BAXCO UNITED CORPORATION BHD V. ATLAS
CORPORATION SDN BHD
HIGH COURT MALAYA, KUALA LUMPUR
[ORIGINATING SUMMONS NO: S1-24-499-2002]
ABDUL MALIK ISHAK J
23 JUNE 2003
LAND LAW:
Housing developers - Sale and purchase of property - Guaranteed rental
return scheme (GRRS) - Supplemental agreement between parties - Declaration
for specific performance - Whether an abuse of the process of the court -
Plaintiff's delay in exercising GRRS - Whether rendered null and void -
Doctrines of waiver and estoppel - Whether should be invoked against
defendant - Whether defendant entitled to set off service charges from
payments due to plaintiff
CONTRACT:Sale and purchase of property - Guaranteed rental return
scheme (GRRS) - Supplemental agreement between parties - Declaration for
specific performance - Whether an abuse of the process of court -
Plaintiff's delay in exercising GRRS - Whether rendered null and void -
Doctrines of waiver and estoppel - Whether should be invoked against
defendant - Whether defendant entitled to set off service charges from
payments due to plaintiff
JUDGMENT
Abdul Malik Ishak J:
Enclosure one (1)
By this enclosure, the plaintiff sought for
the following prayers:
(a) a declaration that all the service
charges and the sinking fund pertaining to
suite A-10-8, Menara Atlas, Plaza Pantai (hereinafter referred to as the
said "property") for the period commencing from 1 May 2000 till 30 April
2006 (hereinafter referred to as the "guaranteed rental period") be borne by
the defendant;
(b) a declaration that the defendant has no
right to set off the service charges and the sinking
fund from the rentals of the said property which the defendant should
pay to the plaintiff during the tenure of the guaranteed rental period;
(c) a declaration that the defendant be held
liable to pay the plaintiff the sum of RM4,166.67 per month for the duration
of the tenure of the guaranteed rental period;
(d) that the costs of this application be
borne by the defendant and payable on the basis of solicitor client costs;
and
(e) any other relief and order which this
court thinks fair and suitable.
What Is A Declaration?
In the realm of private law, declaratory
judgments play a significant role. It is a valuable remedy in order to
settle disputes before those disputes reach the point where the right of one
party is infringed. A good write-up on declaratory reliefs can be seen in
Woolf and Zamir, The Declaratory Judgment, second edition. It is, however,
appropriate to mention that the essence of a declaratory judgment is to
state the rights or the legal position of the parties as they stand. A
declaration is a discretionary remedy. It is available to anyone and against
everyone. It is freely available. Thus, like the case of Gateshead Union
Guardians v. Durham CC[1918] 1 Ch. 146, a child's guardian may even
obtain a declaration that a county council was wrong in refusing to accept
children in its schools. Even a police officer may obtain a declaration that
he has not been validly dismissed (Cooper v. Wilson[1937] 2 KB 309;
and Ridge v. Baldwin[1964] AC 40). A dock worker too may go to court
and may obtain a declaration that he has been wrongfully removed from the
register and thus preserving his right to be employed under the dock labour
scheme (Vine v. National Dock Labour Board[1957] AC 488). I say that
declarations are given in varying fact situations. The courts are always
magnanimous and would grant declarations to a variety of applicants. In the
past, declarations have been granted against unlawful tax demands (Bowles
v. Bank of England[1913] 1 Ch. 57; and Dyson v. A.G.[1912] 1 Ch.
159), against enforcement notices (Francis v. Yiewsley & West Dayton
Urban District Council[1958] 1 QB 478), and even against compulsory
purchase orders as envisaged in Grice v. Dudley Corporation[1958] Ch.
329. The plaintiff must certainly have the necessary standing to sue. As
Lord Diplock said in Gouriet v. Union of Post Office Workers[1978] AC
435 at 501:
But the jurisdiction of the court is not to
declare the law generally or to give advisory opinions; it is confined to
declaring contested legal rights, subsisting or future, of the parties
represented in the litigation before it and not those of any one else.
Standing to sue is certainly an important
consideration. So long as the declarations sought are not barred by statute,
the courts would be amenable to grant it. In the words of Bankes LJ in the
case of Guaranty Trust Co. of New York v. Hannay & Co.[1915] 2 KB 536
at 572, that the jurisdiction to grant a declaration "should receive as
liberal a construction as possible". Statutory wise, in Malaysia, O. 15 r.
16 of the Rules of the High Court 1980("RHC") allows the court to issue
declarations and that Order is worded as follows:
No action or other proceeding shall be open
to objection on the ground that a merely declaratory judgment or order is
sought thereby, and the court may make binding declarations of right
whether or not consequential relief is or could be claimed.
Under this Order, the plaintiff needs only to
establish that his legal interests are peculiarly affected (Tan Sri Hj
Othman Saat v. Mohamed Ismail[1982] 1 LNS 2; [1982] 2 MLJ 177; and
Lim Cho Hock v. Speaker, Perak Legislative Assembly[1979] 1 LNS 45;
[1979] 2 MLJ 85, 87). This would be followed by s. 41 of the Specific Relief
Act 1950(Act 137) where the plaintiff can seek a declaration as to his
entitlement to a legal character, or status or right to property. The
plaintiff here is not an exception. It seeks declaratory reliefs as alluded
to in encl. one (1).
