THE OFFICIAL REPOSITORY OF
MALAYSIAN JUDGMENTS & RULINGS

[2018] MYCA 59 ENGLISH

Tan Yew Lan and 3 Others v Tan Kim Seng
Suit Number: Rayuan Sivil No. B-02(NCVC)(W)-312-02/2017 

Contracts & commercial – Sale and purchase agreement – Specific performance – Whether specific performance should be ordered

Litigation & court procedure – Doctrine of acquiescence and laches – Limitation – Whether an extension of time can be indefinite

JUDGMENT

Introduction

[1] This is an appeal by the Appellants/ Defendants against the whole decision of the High Court at Shah Alam (Rozana Ali Yusof, JC, presiding) (‘the learned JC’) which allowed the Respondent/ Plaintiff’s claim and dismissed the Appellants/ Defendants’ counterclaim with costs. In allowing the Respondent/ Plaintiff’s claim, the High Court ordered specific performance of a Sale and Purchase Agreement dated 24.12.1993 (‘the said SPA’) and for the land in question to be transferred to the Respondent/ Plaintiff.

[2] We heard the Appellants/ Defendants’ appeal on the 30th August 2017. After considering the written submissions and the oral arguments from both parties on all the issues raised, we allowed the appeal. We now give our reasons for doing so.

[3] For ease of reference, the parties will be referred to as they were described in the Court below.

Background Facts

[4] The dispute between the parties centred around a piece of land known as GM 822, Lot 17404, Sungai Binjai, Mukim Kapar, Daerah Klang, Negeri Selangor (‘the said land’). The Defendants are the joint registered owners of the said land. The Defendants and the Plaintiff had entered into the said SPA for the said land for a total purchase price of RM546,024.60. By virtue of Clause 2(i) of the said SPA, the agreement was conditional upon compliance of the following three (3) conditions, namely:

(a) Compliance with the letter annexed to the said SPA by the Defendants;

(b) The registration of an easement not less than twenty (20) feet wide at its narrowest point; and

(c) The change of land use from agriculture to industrial by the Pentadbir Tanah Daerah, Klang or other relevant authority.

[5] The letter annexed to the said SPA was a letter from the Majlis Perbandaran Klang (‘MPK’) dated 19.8.1993 requesting the Defendants to comply with terms and conditions of the said letter annexed to the said SPA, one of which was to make an application for a change of land use to ‘industrial’.

[6] Upon signing the said SPA, the Plaintiff made payment of a deposit in the sum of RM20,000.00 to the Defendants and he then proceeded to wait for the Defendants to make the necessary application for change of the said land use.

[7] After a lapse of two (2) years, through a letter dated 23.12.1995, the Defendants had sent the Plaintiff a Standard Chartered Bank cheque bearing cheque No. 300048 for RM21,500.00 stating that pursuant to the said SPA, if they had failed to convert the land use, the deposit would have to be refunded and in those circumstances, they were doing so.

[8] However, the Plaintiff through his solicitor’s letter returned the cheque and requested for documentary evidence of the application for conversion. After this, there was no further action taken by either parties.

[9] Then, on 17.6.2014, about some twenty (20) years later, the Defendants entered into a Sale and Purchase Agreement with a third party in respect of the said land. The Plaintiff upon knowledge of the latest dealing by the Defendants over the said land, entered a private caveat on the said land on 8.8.2014.

[10] The Defendants then filed a suit at the Shah Alam High Court via Originating Summons No: 24-1188-10/2014 to remove the private caveat entered by the Plaintiff. The High Court then ordered that the suit be converted into a writ action as that there were many issues to be dispute.

[11] The Plaintiff then filed the present suit in the High Court of Shah Alam. In the present suit, the Plaintiff prayed for the following reliefs in paragraph 19:

“(a) Pelaksanaan Spesifik Perjanjian tersebut terhadap Tanah tersebut;

(b) Defendan-defendan memindah milik Tanah tersebut kepada Plaintiff;

(c) Secara alternatif Defendan-defendan membayar Plaintif ganti rugi (am dan khas) yang ditaksirkan oleh Mahkamah;

(d) Faedah pada kadar 5% setahun ke atas jumlah yang ditaksirkan dari tarikh writ sehingga tarikh penyelesaian sepenuhnya;

(e) Kos tindakan ini; dan

(f) Perintah-perintah dan relief yang sesuai dan wajar oleh Mahkamah ini.

