FABER MERLIN
(M) SDN BHD & ORS V. LYE THAI SANG & ANOR
TAN KIM CHUA REALTY (M) SDN BHD V. LYE THAI SANG & ANOR
FEDERAL COURT [JOHORE BAHRU]
CIVIL APPEALS NOS 79 AND 90 OF 1984
ABDUL HAROLD, CJ (MALAYA), WAN SULELNUM, J & SEAH, SCJJ
11 MARCH 1985, 18 MAY 1985
Wan Suleiman S CJ
(delivering the Judgment of the Court): The two appeals, FCCA 79/84 and FCCA
90/84 were heard together. The appellants in FCCA 79/84 being defendants
Nos. 2, 3 & 4 and the appellant in FCCA 90/84 defendant No. 1 in the court
below.
It would be convenient to refer to appellant in FCCA 90/84 as 1st appellant
and to those in FCCA 79/84 as 2nd, 3rd & 4th appellants respectively. The
following are the facts as found by the learned trial Judge, and are not
disputed in this appeal. 1st appellant is the owner of a multi-storey
complex, the Merlin Tower Johor (herein after referred to as "the complex").
On April 1, 1977 it entered into an agreement with the plaintiffs (Pages 17
to 30 of the Records in FCCA 79/84) by which it sold to them a parcel in the
complex, No, 212 on the second floor.
On or about July 1980, it sold the complex to the 2nd appellant. 3rd
appellant then became the owner of the podium block and the office units.
4th appellant later acquired the hotel lobby and the car parks. Apart from
the transaction between the respondents and 1 st appellant it is not clear
precisely when 2nd, 3rd and 4th appellants made their respective
acquisitions.
Under Clause 8.04 of the agreement, it is provided that certain parts of the
complex is "common property". Subsequently the 1st appellant built a
mezzanine floor within the 24 feet void between the roof garden and the
fifth floor, and converted a portion of the ground floor passageway into a
hotel lobby. It sold to 2nd appellant the basement car parks, the mezzanine
floor and the hotel lobby. The latter later transferred them to the 3rd and
4th appellants. The 3rd appellant then applied for separate titles for the
car park, mezzanine floor, the hotel lobby and the roof garden.
The respondents asserted that these places were "common property" under the
agreement and by way of Originating Summons asked for a declaration to that
effect; and further declarations that the construction of the mezzanine
floor and the conversion of the void into a hotel lobby were unreasonable as
contrary to Clause 1.01(f) alternatively, the sites chosen were common
property; that the sale of the property to the 2nd and the other appellants
were ultra vires the agreement and void.
They also sought to obtain an injunction to restrain the 3rd appellant from
applying for the issue of separate titles and for applying to the
authorities for further amendments to the building plan under the agreement,
and a further declaration that pursuant to clause 1.01(2)of the agreement,
the 3rd appellant should render accounts showing how the service charges for
respondents' parcel as well as those for the other parcels in the complex
are determined.
The learned trial judge listed four issues for determination between the
parties:—
(a) whether the car parks are "common property" within the meaning of the
agreement;
(b) whether the mezzanine floor, hotel lobby and the roof garden were sited
on the common property. If they were, whether the amendments made to the
plan which render them not common property were ultra vires the agreement;
(c) whether the plaintiffs were entitled to an account levied on the service
charges;
(d) whether the delay in bringing the action defeats the plaintiffs' case.
The following acts were agreed upon before the hearing in the court below:—
(1) The original approved building plan submitted by the First Appellant did
not have the hotel lobby and mezzanine floor.
(2) The amended approved building plan submitted by the First Appellant was
approved on October 30, 1979. It contained amendments sought by the First
Appellant. The amendments were the inclusion of the hotel lobby and
mezzanine floor.
(3) The First Appellant had applied for strata titles on May 25, 1978 and no
application was made for strata titles for the following areas — the
basement car parks, the hotel lobby and the mezzanine floor. There is fresh
application for strata title for the three areas and the roof garden.
The learned trial judge found in favour of the respondents on all counts and
made an order in terms of their prayers in the Originating Summons.
Raja Abdul Aziz for the appellants (Mr. Balarajah for 1st appellant having
adopted his submission in its entirety) listed the four principal issues in
a somewhat different form but since these are substantially the same as the
four dealt with by the learned trial judge and received without demur by
counsel for the respondents, we should adopt this version.
First, which part of the complex constitutes "common property".
