1. ) Chin Chee Yuen v 1. ) Chong Kin Hin (BA-22NCvC-415-10/2023)

CHIN CHEE YUEN

CHIN PHEY SEE (NO. K/P: 750330-02-5490) …PLAINTIF-PLAINTIF

CHONG KIN HIN

CHONG KIN KOK (NO. K/P: 660306-05-5199) …DEFENDAN-DEFENDAN

The Plaintiffs in this case were the purchasers in a botched sale and purchase transaction. After the offer letter was accepted and the earnest deposit was paid, the Defendants disclosed that the 2nd Defendant was being sued by Tenaga Nasional Berhad (“TNB”) for meter tampering at the property. The parties could not agree on the proposed terms of the draft Ssale and 17/09/2025 11:57:42 BA-22NCvC-415-10/2023 Kand. 77 S/N seakyHkh906Mlmpna6d8ow purchase agreement (“SPA”) to deal with the TNB suit and the Defendants terminated the transaction.

The Plaintiffs received a refund of the earnest deposit paid, but they were unsatisfied. They caveated the property on 14-10- 2022 and sued the Defendants for fraudulent misrepresentation, alleging that they are entitled to recover a further RM20,000.00 on top of the refunded earnest deposit and damages in the sum RM272,189.00, being the price difference for another shophouse they ended up purchasing. The Defendants counterclaimed for removal of the caveat and damages for its wrongful entry by the Plaintiffs. Background facts

The property in question is a 3-storey shophouse at 32, 32A, 32B, Jalan BP 6/13, Bandar Bukit Puchong, 47120 Puchong held under Geran 73582 Lot 59251, Mukim Petaling, Daerah Petaling, Negeri Selangor Darul Ehsan (“Property”).

A Letter of Offer to Purchase dated 22-8-2022 (“Offer to Purchase”) for the sale and purchase of the Property for RM1.25 million was prepared by the real estate agent, EUM Realty Sdn. Bhd. (“Agent”) and signed by the Defendants on 23-8-2022. The earnest deposit of RM20,000.00 was paid by the Plaintiffs to the Agent’s account on 26-8-2022. Solicitors were then appointed to prepare the SPA. S/N seakyHkh906Mlmpna6d8ow

The draft SPA was prepared by the Plaintiffs’ solicitors and forwarded to the Defendants’ solicitors on 26-8-2022. It called for representations and warranties that there were no pending lawsuits against the Defendants. In response, the Defendants disclosed to the Plaintiffs that TNB had filed Petaling Jaya Suit No: BB-B52NCVC-82-12/2021 against the 2nd Defendant as the registered TNB account holder, seeking to recover RM386,169.75 as alleged lost revenue due to tampering of the electricity meter attached to the Property (“TNB Suit”).

A set of the cause papers in the TNB Suit was forwarded to the Plaintiffs’ solicitors on 6-9-2022. It was a fairly typical civil suit by TNB for a money claim against the 2nd Defendant.

The deadline for execution of the SPA was on 12-9-2022, and on this date, the Plaintiffs inserted a condition precedent to the draft SPA calling for the TNB Suit to be settled by 31-10-2022, failing which the Plaintiff shall have the option to grant a further extension of time or terminate the SPA with the payment of RM20,000.00 as agreed liquidated damages. The Defendants did not agree to the insertion of the condition precedent, as the Property was free from encumbrances since the TNB Suit was an in personam action filed against the 2nd Defendant. S/N seakyHkh906Mlmpna6d8ow

The Plaintiffs insisted that it was entitled to liquidated damages in the sum RM20,000.00 to terminate the transaction, while the Defendants took the position communicated on 29-9-2022 that the deadline to execute the SPA had lapsed, and that since parties were unable to reach a mutual consensus on the terms of the SPA, the Offer to Purchase was automatically terminated and instructed the Agent to refund the earnest deposit to the Plaintiffs.

