|
MAJOR INDAH SDN
BHD V. HOMENG REALTY SDN BHD
:HIGH COURT [KUALA LUMPUR]
MOHD GHAZALI MOHD YUSOFF, J
[GUAMAN SIVIL NO: D1 - 22 - 2415 TAHUN 1999]
19 FEBRUARY 2000
DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR
(BAHAGIAN DAGANG)
GUAMAN SIVIL NO: D1 - 22 - 2415 TAHUN 1999
MAJOR INDAH SDN BHD (dahulunya dikenali sebagai SERAMPAI TARAF SDN BHD)
PLAINTIF
DAN
HOMENG REALTY SDN BHD
DEFENDAN
ALASAN PENGHAKIMAN
The dispute between the plaintiff and the defendant arose out of a
joint-venture agreement ("the JV agreement") entered into between the
parties on 23 April 1999 to develop a housing project known as Sentul Indah
comprising of 374 units of apartments and 19 units of shophouses ("the
project"). Pursuant to the falling out
between the parties the plaintiff filed this action on 2 September 1999
praying for the following reliefs -
(1) an injunction to restrain the defendant from representing or holding
themselves out to be the sole developer of the project to the exclusion of
the plaintiff;
(2) an injunction to restrain the defendant from advertising the project for
sale to the public or to solicit enquiries from the public by way of
advertisements in newspapers, pamphlets, advertisement/signboards or
otherwise without the express approval or concurrence of the plaintiff and
in this respect to remove or take down any advertisement/signboards if any
that may have been erected advertising the project for sale to the public or
to solicit enquiries from the public;
(3) an injunction to restrain the defendant from receiving or accepting any
payments whether in the form of booking fees, deposit payments or other
payments from any purchasers or prospective purchasers or other third
parties in respect of the project without the express approval or
concurrence of the plaintiff;
(4) an injunction to restrain the defendant from awarding any contract or
tender to any third party or from appointing any contractor, engineer,
architect, worker or anyone else to commence any work related to the project
without the express approval or concurrence of the plaintiff;
(5) an injunction to restrain the defendant from commencing or continuing
with any work concerning or related to the project without the express
approval or concurrence of the plaintiff;
(6) an order for specific performance of the JV agreement;
(7) damages;
(8) in lieu of specific performance, judgment for the sum of RM944,015-15
together with interest at the rate of 8% per annum from the date of this
writ till full payment;
(9) costs.
Simultaneously the plaintiff filed an ex-parte application praying
for interlocutory orders in the form similar to prayers
(1) to (5) as laid down above. When the ex-parte application came up
before me on 20 September 1999, I ordered that the matter be heard inter-partes.
The plaintiff consequently served the cause papers on the defendant. The
matter was heard on 20 November 1999 and on that date I allowed the
plaintiff's application for the said interlocutory orders. Against that
decision the defendant has appealed.
The facts show by a written agreement dated 18 March 1991 ("the first
agreement") and entered into between one Region Dynamic Sdn Bhd and the
owners of land held under GM No. 1167 Lot No. 4028 and GM No. 1168 Lot No.
4029 both in the Mukim of Batu, Wilayah Persekutuan ("the land"), it was
inter alia agreed that Region Dynamic Sdn Bhd would undertake the
development of the project to be erected on the land subject to the terms
and conditions as contained therein. By another written agreement dated 4
April 1994 ("the second agreement") and entered into between Region Dynamic
Sdn Bhd and the
defendant, Region Dynamic Sdn Bhd assigned all its rights, benefits and
interests under the first agreement to the defendant subject to the terms
and conditions as contained therein. After the execution of the second
agreement, the defendant launched the project and sold approximately 96
units of apartment under the project and collected the 10% deposit payable
respectively for those units.
