THE OFFICIAL REPOSITORY OF
MALAYSIAN JUDGMENTS & RULINGS

[2018] MYCA 26 ENGLISH

Tan Ah Moai and 2 Others v Li Chee Loong
Suit Number: Rayuan Sivil No. J-02(NCVC)(W)-2010-11/2016 

Contracts & commercial – Sale and Purchase Agreement – Whether duly executed

Contracts & commercial – Remedies for beach – Specific performance – Damages – Specific Relief Act 1950

JUDGMENT 

[1] The appeal before us was against the decision of the learned High Court Judge in Johor Bahru High Court Civil Suit No.23NCvC-12-03/2015 allowing the Respondent’s (the Plaintiff in the High Court) claim. We had, after perusing the Records of Appeal and considering the written and oral submissions of learned counsels for the Appellants and the Respondent, unanimously allowed the appeal in part with costs. We set aside the order in respect of the remedies granted, in particular, prayers (b), (c), (d) and (e). We further ordered that the deposit be refunded. Our reasons appear below.

[2] For the purpose of this judgment, the parties will be referred to as they were referred to in the High Court.

The Plaintiff’s case

[3] The Plaintiff and the Defendants entered into a Sale and Purchase Agreement dated 20.2.2014 (“SPA”) for the sale of a property described as No. 20, Jalan NB2 5/1, Taman Nusa Bestari 2, 81300 Skudai, Johor held under Grant 131024 Lot 78087 (formerly known as HSD 349877 PTD 117293) Mukim Pulai, Daerah Johor Bahru (“the property”) for the sum of RM250,000.00. The sale and purchase transaction of the property was handled by Messrs Woon Wee Yuen & Partners (“Messrs Woon”) appointed by the Plaintiff. The 1st Defendant is the mother of the 2nd Defendant whereas the 3rd Defendant, the 2nd Defendant’s father. The Defendants each hold 1/3 ownership of the property. The 2nd Defendant took a housing loan from Citibank Berhad (“Citibank”) to finance the purchase of the property. The property was charged and a sum of RM59,000.00 was still owing to Citibank.

[4] The Plaintiff contended that he had initially paid the sum of RM40,000.00 on 20.2.2014 to the 2nd Defendant. The Plaintiff alleged that the 2nd Defendant was authorised by the 1st and 3rd Defendants to receive all the payments for the sale of the property. The 2nd Defendant acknowledged the receipt of the bank draft for RM40,000.00 that was made out in his name. The Plaintiff made two further payments, on 24.2.2014 the sum of RM75,000.00 and on 28.2.2014 another payment of RM75,000.00. Both payments were made to the 2nd Defendant.

[5] The Defendants also appointed Messrs Woon on 20.2.2014 to handle the discharge of the charge for the said property from Citibank. Messrs Woon wrote to Citibank on 24.2.2014 requesting the redemption statement for the said property which was charged to the bank.

[6] In June 2014, Messrs Woon received the redemption statement dated 27.5.2014 from Citibank. However, before the Plaintiff could make any payment to Citibank to discharge the charge, Messrs Woon received a letter dated 16.7.2014 from Citibank notifying that the redemption statement dated 27.5.2014 was cancelled on the instruction of the borrowers, i.e. the Defendants. Subsequently, Citibank refused to give the redemption statement to the Plaintiff.

[7] According to the Plaintiff he tried to contact the Defendants but the Defendants refused to give any reason as to why they instructed Citibank to cancel the redemption statement. The 2nd Defendant subsequently informed the Plaintiff that the Defendants did not intend to sell the said property to the Plaintiff. However, the Defendants refused to admit that the 1st and 3rd Defendants had received the said sums totalling RM190,000.00 through the 2nd Defendant.

[8] On 10.7.2014, the Defendants appointed Messrs. C. S Lim & Associates and applied to cancel the SPA. The Plaintiff’s solicitors informed the Defendants that the Plaintiff agreed to the cancellation of the SPA if the Defendants paid the sum of RM190,000.00 and RM40,000.00 as damages to the Plaintiff. The Defendants, however, did not respond.

