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CHEONG
SOO LEONG & ORS V. H'NG AH BA
COURT OF APPEAL, KUALA LUMPUR
[CIVIL APPEAL NO: P-02-532-1997]
MOKHTAR SIDIN JCA, ABDUL KADIR SULAIMAN JCA, PAJAN SINGH GILL JCA
22 DECEMBER 2003
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
JUDGMENT
Abdul Kadir Sulaiman JCA:
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 24 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.
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.
The plaintiff as a purchaser entered into a sale and purchase
agreement dated 1 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 1 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.
By Suit No: 22-507-83, ("the plaintiff's suit), the plaintiff on 13
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 31
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.
However, only on 25 September 1986, after a lapse of about three
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.
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 24 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 6 August 1997 against the decision of the learned judge
includes an appeal against the dismissal of the firm's suit.
Be that as it may, however, in the judgment of the learned judge of
24 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.
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.
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" ie, 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.
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.
The schedule of payment provided by the agreement, is a follows:
(a) Booking Fee 2 1/2%
(b) Upon execution of Purchase
Agreement 7 1/2%
(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%
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 cl. 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.
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".
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 para. 11 above, except for item (b) being substituted
with figure "10%" instead of "7 1/2"
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.
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.
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
8th July, 1979 RM16,298.10
24th July, 1979 RM 4,432.70
Total paid: RM21,730.80
According to the receipts issued by the firm, the payment on 17
November 1978 for RM1,000 was "Being Payment to account of Purchase
Price $54,327 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.
The payment on 8 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.
The payment on 24 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.
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 10 June 1983.
In their joint defence, the defendants by their statement of defence
dated 29 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 17 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
1/2 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
four 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 4 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, videletter dated 28 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 27 December 1985.
Then as mentioned earlier, on 25 September 1986, after a lapse of
about three 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.
The pleadings averred that based on the two agreements, the firm on
1 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 28
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 19 October 1983 there was a delay of 1422 days. On 19 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 28 December 1984
the amount of money paid so far by the plaintiff was refunded in
accordance with the provisions of the agreements. However, on 14
January 1985 the said amount was refunded to the firm by the
plaintiff maintaining the two agreements as valid and subsisting.
Then on 4 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 28 November 1979. For
the case of the firm or the defendants, it is indeed confusing to
say the least.
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.
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 1966 prohibits
rescission, and
(e) belated exercising of the right, if any, by the defendant.
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.
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 if 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.
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.
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 s.
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.
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.
On issue (c), in accordance with the decision in S.E.A. Housing
Corporation Sdn. Bhd. v. Lee Poh Choo[1982] CLJ 355; [1982] CLJ
(Rep) 305 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.
On issue (d), upon the finding by the learned 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.
On the last issue, which is issue (e), 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.
For the above reasons, having heard the appeal, we, on 13 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.
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