H'ng Ah Ba v Cheong Soo Leng & ors
(Golden City Development Company)
IN THE
COURT OF APPEAL OF MALAYSIA
(Appellate Jurisdiction)
LAND LAW: Housing developers - Sale and purchase agreement
- Land not transferred and house not completed and delivered within
time period agreed - Whether plaintiff purchaser entitled to
specific performance and damages for late delivery - Whether
defendants were developers within Housing Developers (Control and
Licensing) Act 1966 - Whether plaintiff entitled to set off payment
of purchase price with damages for late delivery
CONTRACT: Breach - Sale and purchase agreement - Land not
transferred and house not completed and delivered within time period
agreed - Whether plaintiff purchaser entitled to specific
performance and damages for late delivery - Whether defendants were
developers within Housing Developers (Control and Licensing ) Act
1966 - Whether plaintiff entitled to set off payment of purchase
price with damages for late delivery
CIVIL APPEAL NO: P-02-532-1997
Antara
1. Cheong Soo Leong
2. Goh Kim Choon
3. Yap Kee Hen
(kesemuanya berniaga sebagai Golden City Development Company) …
Perayu
Dan
H’ng Ah Ba … Responden
(DALAM PERKARA GUAMAN SIVIL NO: 22-507-83
DALAM MAHKAMAH TINGGI MALAYA DI PULAU PINANG
Antara
H’ng Ah Ba … Plaintif
Dan
1. Cheong Soo Leong
2. Goh Kim Choon
3. Yap Kee Hen
(kesemuanya berniaga sebagai Golden City Development Company) …
Defendan)
Corum: Mokhtar bin Hj. Sidin, HMR
Abdul Kadir bin Sulaiman, HMR
Pajan Singh Gill, HMR
GROUNDS OF JUDGMENT
This is an appeal by the first and the third defendants in High
Court Civil Suit No: 22-507-83 against the decision of the learned
Judge made on 24th July 1997 allowing the claim of the plaintiff.
For convenience, throughout this judgment, the appellants will be
referred to as the defendants and the respondent as the plaintiff.
2. The defendants were partners in the firm of Golden City
Development Company (“the firm”). The first defendant was at the
same time a building contractor for the firm.
3. The plaintiff as a purchaser entered into a sale and purchase
agreement dated 1st August 1979 (the first agreement) with the first
to the third defendants as “the vendor”, who describe themselves as
“the owner of all that piece of land, known as H.S. (D) 66, P.T.
1426-67 (Private Plot No: S19)” (“the subject land”). The cost of
the subject land was RM21,327/-. A single storey semi-detached house
was to be constructed on the subject land for the plaintiff. To that
end, the plaintiff entered into another agreement (the second
agreement) also dated 1st August 1979 with the firm. The plaintiff
describes himself as the owner who purchased the said land from the
three defendants. The three defendants executed this second
agreement on behalf of the firm which describes itself as the
Company. The consideration for the construction of the semi-detached
house was RM33,000/-. Hence, the total cost to be incurred by the
plaintiff for the price of the land and the house to be constructed
on it, worked out to a total amount of RM54,327/-. However, the
agreement between the parties did not come about smoothly as
expected by the two agreements. Some payments were made by the
plaintiff in pursuance to the two agreements but the land was not
transferred and the house was not completed and delivered to him in
the time period agreed.
4. By Suit No: 22-507-83, (“the plaintiff’s suit), the plaintiff on
13th August 1983 launched a claim against the first to the third
defendants for specific performance in respect of the two
agreements, liquidated damages for non-delivery of the house from
31st January 1981 to the date of delivery of vacant possession to be
assessed, interest at the rate of 8% p.a. from the date of judgment
to the date of satisfaction, and costs. The three defendants filed
their joint defence but did not make any counterclaim in respect of
the plaintiff’s suit.
5. However, only on 25th September 1986, after a lapse of about 3
years from the date of the plaintiff’s suit, the firm, (and not the
defendants), filed Suit No: 24-786-86, (“the firm’s suit), against
the plaintiff upon the same subject matter of the sale of the
subject land and the construction of the semi-detached house, for a
declaration that the two agreements mentioned earlier have been
lawfully determined and are null and void and of no legal effect,
damages in the sum of RM16,717.95, interest and costs.
