1. Tan Kim Seng (No K/P: 571201-01-5057) v Trade Secret Sdn Bhd (22NCVC-63-04/2014)

SOO YUH MIAN (P) (NO. K/P: 680126-01-6342) PLAINTIF-PLAINTIF DAN TRADE SECRET SDN BHD (NO. SYARIKAT: 732408-W) DEFENDAN JUDGMENT CHOO KAH SING Judicial Commissioner High Court, Johor Bahru Date: 10.5.2017 Page 2 of 21 Introduction [1] This case concerns a sale and purchase of four compartments (hereinafter be referred to as ‘the parcels’) which are located in a building in which is specifically constructed for harvesting bird swifts for the purpose of collecting bird nest. The parcels and other parcels in the said building were sold to individual purchasers. The defendant was the owner and vendor of these parcels. The plaintiffs had purchased the parcels from the defendant. Both the plaintiffs and defendant had alleged that it was the opposing party who had committed a breach of the contracts entered into by the parties. [2] On 29.3.2017, this Court dismissed the plaintiffs’ claim and allowed the defendant’s counter-claim after a full trial. This is the judgment of this Court. The reasons for the decision are set down as below. The Salient Facts [3] On 9.4.2008, the defendant and the plaintiffs entered into four Sale and Purchase Agreements (all four Sale and Purchase Agreements shall collectively hereinafter be referred to as ‘the SPAs’). [4] The defendant agreed to sell and the plaintiffs agreed to purchase the parcels stated in the SPAs respectively. The parcels are located in a building identified as ‘Building A’. The details of the parcels are particularized as below: Page 3 of 21 No. Parcel Storey Building Area Size Approximate in sq. ft. Purchase Price (RM) 1 7 1 1,356 215,000.00 2 8 1 1,853 215,000.00 3 8 2 1,853 225,000.00 4 8 3 1,853 235,000.00 Total Purchase Price 890,000.00 The Plaintiffs’ Case [5] The plaintiffs in their statement of claim asserted, inter alia, that they would not have entered into the SPAs with the defendant if not for the fact that the defendant had misrepresented to them that the individual parcel was to be built at a height of 3000mm, instead of the actual height upon completion of the construction of the building, which is only 2700mm. [6] The plaintiffs referred to the Second Schedule of the SPAs where the floor plans for the building were attached. The plaintiffs asserted that according to the floor plans, the height for each parcel (or each floor) was stated to be 3000mm. [7] The plaintiff also asserted that before the SPAs were signed, the defendant was fully aware that the actual height for each floor was only 2700mm, and not 3000mm. But, the defendant did not inform the plaintiffs that the actual height was 2700mm which was the approved height by the authority. [8] The defendant did not reveal this material fact to the plaintiffs before the execution of the SPAs. The defendant’s failure to reveal the Page 4 of 21 actual height to the plaintiffs before the execution of the SPAs would tantamount to a misrepresentation of fact to the plaintiffs, the plaintiffs argued. [9] For the above reasons, the plaintiffs sought for a declaration to declare that the SPAs entered into between the parties are invalid and terminated. The plaintiff also sought for the refund of RM86,000.00 (hereinafter be referred to as ‘the deposit’) from the defendant being the deposit paid to the defendant for all the parcels. The plaintiffs also claimed other damages as consequential losses for the termination of the SPAs. The Defendant’s Case [10] The defendant denied and refuted the plaintiffs’ assertion that the defendant had misrepresented to the plaintiffs. The defendant relied on the terms and conditions of the SPAs and stated that in fact it was the plaintiffs who had breached the terms and conditions of the SPAs. The defendant averred that the plaintiffs had failed to settle the balance purchase price of the SPAs after several extensions of time had been granted to the plaintiffs to pay the balance purchase price by the defendant. As a result of the plaintiffs’ breach, the defendant is entitled to terminate the SPAs and forfeit the deposit. [11] The defendant, therefore, counter claimed the plaintiffs and sought for a declaration that the plaintiffs had breached the SPAs. The defendant also sought for a declaration that the SPAs have been terminated, and the defendant is entitled under the terms and conditions of the SPAs to forfeit and keep the deposit. Page 5 of 21 The Findings of this Court [12] The defendant through its solicitors, Messrs Lim & Hooi, had prepared a template sale and purchase agreement for the sale of the parcels. The defendant’s solicitors had used the template agreement as the standardized sale and purchase agreement for the sale of the parcels and other parcels, both before and after the completion of the construction of the building. The defendants’ solicitors merely inserted the details of the purchasers and units which are stated in the First and Third Schedule and the execution page. [13] On 9.4.2008, the parties entered into the SPAs. On this date, the construction of the building had been completed. The relevant clauses in the SPAs are stated as below. [14] Clause 12.1 states as follows:

12.1 The position of the Parcel in relation to the other units shown in the proposed Building Plans, and the measurements, boundaries and area of the Parcel as given therein are believed but not guaranteed to be correct and if the measurements, boundaries and area of the Parcel shown in the proposed Building Plans shall be different from its measurements, boundaries and/or area as stated in the approved Building Plans and/or strata title when issued, no such discrepancy or inaccuracy shall annul the sale herein nor shall it entitle the Page 6 of 21 Purchaser to withdraw from the sale or purchase herein or to claim for any damages arising therefrom. [15] Clause 12.1 has stated explicitly that the Building Plans (Second Schedule) attached thereto in the SPAs were a proposed Building Plan. A proposed building plan simply means that it is not the approved building plan from the relevant authority. [16] Clause 35 of the SPAs has explicitly stated that this proposed Building Plan shall form an essential part of the SPAs. Clause 35 states as follows:

The First, Second, Third and Fourth Schedules hereto shall form part of this Agreement and shall be read taken and construed as an essential part of this Agreement. [17] Reading clauses 12 and 35 together connotes that the defendant had notified the plaintiffs that the proposed Building Plan in the Second Schedule was not the final and approved building plan, and that it could differ from the approved building plan or strata title. This in turn means the plaintiffs were made aware that the height of each floor stated in the proposed Building Plan was not the final approved building plan. [18] It was not in dispute that the plaintiffs were aware that the building has been fully constructed, although the terms in SPAs are worded as if the building has yet to be built. The plaintiffs did not enquire whether there was any approved building plan before executing the SPAs. The Page 7 of 21 plaintiffs accepted the clause on the proposed Building Plan, despite knowing the building had been fully constructed. Hence, the plaintiffs had accepted the term that there could be modification to the proposed Building Plan based on clause 12.1 of the SPAs. [19] The plaintiffs did not enquire further with the defendant whether there was an approved building plan before executing the SPAs or whether there were any changes in the Second Schedule. [20] There was no representation, whether in writing or oral, made to the plaintiffs by the vendor that no changes would be or had been made to the information stated in the proposed Building Plan (Second Schedule). [21] The plaintiffs had been notified and were fully aware that they could not annul the SPAs in the event of any derivations from plans, details and specifications in the Second Schedule as directed or required by the appropriate authority. Clause 39 states as follows:

The Vendor shall at its costs and expense proceed to construct the Parcel in accordance with the plans as annexed in the Second Schedule hereto which plans are hereby declared to have been inspected by the Purchaser and have been expressly accepted by the Purchaser as the Purchaser hereby acknowledges. The Vendor however reserves the right from time to time to make such deviations from the said plans details and specifications if the Appropriate Authority shall so Page 8 of 21 direct or require of if the Vendor’s Architect shall in the circumstances of the case consider it necessary or expedient without incurring any liability of any kind whatsoever to the Purchaser in respect thereof without the Purchaser being entitled to annul this Agreement or to any reduction of the Purchase Price or any damages in respect thereof. [22] Clause 42.1 explicitly states that the plaintiffs shall be deemed to have inspected the Building Plan and accepted the contents stated therein. Clause 42.1 states as follows: “42.1 It is hereby expressly acknowledged agreed and declared by the parties hereto that the Vendor has not printed distributed and/or permitted to be printed distributed any sales brochure and/or other promotional materials for the said Land and Building and/or the Parcel and the Vendor dose [sic] not give any warranty whatsoever with regard to the Agreed Purpose or anything in relation thereto and the Purchaser shall be deemed to have satisfied himself by examination search and inspection as to the title deed to the said Land the Building Plan in every respect and shall be deemed to have full knowledge of the nature and effect thereof and the Purchaser shall be deemed to have entered into this Agreement for purchase of the Parcel voluntarily and with notice and not upon or pursuant to any representation statement warranty Page 9 of 21 guarantee covenant and/or condition whatsoever made to the Purchaser and the Purchaser shall not have any claim against the Vendor for costs, damages, compensation or otherwise which the Purchaser may suffer for the purchase of the Parcel.” [23] It is also stated clearly that the plaintiffs had entered into the SPAs not pursuant to any representation statement made by the defendant. [24] Reading all the above clauses together, it could be surmised that:

the plaintiffs shall be deemed to have inspected the Second Schedule and accepted the contents therein;

(ii) the defendant had notified the plaintiffs the building plans in the Second Schedule was a proposed Building Plan and not the final or approved building plan;