On 20-10-2022, the Agent refunded the earnest deposit to the Plaintiffs under the cover of a letter dated 18-10-2022:

On 21-11-2022, the Plaintiffs purchased another 3-storey shop office at No. 89, Jalan BP 6/3, Bandar Bukit Puchong, 47120 Puchong, Negeri Selangor Darul Ehsan held under Geran 71787, Lot 59439, Mukim Petaling, District Petaling, Negeri Selangor Darul Ehsan for RM1.5 million. S/N seakyHkh906Mlmpna6d8ow Issues for determination

Based on the pleaded case, the following were the issues to be determined in the trial of the action: a) Whether the Defendants fraudulently concealed the TNB Suit; b) Whether the Defendants breached clause 5(a)(ii) of the Offer to Purchase by failing to pay liquidated agreed damages; c) Whether the Plaintiffs have a caveatable interest in the Property; and d) Whether the respective claims and counterclaim for damages by the Plaintiffs and the Defendants are sustainable and proved. Non-disclosure of TNB Suit 12. In answer to the Plaintiffs’ allegation of fraudulent misrepresentation, a good starting point is the following extract from Chitty on Contracts (33rd Edition) at paragraph 7-175 (34th Edition 9-184): “Contracts for the sale of land are not uberrimae fidae in the sense that the vendor has to make to the purchase a full disclosure of all material facts. In the absence of actual S/N seakyHkh906Mlmpna6d8ow misrepresentation the general rule is caveat emptor. But certain qualifications must be made because the vendor is under a duty to disclose defects relating to title. Every material defect in the vendor’s title must be disclosed, because if the title is in fact defective the vendor will be unable to perform his contract in the absence of a condition that the purchaser should accept a defective title. In consequence, if any such defect is not disclosed the purchaser may rescind the contract or resist a suit for specific performance.”

That a contract for the sale of land is not a contract uberrimae fidei was affirmed by Court of Appeal in QVC Rock Products Sdn Bhd v Pohmix Kuari Sdn Bhd [2024] 3 MLJ 752: “[42] It is plain to us that the SPA is not a contract which is of uberrimae fidei (utmost good faith). Thus, the appellant must itself be aware and make its own requisite inspection and inquiry on both Lot A and Lot B including the physical nature of the sites before entering into the SPA. As a matter of fact, it was the appellant itself who identified and chose Lot B in lieu of Lot X. The failure of the appellant to carry out its physical visual inspection as well as preliminary survey of both Lot A and B is hence fatal to its pleaded claim based on negligent misrepresentation. We are mindful that the appellant attempted to rely on cl 5.3.1 of the SPA to argue that it has 60 days upon the issuance of the TOL to conduct a due diligence on Lot B but we find that the purpose of cl 5.3.1 is for legal due diligence on the title but not on the physical state or condition S/N seakyHkh906Mlmpna6d8ow of Lot B. The facts of the case of Gemakota Enterprise Sdn Bhd v Public Bank Bhd [1998] MLJU 389; [1998] 4 CLJ Supp 476 relied on by the appellant are distinguishable.” (See also Bayangan Sepadu Sdn Bhd v Jabatan Pengairan dan Saliran Negeri Selangor & Ors [2022] 2 CLJ 1).

It is not seriously disputed in this case, that the Defendants did not disclose the existence of the TNB Suit to the Plaintiffs at any time before the execution of the Offer to Purchase. However, it is also not seriously disputed that the TNB Suit did not create any encumbrance on the title to the Property. The principle of caveat emptor applies. As the transfer of title was not affected by the TNB Suit in any way, there was no duty on the party of the Defendants to disclose it.

For this reason alone, the Plaintiffs’ claim in fraudulent misrepresentation must fail. This Court will add that from the testimony of the witnesses, no dishonest intent on the part of the Defendants was detected, as the disclosure was made as soon as the draft terms of the SPA from the Plaintiff’s solicitors called for the disclosure of any litigation affecting the parties. The SPA was not ultimately concluded for the term to have contractual effect, but the whole point of representations and warranties in a contract for sale is to allocate risk, establish facts and provide remedies. S/N seakyHkh906Mlmpna6d8ow Non-execution of SPA and termination of transaction

The Offer to Purchase the Property was subject to the execution of the SPA, as the mode of payment of the purchase consideration was set out by reference to the date of the SPA and the parties contemplated the possible non-execution of the SPA in the following terms: “5.