Facts Of The Case
The facts of a given case are very important
because it would determine the prayers that the court would grant. Here, the
facts may be stated in this way.
By way of a sale and purchase agreement ("S &
P agreement") dated 9 February 1996 (see exh. "A1" of encl. 21), the
plaintiff purchased from the defendant developer the property in question at
the price of RM500,000. The plaintiff was motivated to purchase the said
property by and upon the representation and agreement by the defendant
developer that the latter would guarantee the plaintiff a net 10% return on
rentals based on the purchase price of the said property for the duration of
the guaranteed rental period - and that would be for a period of six (6)
years. The guaranteed rental return scheme agreement (hereinafter referred
to as the "GRRS") was entered into between the parties by way of a
supplemental agreement on 9 February 1996 as seen in exh. "A2" of encl. 2.
The salient terms of the GRRS were found in the supplemental agreement and
captioned as the Guaranteed Rental Return and they may be stated as follows:
(1) By way of Recital "C" of the
supplemental agreement, it was stipulated that, "The vendor has
represented to the purchaser that the vendor shall guarantee a net 10%
return on rentals based on the purchase price of the suite for six (6)
years in respect of the suite ('Rental Scheme') subject to the purchaser
having exercised his option by 30 June 1996 ('the said date') for the
Rental Scheme."
(2) Clause 2 of the supplemental agreement
stipulated that (the relevant parts only):
2. RENTAL SCHEME
2.1 The Vendor
hereby offers to the Purchaser the Rental Scheme to the Purchaser
subject to:
(a) the ten
percent (10%) rental returns to be net based on the purchase price
of the Suite as stated in the SPA after the deduction of any
management cost but provided it shall be the liability of the Vendor
to absorb the cost(s) of service charge and
sinking fund contribution at the rates of Forty Five Sen
(45 Sen) and Ten Sen (10 Sen) per square foot respectively. However,
the Purchaser shall still be liable to bear the costs of:
(aa) insurance )
all of which shall be confirmed
(bb) quit rent )
by the Vendor only after
(cc) assessment
) completion of construction of the Suite
(dd)
refurbishment and interior decoration of the Suite; and
(ee) any other
incidentals
(b) a guarantee
period of six (6) years ('Guaranteed Period') commencing three (3)
calendar months on the 1st day of the following month after the date
the (Temporary) Certificate of Fitness for Occupation ('CFO') is
issued by the local authority to the Suite, for example if CFO is
issued on the 18th March 1998 then the guarantee period commences
from the 1st July 1998.
(3) While cl. 3 of the supplemental
agreement carried the following terms (the relevant parts only):
3. EXERCISE OF RENTAL SCHEME
3.1 The Purchaser shall have to exercise
the option for the Rental Scheme by the said Date, failing which the
Vendor's offer of the Rental Scheme to the Purchaser shall lapse and be
rendered null and void and shall have no legal effect and in such an
event the parties hereto shall have no further claim against each other.
3.3 The Purchaser hereby agrees with the
Vendor that upon the Purchaser exercising the option for the Rental
Scheme, the Purchaser shall have deemed to have irrevocably appointed
the Vendor as the manager of the Purchaser to have exclusive conduct and
management over the Suite including but not limited to the right to
secure, arrange and procure a tenant or tenants for the Suite, negotiate
and settle terms of the tenancy/tenancies, execute the tenancy
agreement(s), collect and receive the rental, demand or sue for arrears
of rental, commence and conduct all lawful proceedings and means by
distress or action or otherwise to recover and receive the said rental
and to enforce the performance by the tenant or tenants of any covenant
therein the tenancy agreement(s) and to evict the tenant or tenants to
recover possession of the Suite and generally to do all things which the
Purchaser would be entitled to do as landlord and the Purchaser hereby
agrees to ratify and confirm whatsoever the Vendor shall lawfully do or
cause to be done as manager of the Suite AND PROVIDED FURTHER that the
Purchaser shall indemnify and keep the Vendor indemnified against all
costs and losses which the Vendor may incur sustain or suffer by reason
of the Vendor acting as manager for the Purchaser in respect of the
Suite. The parties hereby agree that the option for the Rental Scheme
granted by the Vendor is contingent not only on the appointment of the
Vendor as manager of the Suite but also contingent on the Purchaser
executing at the Vendor's cost and expense a power of attorney to
appoint the Vendor or their substitute or substitutes as its attorney to
manage the Suite concurrently with the exercise of the option by the
Purchaser and in the event the power of attorney is not executed
concurrently the option shall be deemed to have lapsed notwithstanding
that the Purchaser shall have attempted to exercise the option by the
said Date.
The plaintiff did not exercise the option by
30 June 1996 for the GRRS. But the defendant was rather magnanimous and
allowed the plaintiff to exercise the option for the GRRS. By letter dated
18 February 1998, the defendant informed the plaintiff that the defendant
was still agreeable to grant the plaintiff the GRRS upon the same terms and
conditions as stipulated in the supplemental agreement. That letter of 18
February 1998 can be seen in exh. "A3" of encl. 2 and it was worded in this
way:
RE: PROPERTY: SUITE NO.
1001, TOWER A, PLAZA PANTAI PURCHASER: BAXCO UNITED CORPORATION SDN BHD
We refer to the above.