By a written joint-venture agreement dated 23 April 1999 and entered into
between the plaintiff and the defendant, i.e, the JV agreement, it was,
inter alia, agreed that the defendant would jointly with the plaintiff
undertake the development of the project subject to the terms and conditions
as contained therein. The following are the salient terms and conditions of
the JV agreement -
(1) that the plaintiff and the
defendant shall jointly undertake the project (clause 1);
(2) that the plaintiff shall pay to the defendant a sum of RM150,000-00 in
3 instalments (clause 2) as follows:-
(a) RM50,000/- to be paid on
signing of the agreement, receipt of which the defendant acknowledges;
(b) RM50,000/- to be paid within 30 days after all the
squatters/occupants on the land has vacated the premises; and
(c) RM50,000/- to be paid within 30 days upon commencement of piling
works;
(3) that all expenses incurred
subsequent to the JV agreement shall be borne and paid by the plaintiff
until the financier bank releases payment for construction cost under the
loan agreement or from progress payments received (clause 5);
(4) that the defendant confirm all the building layout plans have been
duly approved by the relevant authorities and currently still valid@
(clause 6);
(5) the basis of the joint development of the project would be 50:50 in
respect of costs and net profits (clause 8(a));
(6) the balance payment of compensation to squatters on the land amounting
to RM745,000-00 shall be paid by the plaintiff and shall form part of the
costs of the project (clause 8(c));
(7) that both parties shall
jointly undertake the organising and management pertaining to the award of
contracts, which shall be based on the lowest tendered price or otherwise
as shall be agreed by both parties, as well as the appointment of
consultants and other related professionals as well as the administration
of the project for its speedy and efficient completion (clause 8(d));
(8) that all payments from the sale of units in the project shall be
deposited into the designated project account as required under the
Housing Developers (Control and Licensing) Act 1996 and the signatories to
the payment approvals and cheques shall be jointly by one representative
each from the plaintiff and defendant (clause 8(e));
(9) that the land and the project are Asubject to encumbrances to Sime
Bank Bhd@ (clause 11);
(10) that both parties shall not do or permit to be done any acts or
matters or things which may adversely affect the development of the
project or the interests of the parties thereto (clause 12).
It is the plaintiff's case that
their obligation was to finance the project and todate they have spent
approximately RM944,015-15 in respect of the project, viz.:-
(a) deposit paid upon execution
of the JV agreement - RM50,000/-;
(b) compensation payments made to squatters on the land - RM725,000/-;
(c) monthly payments of RM10,000/- towards the project - RM30,000/-;
(d) interest payment paid to Sime Bank Bhd on behalf of the defendant -
RM85,735-15;
(e) deposit and advance rental for sales/administration office at No. 34-3
(3rd Floor), Jalan 14/48A, Sentul Raya Boulevard, 51000 Kuala Lumpur -
RM3,600/-;
(f) application fees and deposit paid to Dewan Bandaraya Kuala Lumpur for
the erection of an advertisement board together with the fees for making
application - RM6,080/-;
(e) refund paid to purchasers of three (3) units sold earlier under the
project before the JV agreement - RM43,600/-.
The plaintiff then claim of late
they experienced a falling out with the defendant due to the following
reasons:-
(1) by Ietter addressed to the
plaintiff dated 6 July 1999, the defendant enclosed a notice from Sime
Bank which was addressed to the defendant demanding payment of overdue
interest in respect of a bridging loan granted to the defendant for the
project as well as a notice of acquisition from Danaharta Managers Sdn Bhd
(ADanaharta@) dated 10 June 1999 stating that all rights and interests in
the credit facilities offered by Sime Bank to the defendant has been
acquired by Danaharta; the defendant requested the plaintiff to pay for
the said amount of overdue interest;
(2) the plaintiff responded to that letter by way of letter dated 7 July
1999 wherein they expressed dissatisfaction with the defendant's conduct
in keeping from them the notices from Sime Bank and Danaharta and
contended they cannot be held accountable for the defendant's operations
of their bank accounts; nevertheless, the plaintiff, in order to assist
the defendant and also in order not to jeopardize the project agreed to
pay the outstanding interest of RM85,713-15 to Sime Bank upon receiving
verbal confirmation from the defendant that the said credit facilities
were still available;
(3) by letter to the plaintiff dated 17 July 1999, the defendant enclosed
several notices of payments from several parties and asked the plaintiff
to pay the same;
(4) by letter to the defendant dated 20 July 1999 the plaintiff reiterated
the relevant clauses in the JV agreement concerning the appointment of
contractors and the awarding of contracts relating to the project and
insisted they will not be responsible for contracts awarded or contractors
appointed without their express concurrence; they also requested that a
meeting be held to address the above issue as well as the following
matters, namely -
(a) the fact that the
development order for the project and hence the buildings plans has long
expired and has not been renewed to date;
(b) the defendant's failure todate to supply them with a list of
