RM23.71 Million Consultancy Fee Claim Dismissed: Malaysian High Court Rules on Contract Termination, Fraud and Directors’ Authority
Introduction
Can a company refuse to pay millions of ringgit in consultancy fees under a signed agreement? Can a director terminate a commercial agreement without a formal board resolution? Does the payment of money after termination automatically mean that the agreement remains enforceable?
These important questions were considered by the Kuala Lumpur High Court in Janajaya Emas Sdn Bhd v Intra Alliance Consult Sdn Bhd [2026] CLJU 2281, a commercial dispute involving an outstanding consultancy fee claim of RM23.71 million arising from a substantial property development project.
In its grounds of judgment dated 15 June 2026, the High Court dismissed the plaintiff’s entire claim notwithstanding its finding that the consultancy agreement was originally valid and enforceable.
The Court held that the agreement had been validly terminated before the claimed payment obligations accrued.
Significantly, the Court also considered the scope of the Valuers, Appraisers, Estate Agents and Property Managers Act 1981, fraudulent misrepresentation under the Contracts Act 1950, the authority of company directors and the evidential consequences of failing to challenge material testimony during cross-examination.
At JY Ko Advocates & Solicitors, we examine this decision and its practical implications for businesses, property developers, consultants and company directors involved in commercial contractual disputes in Malaysia.
Background: A Property Development Consultancy Agreement Worth RM24 Million
The dispute arose from a 41-storey residential development project in Setapak, Kuala Lumpur, undertaken under the Perumahan Penjawat Awam 1Malaysia (PPA1M) scheme.
The defendant, Intra Alliance Consult Sdn Bhd, was the project developer.
The plaintiff, Janajaya Emas Sdn Bhd, claimed to have been engaged to provide consultancy services relating to land matters, the acquisition of the property from its original owner and the successful launch of the development.
The consultancy arrangement was associated with earlier negotiations involving the acquisition of shares in the developer and the project land.
Under the consultancy agreement formally dated 8 January 2020, the plaintiff was entitled to consultancy fees calculated at 4.8% of the project’s Gross Development Value (GDV).
The payment arrangement provided for eight quarterly instalments, with the first seven instalments fixed at RM3 million each and the final instalment subject to adjustment by reference to the actual GDV.
The first instalment was to become payable within three months of the issuance of the relevant housing development licence.
The licence was issued on 18 December 2019.
However, the defendant made payments totalling only RM290,000 between January 2021 and August 2022.
The plaintiff subsequently commenced legal proceedings to recover the alleged outstanding balance of RM23,710,000, together with damages, interest and costs.
The defendant resisted the claim and maintained that no further consultancy fees were payable.
The Three Main Defences Raised by the Developer
The defendant relied on three separate legal grounds.
First, it argued that the consultancy agreement was unenforceable because the plaintiff was effectively carrying out estate agency services without the necessary registration under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981.
Second, it alleged that the agreement had been procured through fraudulent misrepresentation concerning the true recipients of the consultancy fees.
Third, and most importantly, it maintained that the agreement had already been terminated by a letter dated 8 January 2020, issued by one of the plaintiff company’s own directors.
The defendant also counterclaimed for declarations concerning fraud, the invalidity of the agreement, the lifting of the corporate veil, repayment of money and damages.
The High Court considered these grounds separately.
Issue 1: Is a Consultancy Agreement Unenforceable If the Consultant Is Not a Registered Estate Agent?
One of the significant legal issues was whether the consultancy agreement violated the statutory restrictions governing estate agency practice in Malaysia.
The Legal Position Under Act 242
Section 22B(1A) of the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 governs the meaning of estate agency practice.
Section 22C restricts the recovery of fees and remuneration for estate agency practice undertaken in contravention of the statutory requirements.
The defendant argued that the agreement was essentially a property brokerage arrangement disguised as a consultancy agreement.
Because the plaintiff was not a registered estate agent, the defendant contended that the consultancy fees could not legally be recovered.
The defendant further argued that the claimed fee of 4.8% of GDV exceeded the applicable prescribed estate agency fee rate.
The High Court’s Finding: Substance Matters More Than the Agreement’s Label
The High Court rejected the illegality defence.
The Court emphasised that the true nature and substance of an agreement must be examined to determine whether it falls within the statutory definition of estate agency practice.
Merely describing services as consultancy does not automatically remove them from estate agency regulation.
Conversely, an agreement which involves some property-related activities does not necessarily become an estate agency agreement if its essential character extends materially beyond ordinary property brokerage.
The Court considered several important features of the actual engagement.
First, the arrangement involved the acquisition and restructuring of the developer company itself, rather than merely the introduction of a buyer to a seller of land.