We have been informed
that you are still interested in our Guarantee Rental Return scheme for
the 6 years which we initially offered to you upon your booking of the
abovementioned Office Suite.
As a gesture of
goodwill, we wish to inform you that the Management is agreeable to grant
you the said Scheme despite (the fact) that you have not exercise(d) the
option on the due date.
The terms and
condition(s) for the Guarantee Rental Return (6 years) are (to) remain the
same as per the Supplemental Agreement dated 9th February, 1996 executed
between us.
Please confirm
acceptance by signing and returning the duplicate of this letter to us
within 7 days from the date hereof.
Thank you.
By another letter dated 16 November 1998, the
defendant required the plaintiff to execute the necessary Power of Attorney
in order to appoint the defendant to manage the property by way of a lease.
That letter can be seen in exh. "A4" of encl. 2 and it was drafted in this
manner:
RE: POWER OF ATTORNEY
SUITE NO. A-1001, TOWER A, PLAZA PANTAI
We refer to the above.
Please be informed that
pursuant to the Clause 3.3 of the Supplemental Agreement, you are to
execute the document, 'Power of Attorney' to appoint us as your attorney
to manage the abovementioned Office Suite in respect of the leasing of the
Office Suite.
We are pleased to inform
you that the Power of Attorney is now ready for your execution. Please
contact the following solicitor at tel: 03-2610377 (Mr. Teoh) for
appointment to execute the said document by 30th November 1998:
Messrs Prasad Abraham
& Associates
Advocates & Solicitors
C-3-6, Megan Phileo
Promenade
189 Jalan Tun Razak
50400 Kuala Lumpur
Please be informed that
in the event that the PA is not executed, the GRR option shall be deemed
to have lapsed notwithstanding that you have attempted to exercise the
option in the earlier occasion.
Please call us should
you have any queries.
And acting expeditiously, the plaintiff duly
executed the Power of Attorney dated 14 December 1998 giving authority to
the defendant to rent out the said property. That Power of Attorney was also
exhibited as exh. "A4" to encl. 2 and it can be seen at p. 50 to p. 57
thereof.
It must be recalled that the issuance of the
temporary certificate for occupation ("TCO") was an essential element
governing the GRRS under the supplemental agreement because the duration of
the guaranteed rental period would only commence "three (3) calendar months
on the first day of the following month after the date the TCO is issued by
the local authority." In reality, the TCO bearing no: 8019 was issued on 7
January 2000 as seen in exh. "A5" at p. 59 of encl. 2 and in accordance with
the provisions of cl. 2.1(b) of the supplemental agreement, the defendant
had by a letter dated 12 January 2000 admitted that the payment under the
GRRS shall be paid by the defendant to the plaintiff with effect from 1 May
2000. That letter dated 12 January 2000 was exhibited as exh. "A5" and
annexed to the affidavit in encl. 2 and that letter was addressed to the
plaintiff from the defendant and it was worded in this way:
PROPERTY : SUITE
NO.A-10-8, MENARA ATLAS, PLAZA PANTAI PURCHASER : BAXCO UNITED CORPORATION
SDN BHD
RE : TEMPORARY
CERTIFICATE OF OCCUPATION
We refer to the above
and are pleased to inform you that the Temporary Certificate for
Occupation (TCO) has been issued by Dewan Bandaraya Kuala Lumpur (DBKL)
for Menara Atlas, Plaza Pantai.
Pursuant to Clause
2.1(b) of the Supplemental Agreement, the payment of the Guaranteed Rental
Returns (GRR) shall commence three (3) months from the 1st day of the
following month after the TCO has been issued, which means, the GRR
payment to you shall commence with effect from 1st May 2000.
We will inform you as to
the mode of payment in due course. For ease of reference, we enclose
herewith a copy of the TCO for your safekeeping.
Thank you.
There was hardly any dispute that the monthly
payment that would be due to the plaintiff under the GRRS would be in the
sum of RM4,166.67 calculated on the following basis:
10% of the purchase price of RM500,000 would
give RM50,000 and when divided by 12 months, the calculation would be in
this fashion:
RM50,000
________ = RM4,166.67
12
The defendant was merely paying lip service
and there was outright refusal on the part of the defendant to pay the
plaintiff the sum of RM4,166.67 per month for the months of May, June and
July 2000. The defendant took it unto itself to set-off those months for the
monthly service charges and interest charges on service charges of the said
property and all these can be seen in the defendant's letters to the
plaintiff dated 5 June 2000, 23 June 2000 and 9 August 2000 as seen at p. 60
to p. 62 of exh. "A6" of encl. 2.
It was also not disputed and admitted by the
defendant that:
(a) at all material times, the said
property had been managed and rented out by the defendant to Bumiputra-Commerce
Bank Berhad pursuant to the Power of Attorney granted by the plaintiff to
the defendant and the rentals were collected and pocketed by the defendant
(see the averments at para. 15 of encl. 2 and at para. 8 of encl. 4);
(b) subsequent to those letters dated 5
June 2000, 23 June 2000 and 9 August 2000 as alluded to earlier and as
reflected in exh. "A6" of encl. 2, the defendant had, as at 31 January
2002, paid a sum of RM15,444.56 to the plaintiff under the GRRS and this
can be confirmed through the averments at para. 13 of encl. 2 and at para.
