Kuchai Estates Sdn. Bhd v Prestige Alloy Sdn. Bhd. (W-02(NCVC)(W) 1283-07/2016)

1.

2.

DATIN HIEW AH LAN …APPELLANTS AND PRESTIGE ALLOY SDN. BHD. …RESPONDENT [In the High Court in Malaya at Kuala Lumpur (Civil Division) Civil Suit No: 22NCVC-123-03/2015 Between Prestige Alloy Sdn. Bhd. …Plaintiff And 1. Kuchai Estates Sdn. Bhd 2. Dato’ Tan Kim Leong 3. Datin Hiew Ah Lan …Defendants] 2 CORAM DAVID WONG DAK WAH, JCA HAMID SULTAN BIN ABU BACKER, JCA UMI KALTHUM BINTI ABDUL MAJID, JCA GROUNDS OF JUDGMENT A.

The Respondent’s/Plaintiff’s claim against the Appellants/Defendants, amongst others, was essentially for specific performance of a Sale and Purchase Agreement entered into between the Plaintiff and the 1st Defendant (D1) dated 26.2.2007 (SPA). There was dispute over the purchase price of the land, being the subject matter of the SPA, as parties could not agree on the actual area/size of the land.

The Defendants aver that the Plaintiff has failed to perform its part of the SPA, has defaulted in the performance of and completion of the SPA, is not entitled to enforce the SPA and the Plaintiff’s claim should be dismissed with costs. D1 essentially counterclaims against the Plaintiff for arrears of rental to the land as well as a declaration that the Defendants are entitled to terminate the SPA, the 1st and 2nd Supplementary Agreements.

The learned High Court Judge had, amongst others, allowed the Plaintiff’s claim for specific performance of the SPA, and partially allowed D1’s counter claim for arrears of rental. 3

The Defendants now appeal against that decision of the learned Judge.

The following is the majority decision of Y.A.A. Justice David Wong Dak Wah and Y.A. Justice Umi Kalthum binti Abdul Majid. Our learned brother Y.A. Justice Hamid Sultan bin Abu Backer will give the dissenting judgment of the Court. For ease of reference, parties will be referred to as they were in the High Court. B.

The brief facts of the case can be gleaned from the Grounds of Judgment of the learned Judge and written submissions of the parties as follows :

6.1 D1 is a company registered under the laws of Malaysia.

6.2 D2 and D3 are individuals and are husband and wife who owned the entire shareholding of D1 and are the only directors of D1.

6.3 D1 is the registered owner of the land held under title HS(D) 50111, PT No. 1789, Mukim and District of Kuala Lumpur, Wilayah Persekutuan with an area measuring approximately 7177.5 m2 or 77,257.89 square feet (1m2 being equivalent to 10.7639 square feet) (the Land).

6.4

6.5

It was, amongst others, a term and condition of the SPA that –

5.1 pursuant to Clause 20, the Purchase Price shall be adjusted accordingly at RM 77.00 per square foot based on the actual area of the Land;

6.5.2 pursuant to Clause 10, the Vendor/D1 shall remove all encumbrances against the Land on or before the Completion Date to enable the Plaintiff to be registered as the owner of the Land.

6.6

6.7 Vide a Supplementary Agreement dated 2.6.2010 (1st SA), the parties agreed to amend the area of the Land stated in the SPA to approximately 6681.1822 m2 from 7177.5 m2.

6.8 Subsequently, vide another Supplementary Agreement dated 9.5.2011 (2nd SA) parties agreed to a revision of the Purchase Price to RM 5,537,550.80 based on the revised area of 6681.1822 m2 or 71,916.249 square feet.

6.9 The consent for the transfer of the Land to the Plaintiff was obtained by way of a letter dated 11.11.2011 (Consent to Transfer) from the Pejabat Pengarah Tanah Dan Galian Wilayah Persekutuan (page 58, Core Bundle 1).

6.10 The memorandum of transfer was adjudicated and the stamp duty of RM 160,128.00 was duly paid by the Plaintiff on 23.02.2012.

6.11 The Plaintiff then paid the differential sum of RM 442,665.05 between the balance of the Purchase Price and the loan sum from the 5 Plaintiff’s end financier to D1’s solicitors vide letter dated 19.4.2012 whereby the latter was to hold the said sum as stakeholders.

6.12 Pending the completion of the SPA, D1 had assigned all its present and future rights under the SPA, including all amounts payable from the Plaintiff to United Overseas Bank (Malaysia) Bhd. (UOB) pursuant to a loan taken by Luxstar Housing Development Sdn. Bhd., a company principally owned by D2, which resulted in a Lienholder’s Caveat being entered against the Land by UOB on 12.01.2012 (Lienholder’s Caveat).

6.13 Pursuant to a letter dated 2.4.2012 from UOB to the Plaintiff’s financier Kuwait Finance House (M) Bhd, the redemption sum payable to UOB to redeem the Land and for the Lienholder’s Caveat to be withdrawn was RM5 million to be paid no later than 27.06.2012.

6.14 Pursuant to a letter dated 12.11.2014 from the Plaintiff’s solicitors to be Defendants’ solicitors demanding, amongst others, that the SPA be completed without delay and for the removal of the Lienholder’s Caveat. This was followed up by a reminder letter dated 27.11.2014, but to no avail. C.

