THE OFFICIAL REPOSITORY OF
MALAYSIAN JUDGMENTS & RULINGS

[2018] MYCA 16 ENGLISH

Tay Hong San and 4 Others v Woolley Development Sdn Bhd and 2 Other Appeals
Suit Number: Civil Appeal Nos. P-02-774-2011, W-02-1822-2011 & W-02-1236-06/2012 

Contract & commercial – Agreements – Validity and enforceability of agreements – Privity of contract

JUDGMENT

A. INTRODUCTION

[1] There were 3 appeals before us. They were P-02-774-2011 (Appeal 774), W-02-1822-2011 (Appeal 1822) and W-02-1236-06/2012 (Appeal 1236). Appeal 774 originated from the High Court at Penang, whilst Appeal 1822 and Appeal 1236 originated from the High Court at Kuala Lumpur. Appeal 1822 was the appeal from 3 Civil Suits which were consolidated at the High Court; they were Civil Suit No. S-22-1206-2006 (Suit 1206) (Kean Yick Enterprise Sdn. Bhd. as Plaintiff) (Kean Yick Enterprise), S1-22-1208-2006 (Suit 1208) (Aidai Timber Products Sdn. Bhd. as Plaintiff) (Aidai) and S2-22-1209-2006 (Suit 1209) (Kean Yick Holdings Sdn. Bhd. as Plaintiff) (Kean Yick Holdings). In all the 3 said Civil Suits, Cherating Development Sdn. Bhd. (Cherating) and Woolley Development Sdn. Bhd. (Woolley) were the 1st and 2nd Defendants respectively. (The 3 companies in the Civil Suits will be collectively referred to as “the Companies”.)

[2] With the agreement of parties, we heard Appeals 1822 and 1236 first, to be followed with Appeal 774.

[3] As the facts in each appeal differed to some extent, we will deal with each Appeal separately.

APPEAL 1822:

B. BRIEF FACTS COMMON IN ALL 3 SUITS:

[4] The Appellants in the Appeal 1822 are the Plaintiffs in the 3 suits respectively (Plaintiffs) whilst the 1st and 2nd Respondents are the same 1st and 2nd Defendants for all the 3 suits respectively (together “the Defendants). The issues raised in the 3 suits are identically the same.

[5] A property (the Land) was developed by Cherating (1st Defendant), who was the registered proprietor (the Project). On 5.11.1998, the Appellants/ Plaintiffs entered into 12 separate Sale and Purchase Agreements (SPAs) with Cherating. Each SPA was for the purchase of each floor in the respective shop lots (the Properties). All the SPAs were executed on behalf of the Plaintiffs by a common director, Mr. Lau Kim Lai (PW1), who was authorised by the Plaintiffs’ Directors Resolutions dated 9.10.1998 to sign these SPAs.

[6] Pursuant to the terms of the SPAs, Cherating agreed to deliver vacant possession of the Properties within 36 months of the date of the SPAs. Cherating was liable to pay liquidated and ascertained amount of damages at the rate of 11% per annum for delay in delivering vacant possession (LAD).

[7] It was alleged that the Plaintiffs had paid Cherating the total purchase price of the Properties.

[8] Subsequently, the Project was abandoned by Cherating since 1998. The Project was later taken over by Woolley (2nd Defendant). As a mechanism for takeover, Cherating and Woolley entered into an Agreement for Transfer of Land dated 20.9.2000 (Transfer Agreement), where Woolley agreed to rehabilitate and to continue to develop and complete the Project subject to the terms and conditions therein.

[9] The Land was not transferred to Woolley, but Woolley was given a Power of Attorney dated 26.9.2000, whereby Woolley was allowed to exercise all the rights and powers of Cherating as the registered proprietor of the Land, including but not limited to the signing of the sale and purchase agreement, transfer documents, building plans etc. that are necessary for the development. Cherating had also signed a Deed of Novation dated 21.6.2006 (Deed of Novation) with Malaysia Building Society Berhad (MBSB), being the financier for the Project and chargee of the Land, to novate its liabilities with MBSB.

[10] In the Transfer Agreement, at recital L, Cherating disclosed the shop lot units that had been sold to individuals as particularised in Annexure H therein.

[11] It was the Plaintiffs’ case that the Defendants had breached the terms of the SPAs by failing to deliver vacant possession within the stipulated time period. The Plaintiffs sought to enforce the SPAs by claiming, amongst others, the following reliefs:

11.1 a declaration that Woolley is bound by the terms of the SPAs;

11.2 order for specific performance of the SPAs, against Cherating/ Woolley to deliver vacant possession of the Properties;

11.3 alternatively damages in addition to or in lieu thereof;

11.4 judgment for a quantified sum of RM 369, 554.79, RM 369, 554.79 and RM 673, 772.30 respectively for liquidated damages for late delivery of vacant possession as at 30.4.2006;

11.5 judgment for an unquantified sum for liquidated damages for late delivery of vacant possession from 1.5.2006 calculated at 11% per annum until date of delivery of vacant possession.