[9] The Plaintiff contended that the Defendants do not have the ability to pay the said sum of RM190,000.00 and damages of RM40,000.00 as demanded. The sums demanded was supposed to be paid to the Plaintiff since July 2014. The 2nd Defendant then entered a private caveat on 20.7.2014 vide presentation No. 24021/2014 to prevent the Plaintiff from transferring the property. The Plaintiff in his Statement of Claim alleged that the Defendants had breached the SPA.

[10] In the Statement of Claim the Plaintiff prayed for the following reliefs:

a) The Defendants and/or their officers and/or servants and/or agents be prevented by injunction from selling, dealing, disposing, charging and/or in any manner dealing with the said property until the disposal of this action;

b) Specific performance against the Defendants pursuant to section 7 of the Specific Relief Act 1950 to continue with the said SPA to sell and transfer the said property to the Plaintiff where the Defendants are precluded from preventing Citibank from issuing the redemption statement to the Plaintiff. The Defendants be ordered to sell the said property for the consideration of RM250,000.00 including the deposit of RM40,000.00 which was paid when the said SPA was signed;

c) The private caveat entered by the 2nd Defendant vide presentation No. 24021/2014 and registered on 20.7.2014 be cancelled immediately;

d) The Defendants do proceed with the discharge of charge for the said property failing which committal proceedings be commenced against the defendants;

e) Damages to be assessed; and

f) Costs.

The Defendants’ Case

[11] The Defendants contended that they do not know the Plaintiff and were induced into signing the SPA as well as other related documents as they were misrepresented by the Plaintiff’s agent and/or the Plaintiff’s solicitor and/or its employees. The Defendants lodged police reports on 11.7.2014 and 25.7.2014. The 2nd Defendant lodged a complaint with the Advocates & Solicitors Disciplinary Board against the main partner of Messer Woon, Mr. Woon Wee Yuen. The Defendants denied receiving payments pertaining to the alleged sale of the said property. In fact, the Defendants contended that they have not even met the Plaintiff prior to the commencement of the action.

[12] The property is the residential house occupied by the Defendants since May 2003. They are still paying the housing loan monthly instalments to Citibank. The 1st and 3rd Defendants are not fluent in English and did not know the nature and contents of the documents they had purportedly signed. It was only on 9.7.2014 when they sought legal advice from a solicitor did they realised that the documents that they had signed were in fact a SPA of the property. The Defendants denied that they had any intention or had agreed to sell the property to the Plaintiff or to any other person for the sum of RM250,000.00. They denied having executed a SPA dated 20.2.2014 with the Plaintiff.

[13] In their Statement of Defence the Defendants stated that they were induced to sign the SPA as the terms of the alleged SPA were never explained to them. The 1st and 3rd Defendants thought they were executing documents relating to a personal loan granted to the 2nd Defendant. Therefore, the SPA cannot be enforced and the defence of non est factum would be applicable.

[14] In the alternative the Defendants pleaded fraud and/or, misrepresentation. The particulars of fraud and/or misrepresentation can be summarised as follows:

i. The 2nd Defendant intended to take a personal loan and sometime in February 2014 contacted a moneylender. The loan was given to the 2nd Defendant. The 2nd Defendant gave a copy of his identification card number and his bank account to the moneylender. The loan was given to the 2nd Defendant with a rate of interest of 10% of the total loan imposed who was required to pay RM600 per week. The 2nd Defendant was unable to pay and borrowed a sum in excess of RM63,500.00 from 9 other money lenders. He signed an agreement but was not explained the terms of the said agreement.

ii. A person by the name of Allan suggested to the 2nd Defendant to use the property as collateral to obtain funds to pay off the moneylenders. Allan had misrepresented to the Defendants that they were required to sign a document relating to the said property as collateral for the loan. An unidentified person at Messrs Woon directed the Defendants to sign on every page of the documents given to them with no explanation as to the terms of the documents.

iii. After signing the documents Allan gave a cheque of RM40,000.00 to the 2nd Defendant. Subsequently, Allan asked the 2nd Defendant to go to Messrs Woon where a cheque for the sum of RM75,000.00 was given to the 2nd Defendant. The 3rd cheque for RM75,000.00 was also collected by the 2nd Defendant.

iv. The Defendants denied receiving any payments pertaining to the sale of the property.