[12] The Defendants, on the other hand, counterclaimed for the following:

“(a) Deklarasi bahawa Perjanjian tersebut adalah tidak sah dan/atau tidak boleh dikuatkuasakan;

(b) Kaveat persendirian No. Perserahan: 4571/2014 yang di masukkan oleh Plaintif dibatalkan;

(c) Secara alternatifnya, Plaintif melaksanakan semua dokumen yang relevan untuk membatalkan kaveat persendirian No. Perserahan: 4571/2014;

(d) Plaintif membayar kepada Defendan ganti rugi am;

(e) Faedah pada kadar 5% atas jumlah di perenggan (d) di atas daripada tarikh penghakiman sehingga tarikh penyelesaian penuh;

(f) Kos; dan

(g) Apa-apa perintah atau relif selanjutnya atau lain sebagaimana yang difikirkan adil dan patut oleh Mahkamah yang Mulia ini.”

At the High Court

[13] At the High Court, the learned JC set out the following three (3) issues to be decided by her, namely:

1. Whether the said SPA is valid and enforceable;

2. Whether the doctrine of acquiescence and laches is applicable and whether this suit is barred by limitation; and

3. Whether the Plaintiff is entitled to specific performance or damages.

[14] With regard to the first issue, the learned JC found that the parties do not dispute that the Plaintiff had paid RM20,000.00 as deposit and part payment of the purchase price. Neither do they dispute that the Defendants as vendors had to fulfill the three (3) conditions under Clause 2(i)(a), (b) and (c) of the said SPA. The three (3) conditions were stipulated by MPK in the letter dated 19.8.1993 sent to the second Defendant. Before a factory could be built on the said land, three (3) conditions must be fulfilled:

(a) The said land had to be converted to industrial use;

(b) The site had to have a legal exit or entry point to the main road; and

(c) The plan for the subdivision of the said land must be prepared according to the MPK’s requirements.

[15] Based on Clause 2(ii) of the said SPA, if the Defendants as vendors failed to comply with the three (3) conditions within six (6) months from the date of the said SPA or within the extended time agreed by the Plaintiff, the purchaser (Plaintiff) may request in writing for a refund and upon refund, the said SPA will be terminated. The learned JC held that there was no evidence that the Defendants had complied with the said conditions. Further, there was no evidence that MPK had rejected the Defendants’ application to change the status and condition of the said land from agricultural to industrial.

[16] The learned JC further held that based on the evidence, the application for the change of land use was made by a third person by the name of Lin Osman, who was not called as a witness in Court. Since there was no evidence to show that there was a request in writing by the Plaintiff for the refund of the deposit, the learned JC held that the said SPA is still valid and enforceable.

[17] As for the second issue, the learned JC found that the Defendants could not rely on the doctrine of acquiescence and laches because it was the Defendants’ own failure to comply with the conditions agreed upon despite the Plaintiff granting them an extension of time. The learned JC was of the view that the Defendants should not be allowed to take advantage of their own wrongdoing. Since the Defendants continued retaining the Plaintiff’s deposit money and did not respond to the Plaintiff’s letter dated 12.1.1996 (ex. P3), it may be reasonably concluded that the Defendants are still intending to proceed with the said SPA. The learned JC viewed this as having given the Plaintiff the reasonable expectation that the Defendants were still trying to comply with their obligations. The learned JC held that the Plaintiff’s action was not barred by limitation as there was no termination of the said SPA.

[18] With regard to the third issue, the learned JC held that despite the Defendants knowing that the said SPA had not been duly and effectively terminated, the Defendants entered into another Sales and Purchase Agreement for the sale of the said land with a third party at a much higher price. This shows clear the intention of the Defendants in dishonouring the said SPA to gain more profits. Under Clause 10 of the said SPA, the Plaintiff is entitled to claim for specific performance.

