Fraud claims must meet a higher standard of proof; the court upheld a settlement agreement despite the appellant's allegations of conspiracy and fraud, finding no substantive evidence.

[1] This was an appeal against the decision of the High Court in dismissing the appellant's claim and entering judgment on the 1st respondent's counterclaim after a full trial.

[2] The appellant's claim before the High Court was for the rescission of a settlement agreement on the grounds of conspiracy, fraud and for breach of contract.

[3] The 1st respondent's counterclaim centred on the settlement agreement where the appellant agreed to pay the 1st respondent the sum of RM11,498,788.12. After the appellant had made the first payment of RM2,500,000.00, the appellant defaulted in making the subsequent instalment and pursuant to the settlement agreement, the appellant was liable to pay the 1st respondent the remaining balance sum of RM8,998,788.12.

The Relevant Facts

[4] This is a factually based appeal and we will now narrate the events that follow. The appellant is the developer of a housing project in Bukit Cerakah, Shah Alam. The 1st respondent, on the other hand, is an earthworks contractor.

[5] Now, the 1st respondent was appointed as the main earthworks contractor for the development in Phase 3A and Phase 3B.

[6] In regard to Phase 3B, the 1st respondent was the 2nd respondent's nominated sub-contractor. The appellant agreed to make all payments that were due under the Phase 3B contract directly to the 1st respondent. Evidence wise, there is no direct contractual relationship between the appellant and the 1st respondent in respect of the works that were carried out in Phase 3B. The letter dated 1 April 1999 from the appellant to the 2nd respondent appointing the 1st respondent as the nominated sub-contractor can be seen at the 1st respondent's Core Bundle at Tab 1. That letter was worded as follows:

"Nomination of Sub-Contractor for PROPOSED CONSTRUCTION AND COMPLETION OF EARTHWORKS AND MAIN DRAINAGE WORKS FOR CADANGAN PEMBANGUNAN BERSEPADU PUNCAK ALAM DI ATAS LOT PT 1929 AND PT 1935, LADANG FELDA BUKIT CHERAKAH, MUKIM JERAM DAN IJOK, DAERAH KUALA SELANGOR, SELANGOR DARUL EHSAN (PHASE 3B)

- Instruction to Appoint Nominated Sub-Contractors

In accordance with cl 28 of the Conditions of Contract, you are hereby instructed to accept the Tender for the above-mentioned Sub-contract Works from Menta Construction Sdn Bhd, who has been nominated to execute and complete the said Sub-contract Road and Drainage Works for the total sum of Ringgit Malaysia: Eleven Million Six Hundred Seventy Seven Thousand Eight Hundred and Ten (RM11,677,810.00).

The above-mentioned firm shall become Nominated Sub-contractor and you shall be required to enter into a formal Sub-contract with the said firm.

The sub-contract documents will be prepared and you shall be notified when they are ready to be signed by you and the Nominated Sub-contractor.

The Nominated Sub-contractor has undertaken to commence the Sub-contract Works within two (2) weeks from the date of receipt of your Official Order and to complete the whole of the Sub-contract Works within Twelve (12) Months from the date of Site Possession.

All correspondence, ie letters, instructions and the like issued by the Superintending Officer whether directly or indirectly to you relating to Sub-contract Works shall be deemed to have been served to you and taken effect thereof by the Nominated Sub-contractor in so far as it related to the proper execution and completion of the NSC works.

You are hereby required to provide all necessary Supervision and Administration of the Nominated Sub-contractor's Works including co-ordination with the Employer and the S.O. to ensure the timely completion of the Works and compliance with the provisions of the Contract.

Please prepare the necessary Letter of Acceptance and Documents for the execution of both the contracts."

[7] Anot