1. ) Stevant Paul a/l Winson v Euroland & Development Sdn Bhd (BA-22NCvC-295-07/2022)

ALL WAYS BUILDER SDN BHD [COMPANY NO. : 201601041757 (1212699-X)]

CHIA CHIW HOON

WONG KIN SING

CHOONG YUEN KEONG @ TONG YUEN KEONG

TONG YUNG MONG

TONG KAH HOE (IDENTITY CARD NO. 650728-10-7113) ….. THIRD PARTIES GROUNDS OF JUDGMENT (Striking Out Third Party Notice with Leave to File Separate Suit) 2 GROUNDS OF JUDGMENT (Striking Out Third Party Notice with Leave to File Separate Suit)

The broad issues in the matter at hand are (a) whether the Court is bound to conduct a joint trial of the plaintiff’s original action and the defendant’s third party action irrespective of the inconvenience and other undesirable factors concerning joint trial in the case, and (b) whether it is consistent with the policy of the Housing Development (Control and Licensing) Act for the developer, when sued by purchasers for liquidated damages under the Schedule H Sale and Purchase Agreement, to join the building contractor and its directors as third parties to have the claims and disputes under the building contract and the tortious claims jointly tried together with the purchaser’s claim for liquidated damages and/or for termination or rescission of sale and purchase agreements.

On 13 October 2022 this Court answered both the abovementioned questions (a) and (b) in the negative and ordered that the developer’s Third Party Notice against the building contractor and its directors be struck out with liberty for the developer to file its said claims against the building contractor and/or its directors in a separate suit.

The Plaintiffs-purchasers have filed the present suit against the Defendant-developer wherein the Plaintiffs are claiming for declaration on rescission of contract and other reliefs in connection with the statutory Sale and Purchase Agreements on residential properties in a residential development project. The gist of the Plaintiffs’ complaint is that after the lapse of about 5 years since the date of the Sale and Purchase Agreements the Defendant-developer still has not completed the project nor has it handed over the vacant possession of the residential units to the Plaintiffs-purchasers and hence the purchasers could validly terminate or rescind the agreements. The Defendant in its Defence denied the Plaintiff’s claims and alleged that the project was issued Conditional Certificate of Completion and Compliance in February 2020.

Within the time prescribed by O. 16 r. 1(1) of the Rules of Court 2012 and without the leave of the Court, the Defendant-developer on 3 November 2021 issued and served a Third Party Notice (Enclosure 3 5) against All Ways Builder Sdn Bhd and the five (5) directors of All Ways Builder Sdn Bhd.

The first-named Third Party, All Ways Builder Sdn Bhd, was the Defendant-developer’s main building contractor who was appointed to carry out the construction works in the development project The main bases of the Defendant-developer’s claim for contribution and damages against its main contractor All Ways Builder Sdn Bhd (“All Ways Builder”) are the allegations that (a) All Ways Builder refused and/or failed to fully complete the construction of the Damai Vista Project within the time limited for it to do so; and (b) despite All Ways Builder bearing the primary obligation to make payments and to settle the claims of the sub-contractors for the Damai Vista Project, All Ways Builder failed, refused, and/or neglected to do the same thereby prolonging and/or causing the prolongation in the completion of the Damai Vista Project.

The Defendant-developer’s claims against contractor’s directors are that they had allegedly conspired and combined together wrongfully and with the sole or predominant intention of injuring Euroland and/or causing loss to them by illegally and unjustifiably causing Euroland’s funds to be channelled out through the Damai Vista Project through lawful and/or unlawful means and thereby prolonging and/or causing to prolong the completion of the Damai Vista Project.

By Enclosures 16 and 18, two (2) of the Directors of All Ways Builder applied under O.18 r.19 to strike out the Third Party Notice against them.

On 13 October 2022 this Court struck out the entirety of the Third Party Notice, terminated the proceedings on the third party notice with liberty for the Defendant-developer to file a new separate suit against the Third Parties herein as co-defendants in that new and separate suit.

Dissatisfied with the said decision dated 13 October 2022, the Defendant-developer has appealed to the Court of Appeal.