6. Upon agreement by all parties concerned, the two suits were heard
together by the learned Judge in the High Court. At the end of the
trial, the learned Judge allowed the claim of the plaintiff against
the first to the third defendants in the plaintiff’s suit but
dismissed the firm’s suit. The order of the court dated 24th July
1997, which is the subject matter of this appeal, allowing the
plaintiff’s claim, however, made no mention of the dismissal of the
suit filed by the firm. But the Notice of Appeal by the defendants
dated 6th August 1997 against the decision of the learned Judge
includes an appeal against the dismissal of the firm’s suit.
7. Be that as it may, however, in the judgment of the learned Judge
of 24th July 1997, he did touch on the matter of the firm’s suit as
follows”
“the last issue to be addressed by the court is
whether the Defendants’ claim against the Plaintiff in C.S. No.
22(24)-786-86 for rescission and for consequential prayers is
statute barred.”
8. Having analysed the evidence before him, the
learned Judge concluded:
“From the pleadings and testimony given in court,
it is beyond peradventure that the whole essence of the
Plaintiffs’ sic Defendant’s defence and their action for
rescission is founded upon their contention that the default in
progress-payment on the part of the Plaintiff occurred on
14.12.79, and the notice (D2) ‘to repudiate the said agreement’,
under clause 11(d) was sent on 19/10/83. Thus, time would start
to run from this date and the Defendants had six years to
commence action, under Section 6(1) Civil Law Act. However the
Defendants only filed their claim on 25.9.86 when they should
have filed their suit on or before 14.12.85. There was a delay
of about 9 months. In the event, I would hold that the
Defendants’ claim in C.S. 22-786-86 not only fails upon grounds
adumbrated in Civil Suit No. 22-507-1983 but is also statute
barred and must, for this added reason, be dismissed with costs.
Consequently, the Defendants’ claim in C.S. 786-1986 (as
plaintiffs therein) would have to be dismissed with costs, and I
so order.
I would therefore allow judgment to the Plaintiff
in the following terms as prayed for in the Statement of Claim
in C.S. 507-83 under prayers (a), (b), (d), (f) and (g), to wit
(for clarification): Specific performance of the first Agreement
for the sale of the land by the Defendants to the Plaintiff;
Specific performance of the Second Agreement for the erection of
the said house; Liquidated damages for non-delivery of the said
house from the 31.1.1981 to 20.7.1983 to be assessed by the
Senior Assistant Registrar of this court; Liquidated damages for
non-delivery of the said house from 21st July, 1983 to date of
delivery of vacant possession also to be assessed by the Senior
Assistant Registrar of this court; Interest on the liquidated
damages referred to in paragraphs (d) and (e) above at the rate
of eight per centum (8%) per annum from the date of judgment to
date of satisfaction or realisation. And the Plaintiff will also
be entitled to the costs of his action.”
9. Since the decision to dismiss the firm’s suit is
not the subject matter of the Order appealed against, we need
mention no more of it except that part of the judgment of the
learned Judge touching on the issue of limitation over the cause of
action of the firm. Limitation is a statutory or legal remedy as
distinct from rescission which remedy is of equitable nature. For
limitation to be an issue before the court, it has to be pleaded.
However, we cannot find anywhere in the defence put up by the
plaintiff that this issue was ever pleaded by him. Hence, it is a
non-issue before the learned Judge. However, we do find from the
defence that the plaintiff raised various equitable defences, such
as laches and unconscionable conduct on the part of the defendants
in order to defeat the claim for rescission. Unfortunately, nothing
found itself in the judgment of the learned Judge on those issues.
However, we fully agree with the learned Judge upon his ground of
dismissal on the ground “adumbrated in Civil Suit No. 22-507-1983”
i.e. the plaintiff’s suit, in that he accepted the version of the
plaintiff in the suit as against the defendants’. The learned Judge,
in our view, is the best person to assess and evaluate the evidence
of both parties before him and perusing the records before us, we
are in no position to disagree or quarrel with his assessment and
evaluation in deciding the case in favour of the plaintiff in the
plaintiff’s suit.
10. Back to the mainstream. According to the first agreement, the
plaintiff was required to pay towards the cost of the said land, on
or before the execution of the agreement a sum of RM2,132.70 by way
of deposit and to account of the purchase price. The completion and
the payment of the balance of the purchase price shall take place
within 18 months from the date of the agreement.