FINDINGS OF THE LEARNED HIGH COURT JUDGE

[15] The learned High Court Judge found that there were two conflicting versions as to who were present when the alleged SPA was signed in Messrs Woon’s office and the purpose of the 3 payments handed over to the 2nd Defendant. Having heard the evidence of the Plaintiff’s witnesses and the evidence of the Defendants as well as the documents that were tendered in Court, the learned Judge accepted the evidence of the Plaintiff as being more probable as compared to the evidence of the Defendants. The learned Judge went on to rule that the Plaintiff had successfully proven that the parties had indeed executed the SPA on 20.2.014. The terms of the SPA were explained by Liew Shw Wee (PW1), a conveyancing clerk to all the three defendants. PW1 had testified that all the Defendants came to her office to sign the SPA and that she had explained the nature and contents of the documents including the Memorandum of T ransfer and the deposit to be paid to all the Defendants. The signatures of all the three Defendants were attested by Fauziah Mydin (PW2), an advocate and solicitor at Messrs Woon. PW2 testified confirming that the deposit of RM40,000.00 was paid after the execution of the SPA. This was followed by further two payments on 24.2.2014 and 3.3.2014.

[16] It was the evidence of PW2 that upon the execution of the SPA the 1st payment of RM40,000.00 by bank draft was handed over to the son, the 2nd Defendant. On 10.7.2014 a stamped copy of the SPA was given to the 2nd Defendant who had acknowledged receipt on the cover of the file.

[17] The Defendants’ version as to what transpired was not supported by any independent witnesses and neither was the defence of non est factum proven. The evidence and allegations made by the Defendants that they were not explained as to the contents of the documents that they signed was in fact a SPA, were just mere bare assertions. They lack corroboration by independent witnesses. Similarly, with the allegation of the presence of the Chinese man who instructed the 2nd Defendant to sign on every page of the documents, and the role played by Allen, the purported money lender in the transaction. The Chinese man and Allen were never called to lend support to the allegations.

[18] The learned High Court Judge also found that there was no proof of fraud on the part of PW1 and PW2 when the SPA was executed. Neither was there proof of the particulars of fraud and misrepresentation as pleaded in the Defendants’ amended Statement of Defence against Allen.

[19] After weighing the totality of the evidence before him the learned High Court Judge concluded that on the balance of probabilities the Plaintiff has proven his case against all the Defendants. The Plaintiff had performed his part of the SPA by paying part of the purchase price which was received and banked into the 2nd Defendant’s account. Furthermore, the Plaintiff was willing and prepared to complete the purchase of the property and to pay the balance sum.

[20] The learned High Court Judge allowed the Plaintiff’s claim against all the three Defendants and allowed prayers (b),(c),(d),(e) and (f) of the Statement of Claim and costs of RM15,000.00.In essence, the High Court had granted remedies of specific relief to the Plaintiff. The orders on remedies relate to that order on specific relief and consequential order following therefrom.

OUR DECISION

[21] We reminded ourselves of the principle religiously observed by our Courts in exercising their appellate powers that is, an appellate court will not intervene unless there is insufficient judicial appreciation of evidence. (See: Lee Ing Chin & Ors v Gan Yook Chin & Anor [2003] 2 CLJ 19). The Federal Court in UEM Group Berhad v Genisys Integrated Engineers Pte Ltd [2010] 9 CLJ 785 held at page 800:

“It is well settled law that an appellate court will not generally speaking, intervene with the decision of a trial court unless the trial court is shown to be plainly wrong in arriving at its decision. A plainly wrong decision happens when the trial court is guilty of no or insufficient judicial appreciation of evidence. (See Chow Yee Wah & Anor v. Choo Ah Pat [1978] 1 LNS 32; Watt v. Thomas [1947] AC 484; and Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 4 CLJ 309).”