(iii) although the plaintiffs were aware (a) the building had been constructed and completed, and (b) the Second Schedule was only a proposed building plan, the plaintiffs did not enquire further whether the building was constructed in accordance with the proposed building plan, i.e. the height of 3000mm, before entering into the SPAs; and

(iv) by executing the SPAs, the plaintiffs had accepted that changes could be made to the proposed building plan and that the measurements, boundaries and area as the parcels could differ from that shown in the proposed building plan; and

there was no representation made to the plaintiffs by the defendant that the actual or built height of the floors in the building was 3000mm. Page 10 of 21 [25] Based on the above terms and conditions of the SPAs, this Court finds the plaintiffs had accepted that the height of the parcels could differ from what is shown in the proposed Building Plan. Despite being put on notice the height of the as built building could differ from what is shown in the proposed Building Plan, yet the plaintiffs did not carry out any physical inspection or measurement of the floor height of the building. The plaintiffs also did not enquire further whether there was any change made to the information shown in the Second Schedule. The plaintiffs had accepted and were bound by the terms and conditions which they had agreed in the SPAs. [26] This Court observed that one of the plaintiffs, the 1st plaintiff, Tan Kim Seng, had previously entered into two sale and purchase agreements with the same terms and conditions as the SPAs. The 1st plaintiff had bought two parcels which are also located in the same building (Building A) together with two other co-purchasers from the defendant. For these two transactions, the sale and purchase of the parcels had been completed, and the said parcels in these transactions had been delivered to the 1st plaintiff and the co-purchasers on 27.11.2008. In view of this fact, the 1st plaintiff ought to have full knowledge of the height of the parcels which were constructed at the height of 2700mm in every floor. However, the 1st plaintiff did not raise any issue about the floor height of the delivered parcels. The plaintiff also did not seek to terminate the sale and purchase agreements by reason of any purported misrepresentation made by the defendant in these two transactions. Page 11 of 21 [27] After the 1st plaintiff had taken delivery of the two parcels in the previous transactions with the height of 2700mm, the plaintiffs continued to take steps to complete the SPAs. The plaintiffs had on several occasions requested the vendor to grant them extension of time to complete the SPAs, i.e. to postpone the date to pay the balance purchase price. The defendant had acceded to the plaintiffs’ requests. The plaintiffs even managed to negotiate with the defendant to settle the balance purchase price at a discounted price of RM700,000.00. [28] On 14.1.2011, the plaintiffs via their loan solicitors, Messrs T.S. Chong & Co. forwarded a letter (Ikatan dokumen bersama, bahagian B, m/s 495) to the defendant’s solicitors, Messrs Lim & Hooi, enclosing a banker’s cheque for a sum of RM700,000.00 as full and final settlement of the balance purchase price for the four parcels. This fact shows the plaintiffs were at the material time ready and willing to conclude the sale and purchase of the parcels. [29] The completion of the sale and purchase came to a standstill when the defendant’s solicitors returned the banker’s cheque to the plaintiffs’ loan solicitors on 19.1.2011 via its letter dated 18.1.2011 (Ikatan dokumen bersama, bahagian B, m/s 497). The defendant’s solicitors returned the said banker’s cheque to the plaintiffs’ loan solicitors because the defendant’s solicitors could not accede to the conditions imposed in the plaintiffs’ loan solicitors’ letter. [30] The plaintiffs’ loan solicitors’ letter stated, inter alia, as follows: “The aforesaid sum is forwarded to you upon the following expressed conditions:

that the properties shall be built as per the specification in the Sale and Purchase Agreement with all the relevant approvals from local government authorities; and