[12] It was the 2nd Defendant’s/ Woolley’s defence that-

12.1 by the Transfer Agreement and the Deed of Novation entered between Cherating, MBSB and Woolley, and subject to the terms thereof, Woolley had agreed to rehabilitate and complete the Project;

12.2 Woolley’s obligation to rehabilitate and complete the Project pursuant to the Transfer Agreement was conditional upon, amongst others, the existing purchasers giving their consent and/or agreement to permit Woolley to complete the Project by executing a novation;

12.3 the Plaintiffs were not amongst the list of purchasers provided by Cherating;

12.4 Woolley had no knowledge of the alleged payment of the full purchase price of the Properties;

12.5 the Plaintiffs did not execute any agreement with Woolley and therefore there is no legally binding relationship between the Plaintiffs and Woolley;

12.6 Woolley therefore denied being bound by the terms of the SPAs.

C. AT THE HIGH COURT

[13] The learned Judge addressed 2 issues to be decided by her as follows:

13.1 whether there is a valid and enforceable contract between the Plaintiffs and Woolley; and

13.2 whether there is privity of contract between the Plaintiffs and Woolley.

VALID AND ENFORCEABLE CONTRACT

[14] Notwithstanding the express terms of the SPAs, it was contended by the Plaintiffs, vide the sole testimony of their witness, PW1, that the sale transactions of the Properties were actually pursuant to a private arrangement between one of the directors of the Plaintiffs, the late Lau Kim Piaw, and Cherating whereby it was agreed that the purchase price for the Properties would be to contra with goods delivered by the Plaintiffs to Cherating and the difference to be paid by cash. The Plaintiffs relied primarily on 3 letters of acknowledgment all dated 15.10.1998 and marked as IDP5, IDP11 and IDP17 by Cherating to the respective Plaintiffs (the Impugned Letters).

[15] The learned Judge found that the Plaintiffs had not discharged their burden of proof that they had made payments for the Properties for the following reasons:

15.1 PW1 did not have personal knowledge of the payments made as he claimed;

15.2 PW1 was not a credible witness as he gave inconsistent evidence;

15.3 on the balance of probabilities, the evidence adduced pointed to the irresistible conclusion that it was highly improbable that PW1 had any personal knowledge regarding the payments of the Properties to Cherating;

15.4 the Court refused to admit the Impugned Letters and other documents, that is, the Plaintiffs’ Directors Resolution (IDP6, IDP12), the Plaintiffs’ solicitor’s letters dated 5.2.2002 (IDP20) and the Financial Statements of the Plaintiffs (IDP25 to IDP29) (collectively “Impugned Documents”), as exhibits of the Court since all these documents were in Part C of the Common Bundle of Documents where the makers of these documents were not called to testify as to their authenticity and contents; further these documents did not fall under the exceptions to section 73A and section 32 of the Evidence Act 1950 (Evidence Act);

15.5 it was highly improbable for the Impugned Letters to be accepted as credible evidence since the Plaintiffs were not listed as purchasers in Annexure H to the Transfer Agreement. Further, the Impugned Letters were issued on 15.10.1998 when the Project was abandoned in 1998, and according to DW3 at the time when Woolley took over the Project in 2001, Cherating had merely completed the piling works whilst the structural and building works had not been completed. The question therefore arose as to why would the Plaintiffs want to pay the full purchase price of the Properties when the Project had not been completed.

[16] In view of the above reasons, the learned Judge found that the SPAs were void for want of consideration pursuant to section 26 of the Contracts Act 1950 (Contracts Act) and the Plaintiffs’ claim were dismissed.

PRIVITY OF CONTRACT

[17] The learned Judge had made a finding that there was no payment of the full purchase price by the Plaintiffs, and since the Plaintiffs were not listed in Annexure H to the Transfer Agreement, and the Plaintiffs had not entered into any new sale and purchase agreements with Woolley, there was no privity of contract between the Plaintiffs and Woolley. The learned Judge in doing so distinguished the facts of this case with that of this Court’s majority decision in the case of Woolley Development Sdn. Bhd. v Mikien Sdn. Bhd. [2008] 2 CLJ 303 (Mikien’s case). In Mikien’s case, Woolley had appealed against the decision of the High Court allowing summary judgment under Order 81 of the Rules of the High Court 1980. This Court had dismissed Woolley’s appeal for failing to dispute a positive averment by Mikien that Woolley was the successor in title and permitted assign of Cherating and that the purchase price had been paid in full. Whereas in this case, Woolley had disputed that they were successors in title and permitted assigns of Cherating and thus Clauses 41 and 38(f) of the SPAs are not binding on Woolley.

[18] The learned High Court Judge therefore found on the balance of probabilities the Plaintiffs had not proven their claims and proceeded to dismiss the Plaintiffs’ claims with costs to be taxed unless otherwise agreed and be borne equally by the Plaintiffs in the 3 suits. The Plaintiffs now appealed to this Court against that decision.

D. DECISION OF THE COURT

[19] Before us, learned counsel for the Plaintiffs stressed on two issues. First, on whether the Plaintiffs were precluded from making their claims against Woolley since they were not listed in Annexure H to the Transfer Agreement? Second, since the Plaintiffs had obtained judgments in default of appearance by Cherating (JIDs) dated 14.3.2007, 16.2.2007 and 31.1.2007 respectively, which had not been set aside, whether the JIDs are binding on Woolley?

