NEWLAKE DEVELOPMENT SDN BHD v 1. ) ZENITH DELIGHT SDN BHD (D1) 2. ) KUMAR JASPAL QUAH & AISHAH (D2) 3. ) How Chee Hong (Steven) (D3) (Amber Kiew Sieh Pei) 4. ) Thian Mung Ching (D4)

Case Significance

Instructive on rescinding a sale and purchase agreement procured by fraud and fraudulent misrepresentation, on total failure of consideration, and on the significance of the money trail and contemporaneous documents in a failed land transaction.

This Court of Appeal decision concerns a failed land transaction in which a prospective purchaser paid a large sum but received nothing, and the appellate finding that the sale and purchase agreement was procured by fraud. The appellant, Newlake Development Sdn Bhd, was the plaintiff below, and the respondents were a company, a firm of solicitors and two individuals. The plaintiff's case, advanced through multiple causes of action, including fraud, conspiracy to defraud, fraudulent misrepresentation, constructive trust or breach of trust, and breach of a professional duty of care under an implied retainer, was that it had paid RM9 million to the first respondent company, which was said to have finalised the purchase of the subject land from its actual owners, only for the sale never to take place, leaving the plaintiff with nothing but losses. The High Court had dismissed the claim, finding no misrepresentation, no negligence and no duty of care. The Court of Appeal, comprising Azizah Haji Nawawi CJSS, Azizul Azmi Adnan and Mohd Firuz Jaffril JJCA, allowed the appeal. It held that the High Court had wrongly applied the parol evidence rule, had failed to appreciate the contemporaneous documents, and had failed to examine the money trail, and it found that there had been a total failure of consideration by the respondents which disentitled them to forfeit the sums paid. On the central issue, the court found that the defendants had committed fraud and fraudulent misrepresentation on the plaintiff, so that the sale and purchase agreement, being premised on fraud and fraudulent misrepresentation, was voidable and liable to be rescinded, and the monies paid under it were to be returned to the plaintiff. The court accordingly set aside the High Court's decision and granted the reliefs prayed for in the statement of claim, ordering costs of RM200,000 against each set of respondents in view of the multiple causes of action and the manner in which the fraud and breach of trust had been practised. The judgment is instructive on rescinding a contract procured by fraud, the total failure of consideration, and the importance of the money trail and contemporaneous documents.