The relevant provisions of the ROC 2012 regarding joinder of parties and joinder of causes of action include the following: 4

“Court may order separate trials (O. 15, r. 5)

Third party directions (O. 16, r. 4)

(a) if the liability of the third party to the defendant who issued the third party notice is established on the hearing, order such judgment as the nature of the case may require to be entered against the third party in favour of the defendant;

(b) order any claim, question or issue stated in the third party notice to be tried in such manner as the Court may direct; or

(c) dismiss the application and terminate the proceedings on the third party notice, and may do so either before or after any judgment in the action has been signed by the plaintiff against the defendant.

In cases where parties or causes of action have already been joined in the Third Party Notice which have already been issued, O.16 r. 4(3) and O.16 r.4(4) of ROC 2012 empower the Court to order separate trials of the main suit and the third party proceeding or separate trials of the causes of action where circumstances are appropriate for doing so, to wit, where it appears to the Court “proper for having the rights and liabilities of the parties most conveniently determined” . This criterion on conveneince is similar to one of the limbs of the provisions in O.15 r.5 which stipulate it as “it appears to the Court that the joinder of causes of action or of parties, as the case may be, may embarrass or delay the trial or is otherwise inconvenient .”

The criterion regarding convenience of the trial and the determination of the rights and liabilities of the various parties in the joined proceedings is a common criterion for considering whether to order joint trials or separate trials. From the similar criterion of convenience, it can be concluded that joinder of causes of action and joinder of trials whether in the same original action or in the third party proceeding is dependent upon the Court’s discretionary assessment of whether or not it appears that such joinder of causes of action or joint trials would be convenient for determining the rights and liabilities of the various parties in the joint proceedings.

Convenience in this context is not the convenience of one party at the expense of inconvenience, prejudice or injustice to another party in the joined proceedings. The question of convenience or inconvenience has to be considered by striking a balance between the conflicting interests of the various parties in the joined proceedings in light of the underlying policies and important features of the court rules and also in light of the policy and objective of the applicable statute. Thus, the convenience in this context cannot be viewed in isolation, but should be viewed in the overall context of the Rules of Court 2012 including the policies underlying the court rules and the important features in the court rules and also, in cases relating to the purchasers’ claims against the developer in respect of the statutory sale and purchase agreements under the Housing Development (Control and Licensing) Act, the policy and objective 6 of the said Act.

O. 34 r.1(1) of the ROC 2012 provides as follows: Orders and directions for just, expeditious and economical disposal of proceedings (O. 34, r. 1)

(1) Notwithstanding anything in these Rules, the Court may, at any time after the commencement of proceedings, of its own motion, direct any party or parties to the proceedings to appear before the Court, in order that the Court may make such order or give such direction as it thinks fit so that —

(a) all matters which must or can be dealt with on interlocutory applications and have not already been dealt with may so far as possible be dealt with; and

(b) such directions may be given as to the future course of the action as appear best adapted to secure the just, expeditious and economical disposal thereof. (emphasis added)

The phrase “Notwithstanding anything in these Rules” in O.34 r.1(1) shows that the criteria and objective of “just, expeditious and economical disposal” of civil proceedings are overriding considerations in managing civil proceedings and conducting trials in civil suits in the courts, and these criteria and objective override any contrary provisions in the other parts of the rules of court.

Hence, in considering whether or not a joint trial of causes of action or joinder of parties would be inconvenient, the Court should take into account and give due weight to the question of just, expeditious and economical disposal of civil suits in court - a main policy and/or important feature of the court rules as embodied in O. 34 r.1(1).

Apart from the abovementioned factors, the Court when considering whether or not a joint trial of causes of action or joinder of parties would be inconvenient or inappropriate should also consider the statute governing the plaintiff’s cause of action in the suit in order to ascertain whether a joint trial of the plaintiff’s cause of action with the defendant’s causes of action against the third party is consistent with or consonant to the policy and objectives of the statute. In our case here, the relevant statute is the Housing Development (Control and Licensing) Act. 7 APPLICATION OF LEGAL PRINCIPLES TO THE PLEADED FACTS AND CIRCUMSTANCES OF THE PRESENT CASE Factors which lean against a joint trial

In our present case, the Plaintiffs are claiming for rescission and other reliefs in connection with the statutory Sale and Purchase Agreements on residential properties, whereas the Third Party Notice involves

(a) the Developer/Defendant suing the building contractor in the Third Party Notice for failure to complete the construction works in the project and failure or neglect to pay the subcontractors for the completion of the construction works in the project: see the Third Party Notice in Enclosure 5; and

(b) the Developer/Defendant suing the Directors of the building contractor in the Third Party Notice for tortious claims against contractor’s directors that they had allegedly conspired and combined together wrongfully and with the sole or predominant intention of injuring Euroland and/or causing loss to them by illegally and unjustifiably causing Euroland’s funds to be channelled out through the Damai Vista Project through lawful and/or unlawful means and thereby prolonging and/or causing to prolong the completion of the Damai Vista Project.

