Kumpulan Bumiklas Sdn Bhd (dalam Likuidasi) v XXXX (WA-12ANCvC-65-05/2023)

KUMPULAN BUMIKLAS SDN BHD (In Liquidation)

MICHAEL JOSEPH MONTEIRO

HENG JI KENG (I/C NO: 471010-01-5435) … APPELLANTS

TAN SIN TING

TAN KIM KOON (I/C NO: 640105-10-5633) …RESPONDENTS 19/02/2024 16:23:37 WA-12ANCvC-65-05/2023 Kand. 26 (In the matter of the Sessions Court at Kuala Lumpur) In The Federal Territory of Kuala Lumpur Summons No.: A52NCVC-389-07/2015

TAN SIN TING

TAN KIM KOON (I/C NO: 640105-10-5633) … PLAINTIFFS

KUMPULAN BUMIKLAS SDN BHD (In Liquidation)

INTERNATIONAL CONST & CIVIL ENG SDN BHD

MICHAEL JOSEPH MONTERO

HENG JI KENG (I/C NO: 471010-01-5435) … DEFENDANTS GROUNDS OF JUDGMENT INTRODUCTION [1] This was an appeal by the Defendants, against the decision of the learned Sessions Court Judge (SCJ) for allowing the sum of RM349,764.92 as liquidated ascertained damages (LAD) for late delivery of vacant possession (VP) to be paid to the Plaintiffs (Assessment Order). [2] This Court dismissed the appeal with cost. The reasoning behind this Court’s decision is as deliberated. [3] For ease of reference, the respective parties shall be referred to as the Plaintiffs and Defendants as they were in the Sessions Court. The 1st, 2nd and 3rd Appellants herein were the 1st, 3rd and 4th Defendants in the Sessions Court respectively, and the Respondents herein were the Plaintiffs in the Sessions Court. BRIEF FACTS [4] The First Defendant (D1) was previously the developer of a commercial development project comprising of 59 units of three-storey shop offices at Pekan Baru Subang (Project). The individual titles for each unit had been issued as HS(D) No. 110996-111054 PT No. 32904-32966, Pekan Baru Subang, Daerah Petaling, Selangor (Lands). [5] On 2.7.1996, the Plaintiffs entered into a sale and purchase agreement (SPA) with D1 for the purchase of a 3-storey shop office identified as P.T. No. 32907 (Property) at a purchase price of RM440,000.00. [6] The Plaintiffs duly paid all progress billings issued by D1 pursuant to the schedule of payments as stipulated in the 4th Schedule of the SPA. [7] Construction works for the Project commenced around 1996 but was subsequently abandoned some time in 2004. By this time, the Plaintiffs had paid a total sum of RM374,000.00 which is 85% of the purchase price. [8] On 19.11.2007, D1 was wound up and the 3rd Defendant (D3) and the 4th Defendant (D4) were appointed as its Liquidators (Liquidators). [9] Subsequently, a scheme of arrangement dated 27.12.2012 (Scheme of Arrangement) was given sanction by a High Court Order dated 19.3.2013, pursuant to section 176(3) of the Companies Act on these terms, inter alia-

D2, shall be appointed as the White Knight to complete the construction works of the built-up area of each unit of the Project at RM58.60 per square foot (Construction Cost); and

(ii) The Purchasers of the Project shall be deemed to have agreed and entered into the Supplemental Agreement (Supplemental SPA) to the SPA. [10] Accordingly, the Certificate of Fitness for Occupation (CF) for the Project was obtained on 12.8.2014 by D2. [11] Pursuant to the Scheme of Arrangements, the Plaintiffs, D1 and D2 were deemed to have entered into the Supplemental SPA and the Plaintiffs were required to pay further sum of RM290,087.58 as Construction Cost. [12] There was a dispute over the late delivery of the unit and also payment of RM66,000.00 for Outstanding Progress Billings and RM10,500.00 for installation of electricity meter. [13] The Plaintiffs then commenced a civil suit against the Defendants in the Sessions Court on 1.7.2015 seeking for, in essence, the following reliefs-

delivery of vacant possession of the Property, free from encumbrances, together with the document of title issued in favour of the Plaintiffs;

losses and damages arising from the failure to deliver vacant possession of the Property to the Plaintiffs for the period from 16.4.2015 until the date of delivery of vacant possession, to be assessed; and

