A

Consent judgment — Application to set aside on grounds of mistake, fraud

and unjust enrichment — Whether mere silence could amount to fraud
— Contracts Act 1950 ss 10, 14, 17 & 21

B
Barter Fortune Sdn Bhd v Majurama Development Sdn
Bhd
HIGH COURT (ALOR SETAR) — CIVIL SUIT NO 22-NCvC-29–10 OF
2011
C SEE MEE CHUN JC
23 APRIL 2012

The defendant in a common suit had claimed RM136,767.12 (‘the late

interest claim’) and RM315,000 (‘the progressive payments claim’) together
D with interest and costs against the plaintiff and a bank (‘CIMB’). CIMB had
guaranteed payment of the progressive payments claim. The defendant
obtained summary judgment against CIMB on its guarantee and the bank
paid the full RM315,000 to the defendant. Subsequently, the plaintiff
entered into a consent judgment with the defendant where it agreed to pay
E the latter RM180,000 in full and final settlement of all disputes arising from
the defendant’s claim and the plaintiff’s counterclaim. In the present action,
the plaintiff sought to set aside the consent judgment claiming that when it
entered into the consent judgment it was unaware CIMB had fully settled
the progressive payments claim. The plaintiff relied upon mutual common
F mistake, material and fundamental unilateral mistake, lack of consensus ad
idem, unjust enrichment and fraud as grounds to set aside the consent
judgment. The plaintiff, inter alia, alleged the defendant was guilty of fraud
because during the deliberations to arrive at the consent judgment figure,
its representatives never disclosed the fact that CIMB had settled the
G progressive payments claim. The defendant, on the other hand, contended
that the plaintiff could not have been under any mistake of fact as the
plaintiff’s lawyers were present when the summary judgment was recorded
against CIMB. The defendant denied the allegations of unjust enrichment
and fraud.
H
Held, dismissing the claim:
(1) The plaintiff’s counsel was present when summary judgment was
entered against CIMB. The plaintiff, through its counsel, was aware of
I this. The plaintiff, further, tried to stay the summary judgment but
withdrew the application when the defendant objected to its locus

207 [2016] 6 MLJcon

208 MLJournal IN FOCUS [2016] 6 MLJcon

standi. The plaintiff knew CIMB would have to pay the summary A
judgment amount if there was no appeal. That being the case, it was
not possible for the plaintiff to now say they were unaware that CIMB
had paid the progressive payments claim when it was negotiating with
the defendant. It was the court’s finding that there was no mistake,
whether common or unilateral, and arising therein there was B
consensus ad idem. Even if it could be said that the plaintiff did not
know CIMB had paid the RM315,000, it could have availed itself to
such information, more so when it had the opportunity to do so from
the time summary judgment was obtained till the time the consent
judgment was recorded (see paras 9 & 12–14). C
(2) The evidence showed there was no active concealment or act of
deceit by the defendant’s DW1. PW1 and/or his counsel knew of the
summary judgment against CIMB and that the natural course of
events, if there was no appeal, would be for CIMB to pay. DW1 said
D
‘I assumed they knew’. This assumption was not far-fetched. DW1’s
silence was not fraud as was apparent from the explanation to s 17 of
the Contracts Act 1950 (see para 24).
(3) On the allegation of unjust enrichment, DW1 said it was not so when
the suit was settled at RM180,000 as that was a reasonable sum for E
the late interest claim plus interest and costs. The court found there
had been no unjust enrichment within the meaning of payment made
to another where it was inequitable for the recipient to keep it (see
para 25).
F
[Bahasa Malaysia summary
Defendan dalam tindakan biasa telah menuntut sebanyak RM136,767.12
(‘tuntutan faedah lewat’) dan RM315,000 (‘tuntutan bayaran progresif’)
bersama dengan faedah dan kos terhadap plaintif dan bank (‘CIMB’). CIMB
telah menjamin bayaran tuntutan bayaran progresif. Defendan G
memperolehi penghakiman terus terhadap CIMB atas jaminannya dan bank
membayar penuh sebanyak RM315,000 kepada defendan. Plaintif
kemudiannya memasuki penghakiman izin dengan defendan di mana ia
bersetuju untuk membayar defendan sebanyak RM180,000 penyelesai
penuh dan muktamad terhadap kesemua pertikaian yang berbangkit H
daripada tuntutan defendan dan tuntutan balas plaintif. Dalam tindakan ini,
plaintif memohon untuk mengetepikan penghakiman izin dengan
mendakwa bahawa apabila ia memasuki penghakiman izin ia tidak sedar
yang CIMB telah selesaikan secara penuh tuntutan bayaran progresif.
Plaintif bergantung ke atas kesilapan biasa bersama, material dan kesilapan I
 Barter Fortune Sdn Bhd v Majurama Development Sdn
[2016] 6 MLJcon Bhd (See Mee Chun JC) 209

