versus
WARGA EDARAN SDN BHD – Respondent
[Civil Appeal No: WA-12BNCVC-159-12/2023]
A partner's liability is contingent upon proof of wrongful acts committed within the ordinary course of business by partners; mere association with the partnership does not establish liability without direct involvement.
Headnote:(A) Partnership Act 1961 - Sections 11, 12, and 14 - Misdirection in law regarding partnership liability - Court found fundamental misinterpretation leading to erroneous imposition of liability; reliance on principles from another case misplaced due to lack of direct involvement of partners; lack of evidence supporting claims of conspiracy or collusion. (Paras 16-30)
(B) Fraud allegations - General allegations of fraud not sufficient; specificity required in pleadings; lack of evidence supporting claims against the partner. (Paras 37-41)
Facts of the case:
The plaintiff, a property development company, claimed against the 6th defendant, a partner in TMY Resources, for improperly receiving misappropriated funds transferred by the 1st and 2nd defendants, employees of the plaintiff. (Paras 1-10)
Findings of Court:
The 6th defendant was not liable as no wrongful act was committed by any partners of TMY Resources related to the transactions, and the court recognized the absence of direct involvement or authorization of partners in the fraudulent acts. (Paras 20-30, 44-46)
Issues: Whether a partner can be held liable for wrongful acts committed solely by non-partners and whether the court misapplied the law regarding partnership liability. (Paras 2, 16, 19)
Ratio Decidendi: The court ruled that liability under the Partnership Act requires proof of wrongful acts committed by partners, and mere association with a partnership does not suffice without clear evidence of their involvement. (Paras 18, 26)
Result: Appeal allowed; decision of the Sessions court set aside.
| Table of Content |
|---|
| 1. overview of parties and wrongful transactions (Para 1 , 4 , 5 , 6 , 7 , 12) |
| 2. key issue of partner liability in wrongful acts (Para 2 , 10 , 15) |
| 3. misinterpretation of partnership liability principles (Para 16 , 21) |
| 4. conditions for holding partners liable (Para 18 , 19 , 20 , 26 , 27 , 28) |
| 5. inapplicability of venu nair case to current facts (Para 22 , 23) |
| 6. lack of ordinary course of business (Para 31 , 32 , 33 , 34 , 35 , 36) |
| 7. procedural requirements for fraud allegations (Para 37 , 38 , 39 , 40 , 41 , 42 , 43) |
| 8. insufficient evidence of conspiracy or collusion (Para 44 , 45 , 46 , 47) |
| 9. misinterpretation of defendant's admission (Para 48 , 49 , 50 , 51) |
| 10. appellate court's role in correcting errors (Para 52 , 53 , 54) |
Introduction
[1] In this judgment, the parties are referred to as they were before the trial court. This appeal was filed by the 6th defendant against the decision of the Sessions court after a full trial. The Sessions court had found the 6th defendant jointly and severally liable with the other defendants in respect of the plaintiffs claim for the sum of RM115,750.00. This amount represented half of the sum which had been wrongfully transferred from the plaintiff's account to the 3rd defendant's account.
[2] The key issue in this appeal was whether a partner could be held liable for wrongful acts committed not by his co-partners but by other persons who were not partners of the firm.
[3] Upon reviewing the evidence and considering the submissions, I found material misdirection of law which affected the findings of liability. Accordingly, the appeal had to be allowed.
Brief Background Facts
[4] The plaintiff was a property development company. The 1st defendant was employed as a sales executive while the 2nd defendant held the position of account executive in the plaintiff company.
[5] The 3rd defendant was a partnership firm known as TMY Resources which was engaged in the business of supplying stationery and providing tuition services. The 6th defendant was a partner in TMY Resources along with the 4th and 5th defendants.
[6] The dispute arose from transactions involving these parties, leading to the present appeal.
[7] Between 29 March 2012 and 21 March 2013, the 1st and 2nd defendants, who were employees of the plaintiff, unlawfully transferred a total sum of RM231,500.00 from the plaintiff's bank accounts to the account of TMY Resources. These transfers were carried out without the plaintiff's knowledge or consent.
[8] The misappropriated funds were transferred in three separate tranches. The first transfer, amounting to RM66,500.00 took place on 29 March 2012. The second transfer of RM85,000.00 was made on 6 September 2012. The final transfer of RM80,000.00 occurred on 21 March 2013.
[9] These unauthorized transactions formed the basis of the claim brought by the plaintiff against the defendants.
[10] Upon discovering these unauthorized transfers, the plaintiff commenced legal proceedings against all six defendants. The claim was based on the wrongful transfer of funds from the plaintiff's bank accounts without its knowledge or consent.
[11] On 9 March 2018, the 1st defendant entered into a consent judgment with the plaintiff. Pursuant to the terms of the judgment, the 1st defendant made payment of RM115,750.00 representing half of the total misappropriated sum.
[12] Following this partial recovery, the plaintiff proceeded with its claim for the remaining balance against the 6th defendant. The claim was brought on the basis that the 6th defendant, as a partner of TMY Resources, was jointly and severally liable for the wrongful receipt of the misappropriated funds.
[13] The 6th defendant subsequently filed a third-party notice against the other defendants, seeking to pass liability onto them. As the other defendants failed to enter an appearance or respond to the proceedings, the 6th defendant obtained a judgment in default against them.
[14] Thereafter, following a full tr