end-purchasers of the project together with receipts,
income and expenditure account relating to the project despite the fact
that the same should have been delivered to them within 7 days of the
execution of the JV agreement;
(5) by letter addressed to the
plaintiff dated 29 July 1999, the defendant made the following
allegations:-
(a) the plaintiff had met one
Mr Tai from Sime Bank after the execution of the JV agreement wherein it
was confirmed that the bridging loan facilities could still be utilised;
(b) that the appointment of one Rencon Construction Works for fencing
work at a cost of RM45,000/- was approved by the plaintiff;
(c) that the appointment of one Bumimetro Engineering Sdn Bhd to conduct
soil tests has been approved by both parties and no letter of award was
required;
(d) that the plaintiff had been given the quit rent and assessment
receipts and could pay the same even if the same were missing;
(e) that a copy of the application for the renewal of the development
order as well as the architect's letter was given to the plaintiff upon
execution of the JV agreement;
(f) that the list of end-purchasers of the project together with
receipts, income and
expenditure account, permits and licence relating to the project have
been given to the plaintiff upon execution of the JV agreement;
(g) that the land has been handed over to the defendant free from any
squatters;
(h) that the decision of the plaintiff not to release any more payment
in respect of the project, after the meeting with Danaharta, constituted
a breach of the JV agreement;
(6) the plaintiff by letter
dated 4 August 1999 replied to the defendant's allegations as follows --
(a) the said Mr Tai of Sime
Bank did not give any information as the defendant did not give written
authorisation as promised; the responsibility for maintaining the
banking facilities with Sime Bank rested solely with the defendant as
the same was solely operated by them and its current condition was not
disclosed to the plaintiff prior to the execution of the JV agreement;
(b) since the development order has long expired, fencing work on the
land would be illegal and that the calling of tenders for fencing work
was only to obtain pricing references; further, the defendant appointed
the person who quoted the
highest price with used fence sheets as opposed to the others who
tendered at lower prices with new fence sheets;
(c) the defendant had failed to approve the draft letter of award for
soil testing prepared by the plaintiff and forwarded to the defendant;
the plaintiff also deny preventing the contractor from carrying out the
work;
(d) the plaintiff deny having been given the quit rent and assessment
receipts;
(e) the plaintiff deny they had been given a copy of the application for
renewal of the development order as well as the architect's letter upon
execution of the JV
agreement; the fact that no development order would mean no project was
hidden from the plaintiff prior to the execution of the JV agreement;
(f) the plaintiff deny having been given a list of end-purchasers of the
project together with receipts, income and expenditure account, permits
and licence relating to the project upon execution of the JV agreement;
(g) the plaintiff has proof that there are still 2 squatter houses
remaining on the land.
The plaintiff also raised the
following issues in the same letter, namely -
(i) that the advertisement
board erected by the defendant on the land advertising the project for
sale lists only the telephone number of the defendant;
(ii) that the plaintiff was not consulted regarding the said advertisement
board which does not contain material information, eg., developer's name,
permit and approved references nor do they agree to the erection of the
same;
(iii) that the plaintiff, whilst denying breaching the JV agreement,
pointed out that in the absence of a valid development order, the units in
the project could not be sold and that this act of the defendant was not
only irresponsible but also illegal.
It is the plaintiff's stand that
todate the defendant has failed, refused or neglected to agree to a meeting
to try and resolve the dispute as requested by them through various letters.
By letter dated 11 August 1999 they wrote to the arbitrator named in the JV
agreement, namely, one Dato' Toh Hock Chew ("Dato' Toh"), a lawyer with the
legal firm of Messrs Amir Toh Francis & Partners, requesting that he call
for a meeting with the defendant to try to solve the dispute. Dato' Toh duly
sent a notice calling for a meeting between the parties to be held on 19
August 1999 but the defendant proposed a date in September 1999 as that date
proposed was unsuitable and simultaneously intimated that they reserve their
right to object to the appointment of Dato' Toh as arbitrator
notwithstanding clause 16 of the JV agreement which read -
"Any disputes or claims
arising out of this Agreement shall, upon failure of an amicable
settlement, be settled by arbitration in accordance with the Arbitration
Act 1952 and both parties hereby agree and irrevocably appoint Dato' Toh
Hock Chew of M/s Amir Toh Francis & Partners to be the arbitrator for the
said arbitration."
The plaintiff complain the
defendant has proceeded unilaterally to advertise the project for sale to
the public by way of erecting the said advertisement board on the land which
only contains the telephone number of the defendant and does not make any
reference to the JV agreement. Further, the defendant has without the
knowledge or approval of the plaintiff appointed one JT Properties as their
agent to market the units under the project.
