Ang Cheng Ai v Pearl Island Resort Development Sdn Bhd (PA-22NCvC-40-02/2019)

High Court of Malaysia21 Jun 2024

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1 DALAM MAHKAMAH TINGGI MALAYA DI PULAU PINANG DALAM NEGERI PULAU PINANG GUAMAN SIVIL NO.: PA-22NCvC-40-02/2019 ANTARA ANG CHENG AI (No. K/P: 630227-07-5266) … PLAINTIFF DAN PEARL ISLAND RESORT DEVELOPMENT SDN BHD (No. Syarikat: 134686-T) … DEFENDANT GROUND OF JUDGEMENT A. INTRODUCTION [1] This is the Plaintiff’s claim for damages against the Defendant for breach of Deed of Settlement dated 23.10.2012 (DOS). My decision is based on the full trial heard before me, the record of proceeding, the witnesses’ statement, the documents tendered and the submissions by both parties. B. BACKGROUND [2] The Plaintiff is an individual with an address for service at 10-C, Jalan DS Ramanathan, 10350 Pulau Pinang. 01/10/2024 14:55:33 PA-22NCvC-40-02/2019 Kand. 92 [3] The Defendant, formerly known as PPH Resorts (Penang) Sdn Bhd, is a developer company established under the Companies Act 1965 and has its registered office at 51-21-A, Menara BHL Bank, Jalan Sultan Ahmad Shah, Georgetown, 10050 Pulau Pinang. [4] Pearl Island Vista Sdn Bdn (Vista) is the developer who has entered into Sale and Purchase Agreement dated 23.9.2011 with the Defendant to undertake the construction of all infrastructures for the development including the Plaintiff Plot. [5] On 29.12.1996 the Plaintiff entered into a sale and purchase agreement with the Defendant in which the Plaintiff had purchased a plot of bungalow lot which has been identified as Plot 20 which is to be subdivided from Lots number 8134 and 5791, Mukim 12, South West District, Penang (hereinafter referred to as "the Sale and Purchase Agreement"). [6] The main terms of the Sale and Purchase Agreement among others, are as follows: - [a] The Defendant was appointed as the contractor to build a bungalow house according to the design and construction price specified in the Sale and Purchase Agreement; [b] The Defendant is given a Power of Attorney to enter into the necessary plans; [c] The Defendant is required to build the infrastructure to provide services for the bungalow lot; [d] The Defendant is also required to build and maintain a Country Club/Resort for the exclusive use of bungalow lot purchasers/owners there; and [e] The Plaintiff, having complied with the terms and conditions of the said Sale and Purchase Agreement, is entitled to the enjoyment of the services and privileges of being a member of the club. C. THE PLAINTIFF’S CASE [7] The Plaintiff had paid the purchase price up to the amount of RM558,150.00 in accordance to the progressive bills of the Defendant. However, the Defendant had failed to carry out the main terms of the Sale and Purchase Agreement, especially building the access road and infrastructure that serves the bungalow lots. Without the infrastructure, the Plaintiff and other buyers could not carry out any construction of their houses on the subject site/lots there. [8] On 23.10.2012, both parties entered into another agreement known as the Deed of Settlement (DOS). The terms of the DOS among others, that: - [a] The Parties agree to mutually terminate the Sale and Purchase Agreement subject to terms and conditions; [b] The Defendant agrees to transfer ownership of the individual lot into the name of the Plaintiff; [c] The Defendant agrees that it shall within forty-eight (48) months from the date of the DOS at its own cost and expense, provide the access road, the infrastructure for the supply of water and electricity to the boundary of the bungalow lot; [d] An automatic extension of twelve (12) months shall be given by the Plaintiff to the Defendant only in the event additional conditions are imposed by local authority to complete construction of the said infrastructures to the subject lot; [e] The Plaintiff shall be entitled to deal with the said Lot in any manner as the Purchaser shall deem fit, including but not limited to reselling or building a bungalow on the said lot; [f] In the event the Defendant fails and/or neglects and/or refuses to complete the access road, for connection of water, electricity and sewage among others, commonly called the infrastructure, then the Plaintiff shall have the right to claim the liquidated ascertained damages against the Defendant at the rate of 10% per annum based on the land cost from the date of the DOS until full completion; [g] In the event that any party shall be in default in the performance of its obligations and covenants herein, the other aggrieved Party shall be entitled to the remedy of Specific Performance against the defaulting party; [h] This DOS shall be binding upon the respective heirs, personal representatives and successors-in-title of the parties hereto; [i] This DOS contains the entire agreement and understanding between the parties herein and shall supersede the terms of any agreement, whether oral or otherwise, made prior to the entering into of this DOS unless stated to the contrary herein. It is expressly declared that no purported variations hereof shall be effective unless made in writing and signed by all the parties herein; [j] Time wherever mentioned shall be of the essence in this DOS; and [k] This DOS including the