A unilateral asas, ketiadaan ad idem konsensus, pengkayaan tak patut dan

fraud sebagai alasan untuk mengetepikan penghakiman izin. Plaintif, antara
lain, mendakwa defendan bersalah terhadap fraud kerana semasa
perbincangan untuk mencapai angka penghakiman izin, wakil-wakilnya tidak
pernah mendedahkan fakta bahawa CIMB telah menyelesaikan tuntutan
B bayaran progresif. Defendan, sebaliknya, berhujah bahawa plaintif tidak
mungkin membuat apa-apa kesilapan fakta memandangkan peguam-peguam
plaintif hadir apapbila penghakiman terus direkodkan terhadap CIMB.
Defendan menafikan dakwaan pengkayaan tak patut dan fraud.
C Diputuskan, menolak tuntutan:
(1) Peguam plaintif hadir semasa penghakiman terus dimasukkan
terhadap CIMB. Plaintif, melalui peguamnya, menyedari mengenainya.
Plaintif, selanjutnya cuba menangguhkan penghakiman terus tetapi
D menarik balik permohonan apabila defendan membantah kepada
locus standinya. Plaintif mengetahui CIMB terpaksa membayar jumlah
penghakiman terus jika tidak terdapat rayuan. Dengan itu, adalah tidak
mungkin untuk plaintif sekarang ini untuk menyatakan mereka tidak
menyedari bahawa CIMB telah membayar tuntutan bayaran progresif
E apabila ia berunding dengan defendan. Adalah dapatan mahkamah
bahawa tidak terdapat kesilapan, sama ada biasa atau unilateral, dan
yang berbangkit di dalamnya terdapat ad idem konsensus. Walaupun
ia dapat dikatakan bahawa plaintif tidak mengetahui CIMB telah
membayar RM315,000, ia boleh mendapatkan maklumat sedemikian,
F
lebih lagi ia mempunyai peluang untuk berbuat sedemikian dari masa
penghakiman terus diperolehi sehingga penghakiman izin direkodkan
(lihat perenggan 9 & 12–14).
(2) Keterangan menunjukkan tidak terdapat penyembuyian aktif atau
G perbuatan menipu oleh DW1 defendan. PW1 dan/atau peguamnya
mengetahui mengenai penghakiman terus terhadap CIMB dan bahawa
kejadian biasa, jika tidak terdapat rayuan, sepatutnya dibayar oleh
CIMB. DW1 menyatakan ‘I assumed they knew’. Anggapan ini adalah
bukan dibuat-buat. DW1 berdiam diri adalah bukan fraud seperti yang
H jelas daripada penjelasan kepada s 17 Akta Kontrak 1950 (lihat
perenggan 24).
(3) Atas dakwaan pengkayaan tak patut, DW1 menyatakan ia bukan
sedemikian apabila tindakan tersebut diselesaikan pada RM180,000
I kerana ianya adalah jumlah yang munasabah bagi tuntutan faedah lewat
tambah faedah dan kos. Mahkamah mendapati tidak terdapat
pengkayaan tak patut dalam maksud bayaran yang dibuat kepada
orang lain di mana adalah tidak adil bagi penerima untuk
menyimpannya (lihat perenggan 25). ]
210 MLJournal IN FOCUS [2016] 6 MLJcon

Cases referred to A
Asean Securities Paper Mills Sdn Bhd v CGU Insurance Bhd [2007] 2 MLJ 301,
FC (refd)
Fernrite Sdn Bhd v Perbadanan Nasional Berhad [2011] 6 CLJ 1, CA (refd)
Tong Lee Hwa & Anor v Chin Ah Kwi; Tong Chong Fah v Chin Ah Kwai [1971] 2
B
MLJ 75, FC (refd)
Yong Tim v Hoo Kok Chong [2005] 3 CLJ 229, FC (refd)

