Newlake Development Sdn Bhd v Zenith Delight Sdn Bhd & Ors

Appellant(s): Newlake Development Sdn Bhd

Respondent(s):

• Zenith Delight Sdn Bhd (D1)
• Kumar Jaspal Quah & Aishah (D2)
• How Chee Hong (Steven) (D3) (Amber Kiew Sieh Pei)
• Thian Mung Ching (D4)

• YAA Datuk Hajah Azizah binti Haji Nawawi
• YA Dato' Azizul Azmi Bin Adnan
• YA Datuk Seri Mohd Firuz Bin Jaffril

• The appellant, a property development company, sought to acquire land and paid approximately RM9 million to the first respondent through the second and third respondents (a law firm and its managing partner).
• Despite payments made over a year, no Sale and Purchase Agreement (SPA) was executed between the appellant and the actual landowners; instead, the appellant entered into an SPA with the first respondent.
• The transaction ultimately failed, leading the appellant to commence legal proceedings against the respondents for multiple causes of action, including fraud, fraudulent misrepresentation, constructive trust, and breach of professional duty, which were dismissed by the High Court.

• Whether the respondents committed fraud and/or fraudulent misrepresentation against the appellant regarding the land acquisition and the status of agreements with the landowners.
• Whether the second and third respondents owed a professional duty of care and/or a fiduciary duty to the appellant, and if they breached these duties by mishandling the deposited monies.
• Whether the first and fourth respondents were liable for conspiracy to injure and defraud, and dishonest assistance in breach of trust.

• The Court of Appeal allowed the appeal, setting aside the High Court's decision and finding that the learned Judicial Commissioner erred in dismissing the appellant's claims.
• The Court found that the appellant's case was premised on a series of misrepresentations, including false assurances about the land acquisition status and the use of the deposited monies, which were almost entirely dissipated to unconnected third parties.
• The Court held that the second and third respondents breached their duty of care and were in a fiduciary relationship, giving rise to a constructive trust over the monies, which were misused; consequently, the SPA was deemed voidable due to fraud.