TAN KOK SOON v 1. ) BOO KUANG LOON 2. ) LEE EE HOE

Case Significance

Illustrates how a claim for a finder's fee stands or falls on the construction of the governing letter of undertaking and the fulfilment of its conditions, and how the termination of the underlying project defeats a fee contingent on the project proceeding.

This High Court decision at Kuala Lumpur, delivered after a full trial, concerns a claim for a finder's fee and related benefits founded on a letter of undertaking. The plaintiff claimed a finder's fee of 2.5% on the total gross development value of a development project on two plots of land at Jalan U-Thant, Kuala Lumpur, of which the defendants had paid RM250,000 as an initial payment, together with a monthly sum said to be due as salary allowance and other benefits. The developer of the project was a company that was later renamed. The central questions were the proper construction of the letter of undertaking and the conditions on which the finder's fee became payable, and in particular the effect on the parties' obligations of the termination of the underlying project. The court approached the dispute by reference to the sanctity of contract and the principle that the parties are bound by their pleadings, and it considered the burden of proof under the Evidence Act 1950 and whether an adverse inference under section 114(g) arose from any failure to call a material witness. Construing the letter of undertaking, the court found that the conditions for payment of the finder's fee and the further sums claimed had not been satisfied, particularly given the termination of the project on which the entitlement depended, and that the plaintiff had not discharged the burden of proving his entitlement. It disallowed the specific heads of claim pleaded and dismissed the plaintiff's claim with costs of RM50,000. The judgment is a useful illustration of how a claim for a finder's fee stands or falls on the construction of the governing undertaking and the fulfilment of its conditions, and of the effect of a project's termination on a fee that is contingent on the project proceeding.