MBf Property
Services Sdn Bhd & Anor v Balasubramaniam a/l K Arumugam
Court of Appeal
- Civil Appeal No W-02-714-97
Gopal Sri Ram,
NH Chan, Ahmad Fairuz Sheikh Abdul Halim,
JJCA
January 25,
2000
CONTRACT:
Agreements - Whether formed part of the
same transaction - Whether should be
read together - Building (Federal
Territory of Kuala Lumpur) By-Laws 1985
Words and Phrases:
Meaning of "Certificate of Fitness" -
Building (Federal Territory of Kuala
Lumpur) By-laws 1985
The
respondent entered into an agreement
(the sale and purchase agreement) with a
housing developer, Kesturi Sakti Sdn
Bhd, for the purchase of a property. In
order to finance the purchase, the
respondent applied for a loan from the
second appellant, MBf Properties Berhad.
By a letter, the second appellant
offered the respondent a housing loan,
which the respondent accepted. Clause 8
of the letter stated that "interest on
the loan shall be payable monthly until
the issuance of the Certificate of
Fitness for Occupation" (CF), and
that the first instalment would be
payable after the date of the issuance
of CF. It was also stated in the same
clause that the second appellant
reserved the right to effect the
commencement of the monthly instalment
at its absolute discretion.
The respondent then
entered into an agreement with the first
appellant, MBf Property Services Sdn
Bhd. This agreement was effectively an
undertaking by the first appellant to
pay all interest accrued on the
respondent's loan until the issuance of
the CF.
The respondent
subsequently applied for a declaration
that there was no necessity for any
payments to be made to the second
appellant until the issuance of the CF.
The term "Certificate of Fitness" was
not defined in the agreements, so, the
learned Judge, in granting an order in
terms of the application, relied on the
Building (Federal Territory of Kuala
Lumpur) By-Laws 1985 in interpreting
that term. This is the appellants'
appeal against that decision.
Issue(s)
-
Whether the second appellant was
entitled to call upon the respondent to
commence repayment of the loan without
taking into account the issuance of the
CF.
-
Whether the learned Judge erred in her
decision.
Held
-
The three agreements must
be read together as they formed part of
the same transaction. The second
appellant could not rely on Clause 8 of
the letter of offer, without taking into
account the sale and purchase agreement
and the agreement between the respondent
and the first appellant. Therefore, the
second appellant was not entitled to
call upon the respondent to commence
repayment of the loan without taking
into account the issuance of the CF.
-
The learned Judge reached
her decision based on well-settled
canons of construction and hence did not
commit any error in reaching her
decision.
Appeal dismissed with
costs: Order of High Court Judge
affirmed
Case(s) referred to by
the court
IDC Group Ltd v Clark
[1992] 2 EGLR 1184 (ref)
Manks v Whitely [1912] 1
Ch 735 (foll)
Legislation considered
Building (Federal
Territory of Kuala Lumpur) By-laws 1985
Housing Developers
(Control & Licensing) Regulations 1989
Gopal Sri Ram, JCA
This appeal concerns the
construction of an agreement entered
into between the first appellant and the
respondent. Briefly, the background
against which this appeal rests is as
follows.
On July 23, 1993, the
respondent entered into a sale and
purchase agreement with a housing
developer called Kesturi Sakti Sdn Bhd
to purchase a property. It was an
agreement in the statutory form
prescribed by the Housing Developers
(Control & Licensing) Regulations 1989.
In order to finance the
purchase of the property under the sale
and purchase agreement, the respondent
applied for and obtained a loan from the
second appellant. In its letter of offer
of a housing loan dated August 25, 1993
the second appellant inserted a
provision which reads as follows:
"Clause 8"
Repayment:
Interest on the loan shall be payable
monthly until the issuance of
Certificate of Fitness (CF). Upon the
issuance of CF, repayment of this loan
will be by 132 equal monthly instalments
of principal and interest of Malaysian
Ringgit RM2,628.76, the first instalment
to be made the first day each month
following next after the date of
issuance of Certificate of Fitness (CF).
However, MBf Berhad reserve the right to
effect the commencement of the monthly
instalment of principal and interest at
our absolute discretion from time to
time."
This offer was accepted
by the respondent on September 2, 1993.
Contemporaneously with the signing of
the sale and purchase agreement, the
first appellant and the respondent
entered into an agreement which is
evidenced in an undated letter of the
first appellant. Shorn of its formal
parts this is what it says:
"We refer to your
purchase of the above unit.