I/We hereby undertake to execute the Sale & Purchase Agreement within fourteen (14) working days from the date of acceptance of this offer by the Vendor, subject to complete submission of the requested documents e.g. Title, SPA, Power of Attorney, quit rent & assessment & etc. by the Vendor. In default of signing the Sale & Purchase Agreement

by the Purchaser(s), (provided that there is no undue delay on the part of the Vendor or Vendor’s Solicitor) the said earnest deposit sum paid herewith shall be forfeited by the Vendor, which shall be shared equally between the Vendor of EUM Realty Sdn Bhd S/N seakyHkh906Mlmpna6d8ow

(ii) by the Vendor, the Vendor shall refund the said earnest deposit sum to the Purchaser(s) together with a compensation sum of equivalent amount which shall be shared equally between the Purchaser(s) and EUM Realty Sdn Bhd failing which the Purchaser(s) shall be entitled to seek for specific performance at the cost and expense of the Vendor.”

The phrase “in default of signing” in the above clause implies that fault is relevant, and not merely the failure to sign the SPA. This is because the clause provides for adverse legal consequences. In this case, both parties did not sign the SPA because the terms were not agreed upon and finalised. Neither party was willing to sign the SPA without resolving the subject of the condition precedent inserted by the Plaintiffs’ solicitors. It cannot be said that either party was at fault when a material disagreement arose while negotiating the terms of the SPA.

For this reason, this Court finds that clause 5(a)(ii) of the Offer to Purchase does not apply, and the correct outcome was that no adverse legal consequences follow, and the parties are returned to their original positions before the Offer to Purchase. Caveatable interest

As noted, the Plaintiffs lodged a private caveat on the title of the Property on 14-10-2022 vide Presentation No. 49169/2022 S/N seakyHkh906Mlmpna6d8ow

By letters dated 10-4-2023 and 11-4-2023, the Defendants sought the removal of the caveat and gave notice to the Plaintiffs that the Defendants have an offer from an intended purchaser (“2nd Offer to Purchase”). However, the Plaintiffs maintained through its solicitors’ letter dated 12-4-2023 that the private caveat would only be removed subject to payment of liquidated damages in the sum RM20,000.00 together with legal costs and disbursements.

On 14-4-2023, the Defendants offered to pay the Plaintiffs’ legal costs and disbursements in the sum RM2,939.00 as a gesture of goodwill but did not agree to pay the liquidated damages demanded. On 20-4-2023, the Plaintiffs refused to remove the caveat unless RM22,939.00 was paid by 26-4-2023.

The 2nd Offer to Purchase dated 24-3-2023 was cancelled on 14-4-2023. Thereafter, the Defendants filed Form 19C dated 3- 5-2023 for the removal of the caveat, which was served on the 1st Plaintiff on 17-5-2023 and according to a land search in evidence, the caveat was removed from the register on 20-7- 2023: S/N seakyHkh906Mlmpna6d8ow

On the facts, the Plaintiffs clearly had no caveatable interest as they had no claim to any registrable interest in the Property as at 14-10-2022 or at any time thereafter. At all material times up to and including the filing of this action, the Plaintiffs were only ever seeking recovery of compensation. The law being patently clear on this point, the Plaintiff’s entry of the private caveat and refusal to remove it were wrongful.

As the Plaintiffs failed to establish any cause of action, the Plaintiffs’ claim was dismissed without the need to consider their claim for damages.

In respect of the Defendants’ counterclaim for wrongful entry of caveat, the costs for the removal of the caveat was allowed as special damages in the sum of RM220.00, but otherwise, the alleged loss for their scuttled sale is not the sale price of RM1.38 million as claimed. Accordingly, this Court only awarded nominal damages of RM5,000.00 for the wrongful entry of the caveat. S/N seakyHkh906Mlmpna6d8ow

This Court further awarded costs of the action to be paid by the Plaintiffs to the Defendants in the sum RM30,000.00. Bertarikh : 17 September 2025 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam bagi pihak Plaintif-plaintif: Amos Ong Weng Mun Messrs Elaine, Yun & Associates Peguam bagi pihak Defendan-defendan: Teoh Bi Shan (with Chiam Fui Ting) Messrs Bishan & Partners S/N seakyHkh906Mlmpna6d8ow