[20] On the first issue, it was agreed for the Plaintiffs that they had entered private caveats on the Properties, which caveats, amongst others, were the subject of the Originating Summons No. 24-568-2007 (O.S.) filed by Woolley against them (amongst others) whereby Woolley applied to have all the caveats stated therein to be removed. In the Affidavit in Support of the O.S. affirmed by the Director of Woolley, Woo Yew Khuen, at paragraph 7, Woolley had categorically deposed that all the caveats listed in Schedule 1 should be removed, except for the caveats in respect of the lots listed in Schedule 2 therein. Amongst other caveats excepted from removal and as listed in Schedule 2 were the caveats lodged by the Plaintiffs Kean Yick Holdings and Aidai. But by consent of parties, the caveat lodged by Kean Yick Enterprise was also excepted from removal vide Amended Consent Order dated 17.1.2008. Therefore, it was argued, Woolley had recognised the Plaintiffs’ right to lodge the caveats on the Properties.

[21] As for the JIDs, it was contended by the Plaintiffs that since they had obtained the JIDs against Cherating, the JIDs would also bind Woolley which had taken over the responsibilities of Cherating and thereby Woolley is now required to deliver the Properties to the Plaintiffs vis a vis the SPAs with Cherating.

[22] With regard to the lodgement of the private caveats on the Properties by the Plaintiffs, we were of the view that the caveats did not signify conclusively that the Plaintiffs have a right to the Properties. We agreed with Woolley’s counsel’s submission that the presence of the caveats merely showed that the Plaintiffs were making a claim on the Properties and not that they have titles to the Properties.

[23] It was noted by us that under the Transfer Agreement, paragraph C to the Recital, reference was specifically made to the existence of caveats lodged over the Land held by Cherating, the particulars of which were described in Annexure C thereto as follows:

“(C) Pursuant to a private title search conducted on 3rd August 2000, there are numerous private caveats lodged by individuals, corporation and financial institution over the Land to protect their respective interests. The particulars are described in Annexure C hereto.”

The Plaintiffs were not listed as caveators in Annexure C thereto. In fact, the Plaintiffs had lodged their caveats after the year 2000, that is in the year 2001. So the Plaintiffs’ rights/ titles to the Properties were never in the contemplation of Cherating and Woolley when they entered the Transfer Agreement in the year 2000. This was further borne out in paragraphs J, K and L of the Recital to the Transfer Agreement which provide as follows:

“J) By a letter dated 27th July 2000 addressed to CDSB, MBSB has agreed with CDSB’s proposal in granting WDSB the rehabilitation and completion of the Project (“the Objective”), whereby CDSB will transfer the Land to WDSB subject to the existing Charges created in favour of MBSB without any money consideration. A copy of the letter is annexed in Annexure G.

K) To achieve the Objective, the parties together with MSBS further agreed to enter into inter alia the following Agreements immediately upon execution of this Agreement on terms mutually agreed upon:

(i) Loan Agreement between WDSB and MBSB;

(ii) Guarantee Agreement from WDSN in favour of MBSB;

(iii) Restructuring Agreement between CDSB, CDSB’s Directors and MBSB;

(iv) Assignment of Profits from CDSB in favour of MBSB;

(v) Tripartite Agreement between CDSB, WDSB and the MBSB;

(vi) Project Management Agreement between WDSB and MBSB;

(vii) Novation of the S&P Agreements between CDSB, WDSB and the individual Purchasers (as herein defined);

(viii) Assignment of the Compensation Agreements between CDSB, the Squatters and WDSB (as herein defined); and

(ix) Other relevant Agreements pertaining thereto.

L) CDSB has by separate and individual Sale and Purchase Agreements made with the individual Purchasers (“individual Purchaser”) (“S&P”), details of which are more particularly described in Annexure H, agreed to sell and transfer their rights and title to and interest in the relevant Unit erected or to be erected on part of the Land (“the Unit”) to the individual Purchasers upon payment of full purchase price and the terms and conditions stipulated in the S&P”

[Emphasis added]

The Plaintiffs were not listed in Annexure H to the Transfer Agreement. Neither did the Plaintiffs execute any novation agreement with Woolley as contemplated by paragraph K (vii) of the Recital to the Transfer Agreement. We therefore came to the irresistible conclusion, as the learned High Court Judge did, that there was no privity of contract between the Plaintiffs and Woolley to enable Woolley to be held responsible to transfer the Properties to the Plaintiffs let alone for damages for LAD etc. We agreed with the learned High Court Judge’s finding that the facts of these cases vis Mikien’s case were distinguishable and did not bind Woolley in these cases.

[24] Other than finding that there was no privity of contract between the Plaintiffs and Woolley, the learned High Court Judge also made a finding of fact that the Plaintiffs had failed to prove that they had made payments of the purchase price to Cherating and that therefore the SPAs were void for want of consideration under section 26 of the Contracts Act. It is trite law that an appellate court should be slow to intervene/ overturn the finding of facts by the trial judge. (See Multar v Lim Kim Chet [1982] 1 MLJ 184; China Airlines Limited v Maltran Air Corporation Sdn. Bhd. [1996] 3 CLJ 161, Beldeu Singh v Dr. Kenneth Abdrew [2011] 4 MLJU 769, Lee Ing Chin @ Lee Teck Seng & Ors. v Gan Yook Chin [2003] 2 MLJ 97). We did not see any need to refute the findings of facts made by the learned High Court Judge.