The basis of the Plaintiffs-purchasers’ cause of action and reliefs against the Defendant-developer (i.e. the statutory Sale and Purchase Agreement) is different from the basis of the Defendant-developer’s causes of action and reliefs against the main contractor (i.e. the building contract), the documents for the two actions are very likely to be different, and the witnesses are likely to be different. This is the first factor which leans against joint trial.

Moreover, the nature of the Plaintiffs-purchasers’ contractual cause of action and reliefs against the Defendant-developer (i.e. the statutory Sale and Purchase Agreement) is very different from the basis of the Defendant-developer’s tortious causes of action and reliefs against the main contractor’s Directors (i.e. tort of conspiracy to injure), the issues are very different, the documents for the two actions are very likely to be different, and the witnesses are likely to be different. This is a second factor which leans against joint trial. 8

As purchasers in the project, the Plaintiffs in the main action are likely to rely on the standard Sale and Purchase Agreement and a few other documents which are not voluminous, whereas the building contract between the Defendant-developer and the Third Party – main contractor is likely to be very voluminous, their building contract disputes on delays and related issues are likely to be many, complicated and prolonged. This is the third factor which tends to make it inconvenient for the purchaser’s claims against the developer to be jointly tried with the developer’s claims and disputes vis-à-vis the building contractor.

The developer’s claims against the Directors of the main contractor in the tort of conspiracy to injure is likely to involve many different witnesses and lengthy and complicated oral evidence which are very different from the issues and evidence in the Plaintiffs-purchasers’ claims against the developer. This is the fourth factor which tends to make it inconvenient for the purchaser’s claims against the developer to be jointly tried with the developer’s claims and disputes vis-à-vis the building contractor.

In a claim and dispute in connection the Schedule H Sale and Purchase Agreement, matters pertaining to extension of time, variations and the like have no relevance or bearing on the issues between the developer and the purchaser. However, in an action between the developer and the building contractor on claims and disputes in connection with the building contract, numerous and/or complicated issues of extensions of time, variations, certification of values of works, defects in works, payment obligations, etc are common. Building contract claims and disputes between developer and building contractor are usually complicated, complex with technical architectural and engineering issues, and entail prolonged trials. It appears to this Court that the trial of the issues in the main action between the Plaintiff and the Defendant would be very much simpler and shorter than the trial of the issues in the third party proceeding between the Defendant-developer and the Third Party-main contractor. This renders it very inconvenient for the claims and disputes between developer and building contractor to be tried together with the purchaser’s claims against the developer. This is the fifth factor which heavily leans against such joint trial.

In the Plaintiffs-purchasers’ main suit, the main complaints of the purchasers are that the developer’s delay in completing the project would entitle the Plaintiffs-purchasers in terminating or rescinding 9 their Sale and Purchase Agreements and that their respective Sale and Purchase Agreements stipulated the time period for completion of property units and the delivery of vacant possession to be 3 years from the date of the Sale and Purchase Agreement but despite the lapse of about 5 years, the developer still has failed or neglected to complete the same. The main document relied upon by each Plaintiff would be his/her Sale and Purchase Agreement, the contract terms thereof and several short documents to prove the purported termination and the non-completion of the property units as at the trial date. In the main suit, the defences available to the Defendant-developer would be those stipulated in the Sale and Purchase Agreement or permitted by the laws. The full trial of the main action is unlikely to involve many factual disputes or much oral evidence. However, in the Defendant-developer’s claims against the Third Party – building contractor, the developer’s claims are likely to be different from those of the Plaintiffs-purchasers’ claims in the main action. The documents and witnesses would be very different, and there will be extensive oral evidence to be adduced in the attempt and effort to the building contract claims and disputes. The full trial of the issues in the Plaintiffs’ main suit is expected to be very, very much shorter than the full trial of the Defendant-developer’s issues vis-à-vis the main contractor All Ways Builder. As the Defendant-developer’s allegation against the Third Party – contractor is the alleged non-payment to subcontractors, the subcontractors would likely be called as witnesses in the third party proceedings with the result that numerous allegations and counter-allegations between the Third Party-contractor and its subcontractors would also be brought into issue in the joint trials, thereby further complicating and prolonging the joint trials. The inclusion of the contractor’s directors in the third party proceedings in connection with the tortious claims of alleged conspiracy to injure further complicates the matters. This is the sixth factor which leans against a joint trial.