We are pleased to inform
you that in consideration of you
purchasing the said unit we agree to pay
all the interest accrued on your loan
disbursed to pay for the purchase price
of the above unit during the period of
construction of the unit and until your
loan is fully drawdown with the
Certificate of Fitness being issued. The
agreement to pay is not assignable by
you and subject to you complying with
the terms and conditions of your Loan
Agreement with your end financier.
The payment of the
interest will be made by us directly to
your end financier with whom we shall be
making arrangement to pay with your
consent. Your end financier will keep
you informed of the payment.
Please note that our
agreement to pay interest is also
subject to that the interest rate from
your end financier for the loan must not
be more than the prevailing rate of
interest imposed by MBf Finance Berhad
for this type of unit. If the interest
rate of your loan is higher than the
rate of MBf Finance Berhad, you will
have to bear the difference of any
excess.
Kindly signify your
acceptance of our agreement to pay
the interest and your consent to
communication with your end financier."
This document is signed
by the first appellant as the attorney
for Kesturi Sakti Sdn Bhd. It shows us
having been copied to "End Financier"
who in the present instance, counsel for
the appellant concedes, is the second
appellant.
Later, on April 29.1997,
the respondent took out an originating
summons against the appellants, asking
for a declaration that he need not make
any payments to the second appellant
until the issuance of the certificate of
fitness for occupation. The learned
Judge granted an order in terms of that
application.
Before us, Mr Kelvin Kong
for the appellant, submitted that the
learned Judge erred by failing to take
account of Clause 8 of the second
appellant's letter of offer. He argued
that on paper construction of the terms
of the said letter, which was issued by
the second appellant and accepted by the
respondent, the second appellant
reserved the right to call upon the
respondent to commence repayment of the
loan without taking into account the
issuance of the certificate of fitness
for occupation.
With respect, we cannot
accept this submission. The three
documents; the sale and purchase
agreement, the agreement with the first
appellant and the loan agreement with
the second appellant, must be read
together as they form part of the same
transaction. This is in accordance with
settled principles of law.
Thus, in Manks v
Whitely [1912] 1 CH735, Fletcher
Moulton LJ, said (at p 754):
"[W] here several deeds
form part of one transaction and are
contemporaneously executed they have the
same effect for all purposes such as are
relevant to this case as if they were
one deed. Each is executed on the faith
of all the others being executed also
and is intended to speak only as part of
the one transaction, and if one is
seeking to make equities apply to the
parties they must be equities arising
out of the transaction as a whole. It is
not open to third parties to treat each
one of them as a deed representing a
separate and independent transaction for
the purpose of claiming rights which
would only accrue to them if the
transaction represented by the selected
deed was operative separately. In
other words, the principles of equity
deal with the substance of things, which
in such case is the whole transaction,
and not with unrealities such as the
hypothetical operation of one of the
deeds by itself without the others."
(emphasis added.)
When the three documents
are read as a whole, their effect is
this. In the first place, the respondent
shall purchase the property from the
developer at a specified price and terms
provided under the sale and purchase
agreement. Thereafter, the first
appellant shall keep the respondent
indemnified and harmless in respect of
any monetary payments due to the second
appellant until the certificate of
fitness of occupation is issued.
Secondly, the second appellant will lend
money to the respondent to pay for the
purchase upon the mutual covenants
contained in the its letter of offer
subject to the condition that the
interest will be paid by the first
appellant during the relevant period.
Now it is quite clear
that the undated letter of the first
appellant provides no definition of the
expression "Certificate of Fitness". It
merely uses that term. The learned Judge
relied on the Building (Federal
Territory of Kuala Lumpur) By-Laws 1985
as an aid to interpret the meaning of
that phrase. "Certificate of Fitness"
under the by-laws means a certificate
which would entitle the respondent to
occupy the subject property.
We are unable to disagree
with the reasoning of the learned Judge.
In the absence of language which denotes
the presence of a contrary intention, it
may be presumed that the parties used
the term "Certificate of Fitness" as
employed by the by-laws. Once this
conclusion is reached, no fault may be
placed upon the reasoning adopted by the
learned Judge. She merely construed the
meaning according to well-settled canons
of construction. (See, for example
Nourse LJ, in IDC Group Ltd v Clark
[1992] 2 EGLF 184). She did not commit
any error. We are unanimous in our
agreement with her judgment.
We would therefore
dismiss the appeal. The appellants must
pay the cost of this appeal. The order
of the Judge is affirmed. The deposit in
court is to be paid to the respondent to
account of his taxed costs.
Solicitors
Kelvin Kong (Heng & Mogan)
for Appellant
V Rajadevan and Joseph
Mathews (Rajadevan & Associates) for
Respondent
Judgment received on
March 8, 2000
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