[25] With regard the JIDs obtained by the Plaintiffs against Cherating, we agreed with the submission of Woolley that it could not have made any application to have the JIDs be set aside because Woolley was not the party against whom the JIDs were obtained. Since the JIDs were obtained against Cherating, which had since been wound up, the enforcement of the JIDs would have to be against the estate of Cherating and not against Woolley in view of our decision affirming the High Court Judge’s decision, that there was no privity of contract between the Plaintiffs and Woolley.

[26] In view of the above, we unanimously found that there was no merit in this Appeal and we dismissed this Appeal with costs of RM 15,000.00 to Woolley/ Respondent. We ordered the deposit be refunded.

APPEAL 1236

E. BRIEF FACTS

[27] The Appellant/ Lau Kim Piaw/ the deceased in Appeal 1236 was the Plaintiff in Civil Suit No. S22-1207-2006 (Suit 1207) whilst Cherating and Woolley were the 1st and 2nd Defendants respectively. Suit 1207 was one of the four suits which were originally ordered to be heard together. However, during case management the High Court was informed that the Plaintiff had passed away. Suit 1207 was subsequently confirmed by the executrix of the estate of Lau Kim Piaw, that is, Chew Sai Nooi (PW1) and was taken out of the trial of Suits 1206, 1208 and 1209 (the Related Actions). The Plaintiffs in the Related Actions are Companies that have common shareholders and directors, notably the family members of Lau Kim Piaw/ the Plaintiff in Suit 1207/ the deceased until the substitution of parties upon his death.

[28] The Plaintiff/ Lau Kim Piaw entered into 4 Sales and Purchase Agreement (SPAs) all dated 24.1.1997 with Cherating for the purchase of each floor in the shoplot (the Properties) in respect of the Land developed by Cherating (the Project). The Plaintiff allegedly paid Cherating the total price of RM 936,580.00.

[29] The facts as stated in paragraphs 6, 8 to 12 above similarly applied to this Suit 1207 with such necessary modifications as are required and in particular as follows:

29.1 in paragraph 11.4 above, judgment for a quantified sum of RM 644, 957.21 for liquidated damages for late delivery of vacant possession as at 30.4.2006.

F. AT THE HIGH COURT

[30] There were 2 issues before the High Court which were the same as that enumerated in paragraph 13 above in respect of the 3 Civil Suits by the Companies in the Related Actions.

VALID AND ENFORCEABLE CONTRACT

[31] The Plaintiff only called 2 witnesses. They were Chew Sai Nooi/ executrix/ PW1 being the deceased’s/ Plaintiff’s wife, and Lau Yam Len (PW2) who was the deceased Plaintiff’s brother. Notwithstanding the express terms of the SPAs, it was contended by the Plaintiff, vide the testimony of PW2, that the sale transactions of the Properties were actually pursuant to a private arrangement between the Plaintiff and Cherating whereby it was agreed that the purchase price for the Properties would be to contra with goods delivered by the Plaintiff to Cherating for the sum of RM 536, 000.00 and the difference of RM 400,000.00 was paid in cash to one Datuk Jeffrey Chuah in the presence of PW2. The Plaintiff relied primarily on 1 letter of acknowledgment dated 13.5.1998 marked IDP 56/IDP 56A issued by Datuk Jeffrey Chuah confirming payment of the properties (the Impugned Letter).

[32] The learned Judge found that the Plaintiff had not discharged his burden of proof that he had made payments for the Properties for the following reasons:

32.1 PW2’s contention that he had personal knowledge of the matters pertaining to the sale transaction was found to be inherently improbable for reasons stated in paragraph 8.1 of the Grounds of Judgment;

32.2 the Plaintiff had failed to adduce evidence to prove the facts alleged;

32.3 Woolley had successfully adduced evidence to rebut the contents of the Impugned Letter;

32.4 the Court refused to admit the Impugned Letter as an exhibit of the Court since it was in Part C of the Common Bundle of Documents where the maker of the Impugned Letter was not called to testify as to its authenticity and contents; further the Impugned Letter did not fall under the exception to section 73A and sections 32 of the Evidence Act;

32.5 it was highly improbable for the Impugned Letter to be accepted as credible evidence since the Plaintiff was not listed as purchaser in Annexure H to the Transfer Agreement. Further, the Impugned Letter was issued on 13.5.1998 when the Project was abandoned in 1998, and at the time Woolley took over the Project in 2001, Cherating had merely completed the piling works whilst the structural and building works had not been completed. The question therefore arose as to why would the Plaintiff want to pay the full purchase price of the Properties when the Project had not been completed.

[33] In view of the above reasons, the learned Judge found that the SPAs were void for want of consideration pursuant to section 26 of the Contracts Act and that the Plaintiff’s claim be dismissed.