refund of the wrongly paid sums of RM66,000.00 being the purported ‘Outstanding Progress Billings’, RM10,500.00 being the costs for the installation of electricity meter and RM2,000.00 being the ‘administrative fee’ for the execution of the Memorandum of Transfer, from the Defendants. [14] The matter went for a full trial at the Sessions Court (SC). At the conclusion of the full trial on 21.9.2017, the learned SCJ decided in favour of the Plaintiffs for the following orders- “(a) The Defendants, jointly or severally, forthwith give delivery of vacant possession of the Property free from all encumbrances together with the Document of Title issued in favour of the Plaintiffs for the Property;

The Defendants, jointly or severally, pay the Plaintiffs for all and or any losses and or damages to be assessed arising from the failure to deliver vacant possession of the Property for the period from 16 April 2015 until the date of delivery of possession;

The 3rd and 4th Defendants, jointly or severally, pay the Plaintiffs for losses and or damages to be assessed arising from the failure to deliver vacant possession of the Property for the period from 16 April 2015 until the date of delivery of vacant possession;

The 1st Defendant and or the 3rd and 4th Defendants forthwith pay and refund to the Plaintiffs the wrongful payment of RM66,000.00 paid to the Plaintiffs to the 1st Defendant for alleged Outstanding Progress Billings together with interests thereto at 5% per annum from 24 September 2014 until the date of full payments;

The 1st Defendant and or the 3rd and 4th Defendants forthwith pay and refund to the Plaintiffs the sum of RM10,500.00 paid by the Plaintiffs to the 1st Defendant for the installation of the electricity meter together with interest thereto at 5% per annum from 26 August 2014 until the date of full payments;

The 1st Defendant and or the 3rd and 4th Defendants forthwith pay and refund to the Plaintiffs the sum of RM2,000.00 paid by the Plaintiffs to the 1st Defendant for the administrative charges together with interest thereto at 5% per annum from 26 August 2014 until the date of full payments;