7.4 of encl. 3; and
(c) the defendant had also, from time to
time, attempted to increase the service charges and the
sinking fund of the said property from 45
sen and 10 sen respectively to RM1.35 sen and 25 sen respectively as
reflected in exh. "A8" of encl. 2.
To The Heart Of The Matter
I will now proceed to examine the issues that
were raised by the defendant not in its chronological order.
(1)(a) that prayer (c) of the originating
summons in encl. one (1) should be struck out on the ground that the said
prayer constituted an application for specific performance of the
supplemental agreement as alluded to at para. 4.1 (i) of encl. 3;
(1)(b) that it was an abuse of the process
of the court to seek for specific performance by way of a declaration as
alluded to at para. 4.1 (ii) of encl. 3; and
(1)(c) that the plaintiff had failed to
file the application in encl. one (1) under O. 81 of the RHC as alluded to
at para. 4.1 (iii) of encl. 3.
All these three issues (at (1)(a), (1)(b) and
(1)(c) as set out above) must be resolved in favour of the plaintiff. Order
81 r. 1(1)(a) of the RHCstates as follows (the relevant parts only):
1 Application by
plaintiff for summary judgment (O. 81 r. 1)
(1) In any action
begun by writ indorsed with a claim:
(a) for specific
performance of an agreement (whether in writing or not) for the sale,
purchase or exchange of any property, or for the grant or assignment
of a lease of any property, with or without an alternative claim for
damages;
the plaintiff may, on
the ground that the defendant has no defence to the action, apply to the
Court for judgment.
and it is similar to O. 14 of the RHCand it
enables the plaintiff where there is no triable defence to the action, to
obtain summary judgment in an action for specific performance of a contract.
The defendant was certainly blowing hot and cold in issue (1) (a) because
the defendant on its own accord admitted that prayer (c) of encl. one (1)
sought for specific performance of the supplemental agreement. Having
perused through the supplemental agreement, I must at once say that the said
agreement was not an agreement that relate to the sale, purchase or exchange
of any property. Rather, the supplemental agreement provided for the
contractual liability of the defendant under the guaranteed rental return
scheme - the GRRS. The plaintiff had no choice but was compelled to seek
declarations for its rights under the supplemental agreement bearing in mind
that the defendant had been very aggressive in asserting its rights to
deduct the service charges and the sinking fund
of the property in clear and obvious violation of cl. 2.1(a) of the
supplemental agreement. What was frightening to the plaintiff was that the
defendant was not asserting that it was not liable to make any payment of
the monies derived from the GRRS to the plaintiff. It was the stand of the
plaintiff that the declarations that were sought for in encl. one (1) should
be granted because the defendant had disputed the plaintiff's rights to the
GRRS payment and that the defendant had purported to set-off the service
charges from the payments under the GRRS. It was submitted that it was
necessary for this court to construe whether under the supplemental
agreement the defendant was entitled to set-off the service charges. It was
urged upon me that the answer to this question should be in the negative.
There are write-ups that appear in the Malaysian High Court Practice,1998
Desk Edition 1 and at p. 382 thereof the following passage appears:
A declaration can be used to ascertain and
determine the rights of parties or to determine a point of law, ...
Continuing at p. 383, the following passage
also appears:
Where the court is asked to construe any
written instrument, it is intended that the answer of the court should
settle the litigation between the parties.
It was entirely within my domain to make the
declarations that were sought by the plaintiff in encl. one (1). In BSN
Commercial Bank (M) Bhd v. Pentadbir Tanah Daerah, Mersing[1997] 3 CLJ
Supp 1, I made reference to the decision of Lord Denning MR in the case of
Punton v. Ministry of Pensions and National Insurance[1963] 1 WLR 186
particularly to p. 192 where his Lordship aptly said (see p. 4 of the CLJ
reporting for BSN Commercial Bank (M) Bhd's case which reproduced in
verbatimthe speech of Lord Denning MR in Punton):
Now, when the case is put that way, it
seems to me to be a very proper matter for determination by originating
summons for a declaration. Indeed, it is a sensible and modern way of
approach. When an originating summons is framed so as to raise a distinct
and important point of law, there is not the slightest ground for saying
that it is frivolous and vexatious.
Just like the case of Punton, I too
hold that "the procedure adopted by the plaintiff in seeking" those
declarations were "beyond reproach". It was part and parcel of my judgment
that it was not an abuse of the process of the court for the plaintiff to
seek specific performance by way of a declaration. At this juncture, the
sage words of Viscount Radcliffe in Ibeneweka v. Egbuna[1964] 1 WLR
219, PC must be put to the forefront. There his Lordship succinctly said:
The prevailing view seems to be that the
court's jurisdiction to make a declaratory order is unlimited, save only
to its own discretion.
For these reasons, I must hold and it was my
judgment that the three issues at (1)(a), (1)(b) and (1)(c) must be answered
in this way. In regard to the issue at (1)(a), I must hold that prayer (c)
of the originating summons in encl. one (1) as presently framed and phrased
should remain on record. There was nothing objectionable about it. In regard
to the issue at (1)(b), I have alluded to the fact that it was not
objectionable nor an abuse of the process of the court to seek for specific
performance by way of a declaration. Pertaining to the issue at (1)(c), I
have this to say. The procedure adopted was perfectly in order. In Malaysia,
most of the applications for declarations are filed and instituted in the
High Courts by way of originating summonses. Enclosure one (1) was also
filed by way of an originating summons in this High Court and it was
certainly beyond reproach.
