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2022 MarsdenLR 215

COURT OF APPEAL PUTRAJAYA
KUNCI SEMANGAT SDN BHD – Appellant
Versus
THOMAS VARKKI M V VARKKI & ANOR – Respondent
[Appeal No: W-02(NCVC)(W)-260-02-2021]

Petitioner Advocates:K Shanmuga,P Dinesh Kumar ,Respondent Advocate: Rajashree Suppiah,Rex Kuan Kai Tat,Amira Nur Nadia Azhar

Unregistered individuals cannot recover fees for services as estate agents under the Act unless the claim is based on a valid legal agreement that is not tainted by illegality.

Headnote:(A) Valuers, Appraisers, Estate Agents and Property Managers Act 1981 – Sections 22B(1A) and 22C(1)(d) – Issue of illegality – Claim for finder's fee by unregistered plaintiffs under alleged oral contract – Illegality not pleaded in defence, leading to dismissal of the argument – Previous case Matad established that one-off transactions may not constitute estate agency practice, yet has been affected by amendments to the Act – Plaintiffs successfully identified and negotiated the property for the defendant. (Paras 1, 78, 107)

(B) Illegality – Requirement of specific pleading of illegality in defence – Judicial Commissioner ruled illegality must be pleaded and was not sufficiently established by the defendant. (Paras 88-96)

Facts of the case: The plaintiffs, who had identified and negotiated a land purchase for the defendant, claimed finder's fees under an oral contract; the defendant countered that the plaintiffs were unregistered estate agents and thus barred from recovering fees under the Act.

Findings of Court: The Judicial Commissioner dismissed the defendant's appeal and found that the plaintiffs did not engage in estate agency practice that required registration, as their actions did not constitute a system or course of conduct. (Paras 42, 108)

Issues: Whether the plaintiffs' claim was prohibited under the Act due to unregistered status; if the illegality argument was permissible despite not being pleaded. (Paras 1, 87, 109)

Ratio Decidendi: The court ruled that failure to plead illegality barred the defendant from relying on it in their defense; furthermore, the plaintiffs' actions did not constitute estate agency practice that would require registration. (Paras 79, 97)

Result: Defendant's appeal dismissed, judgment for the plaintiffs affirmed.

JUDGMENT:

S Nantha Balan JCA:

Introduction

[1] The main issue in this appeal is whether the plaintiffs' claim against the defendant for the balance of what has been described as a "finder's fee" is tainted with illegality, ie a claim which is prohibited by the provisions of the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 ("the Act"). The problem here is that illegality was not pleaded in the Defence and was not an issue to be tried. And the issue of illegality was not at all raised when the evidence was presented during the trial. The issue of illegality surfaced only when post-trial written submissions were filed. This is an appeal by Kunci Semangat Sdn Bhd (Co No 365006-T) ("defendant") against the decision of the Learned Judicial Commissioner dated 7 January 2021 after a full trial, whereby the claim by Thomas Varkki a/l MV Varkki (1st plaintiff - "P1") and Amarjit Singh a/l Kartar Singh (2nd plaintiff - "P2") was allowed and judgment was entered for the sum of RM545,720.00 with interest thereon at 5% per annum from 7 January 2021 until the full payment or realisation. The defendant was also ordered to pay costs of RM40,000.00. By the said decision the Judicial Commissioner also dismissed the defendant's Counterclaim. P1 and P2 shall be referred to collectively as "the plaintiffs". The Judicial Commissioner's judgment is reported as Thomas Varkki MV Varkki & Anor v. Kunci Semangat Sdn Bhd.

The Claim

[2] The plaintiffs are not registered under the Act as estate agents. The basis for the plaintiffs' claim is that as per the defendant's request via an oral contract with the defendant's director, they had successfully identified a parcel of landed property, and negotiated the price for the property, which was eventually purchased by the defendant. The defendant made part payments totaling RM75,000.00 through its holding company. The plaintiffs initially filed a suit in the Sessions Court at Kuala Lumpur (Suit No: WA-B52NCVC-15-01-2020) to claim the sum of RM545,720.00, being the balance of their finder's fee. The defendant, in turn, filed a Counterclaim, wherein the quantum sought as part of the reliefs exceeded the monetary jurisdiction of the Sessions Court. The Sessions Court suit was therefore transferred to the High Court and registered as Suit No: WA-22NCVC-384-07-2020.

Illegality

[3] The first issue in this appeal is whether illegality viz contravention of the provisions under the Act must be specifically pleaded in accordance with O 18 r 8 of the Rules of 2012 ("ROC") . The next issue is whether the plaintiffs' claim based on a "finder's fee" arrangement with the defendant, albeit a "one- off" transaction, is prohibited by virtue of s 22C(1)(d) read together with s 22B(1A)(b) or (d), of the Act.

[4] In this context, the issues, when amalgamated, raise the question of whether the defendant ought to have pleaded, and put their case during the trial, and proven that the plaintiffs were engaged in estate agency practice, such that their claim is barred by the provisions of the Act.

Matad

[5] The related issue is whether in light of the amendments to the Act in 2011 and 2017, the decision of the Court of Appeal in Matad Sdn Bhd v. Ng Chee Keong , [2004] 2 CLJ 99 (CA) ("Matad") which examined the relevant provisions of the Act as applicable at that time, is still good law.

[6] In Matad, the Court of Appeal enunciated that a one-off transaction is not within the purview of the Act, but left open the possibility that "an isolated act may amount to estate agency practice if evidence of a system of such acts is established to the satisfaction of the Court". In the latter event, the one-off transaction may well be within the purview of the Act.

[7] Perhaps the final issue is whether, as contended by the defendant, the High Court ought to have ruled that regardless of the defendant's failure to plead illegality in the Defence, the plaintiffs' claim ought to have been dismissed in any event, as the evidence at trial d

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2022 MarsdenLR 215

COURT OF APPEAL PUTRAJAYAKUNCI SEMANGAT SDN BHD – AppellantVersusTHOMAS VARKKI M V VARKKI & ANOR – Respondent[Appeal No: W-02(NCVC)(W)-260-02-2021]

Unregistered individuals cannot recover fees for services as estate agents under the Act unless the claim is based on a valid legal agreement that is not tainted by illegality.

COURT OF APPEAL PUTRAJAYA
KUNCI SEMANGAT SDN BHD – Appellant
Versus
THOMAS VARKKI M V VARKKI & ANOR – Respondent
[Appeal No: W-02(NCVC)(W)-260-02-2021]