PRIVITY OF CONTRACT

[34] The learned Judge again had made a finding that there was no payment of full purchase price by the Plaintiff and since the Plaintiff was not listed in Annexure H to the Transfer Agreement, and the Plaintiff had not entered into any new sales and purchase agreements with Woolley, there was no privity of contract between the Plaintiff and Woolley. The learned Judge in doing so distinguished the facts of this case with that of this Court’s majority decision in Mikien’s case (supra). In Mikien’s case, Woolley had appealed against the decision of the High Court allowing summary judgment under Order 81 of the Rules of the High Court 1980. This Court had dismissed Woolley’s appeal for failing to dispute a positive averment by Mikien that Woolley was the successor in title and permitted assign of Cherating and that the purchase price had been paid in full. Whereas in this case, Woolley had disputed that they were the successors in title and permitted assigns of Cherating and thus Clauses 41 and 38(f) of the SPAs were not binding on Woolley.

[35] The learned High Court Judge therefore found on the balance of probabilities the Plaintiff had not proven his claim and proceeded to dismiss the Plaintiff’s claim with costs to be taxed unless otherwise agreed. The Plaintiff now appealed to this Court against that decision.

G. DECISION OF THE COURT

[36] As the facts and issues of this appeal were very similar, if not the same, as in Appeal 1822, we adopted our reasons as laid out in Appeal 1822 with such necessary modifications as were required. We therefore dismissed Appeal 1236 with costs of RM 15,000.00 to Woolley/ Respondent and ordered the deposit to be refunded.

APPEAL 774:

H. BRIEF FACTS:

[37] In this Appeal, the Appellants were the Plaintiffs in the Court below whilst Cherating was the 1st Defendant and Woolley/ Respondent was the 2nd Defendant. We will refer the parties as they were in the Court below.

[38] The Plaintiffs contended that, pursuant to 4 Sale and Purchase Agreements dated 3.1.1997 (SPAs), they had agreed to purchase 1 unit of shoplot comprising of the ground, 1st, 2nd, and 3rd Floors described as Parcel No. 73A at the Project developed by Cherating (Project).

[39] Pursuant to the SPAs, Cherating agreed to deliver vacant possession of the Properties within 36 months of the date of the SPAs. Cherating was liable to pay liquidated and ascertained damages at the rate of 11% per annum for delay in delivering vacant possession (LAD).

[40] The Plaintiffs had paid Cherating RM 75,000.00 being initial deposit towards the purchase price of the Properties, which represented 10% of the total purchase price.

[41] Pursuant to a letter dated 28.5.2001 (D7), Woolley had informed the Plaintiffs that it had taken over the Project from Cherating. It was contended by the Plaintiffs that they had agreed to pay the balance purchase price according to the Schedule of Payment pursuant to the Third Schedule of the SPAs and that Woolley had agreed to inform the Plaintiffs of the progress of the Project and the Schedule of Payment. However, Woolley had failed to issue any notice of payment under the SPAs. Instead, Woolley had completed the Project/ Properties and sold it to third parties without the Plaintiffs’ knowledge and consent. Woolley therefore had breached the terms of the SPAs and the Plaintiffs sought to enforce the SPAs by claiming, amongst others, for an order for specific performance of the SPAs and LAD.

[42] The facts pertaining to the abandonment of the Project by Cherating, the execution of the Transfer Agreement dated 20.9.2000, the Power of Attorney and the Deed of Novation dated 21.6.2006 referred to in Appeal 1822, (see paragraph 8 to 10 above) equally applied to this Appeal 774. The Plaintiffs were registered in Schedule H of the Transfer Agreement.

[43] It was Woolley’s/ 2nd Defendant’s defence that-

43.1 the SPAs were entered into between the Plaintiffs and Cherating;

43.2 Woolley is not bound by the terms of the SPAs;

43.3 by the Transfer Agreement Woolley agreed to rehabilitate and complete the Project subject to the terms thereof;

43.4 the deposit paid by the Plaintiffs to Cherating were not forwarded to Woolley;

43.5 Woolley did not enter into any agreement with the Plaintiffs and was therefore not responsible for any fulfilment of the terms and conditions of the SPAs. There was no contractual relationship between the Plaintiffs and Woolley;

43.6 Woolley had issued a letter dated 28.5.2001 (D7) to the Plaintiffs informing them that Woolley had been appointed by Cherating to rehabilitate the abandoned Project and advised the Plaintiffs to call to fix an appointment;

43.7 on 10.11.2001, Woolley had issued a letter (D11) to the Plaintiffs urging them to confirm in writing whether they intended to purchase the Properties, failing which Woolley would deem the Plaintiffs were no longer interested in the Properties;

43.8 Woolley denied the Plaintiffs’ allegation that Woolley had agreed to inform the Plaintiffs of the progress of the Project and the Schedule of Payment;

43.9 Woolley also denied the Plaintiffs’ allegation that they were able and ready to pay the balance purchase price.

I. AT THE HIGH COURT

[44] 3 issues were determined by the learned Judge as follows:

44.1 whether there exists a legal and binding contractual relationship between the Plaintiffs and Woolley;

44.2 whether Woolley is successor in title or permitted assign of Cherating, thus bound by the terms and conditions of the SPAs; and

44.3 whether the SPAs can be specifically enforced against Woolley.