(2)(a) that the plaintiff had failed to
exercise the option for the GRRS on or before 30 June 1996 as provided for
by Recital "C" of the supplemental agreement and the GRRS had therefore
lapsed and was therefore null and void as reflected at paras. 5.1, 5.2,
5.3, 5.4, 5.5 and 5.6 of encl. 3;
(2)(b) that the plaintiff had failed to
execute the Power of Attorney concurrently with the exercise of the option
for the GRRS as provided for under cl. 3.3 of the supplemental agreement
as reflected at paras. 6, 6.1, 6.2 and 6.3 of encl. 3; and
(2)(c) that the plaintiff had failed to
execute the Power of Attorney by 30 November 1998 as stated in the
defendant's letter dated 16 November 1998 as seen in exh. "A4" of encl. 2.
In regard to issue 2(a), it must be recalled
that the defendant had in their letter of 18 February 1998 (that was
reproduced earlier and marked as exh. "A3" of encl. 2) categorically stated
at para. 3 thereto that, "As a gesture of goodwill, we wish to inform you
that the management is agreeable to grant you the said Scheme despite (the
fact) that you have not exercise(d) the option on the due date." So it can
be surmised that the dateline of 30 June 1996 that was accorded to the
plaintiff to exercise the option had been waived by the defendant. While
discussing waiver in the context of a revenue statute, Lord Hailsham of St
Marylebone LC aptly said in Banning v. Wright (Inspector of Taxes)[1972]
2 All ER 987 at 999, [1972] 1 WLR 972 at 980:
Waiver is the abandonment of a right.
Viewed from one aspect of the matter the right abandoned is conferred by
the conduct of the appellant in breach. Viewed from another aspect the
same right is conferred by the term of the contract which has been broken
by the appellant. When a contract is broken the injured party in condoning
the fault may be said either to waive the breach or to waive the term in
relation to the breach. What in each case he waives is the right to rely
on the term for the purpose of enforcing his remedy for the breach. I
cannot construe 'waiver' as only applicable to the total abandonment of
any term in the lease both as regards ascertained and past breaches, and
as regards unascertained or future breaches. I am equally unable to regard
a compromise forgiving a past default as the same thing as a consent
licensing in advance conduct for which a prior licence is required by the
terms of a contract.
I venture to say that the word "waiver" is
most commonly used to describe the process where one party grants on a
voluntary basis a concession to the other party by not insisting upon the
precise mode of performance provided for in the contract, whether it is
before or after any breach of the term waived. It is said that a waiver may
be express (Charles Rickards Ltd v. Oppenheim[1950] 1 KB 616, [1950]
1 All ER 420, CA) or implied from the conduct of one of the parties (Panoutsos
v. Raymond Hadley Corporation of New York[1917] 2 KB 473, CA). Of
significance would be that whether it is express or implied, it must be an
unambiguous representation (Woodhouse AC Israel Cocoa Ltd SA v. Nigerian
Produce Marketing Co Ltd[1972] AC 741, [1972] 2 All ER 271, HL), and
that representation must arise as a result of a positive and intentional act
of the party that grants the concession with all the material circumstances
in mind (Watson v. Healy Lands Ltd[1965] NZLR 511 at 534, per
Woodhouse J; Earl of Darnley v. London, Chatham and Dover Rly Co.[1867]
LR 2 HL 43 at 57, per Lord Chelmsford LC; and Auckland Harbour Board v.
Kaihe[1962] NZLR 68 at 88 (NZ CA), per Gresson P). According to Winn LJ
in the case of Panchaud Freres SA v. Etablissements General Grain Co[1970]
1 Lloyd's Rep 53 at 60, CA there must be actual knowledge and that
constructive notice would not be sufficient to establish waiver in the
context of commercial law. The plaintiff here relied and acted upon the
concession that was extended by the defendant by way of that letter dated 18
February 1998. And what the plaintiff did was entirely within the purview of
what Lord Denning LJ said in the case of Charles Rickards Ltd v.
Oppenheim[1950] 1 KB 616 at 623, [1950] 1 All ER 420 at 423, CA, where
his Lordship said that for a waiver to operate effectively, the party to
whom the concession was granted must act in total reliance of that
concession. Lord Diplock J too said in the same vein in the case of
Enrico Furst & Co. v. W.E. Fischer Ltd[1960] 2 Lloyd's Rep 340 at 350.
The same stand was also adopted by Woodhouse J in the case of Watson v.
Healy Lands Ltd (supra)at p. 514. I have no hesitation to hold that the
deadline of 30 June 1996 to exercise the option had been waived by the
defendant.
In regard to issue 2(b), I have this to say.