Appendices hereto (if any) shall constitute the whole Agreement between the Parties hereto. [9] After execution of the DOS, the Defendant did effect the transfer of title of the bungalow lot to the Plaintiff’s name and the same is now held under Grant title number 87170, Lot 11955, Mukim 12, Southwest District, Penang. Nevertheless, the Defendant had breached the DOS when it failed, neglected and/or refused to construct the access road and infrastructure as required without any valid reason till to date. [10] The Plaintiff has made enquiries regarding the matter but the Defendant failed, neglected and/or refused to give any response or explanation to the Plaintiff. In addition, the Defendant had never answered the Plaintiff’s notice of demand till to date. Therefore, the Plaintiff now sought for the following reliefs: - [a] An Order for Specific Performance pursuant to the DOS to build an access road and infrastructure for the supply of water and electricity to the boundary of the bungalow lot held under Grant title number 87170, Lot 11955, Mukim 12, Mukim 12, Daerah Barat Daya, Negeri Pulau Pinang within the period of twelve (12) months; [b] An Order for Liquidated Ascertained Damages (LAD) with the amount calculated from the date of the DOS until the date of Certificate of Practical Completion (CPC) for the construction of the access road and infrastructure required under the DOS; [c] Additionally and/or alternatively, damages for breach of contract in lieu of or in addition to specific performance; and [d] Costs. D. THE DEFENDANT’S CASE [11] The terms of the DOS have been duly honoured by the Defendant, except for the construction of access roads and infrastructure for water and electricity supply. This obligation remains unfulfilled because the Defendant is no longer the developer for the said development. This stems from an additional sales and purchase agreement dated 23.9.2011 between the Defendant and Vista, wherein Vista agreed to undertake the construction of all infrastructure for the development, including that of the Plaintiff’s plot. [12] The Defendant submitted that even though the Plaintiff has pleaded that she repeatedly wrote and called the Defendant to inquire about the status of the infrastructure construction before entering the DOS but there were not documents produced by the Plaintiff to prove such the assertion. [13] The valuer’s report and valuation of the Plaintiff’s plot is solely to assess the value of the land in Plot 20 and does not determine the type of damages the Plaintiff is entitled to. Plaintiff has also failed to provide any documentation to substantiate all the alleged loss pleaded. [14] As for the relief of Specific Performance sought by the Plaintiff, Defendant submits that Section 21 of Specific Relief Act 1950 provides that the Court may not decree Specific Performance in cases where the performance of a contract would involve some hardship on the Defendant which he did not foresee. By enforcing the Specific Performance, the Defendant would be in difficult position, potentially risking a breach of contract with Vista. [15] The Defendant also submitted that the Plaintiff shall only be entitled to claim LAD should the Defendant fail, refuse or neglect to complete infrastructure. However, Defendant had never refused or failed to complete the infrastructure. On contrary, the Defendant had entered into an agreement with Vista to undertake the construction and completion of infrastructure works on the development land, including the Plaintiff’s plot. Therefore, the Plaintiff is not entitled to for LAD. [16] The Plaintiff pleaded in her witness statement that she has suffered significant losses in attempting to sell the land but her effort have been unsuccessful as there is no interest from potential buyer. In top of that the Plaintiff has not satisfied the legal burden required to substantiate their case as there was no mention of her attempt to sell the land in the pleadings. E. ISSUES TO BE TRIED [17] The agreed issues submitted by the parties are as follows: [a] Whether the Defendant has breached and/or is in default of the DOS. [b] Whether or not the Defendant has failed, refused and/or neglected in constructing the access road and infrastructure according to the agreement between both parties. [c] Whether or not the Plaintiff is entitled to Specific Performance against the Defendant to enforce the terms of the DOS. [d] Whether or not the Plaintiff is entitled to LAD against the Defendant pursuant to the DOS. [e] Whether or not the Plaintiff has to prove its losses before being entitled to claim for LAD against the Defendant. [f] Whether or not the Plaintiff is entitled to claim for damages against the Defendant for breach of contract in lieu of Specific Performance and/or damages in addition to Specific Performance against the Defendant. F. ANALYSIS AND DECISION [18] The main issue before me is whether the Defendant has breached the DOS. The Plaintiff in this suit claim that the Defendant has failed to comply Clause 3.1. and 3.2 of DOS whereby the Defendant has failed to provide/construct the access road and infrastructure pursuant to the DOS within the 48 plus 12 months as prescribed in the DOS or even until to date. PROVISION OF ACCESS ROAD, FOR CONNECTION TO SUPPLY