[45] The learned High Court Judge, in answering all the three issues, referred to the letter dated 28.5.2001 (D7), which is reproduced below.

“28th May 2001

Mr Tan Boon Seng & 3 others
No. 58, Lorong 1/4A,
Taman Wira Jaya
08000 Sungai Petani
Kedah

Re: PURCHASE OF SHOP OFFICE UNIT AT RAJA UDA COMMERCIAL CENTRE, BUTTERWORTH, SEBERANG PERAI UTARA

Reference is made to the above matter.

We are pleased to inform you that M/s Woolley Development Sdn Bhd is taking over and rehabilitating the abovementioned project from the previous developer, M/s Cherating Development Sdn Bhd.

As purchaser(s) of the above project, you are invited to our office for a further discussion and would appreciate if you could call our Miss Dorothy or Miss Gan at 04-323 8199 for an appointment.

We look forward to seeing you soon!

Thank you.

Yours faithfully
WOOLLEY DEVELOPMENT SDN. BHD.

Sgd.
Dorothy Wang
Business Development Manager’

The learned High Court Judge found that, when D7 read together with the Transfer Agreement, Woolley was the successor in title and permitted assign of Cherating. However, the learned Judge also found that in view of the peculiar factual background of the case, Woolley was not bound by Clause 41 of the SPAs (that is, that the SPAs shall be binding on the successors in title and permitted assigns of Cherating). The following was what the learned Judge held at paragraphs 42 and 43 of the Grounds of Judgment:

"42. So, the second Defendant [Woolley] is the successor in title or permitted assign of the first defendant [Cherating]. Is the second defendant thus bound by the said clause 41 of the original S&P Agreements? (exh P1 A­D). For the peculiar factual background of this case, I take the view that the answer is in the negative. It must necessarily be so, for to rule otherwise it would have lead to an absurdity and injustice to the second defendant as it would have upon the execution of the said Transfer Agreement, immediately and readily be liable to be sued for late delivery as stipulated in clause 7 thereto which spelled out the period of delivery of vacant possession being 36 months. It must be remembered that at the time the second and first defendant executed the said Transfer Agreement on 20.9.200[0], the said period of 36 months had long lapsed, that was on the 3.1.2000. Hence, the need for novation of the S&P Agreements as stipulated in clause 4(e) (vii) thereto as was so executed by the 94 other existing purchasers with the first defendant as explained by DW3.

43. Therefore, the failure of the second Defendant to provide the novation agreement with the existing purchasers within 30 days from the execution of the said Transfer Agreement, must to my mind be viewed with the facts that the plaintiffs had refused to continue with their said S&P Agreements with the second defendant. Clearly, such object of rehabilitation can only to my mind be achieved upon the execution of the novation agreement by the first and second defendant with the existing purchasers. Therefore, until and unless the novation agreement is executed with the existing purchasers, the second defendant cannot be said to have automatically be bound by the terms and conditions of the S&P Agreements between the existing purchasers and the first defendant. The novation agreement must be first executed where parties can novate, alter or rescind the terms of existing S&P Agreements-for example the deposit that had been paid to the first defendant be considered as part of the purchase price of the units to be rehabilitated by the second defendant and the period of the delivery of vacant possession be extended or be calculated from the time of the execution of such novation agreement.”

[46] In short, the learned Judge found that as there was no novation agreement executed between Cherating, Woolley and the Plaintiffs, Woolley was not bound by the SPAs.

[47] With regard to the Plaintiffs’ assertions that they were never told by Woolley about the need for the Plaintiffs to enter into a novation agreement but were instead, as contended by the Plaintiffs, told to wait for the notice of the progressive payment to be sent out by Woolley, and that the Plaintiffs had never received the ultimatum letter D11 dated 10.11.2001, the learned Judge chose, on the balance of probabilities, to believe Wooley’s version of the matters. The learned Judge found that-

47.1 although the Plaintiffs’ address as stated in D11 was clearly different from the Plaintiffs’ address as stated in the SPAs, but the address as stated in D11 was the same address as used by Woolley in the letter. D7 to the Plaintiffs’ and which had not been disputed to have been received by the Plaintiffs;

47.2 the Plaintiffs had failed to revert with the conclusive option whether to continue or not with the purchase of the Properties after asking for time to so decide and after being served with the ultimatum letter D11. For ease of reference, D11 is reproduced as follows:

“Date: 10 NOV 2001

Tay Boon Seng & Tay Hong San &                                       By Registered Mail

Tay Boon Kuang & Tay Lay Eng &

Tay Boon Siang

No. 58, Lorong 1/4A,

Taman Wira Jaya,

08000 Sungai Petani.

Re REHABILITATION OF RAJA UDA COMMERCIAL CENTRE, JALAN RAJA UDA, BUTTERWORTH NOW KNOWN AS WOOLLEY AVENUE, BUTTERWORTH Sale & Purchase Agreement dated 3rd January 1997 between Tay Boon Seng & Tay Hong San & Tay Boon Kuang & Tay Lay Eng & Tay Boon Siang and M/s Cherating Development Sdn Bhd for property known as: Parcel No. 73A (Ground, 1st, 2nd, 3rd Floor), Block G, Phase 2, Raja Uda Commercial Centre

Reference is made to the above and our letter dated 28th May 2001 to you, a copy is enclosed for your easy reference.

