PLUS THREE CONSULTANTS (MALAYSIA) SDN. BHD. v 1. ) LANDASAN KAPITAL (M) SDN. BHD. 2. ) LIM CZE MIEN (Pemilik Tunggal beramal di bawah nama dan gaya Tetuan Cze Mien & Co)

Case Significance

Applies fiduciary-duty and constructive-trust principles to a consultant engaged as its client's agent in arbitration, holding that profits retained in breach of that duty are recoverable by the principal and defeat the consultant's own fee claim.

This High Court judgment from the Construction Court in Kuala Lumpur addresses a dispute over fees claimed by a consultancy firm engaged to provide arbitration support services. The plaintiff, Plus Three Consultants (Malaysia) Sdn Bhd, had been appointed by the first defendant, Landasan Kapital (M) Sdn Bhd, to act as its agent and manage the conduct of an arbitration that had arisen out of a construction sub-contract. The plaintiff sued for outstanding invoices of RM1,880,378.42, contending that its monthly invoices and timesheets had gone unchallenged. The first defendant disputed liability, denied that the sums were owing, and counterclaimed for the return of RM1,089,531.18 already paid, alleging breaches of the duties owed to it as agent and fiduciary and of the contractual obligation to act in good faith. A related counterclaim against the second defendant was settled before submissions. The central issue the Court determined was whether the plaintiff, as its principal's agent in the arbitration, had acted in breach of fiduciary duty. The Court held that it had, and analysed the consequences by reference to constructive-trust principles, including the proposition that profits retained in breach of fiduciary duty may be held on constructive trust for the principal. Having found the breach established, the Court dismissed the plaintiff's claim against the first defendant with no order as to costs. On the counterclaim, it granted the first defendant the reliefs it sought: rescission of the March proposal and additional estimate fee, a declaration that the profits retained by the plaintiff were held on constructive trust, and repayment of RM356,319.58 — the sum paid less the amounts the plaintiff had in turn paid to external lawyers — together with interest at five per cent per annum from the date of the order until full payment, and costs of RM50,000.00. The decision illustrates the fiduciary constraints on a consultant acting as its client's agent in litigation or arbitration.