Badan Pengurusan Bersama Apartment Nusa Puncak v All Strata Sdn Bhd (JA-22NCvC-103-07/2021)

the Plaintiff has no locus standi to bring and maintain this action against the Defendant due to the fact that the former was not a purchaser and the latter was not the party to the contract; and

there was no contract between the Plaintiff and the Defendant. [3] As a brief background, Nusa Puncak Apartment (“the Apartment”) which is also known as Nusa Heights Apartment is located at Jalan Gelang Patah, Taman Nusa Puncak, Johor consisting 5 apartment blocks and comprising in total of 910 parcels. This project was developed by a licensed developer known as Mahabuilders Bhd being the developer. [4] As part of the sales promotion, Mahabuilders Bhd had offered a few incentive packages to the purchasers including a rebate on the purchase price and legal fees, furniture package and free maintenance package (“FMP”). Under the terms of the FMP, the purchasers would be given three years waiver of service charge and contribution to the sinking fund and Mahabuilders Bhd undertook to pay on behalf of the purchasers the service charge and contribution subject to a maximum of RM0.25 cents per month per square foot multiplied by the area of the parcel for three years from the date of Certificate of Completion and Compliance of the parcel, subject to the condition that the purchasers must pay the service charge for four months in advance to Mahabuilders Bhd and the contribution to the insurance premium and quit rent. [5] A standard agreement setting out the incentive packages was prepared and entered into by Mahabuilders Bhd and individual purchaser. The standard agreement containing the FMP reads – _________________________________________________________________________________ 3

of the Rules of Court can be succeeded only when the Statement of Claim is on the face of it “obviously unsustainable”. Order 18 rule 19(1) ROC states – “Striking out pleadings and endorsements (O. 18, r. 19)

we (Mahabuilders Bhd) shall pay you on your behalf the service charges and sinking fund (excluding insurance premium, quit rent and other payment) of the Parcel (‘Free Maintenance Package’) subject to a maximum total sum of Sen Twenty Five (RM0.25) only per month per square foot multiply by the area of the Parcel (excluding the area of the accessory parcel) (‘Maximum Contribution’) for a period of three (3) years only from the date of the Certificate of Completion and Compliance of the Property (‘FMP Period’) [6] The vacant possession of the Apartment was surrendered to the purchasers in 2015 and on or about July 2015, Mahabuilders Bhd had appointed the Defendant (then known as “MB Supply Sdn Bhd”) to manage the Apartment. Mahabuilders Bhd, via a letter, also informed the purchasers about the appointment. [7] On 8.3.2016, Mahabuilders Bhd was wound-up voluntarily by way of members’ resolution. On 28.4.2016, Mahabuilders Bhd through its liquidator (as the donor) executed a power of attorney in favour of MB Supply Sdn Bhd (as the donee) in respect of all development projects undertaken by Mahabuilders Bhd including Nusa Heights Apartment. [8] On 30.8.2016 the Plaintiff as the Joint Management Body of the Apartment was established. [9] the Defendant vide its letter dated 15.12.2017 informed the Plaintiff that pursuant to the terms in the incentive package, the former would release the remaining amount payable by 31.12.2017. Accordingly, as at January 2018, the Defendant had paid more than RM3.576 million to the _________________________________________________________________________________ 4 Plaintiff. However, the amount was RM3.67 million less than what was promised by the Defendant. The Plaintiff averred that the Defendant failed to make payment based on the rate of RM0.25 cents per square foot as stipulated in the FMP. [10] The Plaintiff through its solicitors demanded the Defendant to pay the balance of the covenanted contribution sum. [11] On 26.7.2021, the Plaintiff filed the Writ and Statement of Claim against the Defendant for the sum of RM3,670,126.00. Law on striking out of plaintiff’s claim [12] It is trite that that an application under Order 18 rule 19(1)(b) and or

19.