The Plaintiff contends the size of the Land as represented by the Defendants was 7177.5 m2 or 77,257.85 square feet. Hence, the agreed Purchase Price was RM 5,948,857.53 or RM 77.00 per square foot. 6

It was agreed between the parties that the Purchase Price shall be adjusted accordingly at RM 77.00 per square foot based on the actual area of the Land. This is provided under Clause 20 of the SPA which is as follows : “20. ADJUSTMENT OF PURCHASE PRICE Within Fourteen (14) days from the date of notification by one party to another the parties hereto hereby agree and declare that in the event the measurements, boundaries and area of the said Property as provided herein are different from the measurements, boundaries and area as stated or shown in the separate qualified titles of the said Property, when issued, such discrepancy shall not annul the sale and purchase herein. PROVIDED THAT if there is a decrease or an increase only in the actual area of the said Property shown on the separate qualified titles issued in respect of the said Property, then the Purchase Price shall be adjusted accordingly at the Per Square Foot which is Ringgit Malaysia Seventy Seven (RM77.00) per square foot. Any adjustment in price shall be paid by one party to the other forthwith upon its being determined that there is a discrepancy in the land area.” [Emphasis added]

The Plaintiff alleges that for the purpose of entering into the 1st SA and the 2nd SA, D2 had represented to the Plaintiff that after the Government’s land acquisition via Gazette WKP No. 20009 dated 18.11.2004 (Land Acquisition), the remaining area of the Land was 6681.1822 m2.

Despite repeated requests from the Plaintiff and/or its financier for the purpose of the release of the balance Purchase Price, D1 failed to furnish any confirmation from the Land Office that the available area of the Land after the Land Acquisition exercise was still 6681.1822 m2 as represented and promised by D1/D2 under the 1st SA and the 2nd SA. 7

Subsequently, the Plaintiff had obtained confirmation from the Land Office vide letter dated 1.4.2014 (page 56, Core Bundle, Volume 1) that the actual remaining area of the Land after the Land Acquisition was only 2139.68 m2.

At all material times the Plaintiff is ready and willing to complete the SPA based on the adjusted Purchase Price of RM 1,773,412.04 (based on RM 77.00 X 23,031.3252 square feet or equivalent to 2139.68 m2) (Adjusted Purchase Price). However, D1, which is at all material times a company exclusively owned and controlled by the husband and wife D2 and D3 respectively, refused to proceed with the SPA and insisted that the area of the Land is 7177.5 m2 without producing any document to substantiate its position in the matter.

Moreover, under Clause 10 of the SPA, it is the responsibility of D1 to remove all encumbrances on the Land which is attributable to D1, which includes the Lienholder’s Caveat. Clause 10 reads as follows : “10. REMOVAL OF ENCUMBRANCE/S The Vendor shall at his own cost and expense remove or cause all encumbrances against the said Property attributable to the Vendor save for such encumbrances caused or attributable to the Purchaser, if any, to be removed and or before the Completion Date to enable the Purchaser to be registered as owner of the said Property.” 8 D.

The Defendants contend that D1, as the registered owner of the Land, had agreed to sell to the Plaintiff the Land at the agreed Purchase Price of RM 5,948,857.53 at RM 77.00 per square foot and that under Clause 20 of the SPA, the Purchase Price shall be adjusted accordingly at RM 77.00 per square foot based on the actual area of the Land.

The Land is described in Recital 1 of the SPA and Section 4 of the First Schedule as measuring approximately 7177.5 m2 as more particularly delineated in green in Annexture 1. This approximate land area of 7177.5 m2 is the balance of the land after a portion acquired by the Government estimated at 4541.50 m2 pursuant to the Land Acquisition. See Recital 2 of the SPA.

The Plaintiff, who was represented by solicitors before and after the execution of the SPA, was well aware of the title, land plan and final land survey plan and was fully appraised of the area of the Land. It had knowingly and willingly entered into the SPA.

D1 had also entered into a tenancy agreement dated 6.7.2007 with the Plaintiff (Tenancy Agreement) to let the Land at a rental of RM 5,000.00 per month pending the transfer of the Land to the Plaintiff. The Tenancy Agreement has described the Land as measuring approximately 7177.5 m2. The Plaintiff is in occupation of the Land until now. 9

The Defendants acknowledge the provisions of the 1st and 2nd SAs which had amended the area of the Land as well as the stated Purchase Price.

The consent to transfer and/or charge on the Land from the Jawatankuasa Kerja Tanah, Wilayah Persekutuan, Kuala Lumpur was obtained on 11.11.2011 (Consent). (See Clause 2.1 SPA.)

It is a condition of the SPA that the sale and purchase of the Land shall be completed by the Plaintiff paying up the balance Purchase Price within 3 months from the date of receipt of the Consent by the Plaintiff’s solicitors or within an extended 30 day period. (See Clause 3 read together with Section 3, Second Schedule, SPA.)

Despite extensions of time having been granted from March 2013 until August 2013, the Plaintiff has not been able to complete the purchase by paying up the balance of the Purchase Price stated in the 2nd SA.

It is wrong for the Plaintiff to rely on the Land Office letter dated 1.4.2014 as its contents are incorrect as the Final Survey Plan of the Land was not taken into consideration and the final title has not been issued.

As far as the Defendants are concerned, the area of the Land was and still is 7177.5 m2 as stated in the SPA. Since the Plaintiff did not complete the purchase as provided under the SPA, and the 1st and 2nd SAs, the Defendants are counterclaiming for a declaration that they are 10 entitled to terminate the SPA, 1st and 2nd SAs. D1 is also counter claiming for the arrears of rental. E. AT THE HIGH COURT :

The Parties had agreed to 4 issues to be determined by the High Court as follows :

24.1 whether the Plaintiff is entitled to specific performance of the SPA and if so what is the purchase price based on the actual area of the Land;

24.2 whether the corporate veil ought to be pierced to make D2 and/or D3 liable for the action of D1 and/or for conspiracy/misrepresentation, if any;

24.3 whether D1 is entitled to rental from September 2014;

24.4 whether D1 is entitled to terminate the SPA and the 1st and 2nd SAs and to refund the monies paid by the Plaintiff and nothing more.