costs in the sum of RM7,110.00.” (SC Judgment). [15] Dissatisfied with the decision, the Defendants appealed to the High Court. When the appeal was dismissed, the Defendants then filed an appeal to the Court of Appeal. On 25.7.2022, the Court of Appeal unanimously dismissed the appeal and upheld the SC Judgment dated 21.9.2017. [16] Thereafter, the Plaintiffs filed for an assessment of damages pertaining to paragraph (b) and (c) of the SC Judgment, that “damages to be assessed arising from the failure to deliver vacant possession of the Property for the period from 16 April 2015 until the date of delivery of possession” seeking for LAD of 12% per annum on the sum of RM664,087.58 (RM374,000.00 the purchase price paid under the SPA and RM290,087.58 of the construction cost under the Supplemental SPA) commencing 16.4.2015 until 4.9.2019, which amounted to RM349,764.92. [17] On 5.5.2023, the Sessions Court ordered LAD of RM349,764.92 to be paid jointly and severally by the Defendants, to the Plaintiffs from 16.04.2015 until the date of VP that is 4.9.2019. Dissatisfied with this Assessment Order, hence the appeal by D1, D3 and D4. Plaintiffs’ Contention [18] The Plaintiffs contended that pursuant to clause 19.1 of the SPA, the LAD is to be calculated at the rate of 12% per annum of the total amount of the purchase price paid by the Plaintiffs as purchasers of the Property pursuant to the SPA and Supplemental SPA amounting to RM664,087.58 which includes the Construction Cost. Defendants’ Contention [19] D1, D3 and D4 contended that the damages for late delivery should be assessed based on the purchase price that was paid by the Plaintiffs under the SPA and not to include the Construction Cost. The Defendant further contended that the LAD is to be calculated on a flat rate of 12% of the purchase price. ISSUES [20] The issues at hand are generally on the method of calculation of the LAD and the purchase price: whether calculation of the LAD is 12% per annum or 12% per purchase price (flat rate) and whether the purchase price includes the Construction Cost as stipulated in the Supplemental SPA? ANALYSIS AND FINDINGS Calculation of the LAD [21] Clause 19.1 of the SPA provides compensation for late delivery of VP to the Plaintiffs as Purchasers. Thus, it is only appropriate for the purpose of calculation of the LAD, that this Court refers to Clause 19.1 of the SPA which provides- “19.1 Provided the Purchaser shall have paid the Purchase Price in full and provided the Purchaser shall have faithfully performed all the terms and conditions set out in this Agreement the Developer shall deliver vacant possession of the Parcel free from all encumbrances to the Purchaser within thirty (30) months from the date of the satisfaction of the Building Plans Approval (hereinafter referred to as "the Delivery Period') failing which the Purchaser shall be entitled only to liquidated damages at the rate of twelve per centum (12%) of the total amount of the Purchase Price paid by the Purchaser until actual delivery of vacant possession of the Parcel. Apart from the above rights the Purchaser shall not have any other right against the Developer regardless of whether or not the Purchaser shall have suffered damages of whatsoever nature: Vacant possession of the Parcel shall be delivered to the Purchaser by way of the Developer notifying the Purchaser in writing to take the same within Fourteen (14) days of the receipt of the notice and vacant possession of the Parcel shall be deemed to have been taken by the Purchaser upon the expiry of the said Fourteen (14) days regardless of whether or not the Purchaser shall have physically taken the same or entered into occupation of the Parcel” [22] Whether clause 19.1 of the SPA that LAD is 12% per annum or at a flat rate, this Court shall certainly look at the surrounding circumstances to understand the intention of the parties. Clearly, clause 19 of the SPA could not be read and interpreted in isolation as a stand-alone provision. The SPA had to be read in its entirety and none of the provisions under the SPA should be interpreted in isolation of the other clauses. Hence, the provisions under the SPA had to be read harmoniously. [23] In Berjaya Times Square Sdn Bhd v. M-Concept Sdn Bhd [2009] 3 MLRA 1; [2010] 1 MLJ 597; [2010] 1 CLJ 269, the Federal Court held- “[42] Here it is important to bear in mind that a contract is to be interpreted in accordance with the following guidelines. First, a court interpreting a private contract is not confined to the four corners of the document. It is entitled to look at the factual matrix which forms the background to the transaction. Second, the factual matrix which forms the background to the transaction includes all material that was reasonably available to the parties. Third, the interpreting court must disregard any part of the background that is declaratory of subjective intent only. Lastly, the court should adopt an objective approach when interpreting a private contract.”. [24] In the case of Catajaya Sdn Bhd v. Shoppoint Sdn Bhd & Ors [2021] 2 MLJ 374; [2021] 2 MLRA 46, the Federal Court referred the case of Charles Grenier Sdn Bhd v. Lau Wing Hong [1996] 2 MLRA 188; [1996] 3 MLJ 327; [1997] 1 CLJ 625; [1996] 3 AMR 3533 where it was held- “[56] In his judgment Gopal Sri Ram JCA cited the speech of Lord Wright in Hillas & Co v. Arcos, Ltd [1932] All ER (Rep) 494, where His Lordship had said: Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business, may appear to those unfamiliar with the business far from complete or precise. It is, accordingly, the duty of the court to construe such documents fairly and broadly, without being, too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as, for instance, the implication of what is just and reasonable to be ascertained by the court as matter of machinery where the contractual intention is clear but the contract is silent on some detail.” [25] The case of Catajaya Sdn Bhd (supra) further held- [57] The terms and conditions of an agreement that have been agreed to by the parties