Of Water And Electricity.

3.1. Notwithstanding Clause 4 herein, the Vendor agrees that it shall within forty-eight (48) months from the date hereof at its own cost and expense, provide the access road, the infrastructure of the supply of water and electricity to the boundary of the said Lot.

3.2. An automatic extension of 12 months from the date of expiry of the said 48 months shall be given by the Purchaser only in the event additional conditions are imposed by local authority to complete construction of the said infrastructures to the said Lot. [19] In the defence, the Defendant did not dispute that there was no access road and infrastructure built by them for the reason that the Defendant had entered into a sale and purchase agreement with Vista on 23.9.2011 wherein the Defendant had agreed to sell the entire development land to Vista for the total consideration of RM42,000,000.00 and Vista has agreed to build the infrastructure. Following this, the Defendant stated that the terms of DOS are impossible to perform as the Defendant is no longer the Developer. [20] Having read clause 3.1 DOS, it is clear that Defendant is bound by terms and conditions to construct the access road and infrastructure. Since the Defendant has failed in its obligation, therefore the Defendant had breached clause 3.1 DOS and Plaintiff is entitled to claim for remedy for the said breach. Even though Vista has agreed to undertakes the construction of all the infrastructure as stipulated in Clause 9.1 of the agreement between Vista and the Defendant.

9.1 The parties hereby agree that immediately upon taking vacant possession of the development land, the purchaser shall in consultation with the vendor, at its own costs and expense, build, construct and complete all the infrastructure works which shall include but not limited to the construction of bulk, earthworks, retention ponds, sewerage treatment plants, TNB sub station, sewer mains, roads, footpaths, drains, streetlights, electricity cabling and all other infrastructure works necessary (hereafter referred to as “infrastructure works”) to service, cater for and pertaining to the Development Land including the 18 Lots but excluding the retaining wall and internal services within the 18 Lots… the said clause cannot absolve the Defendant of its liability since it has no binding effect on the Plaintiff which is not privy to the said agreement. Furthermore, Vista cannot be compelled by this Court to construct the access road and the infrastructure since Vista is not a party to this suit and the Defendant also chooses not to commence an action against Vista as 3rd party. [21] The relief sought by the Plaintiff against the Defendant are as stipulated in paragraph 9 above. Following the sale and purchase agreement with Vista, the Defendant’s obligation to construct the infrastructure to the Plaintiff’s lot had been transferred to Vista where Vista has undertaken to construct all infrastructure for the development. For this reason, I am of the view that an order for Specific Performance is no longer appropriate. Section 18 of the Specific Relief Act 1950 as well as decided cases such as Balbeer Singh Karam Singh & Ors v. Sentul Raya Sdn Bhd [2014] 7 CLJ 461 and Million Westlink Sdn Bhd & Anor v. Maybank Investment Bank Bhd & Ors And Other Appeals [2018] 3 CLJ 315 to support the contention that s. 18 of the Specific Relief Act 1950 permits the court to order compensation for breach of contract in addition to or in substitution to the plaintiffs seeking specific performance. The Court of Appeal in Balbeer Singh (supra) held that;

Section 18(5) of the Specific Relief Act 1950 ('SRA') provides that the jurisdiction conferred under s. 18 may be exercised notwithstanding that the contract had become incapable of performance. Therefore, the appellants, having prayed for damages, were entitled to consideration for damages even if their prayer for specific performance was dismissed. The Court of Appeal in Million Westlink (supra) held that;