Second, the consultant had personally advanced approximately RM2.265 million to facilitate the transaction.
Third, the services involved assistance in resolving substantial litigation affecting the project, including the introduction of solicitors who successfully pursued a Federal Court application.
Fourth, the consultancy arrangement contemplated a broader developmental and advisory role connected with the project.
These features demonstrated that the engagement was commercially more complex than ordinary estate agency services.
The Court therefore found that the defendant had failed to establish that the agreement was, in its essential character, prohibited estate agency practice.
Legal Principle
The enforceability of a consultancy or commission agreement involving property transactions depends on the substance of the contracted services, not merely the contractual label.
However, this decision does not mean that parties can circumvent estate agency licensing requirements by describing brokerage commissions as consultancy fees.
Where an arrangement is, in substance, regulated estate agency practice, the statutory prohibition may still apply.
Issue 2: Can a Consultancy Agreement Be Avoided Because of Fraudulent Misrepresentation?
The defendant also alleged that the 4.8% consultancy fee had been procured through fraud.
According to the defendant, it had initially been represented that the original project owners required consideration equivalent to 18% of the GDV.
In reality, the original owners were entitled to only 13.2%, with the remaining 4.8% intended for the individuals involved in facilitating the transaction.
The defendant claimed that it would not have agreed to the consultancy arrangement had the true position been disclosed.
Fraud Under Sections 17 and 19 of the Contracts Act 1950
Under Section 17 of the Contracts Act 1950, fraud includes the intentional suggestion of a false fact by a person who does not believe the statement to be true.
Section 19(1) provides that a contract is voidable at the option of a party whose consent was caused by fraud.
However, proving fraud requires more than merely demonstrating an inaccurate or misleading statement.
The party relying on fraud must establish the relevant fraudulent conduct and that the misrepresentation caused its consent to the contract.
Why the Fraud Defence Failed
The Court acknowledged that there was troubling witness evidence suggesting that the consultancy fees had been presented misleadingly during the original negotiations.
Nevertheless, the contemporaneous documents did not support the defendant’s allegation that its consent to the particular consultancy agreement had been obtained through fraud.
The Court relied on several factors.
First, the company’s board minutes contradicted the allegation of concealment.
Board minutes dated 27 October 2017 separately recorded the 13.2% entitlement of the original owners and the 4.8% consultancy fee.
This undermined the assertion that the entire 18% had been concealed as a payment belonging to the previous owners.
Second, the executed commercial agreements identified the actual consideration.
The relevant share sale and property sale agreements recorded the previous owners’ entitlement at 13.2%.
The defendant’s director had signed those documents.
Third, the alleged reliance was substantially based on personal assumptions.
The Court distinguished between a party being induced by a false representation and a party making its own assumptions despite the terms of the documents it had signed.
Fourth, the relevant director had discovered the true position before entering into the disputed Janajaya agreement.
The Court found that the director’s own evidence indicated he knew the 4.8% represented consultancy commission by the time the agreement was negotiated and executed in late 2019.
Fifth, important witnesses were not called.
The absence of material individuals involved in the original negotiations weakened the fraud allegation.
Consequently, the Court found that fraudulent inducement had not been established on the balance of probabilities.
Legal Principle
An allegation of fraudulent misrepresentation must be supported by precise evidence showing not only the alleged deception but also its operative effect on the contracting party’s consent.
Contemporaneous board minutes, signed agreements and the sequence of negotiations can be decisive in determining whether fraud has been proved.
Issue 3: Can a Company Director Terminate a Contract Without a Board Resolution?
This was the decisive issue.
The defendant relied on a letter dated 8 January 2020, issued by Tee Sien Ghee, who was then a director of the plaintiff company.
The letter communicated that the plaintiff did not wish to proceed with the consultancy agreement and requested that a new agreement be prepared.
The plaintiff disputed the authenticity and effectiveness of the letter.
Among other matters, the plaintiff argued that:
- The letter was not issued on the company’s usual official letterhead.
- No board resolution had authorised the termination.
- The termination letter bore the same date as the consultancy agreement.
- The letter had not been produced in earlier proceedings.
- Subsequent payments were inconsistent with termination.
The High Court rejected these objections after evaluating the evidence.
A Director’s Authority and the Turquand Rule
The Court applied the well-established rule in Royal British Bank v Turquand (1856) 6 E&B 327, as recognised by the Malaysian Federal Court in Pekan Nenas Industries Sdn Bhd v Chang Ching Chuen & Ors [1998] 1 CLJ 793.
The principle generally protects outsiders dealing with a company in good faith by allowing them to assume that the company’s internal corporate procedures have been properly complied with.
In this case, the individual who issued the termination letter was an existing director of the plaintiff company.