of the agreement cannot be simply brushed aside and ignored. This Court through the judgment of Azahar Mohammad FCJ in the case Lucy Wong Nyuk King (F) & Anor v. Hwang Mee Hiong (F) [2016] 3 MLRA 367; [2016] 3 MLJ 689; [2016] 4 CLJ 813; [2016] 3 AMR 101 explained the principle of construing a contract as follows: ...it is an established principle of construing a contract that, among others, a contract must be construed as a whole, in order to ascertain the true meaning of its several clauses, and also, so far as practicable, to give effect to every part of it. Each clause in an ordinary commercial contract should be so interpreted as to bring them into harmony with the other clauses of the contract (see National Coal Board v. WM Neill & Son (St Helens) Ltd [1984] 1 All ER 555 which was cited in Royal Selangor Golf Club v. Anglo-Oriental (M) Sdn Bhd [1990] 2 MLRH 383; [1990] 2 MLJ 163; [1990] 3 CLJ (Rep) 37 and Mulpha Pacific Sdn Bhd v. Paramount Corporation Bhd [2003] 1 MLRA 577; [2003] 4 MLJ 357; [2003] 4 CLJ 294; [2003] 6 AMR 22). In Australian Broadcasting Commission v. Australasian Performing Right Association Limited [1973] 129 CLR 99, it was held that the whole of the contract has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. [58] The Federal Court in SPM Membrane (supra) set out with acuity the approach the court must take when construing contracts to determine the true intent of the parties: [34] Where the natural meaning of the contract is not clear and in the particular absence of words to the effect mentioned above, the principles in ICS in their qualified form..., remain applicable and relevant to the construction of the construct such as to enable the court to objectively determine "the meaning which the contract would convey to a reasonable person having all the background knowledge...available to the parties.”. [26] It was duly observed that other penalty provisions in the SPA had also stated a 12 percentage per annum and not a flat rate. For example, at clause 4 of the SPA on consequences of failure by the Plaintiffs to pay deposit or instalments to D1, the penalty amount is 12% per annum as stipulated under clause 4.1. It was also stipulated in the proviso of clause 4.2 of the SPA which provides “shall bear interest at the rate of 12% per annum…”. [27] All the penalty provisions in the SPA were clear and unambiguous, that provided calculation by way of a percentage per annum. Thus, this Court finds that clause 19 was also meant to provide for 12% per annum similar to the other penalty clauses as stipulated in clauses 4.1 and 4.2. [28] In this context, the SC Judgment which was affirmed by the Court of Appeal, clearly stated that the time frame for payment is from 16.4.2015 until the date of VP, thus indicated that the 12% to be calculated within this period of time. If the SC Judgment on the LAD was to be fixed at 12% of the purchase price only and not on 12% per annum, there would be no necessity to provide a time frame of which the damages are to be calculated. [29] Furthermore, in the usual conduct of this type of business where time is of the essence and completion date for purpose of VP is vital, the penalty clause for LAD has always been for a certain percentage per annum of the purchase price until the date of VP. [30] Besides, as time is of the essence, the delay factor is substantial and would be absurd in the commercial common sense to put a flat rate for LAD for late VP. The Defendants may take unlimited period of time to complete and deliver the Property, and yet would only be required to pay the same amount of LAD. This definitely, is not in line with the provision of the SPA that ‘time is of the essence’. [31] This Court therefore, agrees with the Plaintiffs’ submission that the correct approach is to interpret agreements in a way that is consonant with business common sense of which the Plaintiffs referred to the case of MBF Insurans Sdn Bhd v. Lembaga Penyatuan Dan Pemulihan Tanah Persekutuan (FELCRA) [2007] 6 CLJ 639; [2008] 2 MLJ 398, where it was held- “[10] In arriving at my conclusion I have adopted the approach commended to me by the leading cases on the subject of contractual interpretation. First, that the yardstick to be applied is "the reasonable expectations of sensible businessmen". See, G Percy Trentham Ltd v. Archital Luxfer Ltd [1993] 1 Lloyd's Rep 25, per Steyn LJ. Second, that a narrow and pedantic approach such as that suggested by the appellant is to be avoided. As Bhagwati, J said in Union of India v. M/s D. N. Revri & Co AIR [1976] SC 2257: It would not be right while interpreting a contract, entered into between two lay parties, to apply strict rules of construction which are ordinarily applicable to a conveyance and other documents. The meaning of such contract must be gathered by adopting a common sense approach and it must not be allowed to be thwarted by a narrow, pedantic and legalistic interpretation. [11] A similar approach as that suggested by Bhagwati J was adopted in Mannai Investment Co. Ltd v. Eagle Star Life Assurance Co. Ltd [1997] AC 749, where Lord Steyn said: In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.” [32] Further, there was an admission by the Defendants as evidenced in the Defendants’ Affidavit in Reply affirmed on 29.9.2022, filed for the purposes of assessment of damages proceeding before the SC, in terms to the calculation of the LAD as reproduced below- [33] As such, this Court also finds that it has always been the parties’ intention that the LAD should be calculated at the rate of 12% per annum and not a flat rate of 12% of the purchase price as evidenced by the surrounding circumstances of evidence and looking at the SPA and Supplemental as a whole. Purchase Price [34] The purchase price in the SPA was for the sum of RM374,000.00 and the Construction Cost of RM290,087.58. Accordingly, the overall payment that the Plaintiffs needed to pay for the Project is RM664,087.58. [35] It is worth to note that the relevant terms and conditions of the SPA and the Supplemental SPA provide that-