Legislation referred to
Contracts Act 1950 ss 10, 14, 17, 21, 22, 23 C
Rules of the High Court 1980 O 14A
M Kanesan (M Kanesan & Assoc) for the plaintiff.
Fahri Azzat (Azzat & Izzat) for the defendant.
D
See Mee Chun JC:

[1] The plaintiff seeks to set aside a consent judgment it entered into
with defendant on 24 May 2011 arising from civil suit GS 22–255 of 2008
(2008 suit). The terms of the consent judgment can be found in B, 121–122. E
It states essentially that the plaintiff who was the first defendant in 2008 suit
would pay the defendant who was the plaintiff in the 2008 suit a sum of
RM180,000 as full and final settlement of all issues and disputes arising from
the claim and counterclaim (settlement amount). In 2008 suit the claim was
for RM136.767.12 as late interest (RM136k claim) and RM315,000 for F
progressive payment (RM315k claim) along with interests and costs.

[2] CIMB was sued as the second defendant in 2008 suit by virtue of it
giving a bank guarantee on the RM315k claim to secure such progressive
payment. On 8 June 2009 summary judgment under O 14A of the Rules of G
the High Court 1980 (‘the RHC’) was obtained against CIMB on the bank
guarantee (B, 38–43, summary judgment).

[3] The bone of the plaintiff’s complaint as given in the evidence of Mr

Tang Wooi Chon, also referred to as Clement (PW1, director of the H
plaintiff company) is that when discussing settlement with the defendant on
the morning of 24 May 2011 when 2008 suit came up for hearing he was not
aware CIMB had settled the sum of RM315,000. In his witness statement
(P1) PW1 states discussions were held with Mr Lam Hoi Khong (DW1,
chief financial controller, the defendant company) in respect of RM315k I
claim only and none on RM136k claim as it had almost a complete defence
for RM136k claim. In the circumstances he offered 50% of RM315,000
which was RM157,000 to settle the matter. DW1 requested a higher sum
and had to contact one other director. DW1 came back with his counsel
 Barter Fortune Sdn Bhd v Majurama Development Sdn
[2016] 6 MLJcon Bhd (See Mee Chun JC) 211

A Mr Wong Guo Bin (DW3) whereupon they proposed a sum of RM200,000

which PW1 did not agree. DW3 whispered to DW1 and then DW3
proposed RM180,000 which PW1 accepted in good faith as full and final
settlement of 2008 suit with no order as to costs. The plaintiff’s counsel
Mr Ahmad Farid bin Zakaria (PW2) joined the discussions and a draft
B consent judgment was prepared and signed by all parties (B, 120). Refer to
Q&A 5 of PL. Later on the same day PW1 contacted CIMB to inform of the
consent judgment and was informed CIMB had settled the sum of
RM315,000. PW2 said he did not know the sum had been paid until after
the consent judgment when PW1 told him.
C
[4] The application to set aside the consent judgment was withdrawn as
the sealed order had been extracted. Hence the present claim. In the
statement of claim the grounds to set aside the consent judgment are.
D mutual common mistake (paras 23 and 24), material and fundamental
unilateral mistake (para 25), no consensus ad idem (para 26), unjust
enrichment (paras 27 and 28(a)) and fraud (para 28(b)). The defence is that
the plaintiff could not have been under any mistake of fact as at all material
times it was under advice of its lawyer who was present when consent
E judgment was recorded on 24 May 2011 and when summary judgment was
obtained against CIMB on 8 June 2009 and if there was any mistake on
plaintiff’s part it is insufficient in law to invalidate the consent judgment
(para 5 of defence). The defendant further denies the allegations of unjust
enrichment and fraud and puts the plaintiff to strict proof (para 6 of
F defence).
GROUNDS FOR SETTING ASIDE

[5] A consent judgment once perfected cannot be set aside in the same
G proceedings which in our case is the 2008 suit. It can only be done by way
of fresh proceedings. Refer to Tong Lee Hwa & Anor v Chin Ah Kwi; Tong
Chong Fah v Chin Ah Kwai [1971] 2 MLJ 75.