Clause 1.01(j) of the agreement reads: "wherever used in this agreement,
unless the context shall otherwise require the following expression shall
have the following meanings:—
(j) 'common property' means in relation to this Multi-Storey Complex that
portion or portions of the Said Lot on which the Multi-Storey Complex stands
together with so much of the Multi-Storey Complex as is excluded from the
individual parcels of business and office premises but excludes the basement
car parks."
The learned trial judge reasoned that the second negative must necessarily
qualify and govern the clause immediately preceding it and not the prior
main clause. As a result he decided that the basement car park was part of
"common property".
The respondents had tried to introduce evidence of subsequent conduct, a
move which found favour with the trial judge and such evidence clearly had
the effect of fortifying his earlier view. It relates to that part of the
agreed facts wherein it was admitted that whilst 1st appellant applied for
strata title on May 25, 1980, no application was made for strata title for
the three areas contended to be common property including the basement car
parks until somewhat later.
Respondents had also sought to introduce evidence to the effect that the
Managing Director of the 1st appellant had, at the time respondents had
purchased the property, said that the basement car parks were not for sale
and that the income derived therefrom would be used to subsidise the service
charges.
Raja Abdul Aziz relies on the rule reiterated in Wickman Tools v Schuler A G
[1974] AC 235, 261 (at Page 261) which reads,
"The general rule is that extrinsic evidence is not admissible for the
construction of a written contract; the parties' intentions must be
ascertained, on legal principles of construction, from the words they have
used."
Section 92 of the Evidence Act is substantially to the same effect. Learned
Counsel for respondents contends that section 92 (f) of the Act — "any fact
may be proved which shows in what manner the language of the document is
related to existing facts" permits him to refer to that part of the agreed
facts (Pages 2 and 3 of Supplementary Appeal Record) wherein 1st appellant
had made a separate application for strata title to the basement car parks,
hotel lobby mezzanine floor and roof garden as an aid to construing the
agreement.
We are not persuaded that there is any ambiguity in that part of the
agreement which would justify ignoring the general rule against admission of
extrinsic evidence.
Given its simple grammatical construction therefore common property is (1)
the portion or portions of the Lot on which the Multi-Storey Complex stands;
(2) the remainder of the complex itself, minus (i) the individual parcels of
business and office premises, and (ii) the basement car parks.
Secondly, what are the respective rights of purchaser and vendor to
common property?
It is not in dispute that strata titles have as yet never been issued in
this country, and that no register of strata titles exists. The importance
of this fact is that the provisions of the National Land Code is irrelevant
for the purpose of construing this agreement so that we would have to
confine ourselves to the agreement itself to determine the rights of the
parties.
The learned trial judge was of the view that clause 8.04 gave the purchasers
unrestricted right to use the common property, despite clause 1.01(f)
thereof which entitles the vendor to make reasonable amendments to the
building plan, and clause 10.02 which says that any amendments to the
building plans shall not annul this contract of sale nor be subject to any
claims for damages or compensation by or against, any party to this
agreement.
Clause 8.04 deserves to be set out in full and reads:—
"The Vendor undertakes that subject to such restriction of use which the
Vendor or the Management Corporation may deem fit to impose the parcel is
sold and that all other parcels shown on the Floor Plan are also sold
TOGETHER with the free right and liberty for the Purchaser and his servants
agents licensees and invitees in common with the Vendor and all other
persons having the like right and] liberty at all times and for all purposes
whatsoever connected with the use and enjoyment of the parcel or other
parcels shown on the Floor Plan to pass and repass along over and upon all
the Common Property TOGETHER also with the full right and liberty to make
all necessary connections and thereafter to use in a proper manner the drain
pipes cables or wires laid or constructed by the Vendor under or over the
Said Lot for the purpose of the supply of water electricity and telephone
services to and for drainage of water from the parcel."
For the appellants it was urged that certain clauses of the agreement, for
example clause 7.01 — payment of outgoings, clause 7.08 — restriction to
alteration of parcel, claus 7.10 — restriction to use of parcel and clause
8.04 itself as being some of a number of restrictions which the vendor can
impose on the purchasers (respondents). It follows that there being not as
yet a Management Corporation, the construction of the mezzanine floor and
the hotel lobby are such restrictions to the common property which the
vendor can impose under clause 8.04.
Moreover the specific provisions permitting amendment to the plan viz.
Clauses 1.01(f) and 10.02 have not been given due weight by the learned
judge in his consideration of respondents' rights to common property under
clause 8.04.
Though we agree with Mr. Lee that the words "use and enjoyment" in clause
8.04 does not merely mean the right to pass and repass, they most certainly
do not confer the outright proprietor's rights which both the learned trial
Judge and respondents appear to think these words confer. We are satisfied
clause 8.04 defines respondents' entitlement with sufficient clarity. With
respect we would also differ from the learned trial judge and hold that the
combined effect of clauses 1.01(f) and 10.02 would be that reasonable
amendments to the building plans are things respondents had agreed from the
very start to accept without demur.
