PROPNEX REALTY SDN BHD v SMALL MEDIUM ENTERPRISE DEVELOPMENT BANK MALAYSIA BERHAD

Case Significance

Confirms that a registered estate agent who is the effective cause of a sale is entitled to the fee prescribed by the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 and rule 92(1) of the Estate Agents Rules 1986, displacing a quantum meruit award, while unspecified tax cannot be added to the agreed fee.

This Court of Appeal decision concerns the entitlement of a registered estate agent to its estate agency fee, and forms the appeal brought by the estate agent in a pair of cross-appeals heard together. Propnex Realty Sdn Bhd, a registered estate agency, claimed RM868,140.00 from Small Medium Enterprise Development Bank Malaysia Berhad, comprising a professional fee of RM819,000.00 and 6% sales and service tax of RM49,140.00, for services said to have secured the sale of the bank's factory in Sitiawan, Perak for RM27,300,000.00. The Sessions Court dismissed the claim; the High Court partly allowed the agent's appeal, finding no express contract as to the fee but ordering payment on a quantum meruit basis. Both sides appealed. In the estate agent's appeal, the Court examined whether the agent had been the effective cause of the sale and whether it was entitled to the scale fee under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 and rule 92(1) of the Estate Agents Rules 1986, rather than to a discretionary quantum meruit sum. The Court held that the agent was the effective cause of the sale and was entitled to the prescribed estate agency fee, and it set aside the High Court's quantum meruit order. It allowed the estate agent's appeal and ordered the bank to pay an estate agency fee of RM819,000.00, being 3% of the purchase price, with interest at 5% from the date of judgment. The claim for 6% sales and service tax was refused because that sum had not been specified in the WhatsApp message of 4 January 2021 or in the letter of intent. The judgment is significant for confirming that a registered estate agent who is the effective cause of a sale is entitled to the scale fee prescribed under the Act and rules, not merely to a discretionary award.