The learned High Court Judge made the following determinations. Issue 1 : Is Plaintiff entitled to specific performance of the SPA? What is the purchase price of the Land? 11

The learned Judge made a finding of fact that, based on the evidence adduced and confirmed by the Land Office’s letter dated 1.4.2014, the actual area of the Land is 2139.68 m2.

27.

The Plaintiff is entitled to specific performance of the SPA. Issue 2 : Whether the corporate veil should be pierced?

From the evidence adduced, the learned Judge found that D2 was the directing mind/alter ego of D1 and was solely responsible for the misrepresentation made to the Plaintiff in respect of the area of the Land.

The justice of this case dictates that the corporate veil be lifted and D2 be held solely accountable. Issue 3 : Whether D1 is entitled to rental from September 2014?

The learned Judge answered this issue in the affirmative based on the Tenancy Agreement seeing that the Tenancy Agreement is for payment of the agreed rental till perfection of the transfer of the Land under the SPA (which has yet to be perfected). 12 Issue 4 : Whether D1 is entitled to terminate the SPA, 1st and 2nd SAs

The learned Judge answered this issue in the negative since she had found that the Plaintiff is entitled to specific performance.

The Plaintiff’s claim was mostly allowed by the learned Judge with costs, in particular prayers (a), (b), (c), (d), (e), (f) (i)(ii) and (g), whilst the counterclaim of the Defendants was partly allowed in that D1’s counterclaim for rental of the Land from September 2014 to date of Judgment only was allowed.

The Defendants now appeal against that decision of the learned Judge. F. THE APPEAL : Defendants’ Submission

35.

Before us, the Defendants essentially raise 4 issues. They are – 1 what is the actual area of the Land?

35.2 whether the trial Court was justified in lifting the corporate veil?

35.3 whether the trial Court was correct in awarding damages to the Plaintiff?

35.4 whether D1’s counterclaim for declaration that it is entitled to terminate the SPA and the 1st and 2nd SAs be allowed? 13 Actual area of the Land :

It is submitted by the Defendants that based on the following factors, the area of the Land is 7177.50 m2 (after acquisition) :

36.1 Recital 1 read with Section 4 of the First Schedule, Recital 2(i) and

36.2 PW1 in oral evidence had agreed that the description of the Land stated the area to be 7177.50 m2 (page 139, Core Bundle);

36.3 oral evidence of DW2 (pages 194-204, Core Bundle), Penolong Pengarah, Jabatan Ketua Pengarah Tanah dan Galian, Kuala Lumpur and his letter dated 30.11.2015 - Exhibit D1 (page 113, Core Bundle) confirming that the area of the land was 11719 m2 before the acquisition of 4541.50 m2;

36.4 oral evidence of DW3 (pages 205-215, Core Bundle), Timbalan Pengarah Ukur II, Jabatan Ukur dan Pemetaan Wilayah Persekutuan Kuala Lumpur and his letter dated 23.11.2015 (page 115, Core Bundle) which confirmed that the area of land was 11719 m2 (there appears to be a mistake in his letter where he stated the land area to be 11715 m2 but during oral evidence he stated it to be 11719 m2 based on the Plan Akui PA14102063 dated 6.8.1986 (page 117, Core Bundle) as attached) before the acquisition of 4541.50 m2;

36.5 oral evidence of DW1 (pages 178-179, Core Bundle), Penolong Pegawai Tanah, Pejabat Tanah dan Galian, Wilayah Persekutuan and his letter dated 24.11.2015 (page 114, Core Bundle) confirmed 14 that the title in continuation would be based on Pelan Akui PA14-102063;

36.6 further evidence allowed to be adduced by this Court on 2.5.2017 as follows :

36.6.1 letter dated 13.7.2016 from Pejabat Pengarah Tanah dan Galian, Wilayah Persekutuan (page 253, Core Bundle) which confirmed that the area of land to be 11715 m2 based on the Pelan Akui PA 14-102063 (before acquisition of 4541.50 m2);

36.6.2 letter dated 24.8.2016 from Pejabat Pengarah Tanah dan Galian, Wilayah Persekutuan (page 254, Core Bundle) which confirmed the land area to be 11719 m2 before acquisition of 4541.50 m2;

36.6.3 Plan of the land dated 25.8.2016 (page 255, Core Bundle) issued and certified by Pengarah Ukur dan Pemetaan, Wilayah Persekutuan Kuala Lumpur/Putrajaya showed area of land to be 11719 m2 (before acquisition);

36.6.4 Borang Permintaan Ukur dated 6.9.2016 (pages 256-257, Core Bundle) states the area to be 7177.50 m2;

36.6.5 letter dated 10.7.2017 from Pejabat Tanah dan Galian, Wilayah Persekutuan (page 309, Core Bundle) confirmed that Jawatankuasa Kerja Tanah dan Galian, Wilayah Persekutuan had approved the area of land to be 11719 m2;

36.6.6 D1 was requested to pay the premium and land tax for the said area and which was paid vide receipt at page 311, Core Bundle; 15

36.7 by leave of this Court on 4.8.2017, the Defendants were allowed to produce fresh evidence in the form of the final title of the Land, which was issued on 11.8.2017 (see Rekod Rayuan Tambahan IV) where it states that the area of the land is 11719 m2 and there is an endorsement which states that about 4541.50 m2 were acquired.