11. The schedule of payment provided by the agreement, is a follows:
(a) Booking Fee - 2 ½%
(b) Upon execution of Purchase Agreement - 7 ½%
(c) On completion of foundation work - 10%
(d) On completion of foundation work - 15%
(e) On completion of Brickwalls of the building, door and window
frames - 15%
(f) On completion of electrical wiring and plumbing (without
fittings) - 10%
(g) On completion of roofing and internal plastering - 15%
(h) On completion of roads and drains serving the said house -
15%
(i) On completion and delivery of certificate of fitness and
handing over - 10%
12. The agreement also made provisions that upon
payment of the balance of the purchase price the defendants will
execute a proper assurance to the plaintiff of the property sold.
One of the terms stipulated in clause 7 of the agreement is that if
the plaintiff shall fail to pay any of the instalments and or the
balance of the purchase price for any period in excess of 14 days
after its due date, the defendants shall be entitled at its option
on giving the plaintiff or his solicitors not less than 30 days
notice in writing to treat the agreement as having been repudiated
by the defendants and the agreement shall at the expiration of the
said notice be annulled and in such event:-
(a) the defendants shall be entitled to deal with
or otherwise dispose of the said property as they shall see fit
as if the agreement had not been entered into,
(b) the instalments previously paid by the plaintiff shall be
refunded to the plaintiff without interest, and
(c) neither party shall have any further claim against the other
for costs, damages, compensation or otherwise.
13. According to the second agreement, the
consideration of RM33,000/- for the construction of the
semi-detached house for the plaintiff on the said land is to be paid
by the plaintiff “by such instalments (according to the progress of
the building operations) as may be requested” and such instalments
to be paid within 14 days “from the receipt of the Registered or
ordinary notification of each such request”.
14. Clause 3 of this second agreement stipulates that the company
will complete the said house of the plaintiff as soon as possible or
within 18 months from the date of the agreement and the final
instalment of the sum of RM33,000/- shall be paid not later than 14
days after the firm shall have given written notice to the plaintiff
that the said house has been completed as aforesaid and is fit for
occupation. The schedule of payment provided in the agreement is the
same as that stipulated in items (b) to (i) of the first agreement
mentioned in paragraph 11 above, except for item (b) being
substituted with figure “10%” instead of “7 1/2”
15. Clause 6 thereof stipulates that if the plaintiff shall fail to
pay the instalments (save and except the final instalment) the firm
shall stop work on the construction, and may take steps as may be
advised by its solicitors. The consequence of the plaintiff failing
to comply with the terms of payment is the same as that provided for
in the first agreement.
16. Thus, it is clear from the reading of the two agreements, it was
the intention of the parties that the plaintiff would ultimately
owned the subject land belonging to the defendants with a
semidetached house constructed by the firm on it for a total
consideration of RM54,327/- as soon as possible or within 18 months
from the date of the agreements. But as mentioned earlier, this did
not happen. Hence, the suit by the plaintiff.
17. From the evidence adduced, in regards to the two agreements, the
plaintiff, however, paid only a total sum of RM21,730.80 as follows:
17th November, 1978 RM 1,000.00
8th July, 1979 RM16,298.10
24th July, 1979 RM 4,432.70
Total paid: RM21,730.80
18. According to the receipts issued by the firm, the
payment on 17th November 1978 for RM1,000.00 was “Being Payment to
account of Purchase Price $54,327-00 of single Storey Semi detached
house on plot No: S19, HS(D) 65, KT. 1426-67 and subject to a sale
Agreement.” It is clear that this payment was made before the
execution of the two agreements. The “Purchase Price” includes the
cost of the land and the house.
19. The payment on 8th July 1979 for RM16,298.10 was for the purpose
of “Progress Payment on Plot No. S19”. This payment was made after
the execution of the two agreements. It is not clear from the detail
of payment in the receipt as to whether this payment was exclusively
for the said land or for the house or for both. But based on the
schedule of payment provided in the two agreements it would not
matter very much and the schedule is based on the progress of the
construction on the land.
20. The payment on 24th July 1979 for RM4,432.70 was for the purpose
of “Progress Payment on Plot S19”. Also this payment was made after
the execution of the agreements.
21. In the statement of claim, the plaintiff pleaded that although
the construction of the house commenced, the defendants neglected
and refused to take any steps towards the completion of it under the
second agreement and/or to execute a transfer of the said land to
him under the first agreement despite a final notice of demand given
on 10th June 1983.
