Six operators of Brain-Zone’s Full Brain IQ and World Class Memory Programmes for children were awarded RM2.35 million in damages in their lawsuit against the company that advertised the programmes to the public.

The High Court in Kuala Lumpur on Friday allowed the civil action by the six plaintiffs, who claimed fraud and misrepresentation in their civil action against Safeway Solutions Sdn Bhd and another defendant.

When contacted, the plaintiffs’ counsel R Rishi confirmed the outcome of the verdict delivered by civil court judicial commissioner Azlan Sulaiman.

According to the civil court’s judgment, the plaintiffs between 2016 and 2017 signed a licensing agreement with Safeway Solutions to run the Brain-Zone Full Brain IQ Programme for young children.

A year or two after opening their centres, the six plaintiffs entered a second licensing agreement with Safeway Solutions to conduct the Brain-Zone World Class Memory Programme for older children.

The plaintiffs contended that they terminated both agreements in 2019.

They contended that the agreements are void as Safeway Solutions and the other defendants induced the plaintiffs to enter the agreements via fraud, deceit, misrepresentation, and/or undue influence.

This involved a claim that the programmes had the approval of the Education Ministry.

The defendants counterclaimed seeking damages from the plaintiffs for the alleged unlawful termination of the two agreements.

In allowing the plaintiffs’ claim and dismissing the defendants’ counterclaim, Azlan ruled that the two agreements resulted from fraud, deceit, and misrepresentation linked to a claim that the programme had approval from the Education Ministry.

Fraud and misrepresentation

The judicial commissioner said that Safeway Solutions’ online advertising of the brain development programme to the public was “approved by the Ministry of Education Malaysia”.

Azlan also noted that the misrepresentation was present during the introductory talks attended by the plaintiffs linked to the programme.

“In these circumstances, I find that the fraud/misrepresentation was that the first defendant (Safeway Solutions) had obtained all the necessary approvals to conduct the programmes, and to license independent business owners like the plaintiffs to also run those programmes,” the judicial commissioner said.

Azlan also agreed with the plaintiffs’ contention that the two agreements were franchise agreements despite being labelled as licensing agreements and that the agreements had contravened the Franchise Act 1998 and the Education Act 1996.

The judicial commissioner awarded the six plaintiffs a total of RM1.8 million in exemplary damages and a total of RM550,550 compensation per Section 66 of the Contracts Act 1950.

Azlan allowed the plaintiffs’ claim for general damages, whereby the quantum would be assessed by the civil court at a later date.

He also ordered the two defendants to pay a total of RM180,000 in costs to the six plaintiffs.

Counsel Daljit Singh also appeared for the plaintiffs, while the defendants are represented by lawyers Koh Kean Kang and Yong Siew Lee.

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