That by virtue of subsection 396 (2) of the National Land Code (NLC), the Approved Plan/Pelan Akui (PA14-102063)(page 117, Core Bundle) by the Director of Survey and Mapping shall be conclusive evidence of the area of the land to be 11719 m2 (before acquisition). The Defendants cited 3 authorities on this issue as follows:

37.1 Yap Lai Yoke v Chin Fook Wah and Connected Case [1984] 2 MLJ 274 F.C;

37.2 Associated Pan Malaysia Cement Sdn. Bhd. v Westwood Development Sdn. Bhd. [2013] 10 CLJ 81 H.C.

37.3 Associated Pan Malaysia Cement Sdn. Bhd. v Westwood Development Sdn. Bhd. [2012] 2 CLJ 81 H.C.

Further, it is submitted that the learned Judge had failed to consider the documents and/or give credence to the oral evidence of DW1, DW2 and DW3 who are officers of the relevant Government department and the contents of the letters referred to above. The learned Judge had relied on one letter from the Pejabat Tanah dan Galian, Wilayah Persekutuan Kuala Lumpur dated 1.4.2014 (page 86, Core Bundle) which stated – “2. Dimaklumkan bahawa luas baki sebenar adalah 2139.68 meter persegi.” 16 As the maker of this letter was not called to testify, and this letter was placed in Part B of the Agreed Bundle, the Defendants submit that this letter is inadmissible, citing Jaafar Shaari dan Siti Jama Hashim v Tan Lip Eng & Anor [1997] 4 CLJ 509 C.A., Sampo Materials (M) Sdn. Bhd. v Tenaga Nasional Bhd [2015] 9 CLJ 902 C.A. and Ab Latef & Associates (M) Sdn. Bhd. v Govindasamy Suppiah [2016] 10 CLJ 1 C.A. as authorities for their submission.

The learned Judge had also misapplied and/or misconstrued and/or did not consider the terms of the SPA vis Clause 20, Clause 3, Section 3 of Second Schedule, Clauses 4,17,23 and 27 of the SPA. Lifting Corporate Veil

The learned Judge had unjustifiably pierced the corporate veil when there was no evidence of misrepresentation or conspiracy or fraud by D2/D3 adduced, citing Formis Resources Bhd & Ors v Risk Management and Safety System Pty Ltd & Ors and Other Appeals [2016] 9 CLJ 169 C.A. and Theta Edge Bhd Infornential Sdn. Bhd. & Another Appeal [2017] 1 CLJ 53 C.A. as their authorities. Damages Awarded

It is further submitted that the learned Judge had awarded damages to the Plaintiff which ought not be awarded pursuant to Clause 17 of the SPA, which provides as follows : 17 “17. STATE OF PROPERTY AND PURCHASE ON AS IS WHERE IS BASIS The Purchaser has examined and inspected the Property and the Purchaser is satisfied as to its present state, condition and use deemed to have accepted and agreed to the purchase of the Property on as is “where is basis”. The Purchaser shall not be entitled to rescind the purchase or to make any claim for compensation or reduction of the Purchase Price or to claim for damages in respect of any misdescription of the area, location, condition, state and use of the Property.” Counterclaim

In regard to the Defendants’ counterclaim, it is submitted that the Plaintiff has failed to pay the balance Purchase Price despite several extensions of time to pay were granted and therefore the Plaintiff has failed to complete the purchase. Since the Plaintiff’s obligation to pay the balance Purchase Price is a fundamental obligation, the breach of which goes to the root of the SPA, this breach renders the SPA terminated and notice of the termination is not necessary – see Master Strike Sdn. Bhd. v Sterling Heights Sdn. Bhd. [2015] 2 CLJ 596 C.A.; Sime Hok Sdn. Bhd. v Soh Poh Sheng [2013] 2 CLJ 615 C.A. The Plaintiff’s Submission Actual Area Land

It is the Plaintiff’s submission that pursuant to Clause 20 of the SPA, the Plaintiff and D1 had agreed that the Purchase Price shall be adjusted according to the separate qualified title of the Land when issued. Vide letters dated 26.3.2008 and 29.3.2008, D1’s solicitors had informed the 18 Plaintiff’s solicitors [Tabs 4 and 5, Respondent’s Supplemental Core Bundle (RSCC)] that the Issue Document of Title (IDT) to the Land is pending issuance and that once it is issued they (D1’s solicitors) will proceed with the application for consent to transfer.

The separate qualified title/IDT (“HSD50111”) was collected by the Defendants on 17.6.2009 (page 4, Core Bundle 1). When the Consent to Transfer was obtained on 11.11.2011, the only thing left to be done was for the title to be forwarded to the Plaintiff/Purchaser and the Purchase Price to be adjusted and paid to D1/Vendor before the Land is transferred.

However, D1 refused to adjust the Purchase Price according to Clause 20. D1, instead of forwarding the title to the Plaintiff to complete the SPA, had charged the Land to UOB for a loan taken by Luxstar Housing Development Sdn. Bhd. Thus the Lienholder’s Caveat was entered against the Land. D1 had failed to remove the Lienholder’s Caveat to date (see Tab 1, Respondent’s Executive Summary) contrary to its obligations under Clause 10 of the SPA and this has prevented the Plaintiff to be registered as the owner of the Land and hence the SPA cannot be completed. To this end the Plaintiff has indicated clearly it is prepared to forward the balance Purchase Price subject to the removal of the encumbrance.