Indeed, apart from such reasonable amendments which the latter two sections
allow, clause 8.04 itself makes respondents' rights to "use and enjoyment"
subjected to "such restrictions as the vendor or Management Corporation may
deem fit to impose".
Thus we find ourselves unable to accept the learned trial judge's view that
only such amendments to the building plan as would enhance the value of the
existing rights of the respondents are permissible.
To succeed, the respondents would have to show that the amendments were
unreasonable, which in the circumstances we find that they have not
succeeded in doing.
We would therefore hold that the 1st appellant was within his right under
the agreement in carrying out those amendments to the building plan
resulting in the construction of the hotel lobby, the mezzanine floor and
the roof garden;
Service charges — whether vendor or owner i.e. 1st appellant should render
accounts for the purpose of service charges.
Service charge is defined in clause 1.01(1) and the rate is determined by
the vendor under clause 7.11.
Raja Abdul Aziz submits that since the provision of the National Land Code
does not apply at the moment, there is no question of accounts being
provided by the 1st appellant to the respondents as purchaser, as required
by them in the Originating Summons.
The respondents clearly had in mind the provision of section 364(4) of the
National Land Code which is set out hereunder:—
"The management corporation shall on the application of a subsidiary
proprietor or any person or body authorised in writing by him certify —
(a) the amount of any contribution determined as the contribution of that
proprietor;
(b) the manner in which the contribution is payable;
(c) the extent (if any) to which the contribution has been paid; and
(d) the amount of any rate paid in respect of that proprietor's parcel by
the management corporation under section 367 and not recovered by it
and in favour of any person or body dealing with that proprietor the
certificate shall be conclusive evidence of the matters certified."
We are inclined to agree with counsel. Service charges are governed here
only by the terms of the agreement, and we can see no reason to justify
making such declaration. Under the present circumstances, it is the vendor
who will determine it and until the parcel has been given its "share value"
on the issue of a subsidiary title under section 157 of the National Land
Code, service charges will have to be determined by the vendor. We cannot
agree with Mr. Lee that because this "share value" for the parcel has not
been determined, service charges cannot likewise be determined. Envisaging
delay in the issue of subsidiary titles, provision has been made for its
determination by the vendor under clause 1.0 l(i).
Fourthly are respondents entitled to the various declarations they seek?
It was argued on behalf of the appellants that declaratory judgment being an
equitable remedy should be governed by equitable principles. We referred to
The Declaratory Judgement by I. Zamir (1962), at Page 191 the relevant part
of which reads:
'The equitable origin, however, has left its mark on the remedy. This is
especially evident in its discretionary nature. This discretion is employed
… primarily to do justice in the particular case before the court … In
another action, the court held that the plaintiff had waived his right to
take the proceedings and, further assumed that the claim might also be
dismissed on the ground of undue delay ("laches")."
The learned Judge had been mistaken, counsel said, when he noted (at Page
184 of the Records) "that no plea was ever made in any of the defendants'
affidavits that the plaintiffs be estopped from bringing the action because
they were guilty of laches". The Assistant Manager for the 3rd appellant had
in his affidavit raised this very point, having alleged that the
respondents, being aware since at least 1978 of the existence of the
mezzanine floor and the hotel lobby had been guilty of laches or undue delay
in taking no steps to claim relief until the filing of the Originating
Summons on May 23, 1983. As in Dyson v A G [1911] 1 KB 410, 417 we are urged
to consider, in the exercise of our discretion whether to make this
declaration or not in the circumstances of this case, particularly since
granting the declaration would amount to an order for the demolition of the
lobby and mezzanine floor.
Mr. Lee's reply to this is that if at all, there is any defence to delay in
the present appeal it will be limitation rather than laches. Even then only
1st appellant can possibly raise it, since his agreement with respondents
was executed on April 1, 1977. Presumably even 1st appellant cannot do so
because any breach of the contract would be within the 6 years limitation
period. This argument we would reject outright for section 32 of the
Limitation Act 1953 states that:
"Nothing in this Act shall affect any equitable jurisdiction to refuse
relief on the ground of acquiescence, laches or otherwise."
The answer to the first two issues would make it quite superfluous to deal
with this issue.
In any case, even if an answer to this latter two issues had been otherwise,
there is evidence of laches, acquiescence and delay on the part of
respondents so that discretion should not be exercised in their favour.
For these reasons we would allow this appeal with costs.