[22] In the instant appeal having perused the Records of Appeal we were of the considered view that the learned High Court Judge having heard the evidence of the Plaintiff’s witnesses and the evidence of the Defendants’ witnesses as well as the documents that were tendered in Court accepted the evidence of the Plaintiff as being more probable as compared to the evidence of the Defendants. The learned High Court Judge ruled that the Plaintiff had successfully proven that the SPA was duly executed and that the Plaintiff had paid part of the purchase price for the property.

[23] The Defendants on the other hand failed to prove the defence of non est factum. They failed to discharge their burden and had merely stated in evidence that the terms and contents of the SPA were not explained to them.

[24] Based on the oral and contemporaneous documentary evidence led before the trial judge we found that the findings on liability of the learned High Court Judge are predicated on both oral and documentary evidence that was presented before him. Hence, we found no appealable error on the part of the learned High Court Judge on liability that merit curial intervention.

The Remedies

[25] However, we are constrained to intervene in respect of the remedies granted by the learned High Court Judge. Unfortunately, in his Grounds of Judgment the learned High Court Judge did not give any reason for granting the specific reliefs. Before going any further, it is important to note that the dispute between the Plaintiff and the Defendants arose because of the Defendants’ reluctance to acknowledge the SPA and to proceed with the sale of the property. Clause 16 of the SPA explicitly provides as follows:

“In the event the Vendor shall fail refuse and/or neglect to complete this Agreement or to transfer the said Property to the Purchaser or his nominee(s) as required herein notwithstanding that Purchaser has performed and completed his obligation under this Agreement, including but not limited to, the payment of the Purchase Price, the Purchaser may elect either to require the Vendor to refund all monies paid free of interest and to pay to the Purchaser a further sum as stated in Section 13 of the Schedule hereto being agreed liquidated damages whereupon this Agreement shall be treated as null and void and of no further effect and neither party shall have any claim whatsoever against the other or alternatively the Purchaser shall be entitled to affirm this Agreement and seek specific performance and/or damages.”

[26] Under clause 16 of the aforesaid SPA if the Defendants, as the vendor "... fail, refuse and/or neglect to complete this Agreement or to transfer the said Property to the Purchaser or his nominee(s) as required…”, the Plaintiff as the purchaser may either “...

(i) require the Vendor to refund all monies paid free of interest and to pay to the Purchaser a further sum as stated in Section 13 of the Schedule hereto being agreed liquidated damages whereupon this Agreement shall be treated as null and void and of no further effect and neither party shall have any claim whatsoever against the other or;

(ii) alternatively the Purchaser shall be entitled to affirm this Agreement and seek specific performance and/or damages.”

[27] Notwithstanding the contractual provision as stated, the granting of specific relief always remains at the discretion of the Court. The law governing it is contained in Chapter II of the Specific Relief Act 1950 (“the Act”). In this regard section 11(2) of the Act provides:

“Unless and until the contrary is proved, the court shall presume that the breach of a contract to transfer immoveable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer moveable property can be thus relieved.”

Despite the presumption under section 11(2) the Act the court in exercising its discretion will have to consider various factors in deciding its discretion to grant this equitable relief.

[28] The learned Judge had allowed the remedy of specific performance on the basis that the Plaintiff was able and willing to perform his part of the bargain. Following from the finding that SPA is valid, the remedy of specific performance may be granted given that the learned High Court Judge found the Plaintiff was willing and able to complete his part of the SPA (See:Ganam Rajamany v Somoo Sinniah [1984] 1 MLRA 38; Tan Ah Chim & Sons Sdn Bhd v Ooi Bee Tat & Anor [1992] 4 MLRH 91).

[29] The learned High Court Judge noted this clause at paragraph 1.11 of his Grounds of Judgment. He, however, did not state clearly whether the specific relief granted was based on this clause.