What the Defendants attempted to do is to rewrite the contract and delay its completion until such time the Final Title is issued to reflect a bigger area so as to circumvent what was agreed in Clause 20. What was agreed in the SPA is for the Land to be paid and transferred according to the Qualified Title which was issued. That Qualified Title has temporary 19 finality for whatever rights and interest which are being transferred to the transferee/Plaintiff – see subsections (1) and (3) (d) of section 215 of the NLC –

“Form, and effect generally, of transfer of land

(d) all other matters then appearing on, or referred to in, the register document of title.” [Emphasis added]

D1 had executed Form 14A to transfer HS(D) 50111 to the Plaintiff, and parties under the SPA had agreed to complete the purchase based on what had then been agreed appearing in HS(D) 50111. The fact that the area appearing in HS (D) 50111 was then regarded as final was confirmed by the Land Office vis evidence of DWI (page 178, Core Bundle 1). As the Defendants insisted that the purchase price be based on the area of land to be 7177.5 m2, which is not reflected in HS(D) 50111, which stated the land area to be 6681.1822 m2, the Plaintiff then wrote to the Land Office which, vide letter dated 1.4.2014, confirmed that the actual area of the Land was 2139.68 m2. (It would appear to us that the Land Office had taken the Land area to be 6681.1822 and after minusing the area of land acquired at 4541.50 m2 to derive the Land area to be 2139.68 m2). All that the learned High Court Judge did was to restore the position of the parties according to what the parties had agreed under the SPA by way of specific performance 20 and reflected in Clause 14 of the SPA. In this context, it is not for the courts to rewrite a contract which has been freely entered into between the parties – see Koh Siak Poo v Perkayuan OKS Sdn. Bhd. & Ors [1989] 3 MLJ 164, S.C.; Shell Malaysia Trading Sdn. Bhd. v Lin Yee Teck & Ors [1982] 2 MLJ 181, F.C. Lifting Corporate Veil

With regard to the issue of piercing the corporate veil, we are urged not to overturn the learned High Court Judge’s finding of fact as she had the benefit of seeing and hearing the witnesses. The Plaintiff submits that it is D2, by himself as well as on behalf of D3, who is his wife, who is/or the directing mind/alter ego of D1. As D3 chose not to testify in Court, there was nothing for her to contradict what D2 had admitted or alleged by the Plaintiff. Damages Awarded

The Plaintiff submits that the damages awarded to the Plaintiff for the amount of RM 135,165.85 incurred by the Plaintiff as additional legal fees and stamp duty based on the higher purchase price compared to the Adjusted Purchase Price for the Land is pursuant to section 18 of the Specific Relief Act 1950. Counterclaim

On the issue of rental of the Land from September 2014, as the Defendants did not raise the issue of rental awarded to D1 in their 21 Memorandum of Appeal and Additional Memorandum of Appeal, and neither did the Plaintiff raise any cross appeal on the matter, there is nothing to consider herein. As for D1’s counterclaim for a declaration that it is entitled to terminate the SPA and the 1st and 2nd SAs, the Plaintiff, in submitting that specific performance of the SPA should be allowed, has in not so many words indicated that, for the reasons it gave as to why the specific performance of the SPA be allowed, D1’s counterclaim on this aspect should not be allowed. G.

After careful consideration of the parties’ submissions, the pleadings and the evidence tendered (oral and documentary), we are of the majority view that the appeal be allowed in part, and we do so order, as per paragraphs 63 to 65 below. We do so for the following reasons. Actual Land Area

We agree that the crucial issue before this Court is, as it was in the High Court, what is the actual area of the Land purchased by the Plaintiff. We agree with the submission of the Defendants as elucidated in paragraphs 36 to 39 above. It is very clear to us that the Land area, after deducting the area acquired by the Government, is 7177.50 m2 and NOT

2139.68 m2 as found by the learned High Court Judge. We agree with the Defendants that the learned High Court Judge had seriously erred in making the finding of fact that the Land area is 2139.68 m2 merely by relying on the Land Office’s letter dated 1.4.2014. In the first place, we 22 accept the Defendants’ submission that as this letter dated 1.4.2014 was in Part B of the Agreed Bundle and its maker was not called to testify, the said letter is inadmissable – see the authorities cited by the Defendants. What this means is that the basis of the Plaintiff’s case on the actual area of the Land falls. The Plaintiff’s contention that by virtue of Clause 20 of the SPA, it was envisaged a separate qualified title is to be issued, and it was issued in the form of HS(D) 50111 (page 4, Core Bundle) which showed the area of the Land to be 6681.1822 m2 and therefore there must be an adjustment made to the area of the Land as well as the Purchase Price under Clause 20, we fear is very much misconceived. This is because even the Plaintiff’s witness, PW1, had agreed that the Qualified Title in Borang 11A (pages 1 – 3, Core Bundle) is the same as the Qualified Title in Borang 11AK (pages 4 – 5, Core Bundle). He also agreed that the latter was issued pursuant to the computerization programme of the Land Office. Below is an extract of the Notes of Proceedings (NP) during the cross examination of PW1 as follows (pages 145 – 146 Core Bundle, Volume 1) : “DC : Datuk, we are at page 31 bundle B Part B. Now this title, my instruction are, was issued pursuant to the computerization programme of the Land Office and this title is no different from the title at page 1 in the sense of particulars and measurements et cetera. PW1 : No, I disagree because page 1 shows 71918 square feet whereas bundle in Part B page 31 shows an area of 6681.1822 square metres. There its slight different, I believe. J : Now you are saying Part A in page 1 is what is the acerage? DC : 1.651 ekar and 71918… J : 71918… DC : Square feet. 23 DC : It works, My Lady, it works out on a conversation basis to be the same, approximately the same amount. I work it out but I don’t brought my working. PC : I confirm that. I think its change the matriks. DC : Except for the matriks system, everything else is the same except the format in page 31 is a computerized format. You agree Datuk? PW1 : Yes, I do. DC : So, you agree that this is not a new title which has been issued for this property? PW1 : We are from beginning made to understand the title was surrendered. In a normal process of acquisition the original title is surrendered and a new title will be issued. After a survey has been conducted. And this copy of the title was given to us somewhere in 2010 if I’m not mistaken.” [Emphasis added]

What this means is that, even though both parties did not raise this aspect in their pleadings, the execution of the 1st and 2nd SAs were done by both D1 and the Plaintiff on the error of understanding between the “original” Qualified Title as against the computerised Qualified Title/HSD

We therefore agree with the Defendants’ submission that in the premises, Clause 20 of the SPA does not apply. [We note that both parties in their submissions have played down reference to the 1st and 2nd SAs, and mainly focused on the provisions of the SPA. But the existence of the 1st and 2nd SAs will very much determine the rights and obligations of the respective parties as stated below.]

