Bank Pembangunan Malaysia Berhad v Kauthar Venture Capital Sdn Bhd (WA-24NCVC-864-06/2020)

This is the Plaintiff’s application for assessment of damages under section 329 (1) of the National Land Code for the wrongful 2 caveat entered by the Defendant over the properties held under PN 167, No. Lot 1476, Mukim Ayer Hangat, Daerah Langkawi, Negeri Kedah.

The said caveat was removed by an order of the High Court on 25-1-2021. The High Court had also directed that the Defendant pay damages to the Plaintiff being compensation and / or general damages to be assessed for the loss and / or damage suffered and / or expenses incurred by the Plaintiff arising from the said wrongful caveat.

The Plaintiff is seeking damages against the Defendant for the following: -

Late Payment charges for the Facilities granted to the borrowers – the total sum of RM 10, 335, 974.56.

The Plaintiff alleges that the Defendant should be made to pay the said sum as the property at issue would have been sold pursuant to the agreement dated 20-5-2020 between the Receivers and Managers of Tanjung Rhu Land Sdn Bhd and Reka Intisari Sdn Bhd 3 with Jati Sutera Sdn Bhd and due to the said caveat, they could not realise the said sale.

Therefore, the Plaintiff alleges that they are entitled to claim the late payment charges chargeable to the borrower 2-3-2020 to 25-1-2021, i.e, the period within which the caveat first entered by the Defendant (2-3-2020) to the date it was removed by the High Court on 25-1-2021.

After considering the facts presented before me and taking into account all facts, I find that the Plaintiff has failed to show that the late payment charges are claimable against the Defendant. In particular, I find that the Plaintiff has proved the essential element of causation to justify the imposition of damages against the Defendant for the said late payment charges to the amount of RM 10, 335, 974.56.

My reasons for coming to the above decision are as stated below. 4 B. Reasoning of this Court

(I) Backgrounds Facts 8. I will not repeat the facts of this case as the same can be found in the Judgment Datin Rohani binti Ismail J dated 25-1-2021 in this case, at paragraphs 5 to 33.

What is important is that I highlight the material terms of the Agreement dated 20-5-2020 that are referred to in paragraph 4 earlier.

In the said Agreement, the Receivers and Managers, on behalf of the two companies (who were the borrowers) agreed to sell the said land to Jati Sutera Sdn Bhd (“Sale and Purchase Agreement”) on the terms which includes: -

Clause 3.1

3.1 This Agreement is conditional upon the fulfillment of the following conditions precedent (together. "Conditions Precedent") within nine (9) months from the Effective Date or such longer extended period(s) as may be mutually agreed by the Parties, which extension(s) shall not be unreasonably withheld by the

The Vendors obtaining the approval of the State Authority, on terms and conditions acceptable to the Vendors and the Purchaser, to the transfer 5 of Land B and required, the transfer of Land A, to the Purchaser (Consent to Transfer)

the R&Ms obtaining the Court Order: and

if a Third Party Caveat has been entered against Land A and/or Land B prior to the date of the obtaining of the Consent to Transfer and the Court Order as aforesaid, TRLSB having at its own costs and expense obtained the removal and cancellation of the Third Party Caveat in accordance with Clause 9.4.

Clause 3.2 3.2 The Purchaser shall be responsible to submit to the State Authority the application for the Consent to Transfer and liaise and deal with the State Authority for the purpose of obtaining the Consent to Transfer.

Clause 3.3 3.3 TRLSB shall within seven (7) Business Days of the Vendors Solicitors receipt of the application form for the Consent to Transfer from the Purchaser's Solicitors. deliver to The Purchaser the application form which have been executed by the R&Ms together with the Chargee's written consent therefor, and the Purchaser shall within seven (7) Business Days of the Purchaser's Solicitors receiving the application form which have been executed by the R&Ms. submit the necessary application and documents to the State Authority for the Consent to Transfer.

Clause 3.8 3.8 The R&Ms shall within thirty (30) days from the Effective Date, commence the appropriate legal proceedings for obtaining the Court Order, which shall be served on Kauthar Venture Capital Sdn Bhd and other interested parties, if any the R&Ms shall within five (5) Business Days of the grant thereof deliver to the Purchaser a copy of the Court Order. The R&Ms shall provide an advance draft of the application and papers to the Purchaser for its review.