[30] Learned counsel for the Defendants argued that despite the state of readiness of the Plaintiff to perform his part of the bargain the Plaintiff is not entitled to specific performance of the SPA of the property as there was undue delay and/or laches on the part of the Plaintiff. The claim was filed on 22.3.2015. The Defendants discovered the alleged fraud in July 2014. Learned counsel for the Defendants further argued in submission that the Plaintiff had admitted during cross examination that he knew from July 2014 that the Defendants no longer wanted to sell the property. Yet, the Plaintiff filed the writ almost 9 months after being notified i.e on 22.3.2015. No reason was given by the Plaintiff for the delay of filing the writ against the Defendants.

[31] The Court of Appeal in Leelavathi a/p K Govindamay v Sivan a/l Subramaniam & Anor [2015] MLJU 13 held:

“In exercising the Court's discretion to order specific performance of a contract for the sale and purchase of land, it is incumbent on it to be satisfied whether the party in whose favour specific performance is to be ordered was able and willing to settle the payment of the purchase price. The High Court in Wong Kup Sing v Jeram Rubber Estates Ltd [1969] 1 MLJ 245, spoke of ”a continuous readiness and willingness to perform the contract from the date of the contract to the date of hearing”. It was clear on the evidence the respondents here could not satisfy this requirement, and therefore the High Court had erred in ordering specific performance.”

[32] The Federal Court in Bandar Eco-Setia Sdn Bhd v Angelane Eng [2016] 1 MLJ 764 summarised the applicable principles when dealing with a claim for specific performance arising from a breach of mutual covenants:

“(a) a covenantee who seeks a decree of specific performance must bring his case within the plain meaning of the contract which he is seeking to enforce. In this regard the court has a duty to look into the words which restrict the rights of the parties and the object to be attained by the covenants;

(b) a covenantee who seeks to enforce a term in a covenant must have acted bona fide and this can only mean that the action is brought for the purpose of giving effect to the object for which the covenant was originally entered into. Therefore, in the event the object to be attained by the covenant cannot be attained by enforcement of the contractual term, equitable relief to enforce it will be refused;

(c) the terms of the covenants will not be enforced ‘if the land has already been so laid out or used that its preservation as intended is no longer possible. ’ In the circumstance there must be evidence showing the ‘altered state of things’ leading to the fact that the preservation of the terms of the covenants is no longer possible. Thus, equitable relief to enforce the covenants will be refused if the plaintiff has debarred himself from such relief by delay or acquiescence. Such a state of things also include a departure by the vendor and the purchasers from the scheme and laches of those entitled to enforce the observance of the covenants. In this regard, the court must be satisfied that ‘the property has been either entirely or so substantially changed such that the whole character of the place or neighbourhood has been altered so that the whole object for which the covenant was originally entered into must be considered to be at an end (German v Chapman); and

(d) waiver of breaches in any single instance of the covenants must not be construed so as to render the whole object of the covenant to be at an end. The fact that some homeowners have breached a term of the covenants and there is evidence of waiver of such breach, do not have the effect of releasing other covenantors from any restrictive covenant of the same kind. In this regard it would be relevant to refer to the judgment of James LJ in German v Chapman, which states that:

If there is a general scheme for the benefit of a great number of persons, and then, either by permission or acquiescence, or by a long chain of things, the property has been either entirely or so substantially changed as that the whole character of the place or neighbourhood has been altered so that the whole object for which the covenant was originally entered into must be considered to be at an end, then the covenantee is not allowed to come into the court for the purpose merely of harassing and annoying some particular man, where the Court could see he was not doing it bona fide for the purpose of effecting the object for which the covenant was originally entered into. That is very different from the case we have before us, where the plaintiff says that in one particular spot far away from this place, and not interfering at all with the general scheme, he has, under particular circumstances, allowed a waiver of the covenant. I think it would be a monstrous thing to say that nobody could do an act of kindness, or that any vendor of an estate who had taken covenants of this kind from several persons could not do an act of kindness, or from any motive whatever relax in any single instance any of these covenants, without destroying the whole effect of the stipulations which other people had entered into with him. For instance, in this very case application was made to the plaintiff for a waiver. It would be monstrous to suppose, if he had acceded to that application, that therefore he was, by the mere act of kindness to the defendants themselves, destroying the whole benefit of the covenants as to all the rest of the estate. It appears to me it is impossible to apply the principles.”