What this also means is that, taking into account the evidence referred to in subparagraphs 36.3, 36.4, 36.5 and 36.6 above, the area of the Land can only be 7177.50 m2, after taking the total area of the land before the acquisition and as per the Pelan Akui PA14-102063 to be 24 11719 m2 and subtracting the area of land acquired as 4541.50 m2. In this context, we agree with the Defendants’ submission in paragraph 37 above and the reference to subsection 396 (2) of the NLC. Subsection 396(2) of the NLC provides as follows: “(2) Any plan approved by the Director of Survey and Mapping under paragraph (1)(e) shall be filed in his office, and (without prejudice to the operation of section 49 in the case of land subsequently affected by any advance of the shore-line or of the bed of any river) shall be conclusive evidence of the boundaries and boundary marks of the land to which it refers, and of the area and the lot number thereof.” [Emphasis added] Thus the area of the Land described in the Recital 1 read with Section 4 of the First Schedule, and Recital 2 (i) and (ii) to be 7177.50 m2 is correct. This area of the Land is further confirmed by the final title of the Land issued on 11.8.2017 which states the area of the land concerned is 11719 m2, and has an endorsement which states that about 4541.50 m2 were acquired. If the area acquired is subtracted from the total area of the land concerned, it will give rise to the balance of land area to be 7177.50 m2, that is, the actual Land area purchased by the Plaintiff. Lifting of Corporate Veil

On this issue, we agree with the Defendants’ submission that the learned Judge had unjustifiably lifted the corporate veil to find that D2 is the directing mind/alter ego of D1 and is therefore solely responsible for the misrepresentation made to the Plaintiff. Without alluding to the actual 25 evidence adduced in Court, the learned Judge, with respect, made the following so-called finding of fact : “Issue 2 : Whether the corporate veil should be pierced?

From the evidence it is clear that D2 was the directing mind/alter ego of D1 and to my mind, was solely responsible for the misrepresentation made to the Plaintiff in respect of the area of the land.

I find that the justice of this case dictates that the corporate veil be lifted and D2 be held accountable.

In the first place, and even though it was an agreed issue to be tried by the Court, the Plaintiff in its Statement of Claim (SOC) did not plead for the lifting of the corporate veil so as to find D2, let alone D3, personally liable. Neither did the Plaintiff prayed for the relief against D2 and D3 personally. Instead, the Plaintiff, at paragraphs 26 to 28 of the SOC, pleaded that D1, D2, D3 (referred to as “the Defendants”) had conspired between themselves to injure the Plaintiff by preventing and/or delaying the completion of the SPA by making representation and promise that the land area is at 6681.1822 m2 despite knowing it is untrue and causing/allowing the Land to be encumbered with the Lienholder’s Caveat from UOB and refusing to redeem the Land to ensure that the SPA can be completed. It is trite law that a party is bound by its pleadings and on that score alone the Plaintiff is precluded from seeking this relief. Our view is fortified by the fact that, after scrutinising the Order of the High Court dated 24.5.2016, we do not see any reference to the liability of D2, let alone D3, to bear personally damages attributed to D1. 26

In any event, and we understand that “in some instances, evidence adduced during the hearing can overcome the defects in pleadings as long as the other party is not taken by surprise. More so if ‘ such evidence when given without any objection by the opposing party will further have the effect of curing the absence of such plea in the relevant pleading…” (see Gurbachan Singh Bagawan Singh & Ors v Vellasamy Pennusamy & Other Appeals [2015] 1 CLJ 719 F.C.). And so for the sake of completion, we agree with the Defendants that the Plaintiff has failed to prove that there was misrepresentation, or conspiracy or fraud by D2 and D3 on the Plaintff, and to lift the corporate veil when the law will only countenance it if fraud is established.

In the Federal Court decision of Gurbachan Singh Bagawan Singh & Ors v Vellasamy Pennusamy & Other Appeals (supra) it was held as follows : “ [96] But in the event that we should, we are of the view that it is now a settled law in Malaysia that the court would lift the corporate veil of a corporation if such corporation was set up for fraudulent purposes, or where it was established to avoid an existing obligation or even to prevent the abuse of a corporate legal personality. [97] As to what constitutes fraudulent purposes it has been described as to include actual fraud or fraud in equity. And fraud in equity occurred in ‘... cases where there are signs of separate personalities of companies being used to enable persons to evade their contractual obligations or duties, the court would disregard the notional separateness of the companies …” See also the Court of Appeal case of Law Kam Loy & Anor v Boltex Sdn. Bhd. & Ors [2005] 3 CLJ 355, per Gopal Sri Ram JCA (as he then was) at page 362, as follows : 27 “In my judgment, in the light of the more recent authorities such as Adams v. Cape Industries Plc [1990] Ch 433, it is not open to the courts to disregard the corporate veil purely on the ground that it is in the interests of justice to do so. It is also my respectful view that the special circumstances to which Lord Keith referred include cases where there is either actual fraud at common law or some inequitable or unconscionable conduct amounting to fraud in equity.”