Clause 3.11 3.11 This Agreement shall become unconditional on the date on which (i) the Vendors Solicitors receive a copy of the Consent to Transfer (on terms acceptable to the Parties), (ii) the Purchaser's Solicitors receive a copy of the Court Order or a copy of the Appeal Decision (as the case may be) and

(ii) if applicable, the Purchaser's Solicitors receive a copy of the notification of the Caveat Cancellation ("Unconditional Date) 6

Clause 9.4 Third Party Caveat

In furtherance of Clause 2.1 and strictly without prejudice to Clause 21. if a Third Party Caveat is entered and registered against Land A and/or Land B at any time prior to the Completion Date, TRLSB shall at its own costs and expense and through the R&Ms, promptly apply for and obtain the removal and cancellation of the Third Party Caveat pursuant to and in accordance with Section 326 and/or Section 327 of the National Land Code 1965 ("Caveat Cancellation within six (6) months from the date of TRLSBs/R&Ms’ receipt of notice of the Third Party Caveat (or such longer period as the Parties may mutually agree) The R&Ms shall notify the Purchaser of the Third Party Caveat promptly after their receipt of notice of the same

In the event a Third Party caveat is entered against Land A and/or Land B as aforesaid, the Completion Period or the Extended Completion Period (as the case may be), shall be automatically extended, free of interest, for a period commencing from the date of the Vendor's Solicitors receipt of notice of the Third Party Caveat until the date of the Purchaser's Solicitors receipt of a copy of a land search report from TRLSB 3nd^ prime or the R&Ms which evidences the cancellation of the Third Party Caveat.

TRLSB and/or the R&Ms shall notify the Purchaser's Solicitors of the obtaining of the Caveat Cancellation by furnishing the Purchaser's Solicitors with a copy of the land search report which evidences the cancellation of the Third Party Caveat, within five (5) Business Days of the Vendors' Solicitors' receipt of the land search report.

The Parties agree that if for any reason TRLSG and/or R&Ms are unable to obtain the Caveat Cancellation within the period as stated in Clause 9.4(a) this Agreement shall forthwith terminate whereupon.

all monies paid by the Purchaser or the Financier towards the Purchase Price including the Deposit shall be refunded by the Vendors, free of interest, to the Purchaser through the Purchaser's Solicitors save for the RPGT Retention Sum which shall only be refunded by the Vendors to the Purchaser within seven (7) Business Days of the Vendors receipt of the same from the DGIR The Vendors shall liaise with the IRB and use their best endeavor to obtain the refund as soon as possible, and

(ii) Upon the depositing of such fund with the Purchaser's Solicitors, the Purchaser shall redeliver legal possession of the Property and Assets to the Vendors (If the same has already been delivered) and cause the Purchaser's Solicitors and/or the Financier's Solicitors to return to the Vendors' Solicitors all documents delivered to the Purchaser the Purchaser's Solicitors. the Financier and/or the Financier's solicitors for the Purchasers benefit (save for the Transfer which if stamped shall be redelivered in accordance with Clause 6.2), with the interest of TRLSB as the registered proprietor of the Land intact and free from encumbrances created by or attributable to the Purchaser and/or the Financier and the Caveat Withdrawal Documents/Fees. Until such documents (save for the 7 Transfer as aforesaid). legal possession and ownership (if applicable) are returned the Purchaser's Solicitors shall not be ownership (if applicable) are returned, the Purchaser's Solicitors shall not be authorized to release any such amount refunded to the Purchaser. Thereafter this Agreement shall be terminated and become null and void and be of no further effect and neither Party shall have any further claims, action or proceedings against the other in respect of or arising out of this Agreement save and except for other antecedent breaches by either Party and the Vendors shall be entitled to dispose of or deal with the Property and Assets at their absolute discretion.

Therefore, the Sale and Purchase Agreement is conditional upon the fulfillment of the following 3 essential conditions: -

The vendor (Receivers and Managers) obtaining approval for the transfer from the State Authority.

(ii) The Receivers and Managers obtaining an order of Court approving the sale.

(iii) The third-party caveat by the Defendant is removed by an order of Court or otherwise.

I am informed by parties that on 20-5-2020 (the date of the Sale and Purchase Agreement), all the 3 conditions were not fulfilled. The Receivers and Managers have yet to obtain the approval from the State Authority and have not obtained the sanction of the Court to authorize the sale. This situation continued 8 to the 25-1-2021 (the date of order of removal of caveat) and even to date the State Authority has not granted the approval for the said sale. I note that the Receivers and Managers have recently obtained the approval for the sale of the property on 10-5-2021 in the Originating Summons No. WA-24NCC-369-08/2020.

