Mahesan s/o Thamhiah v Malaysia Government Officers' Co-operative Housing Society Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1978 |
| Date | 1978 |
| Year | 1978 |
| Court | Privy Council |
Agency - Fiduciary relationship - Bribed agent - Remedies of principal - Claim for recovery of bribe and damages for fraud - Whether cumulative remedies -
The agent of a housing society dishonestly agreed with one M that M should purchase 59 acres of land in Penang which was on the market at a low price and sell it to the housing society at a profit and that the agent should neither tell the housing society that the land was then for sale nor on the resale, reveal the price which M had paid. M bought the land for $456,000 on November 6, 1964, and after expending $45,000 on evicting squatters resold it to the housing society on February 22, 1965, for £944,000. His net profit was $443,000. He paid the agent a bribe of $122,000 for his connivance in the transaction and disappeared. The agent was charged with and convicted of two offences of corruption under section 4 (a) of the Malaysian Prevention of Corruption Act 1961, in respect of the bribe. Subsequently the housing society brought civil proceedings against the agent claiming both the amount of the bribe and damages for the loss suffered by the society.
The trial judge ordered that the housing society should recover the amount of the bribe from the agent and dismissed the claim for damages. On appeal by both parties the Federal Court held that the housing society could recover from the agent both the amount of the bribe and damages for the whole of the loss sustained by the society as a result of the agents' fraudulent breach of duty and, accordingly affirmed the order of the trial judge as to the bribe and in addition ordered the agent to pay the society damages of $443,000.
On appeal by the agent to the Judicial Committee: —
Held, allowing the appeal, that at common law a principal could recover from his bribed agent either the amount of the bribe as money had and received or, alternatively, compensation for the actual loss sustained through entry into the transaction in respect of which the bribe was given as damages for fraud; that section 30 (1) and (2) of the Prevention of Corruption Act 1961 merely recognised and affirmed those common law rights and that therefore the housing society was not entitled to make double recovery from the agent and was bound to elect at the time when judgment was to be entered between its claim for the amount of the bribe and its claim for damages (post, pp. 450B, C, 451E–G, 452C, D).
The following cases are referred to in the judgment of their Lordships:
Bagnall v. Carlton(
Boston Deep Sea Fishing and Ice Co. v. Ansell(
Fawcett v. Whitehouse(
Grant v. Gold Exploration and Development Syndicate Ltd.[
Hovenden and Sons v. Millhoff(
Reading v. The King[
Salford Corporation v. Lever[
United Australia Ltd. v. Barclays Bank Ltd.[
The following additional cases were cited in argument:
Attorney-General for Novia Scotia v. Christian(
Andrews v. Ramsay & Co.[
Cohen v. Kuschke(
Lister & Co. v. Stubbs(
Slater v. Hoyle & Smith Ltd.[
Tai Hing Cotton Mill Ltd. v. Kamsing Knitting Factory (a firm)[
Taylor v. United Africa Co. Ltd.
United Marketing Co. v. Kara[
APPEAL (No. 17 of 1974) by T. Mahesan s/o Thambiah an agent of the respondent, the Malaysia Government Officers' Co-operative Housing Society, from a judgment and order (February 28, 1974) of the Federal Court of Malaysia (Azmi L.P., Suffian C.J. and Syed Othman J.) dismissing his appeal and allowing the respondent's cross appeal from a judgment and order of Abdul Hamid J. in the High Court of Malaysia whereby he ordered that the housing society should recover $122,000 secret commission, or bribe, from the agent and dismissed the housing society's claim for compensation for the loss of $488,000. The Federal
Court ordered that the agent should pay the housing society the amount of the bribe and in addition damages of $ 443,000 for fraud.
The facts are stated in the judgment of their Lordships.
Charles Fletcher Cooke Q.C. and Nigel Murray for the agent.
Robert Gatehouse Q.C. and Raja Aziz Addruse (of the Malaysia Bar) for the housing society.
November 28. The judgment of their Lordships was delivered by LORD DIPLOCK.
The facts of this case found by the trial judge are recounted in his judgment. His findings were accepted by the Federal Court. These are thus concurrent findings of fact, with which their Lordships, in accordance with their well-established practice, do not interfere. For the purpose of the questions of law which arise the relevant facts may be stated very shortly.
The appellant (“the agent”) was a director and employee of the respondent (“the housing society”). Its object was to provide housing for government employees. In connection with a transaction involving the purchase of land in Penang from one Manickam, the agent received from him a bribe amounting to $122,000. Shortly before this sale the agent and Manickam had inspected the land together. The agent had found it to be suitable for the housing society's purposes and Manickam had purchased it from its former owners at a price of $456,000. He re-sold it to the housing society for $944,000, thus realising a gross profit of $488,000, one quarter of which he passed on to the agent. Between the purchase and the re-sale expenses amounting to $45,000 had been incurred by Manickam in removing squatters from the land; so the net profit that was made out of the housing society was $443,000. This represents the loss sustained by the housing society as a consequence of the agent's fraudulent breach of duty in failing to inform his employers when he inspected it that the land was available at the price of $456,000, and in conniving with Manickam in the purchase of it by the latter and his re-sale of it to the housing society at more than double what he had paid for it. The facts relating to the transaction were eventually discovered. Manickam escaped to India but the agent was apprehended and brought to trial in...
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