[6] The grounds to set aside are similar to the grounds to set aside an
H agreement. Section 10 of the Contracts Act 1950 (‘Act 136’) provides,
inter alia, all agreements are contracts if they are made by the free consent
of parties competent to contract. Section 14 states what free consent is
and the instances where relevant to our case are when it is not caused by
fraud (as defined in s 17) or mistake (subject to ss 21–23).
I
Mistake

[7] Section 21 of Act 136 provides where both parties to an agreement

are under a mistake as to a matter of fact essential to the agreement, the
212 MLJournal IN FOCUS [2016] 6 MLJcon

agreement is void. Section 23 provides a contract is not voidable merely A

because it was caused by one of the parties to it being under a mistake as
to a mistake of fact.

[8] It is the plaintiff’s contention it did not know RM315k claim had been
paid by CIMB when it was discussing to settle with the defendant through B
DW1 and DW3. This according to them amounts to a mistake essential to
the consent judgment or at the very least a unilateral mistake on the
plaintiff’s part. The defendant counters there was no mistake whether
common or unilateral as the plaintiff was legally represented at 2008 suit
C
and knew of summary judgment obtained against CIMB.

[9] PW1’s evidence is that when 2008 suit was going on it he did not
contact CIMB although he did say it would have been prudent to do so. He
disagreed it was a mistake not to verify with CIMB as they still had the main D
case. On the summary judgment obtained against CIMB the evidence is
clear the plaintiff and its counsel was aware of the defendant’s application
and the order obtained. This is apparent from the order where the
presence of the plaintiff counsel PW2 is recorded. Although PW2
explained he was present because the defendant’s application under O 14 E
of the RHC was also fixed to be heard on the same day, it does not detract
from the fact the plaintiff through its counsel knew of the summary
judgment obtained against CIMB. Further the plaintiff tried to stay the
summary judgment (B, 44–45) and PW1 affirmed an affidavit in support
dated 18 June 2009 (B, 46–118). This is confirmed by PW1 who stated they F
did the stay application and CIMB didn’t ask them to do so. PW2 stated the
application for stay was withdrawn as the defendant had objected to their
locus standi. Both said if there was no appeal against the summary judgment
CIMB would have to pay. PW2 also stated after the summary judgment
there was no discussion with CIMB or its solicitors. They had no interest in G
the progress of the CIMB matter as CIMB had its own solicitors. As to how
the claim against CIMB would affect the claim against the plaintiff he replied
the plaintiff would have to pay for the guarantee. When asked if he had
advised the plaintiff to take an interest in the CIMB proceedings he stated
he told them to see the bank, appeal or stay. H

[10] In addition DW3 informed the court prior to the hearing of 2008
suit he had proposed to PW2 to withdraw RM315k claim as it had been
paid by CIMB and that the plaintiff’s counterclaim be withdrawn. This was
collaborated by Mr Chan Szu Fu (DW2) who mentioned 2008 suit on I
DW3’s behalf on 27 April 2011. There are also the documents D4 and D5.
Although PW2 denies such a proposal and that the proposal was in respect
of dropping the interest on RM315k claim and RM136k claim the evidence
of DW2 and DW3 on this score is more probable.
 Barter Fortune Sdn Bhd v Majurama Development Sdn
[2016] 6 MLJcon Bhd (See Mee Chun JC) 213

A [11] DW1 in Q&A 6 of his witness statement (D3) said there was no
common mistake when parties entered the consent judgment as the
defendant knew RM315k claim had been paid in September 2009.

[12] The net effect of the evidence is that the plaintiff through PW1 and
B through its counsel knew of the summary judgment and that CIMB would
have to pay if there was no appeal. That being the case I do not think it
possible for the plaintiff to now say they were not aware CIMB had paid the
RM315k claim when it was negotiating with the defendant. Further if all the
while during the 2008 suit PW1 had never been in contact with CIMB the
C question arises as to why he would have found it necessary to contact them
when the consent judgment was entered into.

[13] It is thus my finding there was no mistake be it common or unilateral

and arising therein there was consensus ad idem.
D

[14] Even if it can be said the plaintiff did not know CIMB had paid the
RM315k it could have availed itself to such information more so when it
had the opportunity from the time summary judgment was obtained till the
E consent judgment was recorded. There was nothing to show CIMB would
not have disclosed the information.