Applicable Law – Issue of Causation

Section 329 of the National Land Code provides that if any party who has lodged a caveat wrongly will be liable to pay compensation to any person or body who suffers any damage or loss that arise from the said caveat.

The damages claimable must be caused by the entry of the wrongful caveat. This will be assessed in accordance with the principles applicable in the law of torts. As explained by the Court of Appeal in MD Biomedical Engineering (M) Sdn Bhd v Goh Yong Khai [2021] 6 CLJ 30 where Lee Heng Cheong JCA stated: - “[28] In Lo Foi v. Lee Ah Hong & Ors (supra) the court there also held "damages under s. 329(1) of the National Land Code must be assessed 9 in accordance with the principles of the laws of torts and that would be the reasonable foreseeability test" and "damages sought for would only be recoverable if they come within the range of damages recoverable in law and secondly, if they are not too remote".

I also refer to the decision of the High Court in Lim Tee Hin v Ledchumanan a/l Nagappan [2004] 3 CLJ 285. In that case Low Hop Bing J (as he then was) stated: - “In my judgment, for the purpose of assessing "compensation to any person or body who thereby suffers any damage or loss" under s. 329(1), on the basis of the aforesaid High Court judgments, the following principles may be culled:

The assessment of compensation under s. 329(1) must be undertaken on the facts and circumstances established by way of the evidence adduced before the assessor having regard to the terms of the order for such assessment;

The burden is on the claimant to prove real and actual loss: Cheng Chin Chong v. Shak Heng & Sons Sdn Bhd [1981] CLJ 91; [1981] CLJ (Rep) 126; Mawar Biru, supra,Coke & Coal, supra, Minty Holdings, supra; Lo Foi, supra; and Quill Construction, supra.

The usual approach is by determining in the first instance, whether there is a property value loss in that there is a decrease in the price of 10 the said property after the same is offered for sale subsequent to the caveat being removed: Mawar Biru, supra; Coke & Coal, supra. However, in my view, this is not the only approach.

The claimant must prove loss of his own money or loss of use of his own money: Coke & Coal, supra.

Damages must be assessed in accordance with the principles of the law of torts by reference to the reasonable foreseeability test ie, reasonable in law and not too remote: Lo Foi, supra.

Compensation would include any fee and expenses incurred to get the caveat removed: Lo Foi, supra; Quill Construction, supra.

The claimant has the duty to mitigate his loss: Coke & Coal, supra; Lo Foi, supra; and Quill Construction, supra”

In this case, the claim raised by the Plaintiff is for the sum of RM 10, 335, 974.56, being the late payment charges that they say are now recoverable against the borrowers and which would not have arisen if the property was sold to Jati Sutera Sdn Bhd on 20- 5-2020. The Plaintiff alleges that the property could not be sold as the private caveat had hindered the sale and stopped it from being realized in full. Thus, the entry of the caveat had allegedly caused a delay in the performance of the Sale and Purchase Agreement 11 justifying the claim for the said late payment charges from the Defendant.

This argument is however flawed because the Sale and Purchase Agreement is conditional not only on the removal of the private caveat by the Defendant, but also on (i) obtaining the consent from the State Authority and (ii) the Receivers and Managers obtaining the approval from the Court for the disposal of the said land.

These two conditions were not fulfilled on the date on which the order for removal was obtained from the High Court (25-1-2021). In fact, as I have said earlier, even to date the State Authority has yet to grant its approval for the sale and transfer of the property to Jati Sutera Sdn Bhd.

As the damage suffered as a result of a wrong caveat under section 329 of the National Land Code must be assessed based on the principles of tort, it must be shown that the damage suffered was caused by the said caveat.

I refer to the judgment of Lord Denning in Cork v Kirby Maclean Ltd [1952[ 2 All ER 402, where he stated: - 12 “Subject to the question of remoteness, causation is, I think, a question of fact. If you can say that the damage would not have happened but for a particular fault, then that fault is in fact a cause of the damage; but if you can say that the damage would have happened just the same, fault or no fault, then the fault is not a cause of the damage...”