the Supplemental SPA is made in addition to and as supplementary to the SPA;

D2 had undertook to deliver the vacant possession of the Property, free from encumbrances, to the Plaintiffs pursuant to the SPA and the Supplemental Agreement (3.2.2 and 4.1.5(i) of the Supplemental SPA). [36] This Court finds that the Plaintiffs had paid the sum of RM664,087.58 as the full purchase price of the Property which include the Construction Cost as part of the total purchase price. [37] Clauses 1.2 and 1.3 of the Supplemental SPA expressly spelt out the terms of the Supplemental SPA shall be “in addition to and as supplementary to the SPA and is intended to vary the terms and conditions of the SPA upon the terms and conditions herein contained” and that “in the event of conflict between any provision contained in the SPA and any provision contains in this Agreement, the provisions herein shall prevail”. [38] Further, clause 4.1.1 of the Supplemental SPA provides- “4.1 In consideration of the White Knight agreeing to undertake of the Project, the Purchaser hereby agrees and undertakes as follows: -

4.1.1 to defer all the claims for the liquidated ascertained damages due to and caused by the delay in the completion of the Project against the Company up to the Completion Date”; (*note- “the Company” refers to D1) [39] The Supplemental SPA was made in addition to and as supplementary to the SPA to vary the terms and conditions of the SPA and clause 4.1.1 of the Supplemental SPA and clause 19.1 of the SPA do not conflict with each other. [40] This Court finds that clause 4.1.1 of the Supplemental SPA, is a provision for the Plaintiffs to defer or delay their claim for LAD against the Defendants and not to absolve or abolish the Defendants’ liability to pay LAD for late delivery the Property. [41] This Court agrees with the contention of the Plaintiffs that the total purchase price for the calculation of LAD, should be based on the total purchase price that was actually paid by the Plaintiffs in respect of the Property pursuant to both the SPA and the Supplemental SPA. The SPA and the Supplemental SPA should be read together in determining the total purchase of the Property and in the words of the SCJ “The Supplemental SPA is complementary in essence and in effect and not intended to be read separately”. [42] Accordingly, the total purchase price of the Property must include the Construction Cost of RM290,087.58 that was imposed on the Plaintiffs under the Supplemental SPA (in addition to the sum of RM374,000.00 that was paid under the SPA) for the completion of the Property. The Construction Cost of RM290,087.58 formed as part of the total purchase price paid for the Property under the SPA and the Supplemental SPA. As such, the total purchase price of the Property was RM664,087.58. [43] In addition, the payment of RM290,087.58 being the Construction Cost was made by the Plaintiffs to D1 and not D2 (Exhibit “TST-5” p. of Enclosure 5) where D1 had issued the official receipt dated 28.8.2014. [44] Therefore, the LAD should be calculated based on the total purchase price of RM664,087.58 that was actually paid by the Plaintiffs in respect of the Property under the SPA and the Supplemental SPA. Appellate Intervention [45] Appellate intervention is warranted only when the decision of the lower court judge is plainly wrong where it could not reasonably be explained or justified in arriving at the decision (Ng Hoo Kui & Anor v. Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67) which is not applicable to this case. CONCLUSION [46] There was no lack of judicial appreciation of facts and evidence by the learned SCJ. The learned SCJ, therefore was correct in assessing the damages for the late delivery of VP of the Property at RM349,764.92. [47] Accordingly, this appeal does not warrant appellate intervention of this Court. [48] Thus, the appeal is dismissed. Global cost of RM 8,000.00 subject to allocator’s fee to be paid jointly and severally to the Respondents by the Appellants. (DR. SUZANA BINTI MUHAMAD SAID) Judicial Commissioner of the High Court of Malaya NCVC 1 Kuala Lumpur Court Date: 12 February 2024 COUNSELS Solicitors for the Appellant Messrs. S. Mathews & Associates No. 31A, Jalan USJ 10/1A, USJ Taipan 47620 Subang Jaya, Selangor D.E. Solicitors for the Respondent Messrs. Christopher & Lee Ong Level 22, Axiata Tower No. 9, Jalan Stesen Sentral 5, Kuala Lumpur Sentral 50470 Kuala Lumpur.