Meanwhile in a letter to the plaintiff dated 20 August 1999 the defendant
alleged that the plaintiff has breached the JV agreement. The allegations
include the following -
(1) failing to pay the
defendant the sum of RM50,000/- within 30 days of the eviction of all
squatters from the land as required by clause 2(ii);
(2) failing to pay the monthly sum of RM10,000/- as monthly expenses in
respect of office operation cost for the month of August 1999 as required
by
clause 3; clause 3 read -
"It is hereby agreed that the Second Party shall advance to the First
Party the sum of RM10,000-00 per month (Ringgit Malaysia: Ten Thousand
only) as monthly expenses for office operation cost to be commenced from
1st May 1999 and thereafter within the first three (3) days of each month
until the practical completion of the Housing Development. "
(3) failing to pay the outstanding interest due on the said facilities and
hence breaching clause 5; clause 5 read -
"All expenses incurred
subsequent to signing of this Agreement shall be paid by the Second
Party until the financier Bank release payment for construction cost
under the loan Agreement or progress payment being received.";|
(4) failing to pay the
following construction cost of the project -
(i) the sum of RM10,000/-
payable to Wengsan Construction Sdn Bhd in respect of work in clearing
the land;
(ii) the sum RM32,409/- payable to Bumimetro Engineering Sdn Bhd in
respect of soil tests conducted in respect of the project;
(iii) the sum of RM45,000/- payable to Rencon Construction Works for the
fencing works in the project;
(iv) the quit rent and assessment in respect of the said land amounting
to RM37,652-53 thereby breaching clause 5.
In the same letter the
defendant claimed they have incurred the following actual loss and damage
as a result of the breach of agreement, namely -
(a) costs of conducting soil
tests - RM 32,409/-;
(b) costs of fencing works - RM45,000/-;
(c) costs of clearing works - RM10,000/-;
(d) costs of disposing rubbish, trees, undergrowth, etc. - RM16,5000/-;
(e) costs of advertising - RM18,880/-;
(f) quit rent and assessment - RM37,652-53.
Subsequently, in another letter
to the plaintiff dated 27 August 1999 the defendant purported to accept
the "breaches" by the plaintiff and proceeded to forthwith terminate the
JV agreement as well as make a claim for loss and damage arising therefrom.
That letter, inter alia, read -
"We refer to the above matter and to our letter to you dated 20th
August 1999 ("our Letter") which you have yet to reply.
2. We have given you in our Letter notice in detail regarding your many
fundamental breaches of the Agreement which have gone to the root of the
Agreement ("your Breaches"). Our Letter has also stated in detail the loss
and damage suffered by us due to your Breaches and as you are well aware
of, our loss and damage directly consequent to your Breaches are still
continuing.
3. TAKE NOTICE that we have decided to accept your
Breaches and to terminate the Agreement effective from the date of this
letter. Our decision to terminate the Agreement is taken primarily to
ensure that the Project is not further delayed and jeopardized.
4. TAKE ALSO NOTICE that we hereby claim
against you for all the loss and damage arising from your Breaches ("our
Claim").
By letter also dated 27 August
1999 and addressed to the said Dato' Toh, the defendant objected to the
appointment of the latter and informed that unless Dato'Toh disqualifies
himself, they would proceed to apply to court to do so.
It is the plaintiff's claim that the defendant itself has breached the JV
agreement the particulars of which are as follows -
(1) the development order in
respect of the project and consequently the building plans of the same has
long expired and has yet to be renewed;
(2) by objecting to the appointment of Dato' Toh as arbitrator;
(3) excluding the plaintiff from the day to day running as well as
management of the project as well as proceeding to act unilaterally
without the consent of or approval of the plaintiff, viz.:-
(a) excluding the plaintiff
from a meeting with Danaharta held on 21 July 1999 by not informing them
of the said meeting;
(b) appointing JT Properties to market the units under the project
without the knowledge or approval of the plaintiff;
(c) proceeding unilaterally to advertise the project for sale to the
public by way of erecting an advertisement board on the land;
(d) failing, refusing or neglecting to agree to a meeting with the
plaintiff to try and resolve the dispute as requested by the plaintiff
through various letters;
(e) unilaterally appointing contractors to carry out work related to the
project;
The plaintiff complain the
defendant, in purporting to terminate the JV agreement, is trying to exclude
or oust them from the project and to deprive them of the potential profits
from the sale of the units under the project. The plaintiff in being
excluded from the project has not only suffered losses financially but also
suffered damage to their reputation and good name due to this debacle. As
this is the plaintiff's first major project, the plaintiff's reputation and
credibility is at stake should the project be a failure. The unlawful
actions of the defendant in relation to the project has also opened up the
plaintiff to potential criminal liabilities and civil liabilities to third
parties, the plaintiff being a
joint developer of the project vis-a-vis the JV agreement. The plaintiff
does not accept the termination of the JV agreement by the defendant as the
termination is unlawful and instead reaffirms the JV agreement and state
that the plaintiff is ready, able and willing to fulfill their obligations
under the JV agreement.
