LYFEMED MEDICARE (M) SDN BHD v 1. ) PROFESSIONAL LATEX SDN BHD 2. ) XALI PTE LTD 3. ) SENDOR SDN BHD 4. ) TANG KUM HOE

Case Significance

Illustrates the principle that a deposit cannot be recovered from a party who was never bound by the contract nor unjustly enriched, even where the truly liable contracting party has become insolvent.

This High Court decision in the Commercial Division at Kuala Lumpur, delivered by Ong Chee Kwan J after a full trial, concerns a claim to recover a deposit paid to secure the manufacture of nitrile gloves during the Covid-19 pandemic. The plaintiff, Lyfemed Medicare (M) Sdn Bhd, sued four defendants: Professional Latex Sdn Bhd (the glove manufacturer, to whose bank account the deposit was paid), Xali Pte Ltd, Sendor Sdn Bhd, and an individual fourth defendant. The judgment frames the case as one born of a misdirection not of motive but of legal recourse: the deposit had been paid to the first defendant, but the contractual relationship and the corresponding obligation to refund it lay with the second defendant, which had since been wound up, rendering a claim against it futile. In the wake of that insolvency the plaintiff turned to the first defendant to recover its loss.

The central questions were who the contracting parties to the sale actually were, and whether there was any contractual relationship — or unjust enrichment — that could fix the first defendant with liability to refund a deposit it had merely received at the direction of the true contracting supplier. The Court held that the deposit had been paid to the first defendant's account only on the instruction of the second defendant, the contracting supplier, and that the first defendant was never bound by contract to the plaintiff nor unjustly enriched by the payment.

As to the individual fourth defendant, the Court found the plaintiff had shown no cause of action; although that defendant had personally paid RM100,000 to the plaintiff, there was nothing to support a claim that he was personally liable for the deposit, and in any event he had been adjudged a bankrupt. The Court held that the claims against the first defendant could not be sustained and dismissed them with costs fixed at RM50,000. The judgment is a useful illustration of the principle that a deposit cannot be recovered from a party who was never bound by the contract nor unjustly enriched, even where the truly liable contracting party has become insolvent.