The plaintiff was only informed by the defendant that the Power of Attorney
which was prepared by the defendant's solicitors was only ready for
execution sometime on 16 November 1998 (see the letter from the defendant to
the plaintiff as seen at exh. "A4" of encl. 2 dated 16 November 1998). That
very letter had been reproduced earlier and the last paragraph of that
letter expressly stated in unequivocal terms the following salient words:
Please be informed that in the event that
the PA (referring to the Power of Attorney) is not executed, the GRR
option shall be deemed to have lapsed notwithstanding that you have
attempted to exercise the option in the earlier occasion.
which meant that the defendant's argument
that the Power of Attorney must be exercised concurrently with the exercise
of the option must fall to the ground like a deck of cards. This brings into
the picture issue 2(c). Again this issue must be read in the context of the
last paragraph of the letter dated 16 November 1998 as reproduced above
which showed that the defendant had clearly admitted that the plaintiff had
indeed previously exercised the option and had agreed that the plaintiff
will be entitled to the GRRS so long as the plaintiff executed the Power of
Attorney. Be that as it may, it must be recalled that the plaintiff did
execute the requisite Power of Attorney on 14 December 1998 and that the
defendant had unequivocally accepted that to be the case. So, the defendant
in exercising its right under the Power of Attorney had rented out the
property to Bumiputra Commerce Bank Berhad. I have enquired as to the
monthly rentals that the defendant had collected from Bumiputra Commerce
Bank Berhad but the learned counsel for the plaintiff was unable to
enlighten me on the matter. Be that as it may, on second thoughts, it made
not a whit of a difference as to the quantum of the monthly rentals because
under the supplemental agreement any excess over and above the GRRS would
belong to the defendant entirely as reflected in cl. 2.2 of the supplemental
agreement. Likewise any shortfall between the GRRS and the actual rentals
paid by Bumiputra Commerce Bank Berhad was of no concern to the plaintiff
because the defendant had guaranteed the plaintiff the GRRS sum of
RM4,166.67 per month for the period of six (6) years. Viewed in its correct
perspective the fact that the defendant had made some payments under the
GRRS to the plaintiff, and the fact that the defendant had accepted the
Power of Attorney executed by the plaintiff and the fact that the defendant
had rented out the property to Bumiputra Commerce Bank Berhad must surely be
factors that ought to be taken into account and these factors would demolish
the defendant's arguments that the GRRS was completely null and void. In my
judgment, the doctrines of waiver and estoppel must be vigorously applied in
favour of the plaintiff. These doctrines must be invoked against the
defendant in order to estop the defendant from denying that the GRRS was
valid. In my judgment, the defendant must be held accountable to the
plaintiff under the supplemental agreement and I must make a declaration
that the defendant be held liable to pay the plaintiff the sum of RM4,166.67
per month for the duration of the tenure of the guaranteed rental period. In
my judgment too, the declarations sought by the plaintiff in enclosure one
(1) at prayers (a) and (b) should also be acceded to. It would be manifestly
and grossly unjust or inequitable if the defendant was allowed to contend
that it was not liable to pay the plaintiff the monies under the GRRS
bearing in mind that the plaintiff had been deprived of the use of the
rentals of the property while the defendant happily collected the rentals
from Bumiputra Commerce Bank Berhad. Strangely enough, the defendant dare
not contend that the tenancy of the property with Bumiputra Commerce Bank
Berhad was also null and void because that contention would surely deprive
the defendant of its right to collect the rentals from the said Bank. Now,
surely the defendant cannot have the cake and eat it.
The letter of 18 February 1998 as seen at exh.
"A3" of encl. 2 would give rise to an estoppel by representation. Basically,
anyone who makes an unambiguous representation by words (Low v. Bouverie[1891]
3 Ch. 82) by words (Hunt v. Carew[1649] Nels. 46), or by conduct (Waldron
v. Sloper[1852] 1 Drew. 193), or by silence (Fung Kai Sun v. Chan Fui
Hing[1951] AC 489; and Pacol Ltd v. Trade Lines Ltd[1982] 1
Lloyd's Rep. 456) of an existing fact, and causes another party to act to
his detriment in reliance of the representation will not be permitted
subsequently to act inconsistently with that representation. The plaintiff
here was entitled to employ and apply the doctrine of estoppel by
representation to its advantage by relying on that letter of 18 February
1998 and the plaintiff here too can show that the defence was inconsistent
with the representation of the defendant on which the plaintiff was relying
upon (Amalgamated Investment and Property Co. (in liquidation) v. Texas
Commerce International Bank Ltd[1982] QB 84; and Pacol Ltd v. Trade
Lines Ltd (supra)). The case of Robertson v. Minister of Pensions[1949]
1 KB 227 should be applied vigorously in favour of the plaintiff. That was a
case where an officer claimed a pension and he relied upon a statement by
the war office that his disability had been accepted due to the military
service and the war office forebore to obtain an independent medical
opinion. The court held that the Crown through the Minister of Pensions
could not resile on the statement previously made. The court also held that
since the officer was no longer in a position to supply the necessary
evidence the Minister of Pensions was estopped from denying that he
qualified. Likewise here, the defendant must be estopped from resiling from
its letter dated 18 February 1998.
I must now proceed to the next issue.
(3) That The Defendant
Was Under A Mistake Of Fact And A Mistake Of Law When The Defendant Issued
Those Letters Exhibited As Exhibits "A5" And "A6" Of Enclosure 2 Wherein The
Defendant Allowed The Plaintiff To Exercise The GRRS Option
Now, the letter in exh. "A5" of encl. 2 was a
letter emanating from the defendant to the plaintiff dated 12 January 2000
and it was reproduced in the early part of this judgment. In brief, by that
letter the defendant had admitted that the payment under the GRRS shall be
paid to the plaintiff with effect from 1 May 2000. While exh. "A6" of encl.