22. In their joint defence, the defendants by their statement of
defence dated 29th February 1984 aver that the plaintiff himself had
defaulted in his progress payments in consequence whereof all
building works had to come to a halt for lack of funds. According to
the defence, the date of default was 17th July 1979 and onwards. The
construction of the house had reached the stage of brickwalls with
door and window frames have been completed, which is item (e) in the
schedule of payment. Hence, the claim of the plaintiff was disputed
and the defendants prayed that the claim of the plaintiff be
dismissed with costs. But, bearing in mind the date of the defence
and the date of the last receipt issued, the reason for the stoppage
of work on the land as given by the defendants cannot be
substantiated. Be that as it may, this defence was, however, amended
in February 1996, some 2 ½ years after the filing of the plaintiff’s
suit. Of substance, the date of the alleged default was now amended
to 14th December 1979 and the stage of the house construction
completed was roofing and internal plastering, which is item (g) in
the schedule of payment. However, in his evidence before the learned
Judge, the plaintiff as PW1, testified that in November, 1979, which
was some 4 months after the last receipt issued, when he went back
to the site office, he found out that the housing project of the
firm had stopped due to dispute among the three defendants. This
incident about the dispute among the defendants was amply
corroborated by the evidence of PW2 who worked for the firm as a
site-clerk for the period from 4th April 1975 to March 1981. The
plaintiff reiterated that he had never defaulted in progress
payments as he did not receive any demand from the defendants with
or without the architect’s certificate, and indeed, vide letter
dated 28th December 1984 the defendants sought to refund the amount
the plaintiff had paid up but was refused by the plaintiff. He did
not pay progressive payments more so because construction works has
stopped, the site office was closed and the site was covered in
vegetation. The first defendant, in his evidence as DW2, however,
admitted that the construction works in the project stopped in
October or November 1980 because the firm was short of fund due to
no-payment of progress payments by the purchasers. The works,
however, resumed in June 1984 and the buildings were completed only
on 27th December 1985.
23. Then as mentioned earlier, on 25th September 1986, after a lapse
of about 3 years from the date of the suit by the plaintiff, the
firm (and not the defendants in the plaintiff’s suit) took out a
writ of summons against the plaintiff: Suit No: 24-786-86 mentioned
earlier.
24. The pleadings averred that based on the two agreements, the firm
on 1st August 1979 commenced building operations on the said land.
However, in breach of the relevant provisions of the two agreements,
the plaintiff defaulted in his progress payment. According to the
particulars provided, the alleged progress payment was due on 28th
November 1979. As at that date, the plaintiff had paid a total sum
of RM21,730.80 and the balance due as at that date was RM13,581.75
and by 19th October 1983 there was a delay of 1422 days. On 19th
October 1983 the firm gave a written notice to the plaintiff
requiring him to settle all the arrears of payment within 30 days
from the date of the notice failing which the firm would repudiate
the said agreements and refund all instalments previously paid by
the plaintiff without interest. Despite the said notice, the
plaintiff had failed and continued to neglect to pay. So, on 28th
December 1984 the amount of money paid so far by the plaintiff was
refunded in accordance with the provisions of the agreements.
However, on 14th January 1985 the said amount was refunded to the
firm by the plaintiff maintaining the two agreements as valid and
subsisting. Then on 4th April 1986 the firm’s solicitors wrote to
the plaintiff informing him that there was a sum of RM5,012.85
refundable to him after setting off a sum of RM16,717.95 being the
resulting damages sustained by the firm as a result of the
plaintiff’s willful failure and neglect to comply strictly with the
terms and conditions of the two agreements. The firm explained the
set off sum being loss and damages suffered on account of cost
incurred during progress of work and the difference for price
increase. Hence, the firm in the suit claims against the plaintiff
for a declaration that the two agreements have been lawfully
determined and are now null and void and of no legal effect, damages
in the sum of RM16,717.95 above-stated, interest and costs. Be it
noted that in the amended defence to the plaintiff’s suit, the date
of the alleged default was said to be 14th December 1979 but in the
statement of claim of the firm the alleged progress payment was due
on 28th November 1979. For the case of the firm or the defendants,
it is indeed confusing to say the least.
25. In his defence to the firm’s suit, the plaintiff averred that
the firm did not continue with the said building works and did not
complete the construction of the house within 18 months as agreed.
As to the alleged default in the progress payment, the plaintiff
averred that he was not bound to do so as the firm’s demand for
payment, which was denied, was not supported with the requisite
architect’s certificate.