on your undertaking not to release the cheque to clients until and unless you have obtained an independent certificate stating that the building is built in accordance with the specification in the Sale and Purchase Agreement and with approvals from local authorities.” [31] In reply to the above plaintiffs’ loan solicitors’ letter, the defendant’s solicitors stated, inter alia, as follows: “Please be informed that we as Solicitors are not in a position to confirm the first expressed condition imposed therein as we are neither a qualified architect nor we are obliged under the provisions of the Sale and Purchase Agreement to give our confirmation that the abovementioned properties have been built as per the specification in the Sale and Purchase Agreement with all the relevant approvals from local government authorities. Please also be informed that there is also no provisions as contained in the Sale and Purchase Agreement obliging us as Solicitors to engage an Page 13 of 21 independent party to certify that the abovementioned properties have been built as per the specification in the Sale and Purchase Agreement with all the relevant approvals from local government authorities. In view of us not being able to give or perform the undertaking/conditions required, we return herewith the bankers cheque no. Bank Islam 017412 in the sum of RM700,000.00 to your goodselves in accordance with the Conveyacing Practice Rules by the Bar Council. However, your goodselves may forward the cheque to our client directly.” [32] The above excerpts of the two solicitors’ letters clearly reveal that the plaintiffs had imposed additional conditions for the payment of the balance purchase price. The additional conditions were outside the terms and conditions of the SPAs. The parties’ obligations could only be confined to the four corners of the SPAs. Any conditions outside the four corners of the SPAs would tantamount to additional conditions. A party has no obligation to perform a condition imposed by the other party if such condition is not stated anywhere in the terms of the written agreement between them. [33] Further, the conditions imposed were directed at the defendant’s solicitors, instead of the defendant. The defendant’s solicitors had no obligation to comply with the conditions imposed therein by the plaintiffs’ loan solicitors. Hence, the defendant’s solicitors had rightfully returned the said banker’s cheque to the plaintiffs’ loan solicitors. Page 14 of 21 [34] After the return of the said banker’s cheque on 19.1.2011, no further attempt was made by the parties, especially the plaintiffs, to complete the SPAs. After a lapse of more than three years, the plaintiffs brought this action claiming for the refund of the deposit and other damages. [35] During the trial, the plaintiffs adduced four sale and purchase agreements (ikatan dokumen, m/s 498-548, bahagian C – P1A-D) which were all dated 24.12.2009. The parties in the four said sale and purchase agreements were the plaintiffs, as vendor, and one Boosa Bio-Tech Sdn Bhd, as the purchaser, for the sale and purchase of all the four parcels respectively for a total sum of slightly less than RM2 million. Based on the plaintiffs’ claim, the plaintiffs asserted that they have suffered a loss of profit amounting to RM1,132,000.00 because the transactions of the SPAs had not been completed due to the defendant’s fault. [36] On the issue of the sale of the four parcels to Boosa Bio-Tech Sdn Bhd. by the plaintiffs, according to clause 23(a) of the SPAs, the plaintiffs could not sell, assign, transfer, etc. their rights, interest and obligation of the parcels to a third party before the individual strata title of the respective parcels have been issued by the relevant authority without first having obtained the consent of the defendant. The plaintiffs did not obtain the consent of the defendant before they decided to sell the parcels to Boosa Bio-Tech Sdn Bhd on 24.12.2009. The plaintiffs, therefore, had in fact breached clause 23(a) of the SPAs, and the defendant could not be liable for the loss of profit of the plaintiffs as alleged. Page 15 of 21 [37] Based on the evidence before the Court, the defendant had submitted the necessary applications for the issuance of individual strata title of the parcels, and the strata titles of the parcels have not been issued. [38] With regard to the substratum of the plaintiffs’ claim, i.e. they were mispresented to by the defendant, this Court is not satisfied that the plaintiffs have discharged the burden of proving there was a misrepresentation as defined in s. 18 of the Contracts Act 1950. First, there is no evidence of any positive assertion made by the defendant to the plaintiffs which is not true. There is no written statement by the defendant to the plaintiffs that the building was built as per the proposed Building Plan. Therefore, the plaintiffs could not have relied on any positive assertion made by the defendant before entering into the SPAs. Secondly, the defendant did not owe any duty to the plaintiffs other than what is provided in the SPAs. The defendant did not breach any duty in the SPAs which had misled the plaintiffs to their prejudice. The plaintiffs had accepted the terms and conditions in the SPAs including that the proposed Building Plan was not the final Building Plan and that the information stated therein was subject to modification or changes. Lastly, the defendant did not cause the plaintiffs to make a mistake as to the substance of anything which forms the subject of the agreement. There was no evidence from the plaintiffs which could suggest that they had relied on any representation of the defendant to believe that the height of the parcel was 3000mm. [39] Based on the above finding of facts, this Court is of the considered view that the plaintiffs had filed this action on hindsight riding on the fact that there is a discrepancy between the actual height of the building and Page 16 of 21 the height stated in the proposed Building Plan in the Second Schedule as the reason to frame their claims and the ground to seek a declaration from the court to terminate the SPAs and to claim for the refund of the deposit and other ancillary damages. [40] With regard to the defendant’s counter claim, clause 4.2 of the SPAs states as follows:

