Pung IT Teong v Capital City Property Sdn. Bhd. (JA-12BNCvC-14-06/2025)

PUNG IT TEONG [NRIC NO. : 790130-07-5553]

TAN YEE TING [NRIC NO. : 800923-01-6082] ... APPELLANTS AND CAPITAL CITY PROPERTY SDN. BHD. [COMPANY NO. : 201301020147 (1049977-V)] ... RESPONDENT IN THE SESSIONS COURT AT JOHOR BAHRU IN THE STATE OF JOHOR DARUL TA'ZIM MALAYSIA CIVIL SUIT NO. : JA-B52NCVC-93-09/2022 21/05/2026 15:39:59 JA-12BNCvC-14-06/2025 Kand. 27

PUNG IT TEONG [NRIC NO. : 790130-07-5553]

TAN YEE TING [NRIC NO. : 800923-01-6082] ... PLAINTIFFS AND CAPITAL CITY PROPERTY SDN. BHD. [COMPANY NO. : 201301020147 (1049977-V)] ... DEFENDANT GROUNDS OF DECISION

This is an appeal by the Appellants ("the Plaintiffs") against the entire decision of the Sessions Court Judge of Johor Bahru ("the SCJ") dated 29 May 2025, which dismissed the Plaintiffs' claim against the Respondent ("the Defendant") with costs of RM9,000.00.

For ease of reference and consistency, the parties in this appeal shall be referred to as in the Sessions Court.

Both parties have filed their respective written submissions and bundles of authorities and the following are the decision and grounds of this Court.

The Plaintiffs are individuals of Malaysian citizenship with an address in Singapore. On 12 May 2014, the Plaintiffs entered into a Sale and Purchase Agreement ("the SPA") with the Defendant (as developer) and Achwell Property Sdn Bhd ("Achwell") (as landowner) for the purchase of one (1) unit of Commercial Shop Lot Unit No. F3-058, Capital 21 @ Capital City ("the Property") at the price of

On the same date, the Plaintiffs entered into a Tenancy Agreement ("the TA") with CCRM Management Sdn Bhd ("CCRM") as tenant. The Plaintiffs also entered into a Deed of Assignment dated 31 July 2015 with Affin Bank Berhad ("the Bank") for the purposes of a loan facility.

The Plaintiffs allege that they were induced to enter into the SPA by five (5) representations made by the Defendant through a marketing video ("P13") and during negotiations, namely –

a purchase and leaseback scheme with a guaranteed rental return of 7% (first year) and 8% (second year onwards);

management by the Hatten Group;

the construction of a Hatten Hotel and an International Hotel;

different continental themes; and

the construction of a First World Museum (collectively, "the Representations").

The Plaintiffs allege that the Representations constitute misrepresentations that induced them to enter into the SPA.

Construction of the Property was completed and the Certificate of Completion and Compliance (CCC) was issued on 26 April 2018. The Plaintiffs took vacant possession on 2 July 2018.

The Plaintiffs initially filed an action against the Defendant on 11 November 2019 (Civil Suit No. : JA-B52NCvC-154-11/2019) but that action was struck out with liberty to refile, consequent upon a judicial management order obtained by the Defendant. The present action was filed on 28 September 2022.

It is well-established law that an appellate court will not disturb the decision of a trial court unless that decision is shown to be plainly wrong. (See : Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1 and Dream Property Sdn Bhd v. Atlas Housing Sdn Bhd [2015] 2 MLRA 247). Appellate intervention is only warranted where there is no or insufficient judicial appreciation of the evidence, a material error of law, findings of fact that have no basis in the evidence, or a demonstrable misunderstanding of relevant evidence.

The central issue in this appeal is whether the Plaintiffs have successfully demonstrated that the decision of the SCJ meets the aforesaid threshold. The Plaintiffs raised ten (10) grounds of appeal through the Memorandum of Appeal (Enclosure 3) and the Supplementary Memorandum of Appeal (Enclosure 8), collectively alleging that the SCJ erred in law and fact.

Having carefully examined the entire appeal record, the submissions of both parties and the grounds of judgment of the SCJ, I find that the Plaintiffs have failed to demonstrate any such error. My reasons are as follows.

The SCJ held that the Plaintiffs did not have locus standi to commence this action against the Defendant on the ground that the Plaintiffs had assigned the entirety of their rights in the Property to the Bank by way of the Deed of Assignment.