[19] Based on the above findings of fact on the three (3) issues ventilated by both parties, the learned JC allowed the Plaintiff’s claim for an order for specific performance and that the Defendant’s counter claim be dismissed with costs of RM20,000.00. Thus, the Defendants’ appeal before us.

The Appeal

[20] Before us, learned counsel for the Defendants canvassed the following three (3) grounds:

(a) The doctrine of acquiescence and laches is applicable and the Plaintiff’s action is barred by limitation;

(b) The extension of time cannot be indefinite; and

(c) Specific performance should not have been ordered.

Our Discussion and Decision

[21] On the doctrine of acquiescence and laches, we agreed with learned counsel for the Defendant’s submission that the learned JC erred when she decided that the Defendants could not rely on the said doctrine as the Defendants were in breach of the said SPA agreement. We are of the considered view that although it is not the Plaintiffs’ responsibility to fulfill the obligations imposed by Clause 2(i) of the said SPA, it is however, the Plaintiff’s responsibility to ensure that prompt action is taken if there is a breach of the said SPA.

[22] We are of the view that the Defendants rightly relied on the equitable principle that equity aids the vigilant and not the indolent, and that the maxim must apply. The Defendants could not be said to have relied on their breach, in relying on the doctrine of acquiescence and laches, as the Plaintiff had taken no interest in enforcing his rights, and had only done so upon discovering that the Defendants intended to sell the land to a third party. There was obviously a delay of more than 20 years and the Plaintiff had failed to explain the delay except by stating in his affidavit that he has not enough money to engage a solicitor. We hold that the excuse was not reasonable.

[23] Learned JC had also touched on the issue of limitation in her grounds of judgment. On this point, it was submitted by learned counsel, and we agreed, that the learned JC erred when she decided that the Plaintiff’s claim is not barred by limitation as there was no termination of the said SPA agreement. We are of the view that limitation should have been triggered at the point when it became apparent that the Plaintiff’s rights in the said land were at stake, i.e. when the Defendants returned the cheque for RM21,500.00, clearly indicating that the Defendants were no longer interested in performing their obligations under the said SPA. After refusing the money, the Plaintiff did nothing to enforce his rights.

[24] As we alluded to earlier, there was no reasonable and acceptable explanation preferred by the Plaintiff for the in-action and delay for over 20 years in enforcing his rights over the said land. We note from the records that the Plaintiff indeed did not take any action within the 20 years period to ensure that the said SPA was performed even though he was aware that the Defendants had not fulfilled the conditions specified under Clause 2(i) of the said SPA. Since reliefs sought by the Plaintiff are equitable in nature, the relevant equitable maxim applicable would be vigilantibus et non dormientibus lex succuvrit-equity aids the vigilant, not those who slumber on their rights (see Matair Suhaili & Anor v Rose Foo Chin Lan & Ors [2007] 5 CLJ 406).

[25] In Alfred Templeton & Ors v Low Yat Holdings Sdn Bhd & Anor [1989] 2 MLJ 202, Edgar Joseph Jr. J (as he then was) had this to say on the same issue of laches:

“Laches is an equitable defence implying lapse of time and delay in prosecuting a claim. A court of equity refuses its aid to a stale demand where the plaintiff has slept upon his rights and acquiesced for a great length of time. He is then said to be barred by laches. In determining whether there has been such delay as to amount to laches the court considers whether there has been acquiescence on the plaintiff’s part and any change of position that has occurred on the part of the defendant. The doctrine of laches rests on the consideration that it is unjust to give a plaintiff a remedy where he has by his conduct done that which might fairly be regarded as equivalent to a waiver of it or where by his conduct and neglect he has, though not waiving the remedy, put the other party in a position in which it would not be reasonable to place him if the remedy were afterwards to be asserted: 14 Halsbury’s Laws of England (3rd Ed) paras 1181, 1182. Laches has been succinctly described as ‘inaction with one’s eyes open’.

Now, can lapse of time and delay, however gross, in a suit seeking final, as opposed to interlocutory relief, of itself amount to the equitable defence of laches. It is clear that delay in some circumstances can amount to evidence from which the inference can be drawn that the plaintiff has released (or waived, there seems to be no difference) the claims which he asserts: lapse of time always gives rise to a presumption that a stale suit is ill-founded; for a reasonable man is not likely to sleep on his claims if they are well-founded. Whether it does or does not is a question of fact in each case.”