All that the Plaintiff submits is to show the fact that D2 is the directing mind/alter ego of D1 (see paragraphs 38-40, Respondents’ Submission) and nothing else. D2 being the alter ego of D1 without more cannot in the circumstances give rise to a situation of fraud, misrepresentation or conspiracy so as to justify the lifting of the corporate veil of D1 and to affix personal liability on D2 only. Moreover, what was alleged to be a conspiracy, misrepresentation or fraud by the Defendants on the Plaintiff as we can see is actually rooted in the misapprehension of the computerised Qualified Title in Borang 11 AK by the parties as alluded to earlier. In the circumstances, we find the Plaintiff has failed to prove the conspiracy, misrepresentation or fraud by the Defendants. Awarding of Damages to Plaintiff

The learned High Court Judge in her Grounds of Judgment had awarded “RM112,928.64 being additional stamp duty and RM135,165.85 being extra legal fees” (see paragraph 43, Grounds of Judgment). But in subparagraph 45(k) of her Grounds of Judgment she stated as follows : “45. The Plaintiff’s claim is allowed and the Defendant’s counter claim is allowed in part. In the circumstances, the following are allowed : … 28

(k) The sum of RM135,165.85 shall be set off against the balance purchase price and the rental due to D1 from September 2014;”. The sealed Order of the High Court dated 24.5.2016, at paragraph (i) states as follows : “(i) Damages of RM 135,165.85 to be paid by the Defendants upon setting-off the sum of RM 105,000.00 as rental of the Property from September 2014 to the date of this Order only;” As parties did not see it fit to seek clarification from the learned High Court Judge on the discrepancy found in her Grounds of Judgment as against the High Court Order dated 24.5.2016, we will regard the disputed amount of damages awarded to the Plaintiff as being RM135,165.85.

In view of our decision that the actual area of the Land is 7177.50 m2, and not 2139.68 m2 as claimed by the Plaintiff, we are of the view that the alleged “damages” so suffered by the Plaintiff was not of the Defendants’ making but due to the insistence of the Plaintiff on its own surmisation of the documents that it has miscontrued. As such, the Plaintiff is not entitled to the damages awarded. In any case, Clause 17 of the SPA precludes the Plaintiff from making such a claim. Counterclaim

The question arises whether, in the light of our decision that the actual Land area is 7177.50 m2 as provided by the SPA, can the Defendants’/D1’s counterclaim for a declaration that it is entitled to terminate the SPA and the 1st and 2nd SAs be allowed, seeing that the 29 Plaintiff has failed to pay the balance Purchase Price? After careful consideration, we are of the view that D1’s counterclaim to terminate the SPA and the 1st and 2nd SAs cannot be allowed for the following reasons :

62.1 the Plaintiff had paid RM594,885.75 to D1 as Deposit for the Purchase Price pursuant to Clause 1 read together with Section 1 of the Second Schedule to the SPA. There is no issue on this payment made. The Deposit amount is based on the agreed Purchase Price of RM5,948,857.53 in respect of the approximate Land area of 7177.5 m2 as per the SPA. This payment clearly showed the Plaintiff’s intention to complete the sale;

62.2 parties had anticipated that when the qualified title to the Land had been surrended to the Land Office by D1, the Land Office would be issuing a new title, which was pending at the time the SPA was executed. In view of this uncertainty in the area of the Land, Clause 20 of the SPA was included;

62.3 after the signing of the SPA on 26.2.2007, the new title was still not available to the Plaintiff even as late as 2009. But vide the 24.6.2009 letter, the Plaintiff informed D1 that based on a land search that they made, the area of the Land is 6681 m2 (page 386, Appeal Record, Volume 2);

62.4 after a meeting held on 2.7.2009, parties agreed for the Plaintiff to appoint a land surveyor to confirm the exact land area and a confirmation of it from the Land Office. D1, vide letter dated 28.7.2009, enclosed a letter dated 22.7.2009 from Jurukur Setia Sdn. Bhd. (Jurukur Setia) stating that the original size of the land 30 was 11719 m2. After deducting an area of 4541.5 m2 for the Land Acquisition, the balance available was 7177.5 m2. In the letter, Jurukur Setia had enclosed an approved plan and a Form E issued for the Land Acquisition;

62.5 then vide letter dated 23.3.2010, D1’s solicitors forwarded the “qualified title” for the Land issued by the Land Office to the Plaintiff’s solicitors. That land title was issued on 13.2.2008 and which stated the Land area to be 6681.1822 m2 (page 4, Core Bundle, Volume 1). In the same letter, D1’s solicitors also informed the Plaintiff’s solicitors that D1 has no objection for parties to enter into a Supplementary Agreement to amend the SPA based on the land area stated in the said title. The 1st SA was then executed by the parties, to be followed by the 2nd SA to revise the Purchase Price to RM 5,537,550.80 based on the revised area of land of 6681.1822 m2 (see PW1’s Witness Statement WSP1, Q&A 4 and 5);

62.6 based on the events which had occurred and referred to in subparagraphs 62.3 to 62.5 above, especially in regard to the circumstances which led to the execution of the 1st and 2nd SAs, we find both parties were under the misapprehension that the actual area of the Land is 6681.1822 m2, whereas the actual area is 7177.50 m2 as we have elucidated above;