4.2 The instalments shall be paid by the Purchaser to the Vendor within fourteen (14) days from the date of a notice in writing from the Vendor requesting payment of the same and every request for the payment of such instalments shall be supported by the requisite certificate of the Vendor’s Architect and the same shall be accepted by the Purchaser without any objection or enquiry and as conclusive proof of the fact that the works referred therein have been duly commenced/completed. [41] On 25.4.2008, the defendant through its solicitors forwarded the Certificate of Fitness for the parcels to the plaintiffs’ solicitors for the SPA, Messrs S.L. Song & Co., and requested for the payment of the balance purchase price. After several postponements of the final date to pay the balance purchase price, the balance purchase price remained unpaid. Despite the fact that the plaintiffs had, through their loan solicitors, attempted to pay the reduced balance purchase price, in fact and in law, the balance purchase price was not settled upon the due date. Page 17 of 21 [42] Based on clause 4.1 above read together with clause 8 of the SPAs which stated that time shall be of essence of the contract (see s. 56(1) of the Contract Act 1950), therefore, this Court is of the considered view that the plaintiffs had breached the SPAs and that the defendant was at liberty to terminate the SPAs on the ground that the plaintiffs had failed to perform their obligation, i.e. the pay the reduced balance purchase price. [43] The failure on the part of the plaintiffs to resolve the return of the banker’s cheque connotes the plaintiffs had no intention to continue to perform their obligations under the SPAs. When the plaintiffs refused, omitted and/or failed to resolve the return of the banker’s cheque, this tantamount to an act of refusal to perform or disabled themselves from performing their promise, i.e. to pay the reduced balance purchase price. Hence, in law, the defendant could put an end to the SPAs (see s. 40 of the Contract Act 1950), as the SPAs had become voidable at the option of the defendant. [44] Based on the termination clause 10.1, the defendant is entitled to forfeit any sums paid by the purchasers. In this case, only a sum of RM86,000.00 was paid. [45] Based on the above findings and explanation, the issues to be tried as submitted by the parties are answered by this Court as below: Plaintiff’s issues to be tried Answer: Whether the defendant had misled the plaintiffs into believing that the 4 parcels Negative. Page 18 of 21 purchased from the defendant vide [sic] the 4 SPAs were constructed in accordance with the plans attached in the 2nd Schedule of the 4 SPAs which inter alia stated that the height of each parcel was 3000mm and not 2700mm? Whether the defendant being full aware that the height of each parcel had been reduced from 3000mm to 2700mm and that the roof of the Building was not constructed in accordance with the plans attached had deliberately concealed these facts from the plaintiffs at the time of the execution of the 4 SPAs? Negative Whether the Defendant had at any time made available for inspection by the Plaintiffs the amended building plans as opposed to the plans attached to the 4 SPAs prior to the execution of the 4 SPAs by the Plaintiffs? Affirmative Whether the Plaintiffs would have entered into the said 4 SPAs if the Defendant had informed them of the reduction in height of the Parcels from 3000mm to 2700mm plus the fact that the roofs were not constructed in accordance with the plans attached to the 4 SPAs? Irrelevant. The parties were bound by the terms and conditions of the SPAs. Further, the plaintiffs had not expressly indicated to the defendant that they wanted the height of the parcel Page 19 of 21 at 3000mm before executing the SPAs. Whether 3000mm is the minimum height required for each of the Parcels for the purpose of harvesting swiftlets and collecting their bird nests? Irrelevant Whether by unilateral reducing the height of Parcels from 3000mm to 2700mm and by failing to procure the individual strata title the Defendant had committed a fundamental breach of the contract and as a result therefrom the Plaintiffs has suffered losses? Negative. Whether there is any merit in the Defendant’s counter claim Affirmative Defendant’s issues to be tried Whether the Plaintiffs had paid the balance of the purchase price together with the late payment interest to the Defendant according to the terms of the Sale and Purchase Agreements? Negative Whether the Plaintiffs had breached the terms of the Sale and Purchase Agreements? Affirmative Page 20 of 21 Whether the Defendant is entitled to forfeit the 10% deposit paid under the Sale and Purchase Agreements? Affirmative Whether the Plaintiffs are entitled to impose additional conditions on the Defendant which were not expressly provided under the terms of the Sale and Purchase Agreements? Negative (Note: the above questions for issues to be tried were framed by the parties and approved by the previous Judge) Conclusion [46] Based on the above reasoning, this Court dismissed the plaintiffs’ claim and ordered costs of RM20,000.00 to be paid to the defendant by the plaintiffs. With regard to the defendant’s counter-claim, this Court allowed its counter-claim and ordered costs of RM10,000.00 to be paid to the defendant by the plaintiffs. -signed- ………………………………………….. (CHOO KAH SING) Judicial Commissioner High Court, Johor Bahru Page 21 of 21 Counsel for the Plaintiffs : Mohd Faizal B Ahmad Tetuan Hazelin & Associates Counsel for the Defendant : Wong Boon Lee (with Chua Yee Leng)