We have informed you that we have entered into inter alia an Agreement for Transfer of Land dated 20 September 2001 with Cherating Development Sdn. Bhd. (CDSB) and a Novation Agreement with CDSB and Malaysia Building Society Berhad, for the rehabilitation of the abandoned project called Raja Uda Commercial Centre now known as Woolley Avenue to be erected on part of Lot Nos 290, 198, 374, 784, 786, 788 all of Seksyen 2 Bandar Butterworth District of Seberang Perai Utara, Pulau Pinang comprised in Geran No. Pendaftaran 15113, 4500, 14423, 4501, 4502 & 4503 respectively and Lot Nos 564, 670, 674, 1961, 5, 6, 180, 1116 all of Seksyen 3 Bandar Butterworth District of Seberang Perai Utara, Pulau Pinang comprised in Geran No. Pendaftaran 15168, 4510, 4511, 13786, 4508, 13528, 4509, 41165 respectively (the Land).

The parties are in the process of effecting the transfer of the Land from CDSB to us. All relevant parties have duly executed all the necessary transfer forms in Borang 14A under the National Land Code and they are in our solicitors’ possession pending removal of private caveats for registration of transfer.

Further to the Meeting held between your goodself and our Business Development Manager, Ms Dorothy Wang on 1st June 2001, you are requested and have promised to revert to us whether you are interested to continue with the purchase of the shop office. However, we regret to note that you have failed to favor us with a reply till to date.

TAKE NOTICE that unless you let us have your written confirmation as to whether you are still interested in purchasing the shop office within fourteen (14) days from the date hereof, it is deemed that you have unconditionally and irrevocably waived your title rights interest in respect of the shop office and we shall have the liberty to dispose off the shop office to anyone without further reference to you.

Yours faithfully

WOOLLEY DEVELOPMENT SDN BHD

Sgd.

………………………………………
Director

Encl/-

c.c. Cherating Development Sdn Bhd
Malaysia Building Society Berhad”

47.3 there was no reason for DW3 to inform the Plaintiffs to wait for the notice of the progressive payment when the Transfer Agreement clearly provided that the novation agreements that were to be executed with the existing purchasers was a condition precedent before the rehabilitation works could commence;

47.4 there was no reason for Woolley to turn the Plaintiffs away knowing very well that the Plaintiffs were ready buyers of the Properties to be rehabilitated.

[48] The learned High Court Judge therefore dismissed the Plaintiffs ’ claim in its entirety with costs of RM 20,000.00 awarded to Woolley. The Plaintiffs now appealed to this Court against that decision.

J. DECISION OF THE COURT

[49] The Plaintiffs’ main ground of appeal was that the learned High Court Judge had seriously erred in law for breaking the doctrine of stare decisis by refusing to follow this Court’s decision in Mikien’s case (supra) where the majority decision found that Woolley had never disputed it was the successor in title and permitted assign of Cherating, thus by virtue of Clause 41 and Clause 38(f), the SPAs were binding upon Woolley. Even though in this case the learned Judge made a finding that Woolley was the successor in title to Cherating, he, however, failed to hold the SPAs were binding on Woolley. In doing so, the learned Judge had departed from this Court’s decision in Mikien’s case and therefore the learned Judge’s decision was plainly wrong in law and should be corrected on appeal.

[50] As we had indicated before, and as found by the learned High Court Judge, the facts in Mikien’s case could be distinguished from the facts of this case. In the Mikien’s case, this Court had dismissed Woolley’s appeal primarily for failing to dispute a positive averment by Mikien (raised in affidavit in the course of the Summary Judgment application) that Wooley was the successor in title and permitted assign of Cherating and that the purchase price had been paid in full. Unlike Mikien’s case, in this case Woolley had categorically disputed the Plaintiffs’ assertion that the SPAs were binding by virtue of Clauses 38 and 41 therein and specifically pleaded that the Plaintiffs had no right to enforce the SPAs against Woolley. The learned High Court Judge similarly had this to say on Mikien’s case, at paragraphs 36 and 37 of the Grounds of Judgment, and we agreed with him-

"36 There can be no doubt that by doctrine of ‘stare decisis’, this court is bound by the decision of the higher court. Nevertheless, upon carefully reading the judgment of the said Mikien’s case, which was a judgment arising out of that affidavit based application under Order [81] [sic] of RHC, it is observed that the majority decision in affirming the decision of the High Court in allowing such application is premised upon the fact that Wooley there had never disputed by not replying the Mikien’s affidavit which averred Woolley being the successor in title and permitted assign of Cherating. It was upon this undisputed fact that the majority decision held that Woolley was thus bound by the terms of the S&P Agreements and that it was untenable for Woolley to claim that there was no privity of contract between Mikien and Woolley. As to the question of novation, it was held by the majority decision that it is one of facts and not of law. Woolley was barred by the Court of Appeal from arguing on this point of facts since the same was not raised before the High Court.