The Judicial Commissioner ('JC'), in dismissing the prayer by the respondents for specific performance, was exercising his discretion as afforded by s. 21 of the Specific Relief Act 1950 ('SRA 1950'). The JC merely declined to order specific performance and instead chose to order damages as the JC retained the right to order compensation in the alternative. Further, s. 18 of the SRA 1950 permits the court to order compensation for breach of contract, in addition to, or in substitution to, a person seeking specific performance. Therefore, no criticism could be levelled at the respondents for mounting their claim for specific performance and also for seeking damages for breach of contract in lieu of specific performance as a sort of breach of the doctrine of election. [22] The 2nd relief claim by the Plaintiff is for Liquidated Ascertained Damages (LAD) at the rate of 10% per annum based on the land cost from the date of the DOS until full completion. Upon reading clause 3.1 and 3.2 with clause 6, it is not doubt that the Plaintiff has the right to claim for LAD should the Defendant fail, refuse or neglect to complete the infrastructure. ENFORCEMENT OF CLAUSE 22 OF THE PRINCIPAL AGREEMENT. The Parties have expressly agreed that in the event the Vendor fails and or neglects and or refuses to complete the access road, for connection of water, electricity and sewage among others, commonly called the infrastructure, then the Purchaser shall have the right to claim the liquidated ascertained damages against the Vendor at the rate of 10% per annum based on the land cost from the date of this Deed until full completion as stated in clause 3.1 and 3.2 hereof. [23] Clause 6 stipulates that the Plaintiff is entitled to LAD calculated from the date of DOS until full completion of the construction of the access road and infrastructure. Since the infrastructure works has not yet started and there is still no date of full completion of the access road and infrastructure, the claim for LAD cannot be sustained. [24] I agree that as the result of the Defendant’s breach, the Plaintiff has suffered and entitled for damages. Section 74 of the Contract Acts 1950 set out the compensation for loss or damage caused. As the Plaintiff has proven that there was a breach of DOS and that she cannot further proceed with the construction of her bungalow due to no access road and infrastructure leading to her land, I am of the opinion that damages is an adequate remedy for the breach. It is a trite law that the party seeking damages in this action, the Plaintiff bears the burden of proving both the fact and quantum of damages, which the Plaintiff is claiming. [25] I noted that the Plaintiff, through her appointed valuer, PW2, submitted two set of assessment for the calculation of damages sought in the alternative or in lieu of specific performance and LAD. PW2’s valuation report dated 20.10.2012 is as follows: - Market Value as at 23.10.2012 i. “As is where is” condition without proper infrastructure RM440,000.00 ii. Assumption with proper infrastructure RM640,000.00 iii. Assumption a double storey detached house had been completed RM1,800,000.00 Market Value as at 11.10.2021 i. “As is where is” condition without proper infrastructure RM900,000.00 ii. Assumption with proper infrastructure RM1,815,000.00 iii. Assumption a double storey detached house had been completed RM3,300,000.00 [26] Here, the Plaintiff submitted that she is entitled to RM1,288,650.00 (RM3,300,000.00) minus (RM900,000.00 + 1,111,350.00) in damages by using the calculation of market value as at 11.10.2021. I observed that PW2 has valued the lot with the assumption of a double storey detached house had been completed for RM3,300,000.00. In my view, the figure RM3,300,000.00 is not acceptable for reason that the market value is for the year 2021 instead of 2012. The figure was also on the assumption of a completed double storey detached house. In my opinion, the reasonable calculated for damages claimed should be based on the assumption with proper infrastructure in the year 2012 which is valued by PW2 as RM640,000.00. It should be borne in mind that the lot has been transferred to the Plaintiff where the purchase price of RM638,650.00 but the Plaintiff had only made a payment of RM558,150.00. This to my mind the Plaintiff has gained some benefit out of the breach. [27] In respect of additional damages for loss of use and enjoyment of the land and rental, I am of the view such claim is too remote and should not be allowed. [28] Having heard the evidences and submission by both parties, I on the balance of probabilities, therefore allowed the Plaintiff's claim for damages in lieu of Specific Performance for breach of DOS for the sum of RM640,000.00 with interest of 5% of judgment sum per annum calculated from the date of filing of Writ (13.12.2019) to the date of realization. Cost is allowed for RM20,000.00 to be paid by the Defendant to the Plaintiff. Dated on 1st October 2024. Counsels Christine Lim, Karin Lim and Nicholas Lim (Messrs H N Lim & Co.) on behalf of the Plaintiff. Vijaya Navaratnam (Messrs Mureli Navaratnam) on behalf of the Defendant.

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Court: High Court of Malaysia
Decision date: 21 Jun 2024
Case number: PA-22NCvC-40-02/2019
Coram: YA Dato' Rozana Binti Ali Yusoff
Practice area: In respect of additional damages for loss of use and enjoyment of the land and rental, I am of the view such claim is too remote and should not be allowed. Having heard the evidences and submission by both parties, I on the balance of probabilities, therefore allowed the Plaintiff's claim for damages in lieu of Specific Performance for breach of DOS for the sum of RM640,000.00 with interest of 5% of judgment sum per annum calculated from the date of filing of Writ (13.12.2019) to the date of realization. Cost is allowed for RM20,000.00 to be paid by the Defendant to the Plaintiff
Version: Alasan Penghakiman 1
Published: 1 Oct 2024
Source ID: 1cb4866a-80da-4425-8fc4-6cef66b05924

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In respect of additional damages for loss of use and enjoyment of the land and rental, I am of the view such claim is too remote and should not be allowed. Having heard the evidences and submission by both parties, I on the balance of probabilities, therefore allowed the Plaintiff's claim for damages in lieu of Specific Performance for breach of DOS for the sum of RM640,000.00 with interest of 5% of judgment sum per annum calculated from the date of filing of Writ (13.12.2019) to the date of realization. Cost is allowed for RM20,000.00 to be paid by the Defendant to the Plaintiff

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Ang Cheng Ai - plaintiff - ejudgment_parties
Pearl Island Resort Development Sdn Bhd - defendant - ejudgment_parties

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Ang Cheng Ai v Pearl Island Resort Development Sdn Bhd (PA-22NCvC-40-02/2019)

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Ang Cheng Ai v Pearl Island Resort Development Sdn Bhd (PA-22NCvC-40-02/2019)

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Of Water And Electricity.

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