[26] On the issue of limitation, we can do no better than to quote Hashim Yeop A. Sani, CJ in Credit Corporation (M) Bhd v Fong Tak Sin [1991] 1 MLJ 409 where his Lordship said:

“As stated earlier a cause of action is said to have accrued when there is in existence a person who can sue and another who can be sued, and when all the facts have happened which are material to be proved to entitle the plaintiff to succeed. In the present case on 18 June 1979 there was undoubtedly in existence someone who can sue, that is, the respondent. There was also undoubtedly some person in existence who can be sued, amongst them the appellant. On the same date there was also in existence the facts to be proved by the respondent to entitle the plaintiff to succeed in the action.

The doctrine of limitation is said to be based on two broad considerations. Firstly there is a presumption that a right not exercised for a long time is non-existent. The other consideration is that it is necessary that matters of right in general should not be left too long in a state of uncertainty or doubt or suspense.

The limitation law is promulgated for the primary object of discouraging plaintiffs from sleeping on their actions and more importantly, to have a definite end to litigation. This is in accord with the maxim interest reipublicae ut sit finis litium that in the interest of the state there must be an end to litigation. The rationale of the limitation law should be appreciated and enforced by the courts.”

[27] It is clear to us that the breach and cause of action arose when the Defendants failed to comply with their obligations under Clause 2(i) of the said SPA within the stipulated time i.e. within 6 months and had continued the breach. Thus, limitation should not have to be triggered by the termination of the said SPA agreement. Even though the Plaintiff had the discretion to grant an extension of time, however in our view, the period of time cannot be indefinite with the Plaintiff seeking to enforce his rights more than 20 years later. It is misconceived on the part of the learned JC when she concluded that the conduct of the Defendants of retaining the deposit monies showed that the Defendants were still intending to proceed with the said SPA. There is clear evidence that the Defendants had tried to return the monies but it was sent back by the Plaintiff who refused to accept it. The reasonable conclusion that can be drawn is that the Defendants were no longer interested in fulfilling their obligations under the said SPA thus triggering the Plaintiff’s cause of action.

[28] With regard to second ground of appeal, the learned counsel for the Defendants submitted that the extension of time given by the Plaintiff had been indefinite. Therefore, it is void for uncertainty. Clause 2(ii) of the said SPA provides as follows:

“2(ii) If for any cause or reason the Vendors shall fail to comply with the conditions stipulated in Clause 1 of this Agreement (or within such extended time that the Purchaser may in its absolute discretion grant) then the Purchaser may request in writing to the Vendors for a refund of all monies paid by the Vendors to the Purchaser under this Agreement and upon such refund this Agreement shall terminate and became null and void and of no effect and neither of the parties hereto shall have any right or claim against the other.”

[29] The Plaintiff in this case, via his letter dated 12.1.1996 (at pages 147-148 of the Appeal Record Part C), stated that he wishes to further extend the period for compliance of the conditions under Clause 2(ii) of the said SPA without mentioning any time period or deadline. Time was thus left open-ended. Section 47 of the Contract Act 1950 provides in the circumstances, the contract must be performed within a reasonable time. Section 47 states:

“Where, by the contract, a promised is to perform his promise without application by the promise, and no time for performance is specified, the engagement must be performed within a reasonable time.”

[30] Considering the lapse of time of more than 20 years in this case, we are of the view that it was not a reasonable extension of time for the Defendants to perform their obligations under the said SPA, and furthermore it is contrary to Clause 14 of the said SPA which provides that time is of the essence of the contract between the parties.

[31] On the issue of specific performance, the learned JC purportedly ordered specific performance instead of damages based on Clause 10 of the said SPA which provides as follows:

“10. If the Vendors shall breach any of its undertakings warranties or covenants herein (other than the compliance of the conditions stipulated in Clause 2(i) herein) or the Memorandum of Transfer of the Said Property in favour of the Purchaser its nominee or nominees cannot be registered due to any act or omission on the part of the Vendors, then the Purchaser shall be entitled to elect to claim specific performance or to demand from the Vendors the refund forthwith of all sums paid towards account of the purchase price and a further sum of Ringgit Malaysia Twenty Thousand (RM20,000.00) as agreed liquidated damages and upon the payment therefore this Agreement shall terminate and become null and void and of no effect and neither of the parties hereto shall have any right or claim against the other.”