In its affidavit in support of the application for the interlocutory orders,
the plaintiff insisted that the defendant had all along been using the
plaintiff's ample financial resources to get the project ready for launching
by clearing the land of squatters and for paying overdue interest payments
to the financier and after the plaintiff had worked to get the project ready
for launching, the defendant is now raising frivolous grounds to terminate
the JV agreement in an attempt to exclude the plaintiff from enjoying the
fruits of their labour, i.e., the profits to be realised from the sale of
the units under the project. It is the plaintiff's contention that the
defendant's actions are clearly mala fide and calculated to cause
loss and damage to them and unless restrained, they will suffer and continue
to suffer irreparable harm and damage which cannot be compensated by costs
or monetary means.
In its affidavit in opposition, the defendant denied having invited the
plaintiff to develop the project together. The deponent to the defendant's
affidavit, one Toh Ah Leong, a director, stated he did not know the
plaintiff or its directors. It was only sometime in January 1999 that he was
introduced to one Hee Jee Pin and one Wee Bing Hock who are the directors of
the plaintiff by their lawyer, that is, the said Dato' Toh when both the
said directors of the plaintiff offered to invest in the project.
In relation to the various payments alleged to have been paid by the
plaintiff, the defendant pointed out that the second instalment of
RM50,000/- should have been paid within 30 days after all the squatters have
been removed from the land and that the third instalment of RM50,000/-
should be paid within 30 days after the commencement of piling works for the
project. The defendant also denied that the plaintiff had expended the sum
of RM3,600/- as deposit and advance rental for the said sales/administration
office. As regards the other payments, the
defendant admits the plaintiff had made those payments but insisted that
what induced the defendant to enter into the JV agreement was because the
plaintiff had agreed to advance those payments until the bank release the
funds under the bridging loan as provided for in clause 5 of the JV
agreement. The defendant insist that under the said clause 5 the plaintiff
is obliged to make all payments which have been agreed to therein. The
defendant then contended as follows -
(1) other than making those
payments which they are obliged to make under the JV agreement, the
plaintiff did not contribute anything else to the project;
(2) upon the execution of the JV agreement, it was the duty of the said
Hee Jee Pin, as instructed by the management committee, to see to the
erection of the fencing for the project with used materials but
he failed to carry out his duty after two months had passed as a result of
which on 8 July 1999 the said Rencon Construction Works was employed to do
the job; however the plaintiff has refused to pay Rencon Construction
Works for the said works and instead accused the defendant of appointing
them without the approval of the management committee;
(3) the plaintiff has prevented the said Bumimetro Engineering Sdn Bhd
from carrying out the soil test on the land notwithstanding that the
management committee has approved that that company is to carry out the
said work;
(4) the plaintiff caused further delay to the implementation of the
project by failing to make payments to the following contractors -
(a) Wengsan Construction Sdn
Bhd - RM10,000/-;
(b) Bumimetro Engineering Sdn Bhd - RM32,409/-;
(c) Rencon Contruction Works - RM45,500/-;
(5) the defendant admits the
state of relationship between both parties is not cordial but in reply to
the averments made by the plaintiff contends, inter alia, as follows -
(a) they deny that they
enclosed the notice of acquisition from Danaharta in the said letter to
the plaintiff dated 6 July 1999;
(b) they only knew sometime in June 1999 that all rights and interest
under the bridging loan facility from Sime Bank had been taken over by
Danaharta and this was informed by the said Hee Jee Pin himself who
stated that he had been in communication with the said Mr Tai;
(c) they deny having kept from the plaintiff notices from Sime Bank and
Danaharta and the monthly statement of accounts;
(d) they deny having conveyed orally to the plaintiff that the credit
facility can still be utilised;
(e) they deny having appointed contractors or awarding contracts without
the concurrence of the plaintiff;
(f) they concede that the development order for the project has lapsed
but insisted that this was due to the presence of squatters of the land;
however they have made an application for the extension of the
development order and the building plan and the delay in making the
application was due to the presence of squatters and this is within the
knowledge of the plaintiff;
(g) prior to the execution of the JV agreement the plaintiff knew that
the development order and the building plan had lapsed and that the
defendant had applied for an extension; furthermore this has been raised
at the weekly meetings between both parties;
(h) it is the plaintiff which failed to pay the outstanding payments due
under the bridging loan;
(i) it is illogical for the plaintiff to seek confirmation from them on
the status of the banking facility as they knew that the facility has
been acquired by Danaharta it being a non-performing loan which came
about as a result of the plaintiff's failure to pay the outstanding