[15] The plaintiff also says DW1 knew or ought to know PW1 was not
aware CIMB had settled RM315k claim. This was because PW1 had initially
F offered 50% of RM315,000 and this was higher than RM136k claim and no
one would offer a higher sum than this claim.

[16] In cross-examination DW1 said as at 24 May 2011 he knew CIMB

has settled the RM315k claim with interest and cost. When asked if that
G had been settled the only claim is RM136k claim he replied ‘on both our
claim of RM315k and RM136k and the counterclaim’. To the question that
since they have recovered the full payment of RM315k claim could he
proceed against the plaintiff for RM315k his answer was ‘no’. When offered
50% of RM315k he asked for more as he took into consideration late
H interest until settlement date and legal costs on the two claims and
counterclaim.

[17] A series of questions were put to DW1 that:

I (a) when PW1 proposed 50% of RM315,000 and you agreed to
RM180,000 you knew that PW1 did not know CIMB had paid to the
defendant; answer — not aware of that;
(b) no one would agree to a settlement of higher sum than what was
claimed; answer — l wouldn’t know; and
214 MLJournal IN FOCUS [2016] 6 MLJcon

(c) you did not disclose the fact that payment made by CIMB; answer — A
l didn’t. I assume the plaintiff is aware.

When asked when PW1 initiated settlement by proposing 50% of RM315k

claim he should have drawn to PW1’s attention that the remaining claim is
RM136k claim DW1 replied the settlement is for the entire claim and B
counterclaim. He denied since he knowingly did not inform PW1 of
payment received from CIMB and remaining claim is RM136k claim he had
been dishonest.
C
[18] In Q&A 4 he disagreed with the allegation the plaintiff was only
discussing to settle RM315k claim. This was because the trial was for the
defendant’s claim and the plaintiff’s counterclaim and settlement has to be
about the entire suit. Further the defendant would not be discussing only
on RM315k suit when CIMB had paid the amount. In Q&A 5 DW1 D
explained RM315k claim could be withdrawn on condition the plaintiff’s
counterclaim was withdrawn. Since the plaintiff did not withdraw its
counterclaim the defendant did not withdraw RM315k claim.

[19] From the evidence DW1 would not know or would not ought to E
have known PW1 did not know CIMB had paid the RM315k claim. As to the
offer being initially 50% of RM315,000 and this was higher than RM136k
claim DW1 had explained he considered the element of late interest until
settlement date. The evidence also shows the discussions must have been
F
on the claim and counterclaim as the 2008 trial was to proceed on that
basis.

[20] Further the terms of the handwritten draft settlement (B, 120)
signed by both counsel show the settlement amount to be ‘as full and final G
settlement of all issues and disputes arising herein on the plaintiffs claim and
the first defendant’s counterclaim with no further recourse to relitigate on
such issues and disputes’. Both PW1 and DW1 confirmed the terms.
Accepting the evidence of PW2 he was not involved in the discussion the
fact of him signing the draft settlement shows the plaintiff had legal advice H
at all relevant times.

Fraud

[21] As per s 14 of Act 136 consent is free when it is not caused by fraud I
as defined in s 17. Section 17 lays down the different acts which may
constitute fraud of which the relevant acts are the active concealment of a
fact by one having knowledge or belief of the fact (para b) and any other act
calculated to deceive (para d). The provision explains further:
 Barter Fortune Sdn Bhd v Majurama Development Sdn
[2016] 6 MLJcon Bhd (See Mee Chun JC) 215

A Explanation — Mere silence as to facts likely to affect the willingness of a person

to enter into a contract is not fraud, unless the circumstances of the case are
such that, regard being had to them, it is the duty of the person keeping silence
to speak, or unless his silence is, in itself, equivalent to silence.