The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that —

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious;

it may prejudice, embarrass or delay the fair trial of the action; or _________________________________________________________________________________ 5

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”. [13] In Abdul Rahim Abdul Hamid & Ors v Perdana Merchant Bankers Bhd & Ors [2000] 1 MLRA 111, the Court of Appeal held that on an application under O. 18 r. 19(1)(a) the court has only to consider whether the statement of claim discloses a reasonable cause of action. The well-established principle is that the court will not summarily strike out pleadings, except only in plain and obvious cases where the claim or counterclaim is plainly and obviously not sustainable. [14] In Bandar Builders Sdn Bhd & 2 Ors v United Malayan Banking Corporation Bhd [1993] 1 MLRA 611; [1993] 4 CLJ 7, Mohamed Dzaiddin bin Hj Abdullah, SCJ (as he then was) held that – "The principles upon which the Court acts in exercising its power under any of the four limbs of O. 18 r. 19(1) Rules of the High Court are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule (per Lindley M.R. in Hubbuck v. Wilkinson [1899] 1 QB 86, p. 91), and this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it "obviously unsustainable" (Attorney-General of Duchy of Lancaster v. L. & N.W. Ry. Co. [1892] 3 Ch. 274, CA). It cannot be exercised by a minute examination of the documents and facts of the case, in order to see whether the party has a cause of action or a defence (Wenlock v. Moloney [1965] 1 WLR 1238; [1965] 2 All ER 871, CA.). The authorities further show that if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O. 33 r. 3 (which is in para materia with our O. 33 r. 2 Rules of the High Court) (Hubbuck v. Wilkinson) (supra). The _________________________________________________________________________________ 6 Court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that the defences raised are not arguable.”. [15] The Lordship further explained that – “It has been said that so long as the pleadings disclose some cause of action or raise some question fit to be decided by the Judge, the mere fact that the case is weak and not likely to succeed at the trial is no ground for the pleadings to be struck out (Moore v. Lawson [1915] 31 TLR 418 CA); (Wenlock v. Moloney (supra)).”. [16] The issue before the Court now is whether or not the Plaintiff’s claim is plainly and obviously unsustainable. Finding of this Court [17] For the grounds raised by the Defendant, the Plaintiff being the Joint Management Body is the party who is entitled to receive the maintenance charges from all parcel proprietors. Under the FMP, Mahabuilders Bhd had undertaken the obligations to pay the charges on behalf of the proprietors. [18] Although the Defendant was first appointed by Mahabuilders Bhd as the managing agent for the Apartment, later by virtue of the power of attorney dated 28.4.2016 executed by Mahabuilders Bhd (in liquidation) in favour of the Defendant, the Defendant had stepped into the shoes of Mahabuilders Bhd and assumed as well as undertaken the rights and obligations of Mahabuilders Bhd in respect of the Apartment. _________________________________________________________________________________ 7 [19] It is pertinent to note that the existence of the power of attorney dated 28.4.2016 was not denied, disputed or even challenged by the Defendant. The relevant clauses of the power of attorney read as follows: “NOW THIS POWER OF ATTORNEY WITNESSTH as follows:

(A) The Donor hereby nominates, appoints and constitutes (a) Donee; and/or

persons as may be nominated by the board of directors of the Donee and each of them jointly and also severally to be the Donor’s true and laful attorney (“Attorney”) (with fill powers of substitution and delegation) to act jointly and also severally for the Donor and in the Donor’s name or otherwise on the Donor’s behalf to jointly and severally do, whenever necessary or required, all or any acts, deeds and things that the Donor may or authorized to do whether in respect of the Development or otherwise and without prejudice to the generality of the foregoing including the following:

To take charge of, manage, develop and improve the Development for such purpose, to such extent, in such manner and of such nature as the Attorney may in its absolute discretion think fit.

To decide upon, effect and carry out all matters whatsoever relating to the Development.

…

…

...