payments due under the bridging loan;
(j) they insist that the plaintiff has been provided with a list of
purchasers for the units under the project together with the receipts
and statement of accounts in relation to income received and expenditure
under the project;
(k) in relation to the allegation of the plaintiff as regards the
advertisement board, the defendant's explanation is as follows -
(i) sometime in 1996, prior
to the expiry of the development order, about 100 apartment
units under the project were sold and the 10% deposits were collected
from the purchasers;
(ii) the project could not progress further due to the presence of
squatters on the land;
(iii) since the said purchasers have been making enquiries about the
project, for the purpose of pacifying them, the defendant erected the
alleged advertisement board giving details of the project not for the
purpose of advertisement but merely to inform the purchasers of the
location of the project and hence the reason why the developer's name
and the advertisement permit number was omitted;
(l) the defendant deny that
the units under the project cannot be sold and claim that Dewan
Bandaraya Kuala Lumpur has approved their application for an
advertisement licence issued pursuant to rule 5(4) of the Housing
Developers (Control and Licensing) Rules 1989 and which is effective
from 29 December 1998 to 28 December 1999;
(m) in relation to the said Dato' Toh, the deponent state -
(i) it was Dato' Toh, as
the plaintiff's lawyer, who introduced the said two directors of the
plaintiff;
(ii) Dato' Toh was actively involved in the discussions leading to the
JV agreement;
(iii) Dato' Toh's legal firm prepared the sale and purchase agreements
for the project;
(iv) Dato' Toh attended and actively participated in the meetings of
the management committee;
(v) Dato' Toh has a close relationship with the said directors of the
plaintiff and they are from the same hometown;
(n) since the execution of
the JV agreement, the defendant never collected any deposits from
purchasers;
(o) the said JT Properties has yet to be appointed as the defendant's
agent to sell the units under the project;
(p) on or about 16 July 1999 the representatives of the plaintiff had a
meeting with Danaharta and the defendant was not informed of the outcome
of the meeting in relation to the status of the defendant's loan, i.e.,
as to whether the defendant can still utilise the said bridging loan or
as to whether further conditions have been imposed;
(q) in a meeting with Danaharta on 21 July 1999, Danaharta informed the
plaintiff that they have to provide an undertaking to pay all interests
due before any proposal in relation to the loan can be considered; up
todate the plaintiff has not furnished that undertaking to Danaharta;
(r) when the defendant executed the JV agreement which was prepared by
Dato' Toh, the terms and conditions of the contract were not fully
explained to them and it was only after its execution that they realised
that certain terms were not discussed, inter alia, clause 5(g) which
provides that Dato' Toh as solicitor for the plaintiff is given the
power to approve and sign cheques to be issued from the project account.
In his submission, counsel for
the plaintiff attacked the various contentions of the defendant as forwarded
in the latter's affidavits, namely -
(1) the defendant's stand
that they did not invite the plaintiff to develop the project is not
true as evidenced by the fourth recital of the agreement which read "The
First Party has requested and invited the Second Party to jointly
develop and the Second Party has agreed to jointly carry out the
development of the Housing Development upon the terms and conditions
hereinafter contained", the "First Party" referred to therein being the
defendant and the "Second Party", the plaintiff;
(2) the defendant deny that the payment relating to the tenancy
agreement has been paid, or if paid, was done without their consent
whereas a copy of the tenancy agreement which is annexed to the
plaintiff's affidavit show that it was the said Toh Ah Leong, i.e., the
defendant's director and deponent to the defendant's affidavit, who
signed the tenancy agreement;
(3) in their affidavit the defendant admit that the development order
has expired and this is contrary to what is expressed by the defendant
in clause 6 of the JV agreement which read -
"The First Party hereby confirm that all the building layout plans
have been duly approved by the relevant authorities (hereinafter
referred to as "the Approved Plans") and currently still valid and that
the Assignment of the Agreement and the Joint-Venture Agreement are
still valid and subsisting";
(4) the defendant's stand that all squatters have been evicted from the
land is not true - a copy of the layout plan and photographs taken on
site which are exhibited in the plaintiff's affidavit show there are
still squatters on the land;
(5) the defendant's claim that the advertisement board erected on the
land was only to inform the previous purchasers is untrue as the price
of the units indicated thereon is the new price;
(6) after the execution of the JV agreement there had only been 4
meetings relating to the project held between the parties and not 12 to
15 as claimed by the defendant; the fourth meeting was held on 18 June
1999 and thereafter upon the onset of the dispute between the parties,
no more meetings were held although the plaintiff repeatedly requested
for the same to resolve the dispute.