The Plaintiffs argue that Clause 4.01 of the Deed of Assignment provides that the assignment was made "as security for the payment, repayment and discharge of the Indebtedness", and that it was therefore merely an assignment by way of security and not an absolute assignment. They rely on Phileoallied Bank (Malaysia) Bhd v. Bupinder Singh Avatar Singh & Anor [2002] 2 CLJ 621, Sakinas Sdn Bhd v Siew Yik Hau & Anor [2002] 5 MLJ 497 and Max-Benefit Sdn Bhd v Phuah Thean An & Anor [2001] 1 MLJ

553.

I observe that there is force in the Plaintiffs' argument that Clause 4.01, when read together with Clauses 4.05 and 4.08 of the Deed of Assignment, suggests that the assignment was made by way of charge only and not as an absolute assignment. However, the inescapable fact is that the Plaintiffs have sought rescission of the SPA as their primary relief. The consequence of rescission would inevitably affect the rights and interests of the Bank as the security holder. Yet, the Bank was not named as a party to this action and there is no evidence that the Bank's consent was obtained.

The Federal Court in Kheng Chwee Lian v. Wong Tak Thong [1983] 2 CLJ 191 established that the Court has no jurisdiction over any person other than those properly brought before it as parties. This principle was affirmed by the Federal Court in Tenaga Nasional Bhd v Majlis Daerah Segamat [2022] 2 MLJ 119, which emphasised that courts cannot make any order that breaches the principle of natural justice.

Accordingly, while the nature of the assignment to the Bank may be debatable, the Plaintiffs' failure to name the Bank as a party is fatal given the primary relief sought. I find that the SCJ did not err in this finding.

Related to the issue above, the SPA involves three parties : the Plaintiffs (as purchasers), the Defendant (as developer) and Achwell (as landowner). If the SPA were to be rescinded, the Plaintiffs would be required to restore title and vacant possession of the Property to Achwell. However, Achwell was not named as a party to this action.

SP1 himself admitted during cross-examination that he only became aware of the failure to name Achwell during the trial. SP1 also admitted that he did not know that the Court could not make an order against a non-party.

Furthermore, CCRM, the tenant under the TA, was also not named as a party. The Plaintiffs did not seek any order for the recovery of possession from CCRM, and there is no evidence that the TA has been terminated.

I therefore find that the SCJ's conclusion that the prayers at paragraphs 1 to 3 of the Statement of Claim (relating to rescission of the SPA) could not be realised due to the non-joinder of Achwell and the Bank was correct in law. I find no error in this finding.

The SCJ also held that the Plaintiffs had failed to particularise the alleged misrepresentations with sufficient specificity as required by Order 18 Rule 12(1) of the Rules of Court 2012.

The law is well-settled that a claim in misrepresentation, whether fraudulent, negligent or innocent, requires clear and specific particulars. The Court of Appeal in Sim Thong Realty Sdn Bhd v. Teh Kim Dar [2003] 3 CLJ 227 established that each classification of misrepresentation yields a different remedy. Fraudulent misrepresentation requires proof of intent to deceive. Negligent misrepresentation requires the establishment of a special relationship under the principles laid down in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. Innocent misrepresentation carries the remedy of rescission and restitution only.

Having examined the Plaintiffs' Statement of Claim, I agree with the SCJ's finding that there are material deficiencies in the pleadings. The Statement of Claim does not clearly state the classification of misrepresentation relied upon by the Plaintiffs. The word "fraud" is not specifically pleaded. There are no particulars as to when, where, and by whom each representation was made. As for negligent misrepresentation, there is no pleading of a special relationship between the parties. These failures are fatal to the Plaintiffs' misrepresentation claim.

Even if the Plaintiffs' pleadings were sufficient (which I have found otherwise), the next question is whether the Plaintiffs have successfully proved misrepresentation on a balance of probabilities.

Applying the three-element test established in Sim Thong Realty Sdn Bhd, an actionable misrepresentation requires –

an unambiguous false statement of fact;

the statement must be addressed to the party misled; and

the statement must be a material inducement to entry into the contract.

As to the second element, the marketing video P13 was addressed to the public at large ("world at large") and not specifically to the Plaintiffs. This undermines the Plaintiffs' ability to satisfy the requirement that the representation was addressed to them specifically.