62.7 since both parties were under the misapprehension on the actual area of the Land, as evinced by the 1st and 2nd SAs, we are of the view that the Plaintiff cannot be faulted for acting as it did on the 31 premise that the Land area is now approximately 6681.1822 m2, and not 7177.50 m2 and that the revised Purchase Price is RM5,537,550.80 and not RM594,885.75. Hence, when the Plaintiff, vide letter dated 19.4.2012 (page 74, Core Bundle, Volume 1), purportedly paid the differential sum of RM442,665.05 between the balance Purchase Price and the loan sum from the Plaintiff’s end financier to D1’s solicitors to be held as stakeholders, we regard the Plaintiff in doing so as acting in good faith in pursuance of the provisions of the SPA read together with the 1st and 2nd SAs;

62.8 all this while the Plaintiff and/or its financier had shown that they had made repeated requests to D1 (for the purpose of the release of the balance Purchase Price) but D1 had failed to furnish confirmation form the Land Office that the available area of the Land after the Land Acquisition was still 6681.1822 m2. The Plaintiff then purportedly obtained the confirmation from the Land Office vis letter dated 1.4.2014 (which we have earlier found to be inadmissable) which purportedly confirmed the actual remaining area of the Land after the Land Acquisition to be approximately 2139.6822 m2. Thereafter, the Plaintiff took into account the previous part payments made by it and concluded that the balance purchase price for the Land due to D1 is RM735,861.24 (see paragraph 18, Statement of Claim, page 57, Record of Appeal, Volume 1). To us, it is well within the Plaintiff’s rights to take such actions so as to assist D1 in the matter to complete the SPA 32 soonest. It, moreover, show to us the Plaintiff is at all material times ready, able and willing to complete the SPA;

62.9 D1 had, however, in the meantime assigned all its present and future rights under the SPA, including all amounts payable by the Plaintiff to UOB pursuant to the loan taken by Luxstar Housing Development Sdn. Bhd. owned by D2, resulting in the Lienholder’s Caveat being entered by UOB on 12.1.2012. It is obvious to us that by encumbering the Land with the Lienholder’s Caveat, D1 had acted against Clause 10 of the SPA, and had prevented the Plaintiff from making the balance Purchase Price (albeit for a lesser sum) to D1 and accordingly register itself (the Plaintiff) as the owner of the Land;

62.10 D1 had not at any time before the suit was filed given notice to the Plaintiff that they wanted to terminate the SPA for fundamental breach of contract on the part of the Plaintiff for failure to make payment of the balance Purchase Price. Instead D1 had proceeded to take actions as if the parties were still contemplating the completion of the SPA and dealing with issues pertaining to the actual area of the Land. In view of this, we are also of the view that, even if there was a fundamental breach of contract by the Plaintiff (which we do not find), D1 had waived its rights to terminate the SPA for fundamental breach of its terms and cannot now counterclaim for a declaration that it is entitled to terminate the SPA; 33

62.11 further, we note that D1 has also counterclaimed for rental of the Land to the Plaintiff under the Tenancy Agreement whereby the Plaintiff has agreed to accept a tenancy of the Land under the SPA from 15.5.2007 until perfection of the transfer of ownership of the Land to the Plaintiff upon the terms and conditions stated in the Tenancy Agreement. The Plaintiff has been paying rental for the Land but has stopped paying from September 2014 until June 2015 and continuing by reason that the Defendants had delayed completion of the SPA. By virtue of the Tenancy Agreement, the Plaintiff is in physical possession of the Land until now. F.

63.

For all the reasons stated - 1 in paragraphs 51 to 61 above, we allow the Defendants’ appeal in part;

63.2 in paragraph 62 above, we dismiss the Defendants’ appeal in regard to D1’s counterclaim for a declaration that it is entitled to terminate the SPA, the 1st and 2nd SAs.

The Order of the High Court dated 24.5.2016 is to the extent stated below modified as follows, and wherever the reference is made to the word “Order” it shall mean the Order of this Court, unless stated otherwise:

64.1 paragraph (b) : “A Declaration that the purchase price of the Sale and Purchase Agreement dated 26.2.2007 between the Plaintiff and the 1st Defendant (“the SPA”) is RM 5,948,857.53”; 34

64.2 paragraph (d) : “An Order that the Defendants shall at their own cost and expense remove or cause all encumbrances against the Property attributable to the First Defendant to be removed, including the lienholder’s caveat entered by United Overseas Bank (Malaysia) Berhad (“UOB”) on 12.1.2012 within 30 days from the date of this Order, to enable the Plaintiff to be registered as the owner of the

Property;” 3 paragraph (e) : “An Order that the Defendants shall at its own cost and expense deliver to the Plaintiff’s solicitor within 90 days from the date of this Order the following :

(i) the Original Issue Document of Title of the Property;

64.4 paragraph (g) : “An Order that the Plaintiff’s solicitor release the balance purchase price of RM 5,353,971.78 to the First Defendant within seven (7) days of compliance with prayer (e) by the Defendants or prior to presenting the memorandum of transfer to the land office for registration;”

64.5 paragraph (h) : “An Order that the Pendaftar Hakmilik / Pentadbir Tanah Wilayah Persekutuan Kuala Lumpur give effect to this Order for the transfer of the Property to the Plaintiff;” 35

64.6 paragraph (i) : “The sum of RM 105,000.00 as rental of the Property from September 2014 to the date of the High Court Order (24.5.2016) only shall be paid by the Plaintiff to D1;”

64.7 paragraph (l) : Is set aside.

We order each party to bear their own costs for here and below. sgd (UMI KALTHUM BINTI ABDUL MAJID) Judge Court of Appeal Malaysia Putrajaya Dated: 29.11.2019 Counsels/Solicitors For the Appellant : S.K. Sivam (from Tetuan P.G. Lim & Co.) For the Respondent : Jason Chan Wa Chiang (together with him Ashwin Kumar) (from Tetuan S.Mathews & Associates)