The case of American Cynamid Co v
Ethicon Ltd [1975] 2 WLR 316 laid down the test to be applied in the
granting of an interlocutory injunction, namely, whether there is a serious
question to be tried and whether the balance of convenience lies in granting
or refusing the injunction. In that case Lord Diplock took the view that
there is a serious question to be tried if a claim is not frivolous or
vexatious. In Donmar Productions Ltd v Burt & Ors [1967] 2 All ER 338 Ungoed-Thomas
J said (at page 339):
"So in an application for the interlocutory injunction the applicant must
establish a probability or a strong prima facie case that he is entitled to
the right of whose violations he complains and, subject to this being
established, the governing consideration is the maintenance of the status
quo pending the trial.
It is well established that in deciding whether the matter shall be
maintained in status quo regard must be had to the balance of convenience
and to the extent to which any damage to the plaintiff can be cured by
payment of damages rather than by granting the injunction."
The prerequisites which must be present before a court can determine whether
an interlocutory injunction should lie has also been summarised in Alor
Janggus Soon Seng Trading SdnBhd & 6 Ors v Sey Hoe Sdn Bhd & 2 Ors [1995] 1
AMR 549 by Mohd Jemuri Serjan CJ (Borneo); he said (at page 568) -
A Firstly, the plaintiffs' case must raise serious issues to be tried. If
the plaintiffs fail at that point there is clearly no case for an
injunction. Secondly, the trial of the main suit is likely to take place in
the sense that the plaintiffs' case shows that they are genuinely concerned
to pursue the claim to trial and they are seeking the injunction as a means
of holding operation pending the trial. Once it can be established that
there are serious questions to be tried then the other guidelines must be
invoked. The court has to consider:
(a) Whether damages are an
adequate remedy;
(b) Where does the "balance of convenience" and;
(c) Are there any "special factor".
It is not disputed that the
development order for the project was issued by the relevant authority on 11
April 1996 and it expired on 10 April 1997. The JV agreement was executed on
23 April 1999
and the defendant has given an undertaking therein that all building plans
and development plans are still subsisting. What is clear is when the JV
agreement was executed, the development order had expired. The defendant do
not dispute that the development order and the building plans have expired
but argued since they have applied to renew it, although no renewal has been
granted up todate, they can still carry on to advertise the project and sell
notwithstanding its expiry.
In his submission, counsel for the defendant stressed that the defendant's
main ground in opposing the plaintiff's application for the various
interlocutory orders is that the plaintiff's claim is based upon an
illegality, namely, the JV agreement was entered into contrary to section 8
of the Housing Developers (Control and Licensing) Act 1966 ("the Act") which
read -
"(1) Where a licensed housing developer proposes to enter into an
arrangement or agreement to sell, dispose of or reconstruct his business
relating to housing development either by amalgamation or otherwise, the
licensed housing developer shall as soon as possible notify the Controller
of the proposed arrangement or agreement and unless approved by the
Controller under subsection (2), the licensed housing developer shall not
proceed with that arrangement or agreement."
Counsel for the defendant pointed out no approval from the Controller has
been obtained prior to the execution of the JV agreement and this is
contrary to the above provision.
It is necessary for a party seeking interlocutory relief to show there is at
least a serious question to be tried and to adduce sufficiently precise
factual evidence to satisfy the court that he has a real prospect of
succeeding in his claim at the trial. A party should not be granted an
interlocutory injunction unless he is able to show that if it were not
granted he would suffer irreparable damage. Is there a serious
question to be tried in the instant case? From my reading of the various
affidavits and the exhibits exhibited therein, I am of the view there are
serious questions to be tried at the trial. Whether the JV agreement is void
as being contrary to the said section 8(1) of the Act is a serious question
to be tried since one of the prayers to the plaintiff's claim is an order
for specific performance of the JV agreement. Whether the plaintiff have
breached the terms of the JV agreement which would entitle the defendant to
terminate the agreement is another serious question to be tried. I am, at
this stage of the proceedings, not in a position to make a finding and rule
that the plaintiff is entitled to an order for specific performance or rule
that the defendant is entitled to treat the JV agreement as void and/or is
entitled to terminate the same on the basis that that the plaintiff has
committed certain breaches. These are issues to be determined at the trial.