2 were letters emanating from the defendant to the plaintiff dated 5 June
2000, 23 June 2000 and 9 August 2000 which showed beyond per adventure that
the defendant had set off the rentals of the property for the monthly
service charges and interest charges on service charges of the said property
and these letters too were alluded to somewhere in this judgment.
I must, at once, say that the general
principles of estoppel as alluded to by me earlier would surely defeat all
the feeble contentions by the defendant. As I said, where by words or
conduct, anyone who makes an unambiguous representation as to his future
conduct intending that the representation would be relied upon and in
consequence of which to affect the legal relations between the parties (Foot
Clinics (1943) Ltd v. Cooper's Gowns Ltd[1947] KB 506), and the
representee alters his position in reliance on that representation, then the
representor will be unable to act inconsistently with the representation if
by so doing the representee would be thereby prejudiced (Combe v. Combe[1951]
2 KB 215 at p. 220). Promissory estoppel is quite wide. It has been expanded
in equity. It includes not only representations of fact but also
representations of intention. Denning J gave prominence to the doctrine of
promissory estoppel in the case of Central London Property Trust Ltd v.
High Trees House Ltd[1947] KB 130 and it became firmly established and
entrenched in later cases (Ajayi v. R.T. Briscoe (Nigeria) Ltd[1964]
1 WLR 1326; and W.J. Alan & Co. Ltd. v. El Nasr Export and Import Co[1972]
2 QB 189). Just like estoppel by representation, promissory estoppel too
does not create a cause of action. It is used as a shield and not as a sword
(Combe v. Combe (supra)at p. 224).
To say that the defendant was mistaken was to
say something that was not correct. In fact, there was evidence that the
defendant was not mistaken at all. The letter dated 18 February 1998 would
categorically show that the defendant was not mistaken and that very letter
was the damning feature of the present case against the defendant. There
was, in my judgment, no mistake of fact and no mistake of law when the
defendant issued those other letters to the plaintiff. The defendant had
rented out the property to Bumiputra Commerce Bank Berhad and had reaped the
harvest, so to speak. The supplemental agreement gave the plaintiff certain
rights and privileges thereto and the plaintiff was only seeking reliefs
under the said agreement and nothing else. Effect must be given to the
supplemental agreement.
Under contract law, the word "mistake" has a
narrower meaning. It is a correct statement of the law to say and I so say
that parties will not be easily discharged from their contractual
undertakings simply because they entered into the contract under some
mistake or misunderstanding, or made a bad bargain (Clarion Ltd and
Others v. National Provident Institution[2000] 2 All ER 265). The
defendant here knew about the full impact and rigours of the supplemental
agreement. The defendant was willing to allow the plaintiff to subscribe to
the GRRS notwithstanding the fact that the plaintiff had not exercised the
option on the due date. The magnanimous gesture of the defendant as
reflected in the letter of 18 February 1998 can never be construed as a
mistake. That was not a mistake at all bearing in mind that the defendant
had collected the rentals of the property from Bumiputra Commerce Bank
Berhad. This was not a case where the parties were under a common
misapprehension either as to facts or as to their relative and respective
rights. This was a case where the parties entered into a legally enforceable
agreement giving rise to obligations for the parties thereto.
I will now allude to the fourth issue. It was
worded in this way:
(4) That The Defendant
Contended That It Was Entitled To Set Off The Service Charges And The
Sinking Fund From The GRRS Payments
I will now summarily say that such a
contention can best be described as nothing short of being frivolous. Clause
2.1(a) of the supplemental agreement as reproduced earlier categorically
stipulated that "... it shall be the liability of the vendor (referring to
the defendant) to absorb the cost(s) of service charge and
sinking fund contribution ..." Both
parties were bound by the terms of the supplemental agreement and the
defendant cannot unilaterally act outside the purview of that supplemental
agreement. This was my judgment and I so hold accordingly.
The next issue was on locus standiand
it may be stated as follows:
(5) Whether The Plaintiff
Had Locus Standi To Commence The Present Action Bearing In Mind That The
Plaintiff Had Entered Into A 'Facilities Agreement And Assignment' Dated 25
July 1996 With Arab-Malaysian Bank Berhad?
The crucial clauses of the "Facilities
Agreement And Assignment" to refer to would the ones styled as s. 9.01 and
s. 9.05. I will now reproduce them in verbatim:
Section 9.01 Assignment
In consideration of the Bank agreeing to
make available and or to continue to make available the Credit Facilities
to the Borrower(s) and pursuant to Section 1.04(1)(i) hereof, the
Borrower(s) as the only beneficial owners of the Property hereby ASSIGN
into the Bank the Property and all the title, rights and interests of the
Borrower(s) therein and the full and entire benefits, remedies and
advantage whatsoever of the Borrower(s) under the Sale and Purchase
Agreement to HOLD the same unto the Bank absolutely. Notwithstanding this
Assignment or any other provisions of this Instrument the Borrower(s)
shall and hereby undertake to pay all and any balance of the purchase
monies or other monies payable under the provision of the Sale and
Purchase Agreement and to continue to observe perform and be bound by all
whatsoever conditions covenants and stipulations therein on the part of
the Borrower(s) expressed and contained.