The Court held that the defendant was entitled to rely on his communication without independently investigating whether the plaintiff had passed an internal board resolution authorising it.
The Court also observed that the plaintiff had not produced a board resolution authorising the original consultancy agreement.
It would therefore have been inconsistent for the plaintiff to rely on the validity of the agreement while simultaneously insisting that its termination required a formal board resolution.
Is a Termination Letter Invalid Without Company Letterhead?
The Court also rejected the argument that the absence of official company stationery invalidated the termination letter.
A written communication does not become legally ineffective merely because it is not printed on official letterhead.
The relevant considerations include the identity and capacity of the person communicating, the recipient and the clarity of the communication.
On the evidence, those requirements were satisfied.
This finding is especially relevant to businesses which frequently communicate contractual decisions through letters, emails and other written communications.
However, a company’s actual authority arrangements and any contractual notice requirements must still be considered in each case.
Issue 4: Do Payments Made After Termination Prove That a Contract Remains Valid?
The plaintiff placed considerable reliance on payments totalling RM290,000 made between January 2021 and August 2022.
Those payments occurred well after the alleged termination on 8 January 2020.
The plaintiff argued that the defendant’s continued payments demonstrated that the consultancy agreement remained operative.
The Court accepted that continued payment under a contract may, depending on the circumstances, support an inference that the contract remains in force.
However, the Court concluded that these particular payments did not unequivocally establish the continued existence of the consultancy agreement.
There were several possible explanations, including loan repayments, separate commercial arrangements, remuneration for subsequent services or payments intended to facilitate a settlement.
The critical difficulty was that the plaintiff failed to cross-examine the defendant’s director, who had made the payments, about their actual purpose.
The Importance of Cross-Examination
The Court referred to the rule recognised in Wong Swee Chin v Public Prosecutor [1980] 1 LNS 138 and applied in civil proceedings in Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen & Ors [1995] 3 CLJ 639.
Where a party intends to dispute a witness’s material evidence, the opposing proposition should generally be put to the witness during cross-examination.
The failure to challenge a material proposition can have serious evidential consequences.
Here, the plaintiff did not directly confront the payment-maker with the suggestion that the payments amounted to an acknowledgment that the agreement remained operative.
The Court therefore declined to treat the payments as unequivocal proof that the agreement had survived termination.
Legal Principle
Payments made after an alleged contractual termination do not automatically revive the agreement or establish continuing contractual liability.
Their legal significance depends on the evidence concerning their purpose, the surrounding circumstances and whether the relevant contractual position has been properly challenged at trial.
Issue 5: Can Missing Emails and Documents Affect the Outcome of a Commercial Dispute?
Another important aspect of the judgment concerns the failure to produce material documentary evidence.
A draft Consultancy-cum-Commission Agreement had been prepared after the original arrangement.
The parties disputed whether the draft preceded or followed the disputed termination.
The plaintiff’s director acknowledged that his solicitors had forwarded the draft to him by email.
However, the relevant email was not produced in Court.
The email could have established when the draft was sent and thereby assisted in resolving the disputed chronology.
The Court drew an adverse inference under Section 114(g) of the Evidence Act 1950 against the plaintiff.
The Court considered that the missing evidence, if produced, would not have supported the plaintiff’s position.
This illustrates the importance of preserving and producing contemporaneous emails, correspondence, board minutes and transaction documents in commercial litigation.
Businesses should not assume that witness testimony alone will be sufficient where relevant documentary records exist.
The High Court’s Decision: RM23.71 Million Claim Dismissed
After examining the evidence and legal arguments, the High Court reached four principal conclusions.
First, the consultancy agreement was not illegal.
The Court found that the engagement extended materially beyond estate agency practice under Act 242.
Second, the fraud allegation was not established.
The defendant failed to prove that its consent to the disputed agreement had been caused by fraudulent misrepresentation.
Third, the consultancy agreement had been validly terminated.
The termination letter dated 8 January 2020 was found to be genuine and legally effective.
The termination occurred before the relevant consultancy fee instalments became due and payable in the form claimed.
Fourth, the defendant’s counterclaim also failed.
Because fraud was not established, the defendant could not obtain the declarations, restitutionary relief and damages sought on that basis.
The Court therefore ordered:
- The plaintiff’s claim for RM23.71 million to be dismissed.
- The defendant’s counterclaim to be dismissed.
- A single global costs order of RM40,000 in favour of the defendant, payable by the plaintiff.
The judgment demonstrates that a party may successfully defend a substantial contractual claim even where the original agreement is found to have been legally valid.
Our Legal Analysis: Five Important Lessons for Malaysian Businesses
1. A Valid Contract Does Not Necessarily Create an Enforceable Payment Claim
The most significant lesson from this decision is the distinction between contractual validity and accrued payment obligations.