In my view, the plaintiff has shown they have a strong prima facie case in
pursuing an order for specific performance of the JV agreement. They may
succeed at the trial in establishing that the
defendant has wrongfully purported to terminate the JV agreement. What they
are seeking in this application is to preserve the status quo of the JV
agreement pending final determination of the suit, i.e., to carry on with
what was agreed to in the JV agreement, viz., that the parties would jointly
undertake the development of the project and that both parties shall not do
or permit to be done any acts or matters or things which may adversely
affect the development of the project or the interests of the parties
thereto. Under the circumstances, I would think that the balance of
convenience would tilt in favour of the plaintiff to grant them the
interlocutory orders sought for since what they are seeking is nothing more
than to preserve the status quo of the obligations of both parties under the
JV agreement.
In allowing the application I had also taken into consideration the conduct
of the parties and also as to whether damages instead of an injunction would
be an adequate remedy. Looking at the facts, I am of the view that the bona
fides of the defendant is suspect. In clause 6 of the JV agreement, the
defendant confirm
that "all the building layout plans have been duly approved by the relevant
authorities and currently still valid". It is not disputed that those plans
had expired on 10 April 1997 and up todate have not been renewed by the
relevant authorities. The defendant concede those plans had expired when the
JV agreement was executed but in relation to this keep on harping that they
have applied for its renewal. Without any valid and subsisting building
layout plans, the project cannot go on and this the defendant concede is the
current scenario. Without the interlocutory orders sought for, the JV
agreement would for all practical purposes come to nought as the defendant,
having purported to terminate the JV agreement would now be in a position
to, for example, dispose of the project by sale or assignment. That being
the reality which may follow, damages may not be an adequate remedy under
the circumstances.
The contention of the defendant that the JV agreement is void, it having run
foul of section 8 of the Act, to me, do not seem to hold water. The said
section 8 provides where a licensed
developer proposes to enter into an arrangement or agreement to sell,
dispose of or reconstruct his business relating to housing development
either by amalgamation or otherwise, the licensed housing developer shall as
soon as possible notify the Controller of the proposed arrangement or
agreement and unless approved by the Controller, the licensed housing
developer shall not proceed with that arrangement or agreement. Section
19(aa) of the Act provides any housing developer who enters into arrangement
or agreement in contravention of section 8, i.e., without first obtaining
the approval of the Controller, shall be guilty of an offence and shall, on
conviction, be liable to a fine not exceeding RM10,000/- or to imprisonment
for a term not exceeding 3 years or to both and shall also be liable to a
further fine of RM5,000/- for every day during which the offence is
continued after conviction. As to whether the JV agreement falls within the
contemplation of section 8 of the Act has not been sufficiently argued by
the parties in their submission. Counsel for the defendant who raised this
contention has not illustrated how the JV agreement has fallen foul of the
said
section 8. Even if the JV agreement is later found to fall within the
contemplation of the said section 8, from my reading of that provision, I
would think the obligation to notify the Controller and seek his approval
prior to the execution of the JV agreement surely lie on the defendant as it
is the defendant which is the housing developer and which would be
committing the offence under section 19(aa) of the Act if that is the
position. Section 8 read together with section 19(aa) has no application to
the plaintiff as it is not a housing developer. Furthermore, nowhere is it
mentioned in the Act that any arrangement or agreement which fall under
section 8 shall be void if the Controller's approval has not been obtained,
i.e., there are no provisions in the Act nullifying such an arrangement or
agreement.
On the whole I am of the view that the plaintiff has clearly shown that it
has a valid cause of action. The plaintiff has also shown it is genuinely
concerned to pursue the claim to trial. The facts show after the execution
of the JV agreement the plaintiff
expended approximately RM944,000/- in respect of the project in line with
clause 5 of the JV agreement. There is nothing to show the plaintiff has
done anything which may adversely affect the development of the project. The
plaintiff is now seeking interlocutory orders to restrain the defendant from
doing acts which may result in the JV agreement being of academic interest
only. I am of the view that if those interlocutory orders sought for are not
granted, damages would not be an adequate remedy. Further, it would also be
difficult to assess the damages in terms of money under the circumstances
seeing that the project has not even lifted off the ground.
On a balance of convenience I am of the view that the application should be
allowed. I have to act upon the principle of preventing irreparable damage.
The purpose of an interlocutory injunction is to preserve the status quo
until the rights of the parties have been determined in the action and
looking at the plaintiffs' case, the subject matter may no longer be there
if the
defendant is not restrained from carrying on with the project on the
assumption that the JV agreement has been lawfully terminated. Upon the
usual undertaking by the plaintiff as to damages, I allowed the application
and ordered that the costs of and incidental to this application to be the
plaintiff's costs in the cause.
(DATO HJ MOHD GHAZALI BIN MOHD YUSOFF)
Hakim
Mahkamah Tinggi
Kuala Lumpur
Tarikh: 19 Februari 2000 |