B [22] On the burden of proof of fraud, Yong Tim v Hoo Kok Chong [2005] 3
CLJ 229 and Asean Securities Paper Mills Sdn Bhd v CGU Insurance Bhd [2007]
2 MLJ 301 have held it to be beyond reasonable doubt. My attention was
drawn to a passage in Sinnadurai Law of Contract (4th Ed Vol 1) (LexisNexis
2011) where it reads as follows:
C
It therefore appears that both Yong Tim v Hoo Kok Chong and Asean Securities
Paper Mills Sdn Bhd v CGU Insurance Bhd were decided per incuriam on the issue
of the standard of proof for fraud in civil proceedings. As pointed out in
Lembaga Kemajuan Tanah Persekutuan (FELDA) & Anor v Awang Son bin Mamat &
D Ors [2009] 4 MLJ 610:
In Yong Tim v Hoo Kok Chong the Federal Court laid down the standard of
proof for fraud in civil proceedings as beyond reasonable doubt. However
this case made no reference to an earlier authority by the same court in Ang
Hiok Seng @ Ang Yeok Seng v Yim Yut Kiu (personal representative of the estate
E of Chan Weng Sun, deceased) [1997] 2 MLJ 45.
As such the correct position of the law seems to be that which is stated in Ang
Hiok Seng @ Ang Yeok Seng v Yim Yut Kiu …

F [23] In Ang Hiok Seng the court stated at pp 59–60:

From the wide definition of fraud under s 17 of Contracts Act 1950 as well as
leading authorities on the subject, where the allegation of fraud in civil
proceedings concerns criminal fraud such as conspiracy to defraud or
misappropriation of money or criminal breach of trust, it is settled law that the
G burden of proof is the criminal standard of proof beyond reasonable doubt, and
not on the balance of probabilities. It is now well established that an allegation
of criminal fraud in civil or criminal proceedings cannot merely be based on
suspicion or speculation … But where the allegation of fraud ... is entirely founded
on a civil fraud — and not based on a criminal conduct or offence — the civil burden
H is applicable ...;

and at p 63:
The definition of ‘fraud’, read in conjunction with the authorities, leads us to the
I conclusion that where the fraud alleged in civil proceedings is based on a
criminal offence, the criminal burden of proof beyond reasonable doubt must
be applied. But where the fraud alleged is purely civil in nature, there is no reason why
the civil burden should not apply. (Emphasis added.)
216 MLJournal IN FOCUS [2016] 6 MLJcon

[24] Hence in this case where the fraud alleged is a civil fraud the civil A
burden is applicable. The evidence outlined above show there was no
active concealment or act of deceit by DW1. PW1 and/or his counsel knew
of the summary judgment obtained against CIMB and that the natural
course of events if there was no appeal would be for CIMB to pay. In the
words of DW1 ‘I assumed they knew’ and this assumption is not farfetched. B
From the explanation to s 17 mere silence is not fraud. In Sinnadurai Law of
Contract (3rd Ed) (LexisNexis Butterworths) it is stated at p 228 para 5.07
that ‘illustration (b) covers the former situation’ ie the first situation while
‘illustration (c) covers the latter’ ie the second situation. DW1’s silence is
not fraud as apparent from the explanation to s 17. C

UNJUST ENRICHMENT

[25] On the allegation of unjust enrichment DW1 said it was not so when
the 2008 suit was settled at RM180,000 and this was a reasonable sum for D
RM136k claim and interest and costs. There has been no unjust enrichment
within the meaning of payment made to another where it is inequitable for
the recipient to keep it as per Fernrite Sdn Bhd v Perbadanan Nasional
Berhad [2011] 6 CLJ 1.
E
DUTY TO DISCLOSE

[26] I add it does not lie on the defendant through DW1 to inform PW1
that CIMB had paid the RM315k claim in the course of discussions for
settlement. In this regard I agree with the defendant’s submission there is F
no such obligation on the defendant to disclose due to the adversarial
nature of our Malaysian legal system. Refer to Jeffrey Pinsler in Evidence,
Advocacy and the Litigation Process (Butterworths 1992) where at p 8 is
stated:
G
… the ‘adversarial’ … process, which characterises the common law
jurisdictions and applies in … Malaysia, involves a situation in which the judge
has a more passive role in the proceedings and the parties a correspondingly
more active one. In fact, it is the parties, through their advocates, who must
take the responsibility of investigating the facts and of ensuring that their
respective cases are comprehensively and effectively prepared for and H
presented at trial.

CONCLUSION

[27] For the reasons given above the plaintiff’s claim is dismissed with I
costs.
 Barter Fortune Sdn Bhd v Majurama Development Sdn
[2016] 6 MLJcon Bhd (See Mee Chun JC) 217

A Claim dismissed.

Reported by Ashok Kumar