37. So, it is clear therefore that I am only bound by the majority decision in that Mikien’s case in so far as it was held that the point of novation was one of facts and not of law.”

[51] With regard to the issue of the Plaintiffs’ refusal to enter into novation agreements with Woolley, it was argued by the Plaintiffs in the main that-

51.1 the learned High Court Judge had misdirected himself in holding that there were novation agreements entered between Woolley and the other purchasers when a perusal of the oral and documentary evidence clearly proved to the contrary;

51.2 Woolley only wrote to the Plaintiffs vide letter D7 dated 28.5.2001 informing them that Woolley had taken over the Project from Cherating;

51.3 the Plaintiffs denied receiving the ultimatum letter D11 as the address therein was the wrong address of the Plaintiffs under the SPAs;

51.4 the learned Judge was wrong in qualifying the admission of Woolley’s witness, DW2, that the ultimatum letter D11 was a termination letter of the SPAs and holding that D11 was merely asking the Plaintiffs whether they intended to proceed with the purchasers or not;

51.5 Woolley had, by sending D11 to the Plaintiffs, wrongfully terminated the SPAs and in clear breach of the SPAs had sold the Properties to third parties.

[52] As we had earlier stated, it is trite law that an appellate court should be slow to intervene/ overturn the finding of facts by the trial judge. Having perused the appeal record and submissions of the parties, we did not see any need to differ from the learned High Court Judge’s findings of facts as alluded to in paragraphs 45, 46 and 47 above. Moreover, the Plaintiffs could not reprobate and approbate the ultimatum letter D11 in the sense that they had denied receiving it (which we agreed with the finding of the learned judge that they did receive it) and yet went on to argue at length that D11 was a termination letter of the SPAs and that Woolley had wrongfully terminated the SPAs and sold the Properties to third parties (see Affin Bank Bhd v Mohd Kassim Ibrahim [2013] 1 CLJ 465; Tan Hood Keng v ARP Aroonasalam Chetty [1934] MLJ 166; Vershures Creameries Ltd. v Hull and Netherlands Steamship Co. Ltd. [1921] 2 K.B. 608).

[53] In view of the above, we found there were no merits in this appeal and we unanimously dismissed Appeal 774 with costs of RM 15,000.00 to Woolley/ Respondent. We ordered the deposit be refunded.

K. CONCLUSION

[54] Based on our reasonings in respect of each Appeal we therefore unanimously decided as follows:

54.1 in respect of Appeal 1822, the appeal was dismissed with costs of RM 15,000.00 to Woolley/ the Respondent and the deposit be refunded;

54.2 in respect of Appeal 1236, the appeal was dismissed with costs of RM15,000.00 to Woolley/ Respondent and the deposit be refunded;

54.3 in respect of Appeal 774, the appeal was dismissed with costs of RM 15,000.00 to Woolley/ Respondent and the deposit be refunded.

Sgd.

UMI KALTHUM BINTI ABDUL MAJID
Judge
Court of Appeal Malaysia
Putrajaya

Dated: 11 January 2018

COUNSEL

Appeal No. P-02-774-2011

For the Appellant: Balvinder Singh Kenth together with S. Annie Santha from Messrs. S. Annie & Associates

For the Respondents: Cyrus V Dass together with Prakash Lachimanan, Syed Ismit Putra and Malarvily Perumal from Messrs. Mathews Hun Lachimanan

Appeal No. W-02-1822-2011

For the Appellant: Haji Sulaiman Abdullah together with Goik Kenzu and Goik Ah Kim from Messrs. Nasir, Kenzin & Tan

For the Respondents: Cyrus V Dass together with Prakash Lachimanan, Syed Ismit Putra and Malarvily Perumal from Messrs. Mathews Hun Lachimanan

Appeal No. W-02-1236-06/2012

For the Appellant: Haji Sulaiman Abdullah together with Ramesh Sivakumar and Goik Ah Kim from Messrs. Ramesh & Loo

For the Respondent: Cyrus V Dass together with Prakash Lachimanan, Syed Ismit Putra and Malarvily Perumal from Messrs. Mathews Hun Lachimanan

Legislation referred to:

Contracts Act 1950, Section 26

Rules of the High Court 1980, Order 81

Judgments referred to:

Affin Bank Bhd v Mohd Kassim Ibrahim [2013] 1 CLJ 465

Beldeu Singh v Dr. Kenneth Abdrew [2011] 4 MLJU 769

China Airlines Limited v Maltran Air Corporation Sdn. Bhd. [1996] 3 CLJ 161

Lee Ing Chin @ Lee Teck Seng & Ors. v Gan Yook Chin [2003] 2 MLJ 97

Multar v Lim Kim Chet [1982] 1 MLJ 184

Tan Hood Keng v ARP Aroonasalam Chetty [1934] MLJ 166

Vershures Creameries Ltd. v Hull and Netherlands Steamship Co. Ltd. [1921] 2 K.B. 608

Woolley Development Sdn. Bhd. v Mikien Sdn. Bhd. [2008] 2 CLJ 303

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