26. As to the rescinding of the agreements by the firm, the
plaintiff averred that it was not entitled to do so for the
following reasons:
(a) that it was done only after the partners was
aware of the plaintiff’s suit against them,
(b) that as at the date of the company’s writ, the sum of
RM24,564.73 indemnity for the delay in the delivery of the house
was due and continuing, and the plaintiff is entitled to have it
set-off from the balance of the purchase price,
(c) that the defendant is not entitled to payments alleged to be
due because he was not supplied with the architect’s certificate
in respect of the progress work done,
(d) Housing Developers (Control and Licensing)
Act 1970 prohibits rescission, and
(e) belated exercising of the right, if any, by the defendant.
27. Hence, the claim is denied except for the balance
of such sum after the setting-off of the indemnity due to him which
he is willing and ready to do so. He prays for the dismissal of the
suit with costs.
28. At the hearing of the two suits before the learned Judge the
following were the issues agreed to be resolved:
(a) whether the defendants are developers within
the ambit of the Housing Developers Act 1966,
(b) whether the plaintiff is entitled to damages for late
delivery pursuant to the Act and the Housing Developers Rules,
(c) whether the plaintiff is entitled to set off the payment of
the balance of purchase price is the answer to (b) is in the
affirmative,
(d) whether the plaintiff is entitled to specific performance of
the two agreements,
(e) whether the defendants are entitled to rescind the two
agreements on ground of default of progressive payments and to
claim damages and whether rescission by the defendants is
permissible in law after an action for specific performance has
already been commenced by the plaintiff.
29. Having heard the evidence proffered by both
parties, the learned Judge preferred the evidence tendered by the
plaintiff as against that of the defendants. On our part, having
gone through the records, we see no reason to differ with the
findings made by the learned Judge and we duly affirm his findings.
The learned judge found issues (a) to (d) above in the affirmative.
30. On issue (a), we find that the second agreement entered into
with the plaintiff is not one of constructing a house on his land
per se by the firm. The firm with the three defendants as partners
embarked on a project to develop a total of 75 units of houses
spread over three phases. The project for which the plaintiff is
involved was comprised in the third phase comprising of the
construction in all of 26 units of single storey semi-detached
houses of which the plaintiff’s house was one. They were therefore,
not merely ordinary contractors engaged to build houses for
individuals but are housing developers involved in housing
development within the context of section 3 of the Housing
Developers (Control and Licensing) Act 1966. So the learned Judge
was right in holding that the defendants are in fact developers
within the meaning of the Housing Developers Act 1966.
31. On issue (b), consequent upon the finding on issue (a) and the
default on the part of the defendants, the firm must be liable in
damages to the plaintiff for late delivery beyond the agreed
completion date stipulated in the agreements. Hence, the learned
Judge is again right in so holding.
32. On issue (c), in accordance with the decision in S.E.A. Housing
Corporation Sdn. Bhd. v. Lee Poh Choo (1982) 2 MLJ 31 cited by the
learned Judge, the plaintiff is entitled to set off the payments of
the balance of the purchase price with that of damages for late
delivery. So, the learned Judge cannot be faulted for so holding.
33. On issue (d), upon the finding by the earned Judge that the
defendants had committed breach of the agreements, which finding we
concur, an order for specific performance of both the said
agreements in favour of the plaintiff would necessarily follow.
34. On the last issue, which is issue (d), all we need to say in the
light of what we said earlier, is that the suit by the firm was
nothing but an attempt on its part to find an escape route over the
valid action of the plaintiff filed some three years earlier against
the defendants.
35. For the above reasons, having heard the appeal, we, on 13th
August 2002 dismissed this appeal of the defendants and duly
affirmed the decision of the learned Judge in allowing the claim of
the plaintiff in Suit No: 22-507-83. We, however, made no order as
to the costs of this appeal.
Dato’ Hj. Abdul Kadir bin Sulaiman
Judge, Court of Appeal
Malaysia
Dated: 22nd December 2003
Counsel for Appellant:
En. Tan Beng Hang
Solicitor:
Tetuan Presgrave & Matthews
Peguambela dan Peguamcara,
P.O. Box 81
10710 Penang
Counsel for Respondent:
En. M. Athimulan
Solicitor:
Tetuan Athimulan & Co
73, 1st Floor, Penang Street
10150 Pulau Pinang |