1. Claim for misrepresentation and negligence inducing tenancy and renovation investment. (Para 1 )
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2026 MarsdenLR 2227
HIGH COURT MALAYA JOHOR BAHRU
WONG MEE LING, J
GOLDFIRE SDN BHD – Appellant
Versus
YAP TEAK FAH & ORS – Respondent
[Civil Suit No: JA-23NCvC-9-09/2019]
Petitioner Advocates:Kuthubul Zaman,Anis Zaman ,Respondent Advocate: Koh Yew Chong,Justin Leong,Izzat Zainal
For actionable misrepresentation, a plaintiff must prove a false statement of fact that induced them into a contract. A claim for special damages requires strict proof. A party is not liable for unauthorized acts of a person who is not its agent.
Headnote:(A) Contracts Act 1950 (Act 136) - Sections 18, 19 - Evidence Act 1950 (Act 56) - Section 114(g) - Valuers, Appraisers and Estate Agents Act 1981 (Act 242) - Section 22C(1) - Negligent misrepresentation - Actionable misrepresentation - Duty of care - Agency - Principal’s liability for agent’s acts - Adverse inference for failure to call key witness - Parties bound by pleadings - Special damages must be strictly proven - Loss of future profit is speculative - Mitigation of losses - Locus standi to sue - Binding effect of Letter of Offer.
(B) Actionable misrepresentation requires a false statement of existing fact, which is material and induces the representee to enter into the contract. A representation regarding a future event is not actionable merely because subsequent events unfold differently from what was anticipated. The representee must prove he was induced by the misrepresentation; if he relies on his own independent judgment, the claim fails. [Paras 38, 42, 63-66]
(C) A principal is only bound by an agent’s acts within their actual authority. If no agency relationship is proven, the principal cannot be held liable for the agent’s representations. An adverse inference under Section 114(g) of the Evidence Act 1950 can be drawn against a party who fails to call a material witness without reasonable explanation. [Paras 82-85]
(D) Parties are bound by their pleadings and cannot depart from the case pleaded. A claim for special damages must be strictly proven with documentary evidence (e.g., receipts, bank statements). Claims for loss of future profits based on projections unsupported by financial records are speculative and too remote. A party claiming damages must prove actual loss and has a duty to mitigate losses. [Paras 67, 97, 105, 109-111, 123, 148]
Facts of the case:
The Plaintiff entered into a tenancy for a unit at a shopping mall, induced by alleged representations that the mall would be an Edutainment Mall with high foot traffic and a renovation subsidy. The Plaintiff took possession, paid a deposit, and incurred renovation costs. The mall did not develop as represented, leading to the Plaintiff’s claim for damages based on negligent misrepresentation. The court also considered a counterclaim by one of the defendants (the alleged landlord) for arrears of rent and service charges. The court noted that many of the represented tenants did commence operations but later ceased, and that the deterioration of the mall was due to poor maintenance by the management.
Findings of Court:
The court dismissed the Plaintiff's claim, holding that the representations were not false when made, and the Plaintiff's decision was based on his own commercial judgment after conducting due diligence. The court further found that the Plaintiff failed to prove any agency relationship between the alleged misrepresentor and the two corporate defendants, and an adverse inference was drawn against the Plaintiff for not calling the said individual as a witness. The Plaintiff also failed to strictly prove its special damages. The court dismissed the defendant’s counterclaim due to its failure to establish legal capacity as the landlord.
Issues: (i) Whether the defendants made actionable misrepresentations that induced the Plaintiff into the tenancy; (ii) Whether the corporate defendants were liable for representations made by a third party; (iii) Whether the Plaintiff proved the quantum of damages; (iv) Whether the counterclaiming defendant was entitled to its counterclaim.
Ratio Decidendi: A claim in negligent misrepresentation requires proof of a false statement of fact that was relied upon. A statement about future prospects is not a false statement of fact if it was genuinely believed when made and was not a guarantee. A party cannot be liable for the unauthorized acts of a person who is not his agent. Damages must be strictly proven with documentary evidence; projections of future profits without substantiating financial records are too speculative. A party claiming damages must take reasonable steps to mitigate its loss. A party seeking to enforce a contract must have the legal capacity to do so. Result : Plaintiff’s claim against all defendants dismissed with costs. Defendant’s counterclaim dismissed with no order as to costs.