A further complication and likely delay is the presence of an arbitration clause in most of the building and construction contracts between the developers and their contractors. With such arbitration clause, many of the contractors cited as defendants or third parties in the court suits are likely to apply for stay of court suit pending arbitration pursuant to section 10 of the Arbitration Act 2005. When the trial court has decided on the section 10 stay application, the party who is aggrieved by the said decision will probably appeal against it, and the appeal is likely to go all the way to the third tier of 10 the court to exhaust the right of appeal. During the pendency of the appeal against the decision on stay, the trial court cannot readily and safely proceed with the full trial of the plaintiff’s suit or the defendant’s claims in the third party proceedings. The process of exhausting the right of final appeal is likely to take many months. Thus, allowing the developer’s claims and disputes vis-à-vis its building contractor to be tried together with the purchaser’s claims under of in respect of the property sale and purchase agreement to be excessively delayed and/or extensively protracted contrary to the policy and objective of the Housing Development (Control and Licensing) Act as a social legislation to facilitate and protect the purchasers’ rights and remedies vis-à-vis developers in residential development projects. This is the seventh factor which leans against a joinder of causes of action to be in the same trial.

In the circumstances, it appears to this Court that the joint trial of the Plaintiffs-purchasers’ main action and the Defendant’s third party action would be inconvenient, and therefore this Court finds that separate trials should be carried out for the Plaintiffs/purchasers’ main suit and the Defendant/developer’s third party action against the main contractor and the directors of the main contractor. Policy and objectives of Housing Development (Control and Licensing) Act

Further or alternatively, this Court also finds that it would be unjust or rather oppressive to the purchasers of housing projects if their simple and short claims against the developers under the terms of the statutory sale and purchase agreements were allowed to be entangled with and bogged down by the complicated and lengthy claims and disputes between the developers and their main contractors in the housing projects.

The policy and objective of the Housing Development (Control and Licensing) Act in protecting the rights and interests of house buyers would be frustrated or defeated if the claims by the house buyers in the courts were to be intertwined with and bogged down through third party proceedings by the much more complicated and lengthy claims and disputes between the developers and their contractors. Joint trial of a house buyer’s simple and short claims under the statutory sale and purchase agreement jointly together with the developer’s complicated and lengthy claims and disputes vis-à-vis its contractors would also compel a house buyer to take part in a 11 complicated and lengthy trial involving extensive time and great expenses for the purchaser’s participation in the joint trial.

Apart from unduly delaying the purchaser’s recovery of his/her contractual entitlements, the house buyer is likely to be out of pocket by substantial amount even if he/she eventually obtains the judgment after the joint trial because the party-to-party costs awarded to the house buyer will not be able to fully cover his/her expenses of legal fees and disbursements on solicitor-and-client basis of costs. For an individual purchaser of a housing unit, such financial burden of shouldering the additional costs and expenses of a lengthy and complication joint trial would be unjust or uneconomical.

If the Courts were to allow such joint trials as a matter of common practice, many an individual purchaser of housing unit would not have the ability and courage in future to file any suit against a developer for damages under or for reliefs in connection with the statutory Sale and Purchase Agreement due to the fear of being dragged into and bogged down by the lengthy, complicated and expensive joint trial together with the developer’s third party proceedings against the building contractor. This would either defeat, or be contrary to, the social objectives of the Housing Development (Control and Licensing) Act,

In the premises, any joint trial of the main action and the third party proceeding in the circumstances of our present case would not be consistent with the main policy of “just, expeditious and economical disposal” of cases laid down in O.34 r.1(1) of ROC 2012 and also would be contrary to the policy and objective of the Housing Development (Control and Licensing) Act. Complications, prolix and repetitious trials if the developer’s claims and disputes with its contractor are joined together with the purchasers’ suits

Moreover, the Defendant here has also filed similar third party claims against the building contractor and the contractor’s directors on similar causes of action in various suits commenced by various purchasers : (i) WA-22NCC-246-06/2020 (Mahkamah Tinggi Kuala Lumpur) (ii) WA-22NCC-632-12/2020 ( Mahkamah Tinggi Kuala Lumpur) (iii) WA-22NCC-137-03/2021(Mahkamah Tinggi Kuala Lumpur) (iv) WA-22NCC-550-12/2012 ( Mahkamah Tinggi Kuala 12 Lumpur), (v). BA-22NCVC-341-09/2021(Mahkamah Tinggi Shah Alam).