[33] In the instant appeal the Plaintiff has not paid the balance of the purchase price of RM60,000.00 neither has the Plaintiff deposited the said balance of the purchase price with his solicitors as stakeholders. There was also no evidence before the trial court of the ability of the Plaintiff to complete the sale transaction of the property.

[34] Applying the principles as enunciated in Bandar Eco-Setia (supra) we are of the considered view that, notwithstanding the provision of clause 16 SPA giving the rights to the Plaintiff to seek specific performance of the SPA this is not a fit and proper case for the grant of specific relief remedies.

[35] The relief of specific performance is an equitable remedy. The court will take into consideration the conduct of the Plaintiff and the circumstances surrounding the transaction. Zainun FCJ in Bandar Eco-Setia (supra) said:

“The relief of specific performance is a discretionary remedy. In any suit for specific performance, the court will consider the conduct of the plaintiff and the circumstances of the defendant before making any decree. Standard grounds of defence in equity such as laches and acquiescence will provide a defence to a claim for specific performance”.

[36] In this appeal before us based on the facts and evidence we found no plausible explanation given by the Plaintiff of the nine months’ delay before commencing the suit against the Defendants. There was also no evidence that the Plaintiff was continuously able and willing to settle the balance of the purchase price of the property. Under the circumstances the equitable relief of specific performance should not be granted.

[37] Furthermore, in his pleadings the Plaintiff had stated that he agreed to cancel the SPA and demanded the refund of the sums paid (RM190,000.00) plus the damages of RM40,000. This meant the Plaintiff invoked the first option as stipulated in clause 16 SPA as stated above. In line with section 11(2) of the Act we are of the considered view that the Plaintiff had proven that compensation in money suffice to compensate his loss.

CONCLUSION

[38] Thus, on those grounds and for the other reasons discussed and elaborated above, we allowed the appeal in part. We set aside the Order of the Learned High Court Judge on the remedies in paragraphs 1 to 5 and substituted the same with the following order. We made an order for the Defendants to refund the sum of RM190,000.00 paid to the 2nd Defendant, to the Plaintiff within 30 days from the date of this judgment together with interest of 5% from the judgment of the High Court until full realisation of the payment. Costs of RM10,000.00 subject to the payment of allocator. The deposit to be refunded.

Sgd

HASNAH BINTI DATO’ MOHAMMED HASHIM
Judge
Court of Appeal, Malaysia
Putrajaya

Date: 19th January 2018

COUNSEL

For the Appellants: SK Jeyakumar, Tetuan Tea, Kelvin Kang & Company, Advocates and Solicitors, No.8.1, Tingkat 8, Menara Pelangi, 80400 Johor Bahru, Johor

For the Respondent: PY Tng, Tetuan Tng, Liew, David Leow & Co., Advocates and Solicitors, Suite 13.03, 13th Floor, Tropical Inn (Johor Tower), No.15, Jalan Gereja, 80100 Johor Bahru Johor

Legislation referred to:

Specific Relief Act 1950, Sections 7, 11(2), Chapter II

Judgments referred to:

Bandar Eco-Setia Sdn Bhd v Angelane Eng [2016] 1 MLJ 764

Ganam Rajamany v Somoo Sinniah [1984] 1 MLRA 38

Lee Ing Chin & Ors v Gan Yook Chin & Anor [2003] 2 CLJ 19

Leelavathi a/p K Govindamay v Sivan a/l Subramaniam & Anor [2015] MLJU 13

Tan Ah Chim & Sons Sdn Bhd v Ooi Bee Tat & Anor [1992] 4 MLRH 91

UEM Group Berhad v Genisys Integrated Engineers Pte Ltd [2010] 9 CLJ 785 

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