Legal Category Hierarchy
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contract law
- misrepresentation
- formation of contract
- agency
- damages
- tort
- practice and procedure
- property law
Table of Contents
2. Plaintiff alleged false promises about mall's success; defendants denied reliance and duty of care. (Para 5 , 29 )
3. Claim dismissed with costs; counterclaim dismissed without costs. (Para 2 , 150 )
4. What constitutes actionable misrepresentation under the Contracts Act 1950?
A false statement of existing fact that induces the contract. Future expectations not materializing do not make representations false. (Para 38 , 39 , 40 , 41 , 42 , 64 , 65 , 66 )
5. Can a principal be liable for misrepresentations made by a person who is not its authorized agent?
No, unless agency is proven. Under Section 180 Contracts Act, principal only bound by acts within actual authority. (Para 72 , 82 , 83 , 85 )
6. What evidence is required to prove special damages for renovation costs and loss of profit?
Strict proof with receipts, bank statements, and contemporaneous documentary evidence. Projections without financial records are speculative. (Para 86 , 91 , 92 , 96 , 103 , 105 )
7. Is a Letter of Offer binding without a signed tenancy agreement?
Yes, if parties' conduct (taking possession, paying deposit, renovating) affirms the contract, the LOO becomes binding. (Para 127 , 132 , 134 )
8. Is a plaintiff required to mitigate losses by seeking a refund of franchise fees before claiming them as damages?
Yes, failure to take reasonable steps to mitigate, such as seeking a refund or relocation, bars recovery of those fees. (Para 109 , 121 , 122 )
JUDGMENT
Introduction
[1] The plaintiff's claim against the defendants arises from, inter alia, negligence and alleged misrepresentation which induced the Plaintiff to enter into a tenancy and expend tal on renovations.
[2] At the end of the full trial, I dismissed the plaintiff's claim and awarded costs of RM10,000.00 to each of the defendants subject to allocator fees, to be paid by the Plaintiff to each of the defendants within fourteen (14) days from the date of this Order. I also dismissed the 5th Defendant's counterclaim with no order as to costs.
[3] Below are the grounds of my decision.
Background
[4] The background facts of this case are gathered from the cause papers and submissions filed by the parties and stated in chronological order.
[5] In late 2017 and early 2018, the Plaintiff was approached by the 1st Defendant ("D1") and the 2nd Defendant ("D2") who are directors of 4th Defendant ("D4") regarding a tenancy at Stellar Walk. The Plaintiff alleges that the defendants made the following key representations to induce the tenancy:
(a) Stellar Walk would be Malaysia's first Edutainment Mall, specifically designed to attract students and families;
(b) provided a list of numerous confirmed and potential businesses, including a supermarket, a florist, a flying school, and several restaurants, to suggest high foot traffic; and
(c) the Plaintiff was promised a renovation subsidy of RM40.00 per square foot.
[6] Based on these representations, the Plaintiff agreed to rent unit RT4- GF-01 (approx. 1,922 sq. ft.). On 13 March 2018, the Plaintiff paid a deposit and fees totaling RM42,890.00 to the 5th Defendant (the landlord of the Stellar Walk premiseses) ("D5").
[7] Following the agreement, the Plaintiff took possession and commenced extensive renovations. The Plaintiff claims to have incurred costs totaling RM609,052.53 for renovations and RM86,477.00 for kitchen equipment and other ancillary costs. The Plaintiff contends these expenses were incurred in reliance on the representations that the mall would be a functional, high-traffic commercial hub.
[8] The Plaintiff contends that the project failed to materialize as represented citing the following grievances:
(a) the building was in poor condition, suffering from water leaks during rain which hindered operations;
(b) the promised Edutainment Mall concept and the diverse range of confirmed tenants never materialized, leaving the mall largely vacant; and
(c) the promised renovation subsidy was never paid despite the Plaintiff proceeding with works.
[9] Consequently, the Plaintiff claims against the defendants jointly and severally for, inter alia, special damages, including:
(i) special damages: recovery of the RM42,890.00 deposit, RM609,052.53 in renovation costs, and RM43,587.00 in incidental costs;
(ii) loss of future income: RM8,217,464.00, representing projected profits over a four-year period (calculated at RM5,628.40 per day); and
(iii) interest and costs: interest at 5% per annum from the date of the claim to the date of judgment, and from judgment until full settlement, as well as legal costs.
[10] The defendants have filed their respective defences. Their respective positions and submissions will be dealt with according to the issues identified for determination.
[11] The matter proceeded to full trial before this court. The Plaintiff called a total of fifteen (15) witnesses, whereas D1, D2, D4 and the 6th Defendant ("D6") called two (2) witnesses, meanwhile 3rd Defendant ("D3") and D5 called one (1) witness each.
Issue To Be Determined
[12] The issues to be determined are as follows:
(a) whether the defendants made actionable misrepresentations that induced the Plaintiff to enter the tenancy agreement;
(b) whether D3 and D5 are liable for representations made by third party;
(c) whether the Plaintiff has proven the quantum of damages; and
(d) whether D5 is entitled to its counterclaim for arrears.
Analysis And court's Findings
(a) Whether The defendants Made Actionable Misre