An agreement may be valid when entered into but subsequently terminated before particular obligations become payable.
Business owners should therefore examine the termination provisions, payment milestones, accrued rights and documentary evidence before assuming that outstanding fees are recoverable.
2. Directors’ Communications Can Create Significant Legal Consequences
Companies should implement clear procedures concerning who may issue termination notices and communicate binding contractual decisions.
The absence of a formal board resolution will not necessarily prevent a company from being bound by a director’s communication, particularly where an external party is entitled to rely on the apparent regularity of internal corporate procedures.
3. Allegations of Fraud Require Strong Documentary Evidence
Fraud is a serious allegation.
A party alleging fraud should be prepared to identify the precise misrepresentation, demonstrate its falsity and establish that the representation caused the relevant contractual consent.
Board minutes, contemporaneous transaction documents and the actual knowledge of the contracting parties may significantly affect the outcome.
4. Documentary Evidence Can Be More Persuasive Than Later Explanations
Contemporaneous correspondence and commercial documents often provide more reliable evidence than recollections given years after a transaction.
Missing emails, inconsistent documents and unexplained gaps in the chronology can substantially weaken a contractual claim or defence.
5. Litigation Strategy Must Address Every Material Issue at Trial
The outcome also demonstrates the importance of effective cross-examination.
A party may have evidence capable of supporting its case but fail to secure the intended inference if material witnesses are not challenged on the relevant matters.
Successful commercial litigation requires not only a sound legal position but also careful preparation, effective witness examination and proper evidential presentation.
Frequently Asked Questions
Can a company terminate a signed agreement in Malaysia?
Yes, depending on the contractual terms and applicable legal grounds. A signed agreement can be terminated through an effective contractual termination mechanism or another legally recognised basis. Whether the termination is valid depends on the facts, the contract and the applicable law.
Can a company director terminate a contract without a board resolution?
Potentially. The director’s actual or apparent authority, the company’s internal arrangements and the position of the counterparty are relevant. In this case, the Court applied the Turquand rule and upheld the effectiveness of a director’s termination communication despite the absence of an exhibited board resolution.
Can I recover consultancy fees after a contract has been terminated?
That depends on whether the right to payment had accrued before termination, the contractual provisions and the nature of the work performed. Termination does not automatically extinguish all previously accrued rights, but a claim for payments not yet accrued may fail.
Is a consultancy commission agreement legally enforceable in Malaysia?
Generally, consultancy arrangements can be enforceable if they satisfy the applicable legal requirements. However, arrangements that are in substance regulated estate agency practice may be subject to the restrictions imposed by Act 242.
Does making payment after termination revive a contract?
Not necessarily. The payment may relate to an existing debt, a separate agreement, settlement negotiations or another commercial obligation. Its legal effect must be determined from the surrounding evidence.
Can a party claim fraud to avoid a commercial agreement?
Yes, if the requirements under the Contracts Act 1950 are established. However, merely alleging misleading conduct is insufficient. The party must prove the necessary elements, including the effect of the alleged fraud on its consent.
Conclusion
The decision in Janajaya Emas Sdn Bhd v Intra Alliance Consult Sdn Bhd [2026] CLJU 2281 highlights the importance of proper contract administration, directorial authority and litigation evidence in Malaysian commercial disputes.
Although the RM24 million consultancy arrangement was found to be valid at formation, the plaintiff’s claim for RM23.71 million ultimately failed because the agreement had been validly terminated before the claimed payment obligations accrued.
For business owners and commercial parties, the lesson is clear: the existence of a signed agreement is only one part of establishing an enforceable contractual claim.
The timing of termination, the nature of accrued rights, the authority of those acting for the company and the available documentary evidence can be equally decisive.
Commercial Litigation and Contract Dispute Lawyers in Kuala Lumpur
At JY Ko Advocates & Solicitors, we advise and represent companies, business owners and individuals in contractual and commercial disputes throughout Kuala Lumpur and Selangor.
Our practice includes breach of contract claims, recovery of outstanding contractual payments, disputes involving consultancy and service agreements, corporate and shareholder disputes, and civil litigation involving substantial financial interests.
We assist clients in assessing contractual rights and obligations, evaluating the validity of termination notices, identifying litigation risks and developing appropriate strategies for negotiation or court proceedings.
If your business is facing a substantial contractual claim, a disputed termination or a disagreement concerning unpaid consultancy fees, obtaining legal advice at an early stage may help protect your commercial position.
Written on: 10th October 2026, Saturday
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Disclaimer: The above proposition is subject to actual facts and circumstances and shall never be referred as the actual law without seeking legal advice. Consult us for more information!