More importantly, with respect to Representations (c), (d) and (e) namely the construction of hotels, the continental themes and the museum, the Plaintiffs' own pleadings use the words "akan dibina" meaning "will be built". These are plainly promises as to the future and not statements of existing fact. The Court of Appeal in IJM Construction Sdn Bhd v Lingkaran Luar Butterworth (Penang) Sdn Bhd & Anor [2024] 4 MLJ 340 held that a misrepresentation must be based on a representation of fact relating to an existing state or situation, and not a promise to do something in the future. The same principle was decided in Chia Tien Foh & Ors v. Lo Man Heng & Ors [2015] CLJU 1219. A future promise cannot sustain a claim in misrepresentation.

As to Representation (a), the guaranteed rental return, SP1 himself admitted during cross-examination that the guarantee of rental return was under the TA with CCRM and not with the Defendant. Accordingly, any non-payment of rental is an issue of breach of contract against CCRM and not a misrepresentation by the Defendant.

As to Representation (b), the management by Hatten Group, SP1 himself admitted that there was no evidence before the Court showing that Hatten Group would manage Capital 21 Mall. Moreover, the full name of the tenant entity, Capital City Retail Management Sdn Bhd, itself demonstrates that the management was not by Hatten Group, a fact that could have been discovered with ordinary diligence prior to the execution of the SPA. I refer to Section 19 of the Contracts Act 1950 which provides an exception where the party claiming misrepresentation had the means of discovering the truth with ordinary diligence.

Additionally, with regard to Representation (d) concerning the continental themes, the Defendant adduced evidence through SD1's testimony and documentary exhibits that Capital 21 Mall was in fact completed with six levels of retail space, each floor themed after various capitals of the world. SP1 admitted during cross-examination that such themes did exist and that their existence was not denied. This further undermines the Plaintiffs' claim that Representation (d) was false.

I find that the SCJ did not err in holding that the Plaintiffs failed to prove the Representations on a balance of probabilities.

Clause 39 of the SPA contains an entire agreement clause which provides that the SPA constitutes the sole and entire agreement between the parties and shall supersede all prior agreements and understandings, whether oral or written. The Plaintiffs had signed the SPA and are thereby bound by this clause.

I note that the Plaintiffs in their Reply Submission relied on the Court of Appeal decision in Chiropractic Specialty Centre Sdn Bhd v Orthorelief & Care Sdn Bhd [2017] 5 MLJ 718 for the proposition that an entire agreement clause does not preclude a claim for misrepresentation. While I acknowledge the principle that the denial of contractual force to a pre-contractual statement does not, in and of itself, negate its character as a misrepresentation, this principle does not assist the Plaintiffs in the present case. The Plaintiffs have failed on the more fundamental grounds of inadequate pleading and failure to satisfy the elements of actionable misrepresentation. The entire agreement clause therefore constitutes an additional ground supporting the dismissal of the claim. The SCJ was correct in taking this clause into account. F.

The SPA was executed on 12 May 2014. The present action was filed on 28 September 2022, which is more than eight (8) years thereafter. Although the Plaintiffs argue that the earlier action which was struck out with liberty to refile should preserve their limitation position, I note that the earlier action itself was filed in November 2019, which was already more than five (5) years after the SPA. Section 6(1)(a) of the Limitation Act 1953 prescribes a limitation period of six (6) years for actions founded on contract. I find that the present action is outside that period, computed from the date of the SPA. The SCJ's finding on limitation was therefore not in error.

The SCJ held that the Plaintiffs' action was an afterthought. I agree. The Plaintiffs took vacant possession on 2 July 2018, continued with the TA with CCRM and did not take any immediate steps to rescind the SPA. These acts constitute affirmation of the contract and not its rejection. A party cannot, after enjoying the benefits of a contract for years, subsequently seek rescission on the basis of misrepresentations that were allegedly known to them prior to taking vacant possession.

Having examined the entire appeal record, the grounds of judgment of the SCJ, the written submissions of both parties and the respective reply submissions, I am satisfied that the Plaintiffs have failed to demonstrate that the decision of the SCJ was plainly wrong. There is no basis for this Court to interfere with or vary that decision.

For the reasons set out above, the appeal of the Plaintiffs is dismissed with costs of RM10,000.00 subject to allocator.

The decision of the SCJ dated 29 May 2025 is affirmed. Dated : 10 April 2026 -signed-YA Dr Noradura binti Hamzah Judicial Commissioner High Court Civil 2 Johor Bahru Solicitor for the Appellants : : Nur Mirza Batrisyia Binti Zamri Messrs. G K Soh & Partners Solicitor for the Respondent : : Intan Maisarah Binti Mohamad Khir Messrs. Kevin & Co.