Section 9.05 Assignment To Remain in
Force
The Assignment herein shall remain in force
until the Said Charge referred to in Section 3.03(1) hereof is duly
registered against the Property or the whole of the monies secured by the
Property together with interest thereon and all the other monies payable
to the Bank hereunder are paid in full whichever first happens but without
prejudice to the Bank's rights and remedies against the Borrower(s) in
respect of any antecedent claims or breach of covenant.
But, it must be borne in mind that under
these sections of the Facilities Agreement And Assignment as seen in exh.
"YBA1" of encl. 3, the plaintiff had merely assigned the property and all
the plaintiff's title, rights and interests in the sale and purchase
agreement to Arab-Malaysian Bank Berhad but not its rights under the
supplemental agreement. It must be recalled that the plaintiff's rights
under and flowing from the supplemental agreement pertained to payments
under the GRRS which was a scheme purely in the nature of a contractual
relationship between the plaintiff and the defendant and it has nothing to
do with Arab-Malaysian Bank Berhad. It must also be recalled that the
prayers in encl. one (1) relate and revolve entirely on the supplemental
agreement. So, it can be surmised that Arab-Malaysian Bank Berhad has no
right to the GRRS payments in any circumstances whatsoever and that the said
Bank was not obliged to perform any of the covenants or obligations of the
plaintiff under the supplemental agreement. I venture to say that the Bank
too - referring to the Arab-Malaysian Bank Berhad, was not obliged to
perform any of the covenants or obligations of the plaintiff under the sale
and purchase agreement of the said property. Rather, only the rights and not
the obligations of the plaintiff in the sale and purchase agreement were
assigned to Arab-Malaysian Bank Berhad. So, the crucial question to pose
would be, "whether Arab-Malaysian Bank Berhad needs to be made a party to
this originating summons?" I would swiftly respond and answer the question
posed in the negative. There was no necessity to cite Arab-Malaysian Bank
Berhad as a party because it would not serve a purpose at all. I say, with
all convictions, that Arab-Malaysian Bank Berhad do not have any right to
the GRRS payments under the supplemental agreement and that any orders that
I will make in regard to encl. one (1) will not affect Arab-Malaysian Bank
Berhad at all and these orders too will not bind the said Bank as well. It
would, of course, be a completely different scenario if the plaintiff's
action in this originating summons were to involve any of the rights of
Arab-Malaysian Bank Berhad under the sale and purchase agreement, for
examples, claim for compensation for late completion of the property, claim
for defective construction, or for the rescission of the sale and purchase
agreement which would seriously affect Arab-Malaysian Bank Berhad's security
over the property and the said Bank's right to foreclose the property. In my
considered opinion, it would be unnecessary to examine those authorities on
locus standibeginning with Nouvau Mont Dor (M) Sdn Bhd v. Faber
Development Sdn Bhd[1985] 1 CLJ 56; [1985] CLJ (Rep) 231because all
those authorities were in regard to the assignments of the sale and purchase
agreements unlike the present case at hand where the plaintiff's cause of
action was premised upon the supplemental agreement. It must be recalled
that under encl. one (1), the supplemental agreement was put under the
microscope and it showed the defendant's infringement of the plaintiff's
rights under the supplemental agreement and not under the sale and purchase
agreement.
In Max-Benefit Sdn Bhd v. Phuah Thean An &
Anor[2001] 2 CLJ 70and in Sakinas Sdn Bhd v. Siew Yik Hau & Anor[2002]
3 CLJ 275, the High Courts there held that the assignments therein to be not
absolute but rather conditional or by way of a charge only. In Chan Min
Swee v. Melawangi Sdn Bhd[2000] 7 CLJ 1, there were clauses in the
assignment which were similar to our ss. 9.01 and 9.05 of the Facilities
Agreement and Assignment and there the defendant's application to strike out
the plaintiff's claim therein proceeded on the argument by the defendant's
counsel that it was a conditional assignment as opposed to an assignment
that complied with s. 4(3) of the Civil Law Act 1956.
The assignment in the present case was
conditional and they were quite similar to the assignments found in
Max-Benefit, Sakinasand Chan Min Swee.
The High Court Judges in Max-Benefitand
in Sakinashad decided that the plaintiffs in those actions had the
locus standito commence the actions without the need to join the
assignee banks as parties to the actions. Whereas the High Court Judge in
Chan Min Sweehad decided to the contrary.
But one thing was certain. It was this. The
ratio decidendiin those three cases - referring to Max-Benefit,
Sakinasand Chan Min Swee,have no bearing to the present case at
hand because the assignments in those three cases relate to the rights in
the sale and purchase agreements unlike the present case at hand where the
rights of the supplemental agreement were not assigned and were of no
concern to Arab-Malaysian Bank Berhad.
In Chan Min Sweethere was a need for
the assignee bank to be made a party to that action because the plaintiff's
case there was for rescission of the sale and purchase agreement and thus
the decision of the High Court Judge would, of course, be of paramount
importance to the assignee bank whose interests as a secured party of the
loan would be affected. So, I can easily surmise that, in the context of the
present case, there was no necessity for Arab-Malaysian Bank Berhad to be
made a party because the said Bank have no interests whatsoever in the GRRS
and the orders sought herein in encl. one (1) would not affect the said
bank's interests and their security over the property would remain intact.
Accordingly, I must dismiss the defendant's objection in regard to the issue
of locus standi.
Conclusion
For the reasons as adumbrated above, I gave
an order in terms of encl. one (1) at prayers (a), (b), (c) and (d). |