1. ) RM LINK SDN BHD 2. ) LIM KONG FAI v 1. ) DK-MY PROPERTIES SDN BHD 2. ) DK LEATHER CORPORATION BERHAD 3. ) KOEK TIANG KUNG

Case Significance

Holds a commission (introduction fee) agreement valid and enforceable where the claimant was not carrying on estate-agency practice, while applying privity and separate-legal-entity principles to confine liability to the contracting company and deny recovery against related parties and the second plaintiff.

This High Court (Shah Alam) decision determines a claim for an introduction fee said to be payable under a Commission Agreement, and raises questions of illegality, privity of contract and the piercing of the corporate veil. The first plaintiff, RM Link Sdn Bhd, claimed an introduction fee alleged to be payable by the defendants jointly or severally under an agreement signed between the first plaintiff and the first defendant, DK-MY Properties Sdn Bhd, on 13 October 2016. The introduction fee related to the sale of all the shares of a property-holding company by a vendor under a Share Sale Agreement, that company being the registered proprietor and beneficial owner of land on which a shopping mall stood. The Commission Agreement provided for payment of an introduction fee calculated on the purchase consideration of RM176,300,000, amounting to RM1,763,000.

The central issue was whether the Commission Agreement was void for illegality because the first plaintiff was not registered under the legislation governing valuers, appraisers and estate agents. The court also addressed the doctrine of privity — whether the second plaintiff had privity of contract to claim under the agreement as the alter ego of the first plaintiff — and whether there was any justification to lift the corporate veil to impose liability on related parties who were not named obligors under the Commission Agreement.

The court held that the Commission Agreement was valid and enforceable, since the relevant provisions of the estate-agency legislation did not apply to the first plaintiff, which was not carrying on an estate agency practice. It found that there had been no variation to the terms of the agreement and that, on largely undisputed facts, the first defendant had breached its payment obligations and was liable to pay the introduction fee of RM1,763,000 to the first plaintiff. As the parties to the Commission Agreement were the first plaintiff and the first defendant alone, the second plaintiff had no privity to claim on it, and there was no liability on the other defendants; no general, aggravated or exemplary damages were proven. Judgment was entered on the claim by the first plaintiff against the first defendant for RM1,763,000 with interest.