[32] With respect, we are of the view that although specific performance is an equitable remedy, the learned JC had failed to consider the equitable maxim that equity aids the vigilant and not the indolent in allowing the Plaintiff’s claim for specific performance after a lack of positive action by the Plaintiff for over 20 years. Specific performance has been rendered impossible now as the said land has been converted to residential use and no longer agricultural use.

[33] This Court in Bersatu-BHV Sdn Bhd & Anor v Eng Ee Ee [2016] 2 MLRA 370, in a similar situation had decided:

“[35] In our view on the facts and circumstances of this case, we find no merits in the above submission by the respondent. First of all, we observe that the transfer of the said property to the 2nd appellant was more than a year after the termination of the SPA by the 1st appellant. Secondly, the respondent’s solicitors’ letter challenging the termination as wrongful was sent almost a year after the termination letter and the suit by the respondent was filed only on 19 April 2012 which is about 14 months after the termination. By then the said property had been transferred to the third party. If the respondent was serious about purchasing the said property, the respondent should have been more diligent and persistent in pursuing her rights and should have filed the claim for the said property at the earliest available opportunity, which in our view should be soon after the date of the termination letter or at the latest soon after the 1st appellant returned the cheque for RM4,000.00 being the differential sum between the amount of the loan approved by the financier and the balance of the purchase price not covered by the loan amount. Clearly in the circumstances of this case the respondent is an indolent party and does not deserve the court’s assistance.

[36] Should the High Court have ordered specific performance in the circumstances of the case? We do not think so. Specific performance is an equitable remedy and it is discretionary. Before ordering specific performance the court must be satisfied that there is equity in the decision and justice of the case will be served by it. In our view there is no equity in this case. At the risk of repetition, we say that the respondent had sat on her rights over an unreasonably long period of time and had displayed an attitude which the appellant counsel described as lackadaisical in performing the obligations under the SPA that contributed to the termination of the SPA by the 1st appellant; and thereafter in pursuing her rights to get the said property.”

[34] In a more recent decision, this Court in Leisure Farm Corporation Sdn Bhd v Kabushiki Kaisha Ngu & 2 Ors [2017] 1 LNS 499, Idrus Harun, JCA opined:

“[12] Following this turn of event, and on the facts of the present case, our stand is, owing to circumstance which has occurred subsequently, that is, the shares are no longer with the first respondent due to the transfer of the shares to the third party, no meaningful order of specific performance could in our view, be made by this Court and enforced against the first respondent as the subject matter of the purported contract is no longer in existence. The appellant, furthermore, takes no steps to preserve the shares, and has undoubtedly taken no steps to recover the shares from the present owner. The proposition that we have just deliberated is lucidly explained in Bandar Eco-Setia Sdn Bhd v. Angelane Eng [2016] 1 MLJ 764 in language that merits recollection:

“[40] In Knight v Simmonds Lindley LJ summed up the relevant law at pp 297-298 as follows:

When a court of equity is asked to enforce a covenant by a decree of specific performance or granting an injunction, in other words, when equitable as distinguished from legal relief is sought, equitable as distinguished from legal defences have to be considered. The conduct of the plaintiff may disentitle him from relief; his acquiescence in what he complaints of, or his delay in seeking relief may of itself be sufficient to preclude him from obtaining it. Sayers v. Collyer and Roper v. Williams illustrate this. In both of those cases the court refused to enforce restrictive covenants at the instance of the particular plaintiffs. But, further, before granting equitable relief, Courts of Equity look not only to the words of a covenant but to the object to attain which it was entered into, and if, owing to circumstance which have occurred since it was entered into, that object cannot be attained, equitable relief will be refused. This doctrine was laid down and acted upon by Lord Alden and Sir Thomas Plumber in Duke of Bedford v. Trustees of the British Museum and by Vice Chancellor Wood in Peek v. Matthews and was recognized in German v. Chapman. It is upon this ground that restrictive covenants intended to preserve the character of land to be laid out and used in a particular way will not be enforced if the land has already been so laid out or used that its preservation as intended is no longer possible. Such a state of things can seldom, if ever, have arisen except from a departure by the vendor and the purchasers from him from the scheme, or from the acquiescence or laches of those entitled to enforce the observance of the covenants in question; but, whatever the explanation of the altered state of things may be, if the object to be attained by the covenant cannot be attained, equitable relief to enforce it will be refused.” [our emphasis]