To exercise and enforce all rights, benefits, powers, remedies and privileges which now or hereafter may vest in or appertain to the Donor in relation to the Development”. [20] The assumption of Mahabuilders Bhd’s obligation was affirmed when the Defendant paid the four months advance totalling RM805,208.00 to the Plaintiff in May 2017 although Mahabuilders Bhd was wound-up on 8.3.2016. This was further affirmed when the Defendant _________________________________________________________________________________ 8 again made additional eight payments totalling RM3,576,746.00 between January 2017 to January 2018 to the Plaintiff (these were within the FMP period). Thus, why did the Defendant make those payments which Mahabuilders Bhd was liable for? [21] I find the Defendant’s conduct of making the payments to the Plaintiff was an implied contract to pay by the Defendant to the Plaintiff (upon assumption of Mahabuilders Bhd’s obligation pursuant to the power of attorney). It is trite that a contract may be implied from the parties’ conduct. In Kondisi Utama Sdn Bhd v. Baltic Agencies Pte Ltd and another appeal [2018] 9 CLJ 561; [2019] 1 MLJ 181 where the Federal Court stressed that the conduct of the parties are relevant in finding an implied contract. The Federal Court held – [74] The Court of Appeal held that "these contracts are contracts implied in fact. A contract implied in fact is not expressed by the parties, but rather suggested from the facts and circumstances that indicate a mutual intention to contract. Circumstances exist that, according to the ordinary course of dealing and common understanding, demonstrate such an intent that is sufficient to support a finding of implied contract. We found this to be the case based on the evidence before the court". The Court of Appeal quoted the following passage from Chitty's on Contract: Agreement is not a mental state, but an act, and as an act, is a matter of inference from conduct. The parties are to be judged not by what is in their minds but by what they have said or written or done. [75] Was the Court of Appeal correct in making the finding that implied contracts subsisted between the parties? Unfortunately, in their broad grounds, the Court of Appeal did not explain the reasons for their finding. _________________________________________________________________________________ 9 Therefore, we need to examine the relevant oral and documentary evidence, in particular the conduct of the parties, in order to answer that question. [22] It is my view that the Plaintiff’s claim is plainly and obviously sustainable. The question of whether there was an implied contract should be determined in full trial. Conclusion [23] In Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1 the Federal Court decided that O. 18 r.19 of the ROC is only applicable when –

it is only in plain and obvious cases that recourse should be had to the summary process under the rule;

this summary procedure can only be adopted when it can be clearly seen that a claim or answers is on the face of it ‘obviously unsustainable’;

it cannot be exercised by a minute examination of the documents and facts of the case in order to see whether the party has a cause of action or a defence;

if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O.33 r.3 of the ROC; and

the court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that defences raised are not arguable. _________________________________________________________________________________ 10 [24] Based on the above observation, I find that the Defendant’s reasons to stike out the Plaintiff’s claim failed to meet the tests provided in Seruan Gemilang Makmur Sdn Bhd (supra). Instead, I find that the Plaintiff’s Statement of Claim is plainly and obviously sustainable and clearly discloses some reasonable cause of actions under the law of contract. [25] Therefore I am of the view that the question of implied contract will conveniently be canvassed when the evidence be presented during the full trial. Thus I dismiss the Defendant’s application in Enclosure 7 with costs. Date : 30.7.2022 -SIGNED- (SHAMSULBAHRI BIN HAJI IBRAHIM) Judicial Commissioner, Johor Bahru High Court Counsels: For the Plaintiff – R. Jayabalan; Messrs R. Jayabalan For the Defendant – Chen Wai Jun; Messrs WJ Chen & Company Cases referred to: ▪ Abdul Rahim Abdul Hamid & Ors v Perdana Merchant Bankers Bhd & Ors [2000] 1 MLRA 111 _________________________________________________________________________________ 11 ▪ Bandar Builders Sdn Bhd & 2 Ors v United Malayan Banking Corporation Bhd [1993] 1 MLRA 611; [1993] 4 CLJ 7 ▪ Kondisi Utama Sdn Bhd v. Baltic Agencies Pte Ltd and another appeal [2018] 9 CLJ 561; [2019] 1 MLJ 181 ▪ Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1 Legislation referred to: ▪ Rules of Court 2012 - O. 18. r. 19(1)