There are different firms of solicitors acting for the different plaintiffs in the various suits filed by different purchasers against the same developer, the Defendant herein. As the separate suits with different firms of solicitors acting for the various plaintiffs-purchasers cannot be consolidated and tried together, such different suits would have to be tried at separate times before different judges with the consequence that the lengthy and complicated claims and disputes between the developer on the one side and the contractor and the contractor’s directors on the other part would have to be tried and decided a number of times by different trial judges. This involved repetitions and tremendous wastage of time and expenses.

In two other similar suits by various purchasers against the same Defendant-developer, this Court has struck out the Defendant-developer’s third party notice with liberty to file as separate suits.

As an illustration of the complications, repetitions and prolixity of allowing the developer’s claims and disputes vis-à-vis its building contractor to be jointly tried together with a purchaser’s claim against the developer, this Court will take an example of a development project with hundreds of purchasers who bought hundreds of units of residential properties from the developer in the same housing development project. In a situation where the purchasers at different locations file various separate suits to claim for their own liquidated damages or reliefs against the same developer under or in respect of their own sale and purchase agreements, there can be numerous suits filed by different solicitors firms on behalf of the respective purchasers. With different solicitor firms acting for different purchasers as plaintiffs, the Court cannot consolidate these separate suits. If the developer-defendant were allowed to join its building contractor as third party and claims against the building contractor for losses and damages under the building contract in each and every of these separate suits and have the third party claims tried jointly with each purchaser’s suit, each Court and each purchaser would have to conduct full trial of the third party claims involving complicated and lengthy evidence on building contract claims and disputes. If joint trial of the purchaser’s claims and the developer’s third party claims were allowed, that would have extremely burdensome and inconvenient for each purchaser in his/her suit. On the other hand, if the third party notice proceedings 13 are terminated and the developer’s claims and disputes vis-à-vis its building contractor is separately tried in a fresh suit between the developer and its building contractor (as ordered by this Court here), there is only one (1) suit and trial between the developer and its building contractor, while the much simpler and shorter trials of each purchaser’s claim against the developer can be expeditiously, conveniently and economically conducted and completed. Summing Up

In the circumstances, this Court in exercise of its discretion under O.16 and O.34 struck out the Third Party Notice herein with liberty for the Defendant-developer to file its claims against the building contractor and the contractor’s directors in a separate suit. Liberty is also given to the building contractor and its directors to make the necessary interlocutory applications in the separate suit.

As this Court has come to the conclusion that the joint trial of the Plaintiffs-purchasers’ main action and the Defendant-developer’s third party action in our present case would be inconvenient and/or would be contrary to the policy and objective of just, expeditious and economical disposal of civil proceedings, this Court pursuant to O.34 r.191) read with O.16 r.4 has terminated the third party proceedings by striking out the Third Party Notice with liberty for the Defendant-developer to file a new and separate suit against the building contractor and/or its directors. Whatever interlocutory applications which the Defendant-developer or the any Third Party wishes to make can be made and dealt with in the fresh suit to be filed.

Since the Third Parties No. 3, No. 4 and No. 5 have filed more cause papers than the other third parties, the Defendant should pay costs of RM3,000 to Third Party No. 3 and RM3,000 to Third Parties No. 4 and No. 5. No order of costs as between the Defendant and the other Third Parties. 14 Dated this : 3rd November 2022. Signed ….............................................................. TEE GEOK HOCK JUDICIAL COMMISSIONER HIGH COURT OF MALAYA AT SHAH ALAM (NCVC 10) To the parties’ solicitors :

For the Plaintiffs : Sarania a/p Sinatamby Chambers of Michael & Sinatamby (Shah Alam)

For the Defendant : Johan Taing Chee Fae Tetuan Shu Yin, Teh & Taing (Subang Jaya)

For the Third Party : Chia Su Wei - (1st and 2nd)) Messrs Kevin & Co. (Kuala Lumpur) - (3rd & 4th) Mohammad Shafiee bin Afendi Messrs KC Tang & Co. (Kuala Lumpur)