[13] In Choong Kim Meng & Anor v. Arena Kencana Sdn Bhd & Ors (Goh Hok Huat, intervener) [2016] MLJU 604 the High Court explained the law further in the following terms:

“[65] The plot of land sold to the Intervener by the 2nd Defendant is a replacement plot. This replacement plot is not the plot of land that was sold to the Plaintiffs under the SPA. The plot of land sold to the Plaintiffs, which is the subject matter of the SPA, does not exist anymore. Thus, there is no basis in law for the Plaintiffs’ to ground their application for specific relief, for the court cannot order specific performance of a contract of which its subject matter is no longer in existence. Nor do the Plaintiffs have any caveatable interest in P.T. 13526, as it is not the same plot of land that the Plaintiffs had contracted to purchase under the SPA.” [our emphasis]

[14] The appropriate remedy under the circumstances, would therefore be damages as ordered by High Court. Thus in Lim Kim Choy v. Wong Chow [1952] 1 MLJ 20, Thomson J had this to say-

“As regards the defendant’s failure to renew for the year commencing 21st November 1950, there can, of course, be no question of specific performance because to perform would be impossible. There will, therefore, be judgment for the plaintiff for damages to be assessed on inquiry by the Registrar. The measure of damages will be the net profit of the time to the defendant during the year in question subject to the deduction of the tribute which would have been payable to him by the plaintiff under the sub-lease. The plaintiff will also have the taxed costs.” [our emphasis]”

Conclusion

[35] Based on the above discussion and having examined the appeal records, we are of the considered view that the learned JC had failed to take cognisance of vital facts and points of law raised by the Defendants in arriving at her decision, which warrants appellate intervention. We are also of the view that there was insufficient judicial appreciation of the evidence and the relevant law on the part of the learned JC.

[36] Based on the aforesaid, we unanimously allowed the appeal with costs of RM30,000.00 here and below to be paid by the Plaintiff to the Defendants subject to allocator. Deposit to be refunded. The decision of the High Court was set aside and we allowed judgment to be entered on the counter claim. We also ordered that the Defendants to make refund the RM20,000.00 deposit to the Plaintiff with interest at the rate of 5% per annum from 30.8.2017 till full realisation.

[37] We therefore ordered accordingly.

Dated: 26th February 2018

signed

KAMARDIN BIN HASHIM
Judge
Court of Appeal
Malaysia

COUNSEL

For the Appellants/ Defendants: S. Ravichandran (Elaina Teng Xue Er, with him), Messrs Seah Balan Ravi & Co, Unit A, 3rd Floor, Wisma 1 Alliance, No. 1, Lorong Kasawari 4B, Taman Eng Ann, 41150 Klang, Selangor

For the Respondent/ Plaintiff: Wong Tat Foy, Messrs T. F. Wong & Tee, No. 37-1, Jalan Batai Laut 3, Taman Intan, 41300 Klang, Selangor

Legislation referred to:

Contract Act 1950, Section 47 

Judgments referred to:

Alfred Templeton & Ors v Low Yat Holdings Sdn Bhd & Anor [1989] 2 MLJ 202

Bersatu-BHV Sdn Bhd & Anor v Eng Ee Ee [2016] 2 MLRA 370

Credit Corporation (M) Bhd v Fong Tak Sin [1991] 1 MLJ 409

Leisure Farm Corporation Sdn Bhd v Kabushiki Kaisha Ngu & 2 Ors [2017] 1 LNS 499

Matair Suhaili & Anor v Rose Foo Chin Lan & Ors [2007] 5 CLJ 406

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