The case of Fullji Realty Sdn Bhd v. Lim Yong Meng serves as a foundational authority in Malaysian law regarding the breach of warranty of authority by solicitors and the procedural nature of third-party proceedings. Although the judgment was delivered ex post facto following a settlement between the parties, it provides a comprehensive judicial illustration of how such disputes are adjudicated.
1. Factual Background
The dispute arose from a purported sale and purchase of land where a person falsely claimed to be the registered proprietor (the imposter). The Plaintiff (the purchaser) had initially met a land broker and the imposter before seeking legal assistance. All parties first met at the office of the Third Party, a solicitor who intended to represent the purchaser.
Upon perusing a temporary identity card and a title deed provided by the imposter, the Third Party realized the “owner” was present and immediately stopped dealing with him to avoid a conflict of interest. The Third Party then contacted the Defendant (another solicitor) to act for the purported vendor. The Plaintiff and the imposter proceeded to the Defendant’s office, where they executed an option agreement and the Plaintiff paid an initial earnest deposit of RM3,000.
The Plaintiff subsequently paid a further balance deposit of RM252,000 and signed a formal sale and purchase agreement. It was later discovered that the vendor was an imposter, and the Plaintiff sued the Defendant solicitor for the loss. The Defendant, in turn, initiated third-party proceedings against the Plaintiff’s own solicitor (the Third Party) for indemnity and contribution.
2. Key Legal Issues
The court was primarily tasked with determining:
- Whether the Defendant solicitor was liable for a breach of warranty of authority by purportedly representing a principal who had no right to the land.
- Whether the Defendant was negligent in representing that he had the authority of the true registered owner.
- Whether the Third Party (the Plaintiff’s solicitor) was liable to indemnify or contribute to any damages awarded against the Defendant.
3. Judicial Findings on Liability
Breach of Warranty of Authority
The court held that to establish a breach of warranty of authority, a defendant must have specifically guaranteed to the plaintiff that they were authorized by the true registered proprietor to sell the land. This warranty must have induced the plaintiff to enter the agreement and part with their money.
In this case, the court found that the Defendant did not warrant the imposter’s authority to the Plaintiff. The evidence showed that the Plaintiff had already decided to purchase the land from the imposter before the parties ever met at the Defendant’s office. Furthermore, the Defendant’s professional duty was limited to verifying the documents visually (the title and temporary ID) to the extent of his faculties before attesting the signatures. The court found the Defendant had discharged this duty adequately and never provided an undertaking that his client was the actual legal owner.
The Negligence Standard
While a solicitor can be liable for negligent misrepresentation if they fail to take reasonable care to ensure their representation of authority is correct, this only applies if the plaintiff relied on that specific representation. Here, the lack of inducement meant the negligence claim could not be sustained.
4. Principles of Third-Party Proceedings
The case provides clear guidance on the mechanics of Order 16 of the Rules of Court:
- Independent Action: Third-party proceedings are essentially independent cross-actions between a defendant (acting as a plaintiff) and the third party (acting as a defendant).
- No Direct Link to Plaintiff: A third-party notice does not make the third party a direct defendant to the original plaintiff. If a plaintiff wishes to obtain judgment directly against a third party, they must apply to add them as a defendant under Order 15 Rule 6.
- Absolution of Third Party: The third-party claim is contingent upon the defendant’s liability. Because the Plaintiff’s claim against the Defendant failed, the Third Party was automatically absolved from liability.
5. Conclusion and Significance
The court ultimately concluded that the Plaintiff’s claim failed because the essential element of inducement was missing—the Plaintiff had not relied on the Defendant’s professional status to verify the vendor’s identity before deciding to buy. Consequently, the third-party action was dismissed, as there was no primary liability for which the Third Party could be held responsible.
Disclaimer: This post is for informational purposes only and does not constitute legal advice. Please consult a qualified Advocate & Solicitor for your specific legal needs.