Clerk & Lindsell on Torts )18th Edition, 2000 explained the application of the above test, which is commonly referred to as the but for test, as follows: - “The first step in establishing causation is to eliminate irrelevant causes, and this is the purpose of the "but for" test. The courts are concerned, not to identify all of the possible causes of a particular incident, but with the effective cause of the resulting damage in order to assign responsibility for that damage. The "but for" test asks: would the damage of which the claimant complains have occurred "but for" the negligence (or other wrongdoing) of the defendant? Or to put it more accurately, can the claimant adduce evidence to show that it is more likely than not, more than 50 per cent probable, that "but for" the defendant's wrongdoing the relevant damage would not have occurred. In other words, if the damage would have occurred in any event the defendant's conduct is not a "but for" cause. 13

I also refer to the judgment Dato Faiza Thamby Chik J in Haji Mahadi Sharharudin v Lembaga Urusan dan Tabung Haji [1994] 1 CLJ 471:- “Sebagai permulaan biarlah saya katakan di sini bahawa dalam "tort of negligence" seseorang defendan tidaklah bertanggungjawab dalam sesuatu kecuaian melainkan kerugian yang dialami oleh si plaintif itu adalah diakibatkan oleh kecuaian si defendan. Dalam mempertimbangkan sama ada perbuatan atau peninggalan si defendan itu telah menyebabkan kerugian ke atas si plaintif ujian yang biasa diterimapakai dikenali "but for test". …”

Therefore, after considering the terms appearing in the Sale and Purchase Agreement, in particular clauses 3.1 and 3.3, which are reproduced earlier, I find that the said damages claimed are not caused by the entry of the caveat.

On the date of the application to remove, consent of the State Authority and the approval from the Court were not obtained to enable the Sale and Purchase Agreement to be unconditional and enforceable. Even to date, the Sale and Purchase Agreement could not be fully enforced as the consent of the State Authority have yet to be obtained from the Government of Kedah. 14

I also do not find any evidence to show that the said consent from the Court and the State Authority could only be obtained with the removal of the caveat. These two conditions are not predicated by the removal of the caveat and are independent conditions under the terms of the agreement.

The Plaintiff has also not shown that the Sale and Purchase Agreement could have been fully enforced and the purchase price would have been fully paid in full if not for the said caveat. Even if one were to assume that there was in fact no caveat entered or that the Defendant agreed to unilaterally remove the same, the Sale and Purchase Agreement could not have been fully performed on 20-5-

The consent of the State Authority and the confirmation of the sale by way of an order of Court was still required as of 20-5-2020. Even today, the consent of the State Authority was not obtained and as such the Sale and Purchase Agreement remains subject to the said condition.

27.

Given the above, I cannot find that the sum of RM 10, 335, 56 is recoverable against the Defendant. The delay in the Sale and Purchase Agreement is caused by other factors. To repeat, 15 even to date, the said Sale and Purchase Agreement remains conditional pending consent from the State Authority.

The Plaintiff has failed to prove to this Court that the said damages are claimable against the Defendant as it has failed to prove that the damages arose naturally as a result of the said caveat. To repeat, there are other factors that caused and continue to cause the delay in the said sale. I refer to the decision of the Court of Appeal in Antonina Marleen Yarendra v Chai Wei Chung [2017] 4 MLJ 359 and Mawar Biru Sdn Bhd v Lim Kai Chew [1992] 1 MLJ 336.

During the course of submissions, the Plaintiff did attempt to seek damages based on the expense and costs incurred by his client in removing the said caveat. However, these costs were not raised in any of the affidavits filed for the purposes of the assessment. The affidavits only explain the claim relating to the late payment charges and no evidence was tendered for these alleged expenses incurred by the Plaintiff. 16

I am further of the opinion that in relation to these costs, as they are relating to the legal fees and disbursements incurred in the removal of the caveat, they should have been raised in the earlier order of Court on 25-1-2021. As the issue is now subject to Res Judicata, I cannot now reopen the same and decide on issues that have been decided by this Court earlier.

Nonetheless, I grant damages to the sum of RM 10,000.00 as nominal damages to the Plaintiff payable by the Defendant based on the decision of the Court of Appeal in Aeon Co (M) Bhd v Asia Plywood Company Sdn Bhd & Anor [2021] 5 CLJ 751 where Mohd Sofian Abd Razak JCA stated: - “[33] In our view under O. 37 r. 1 of the ROC 2012, the learned Deputy Registrar was to certify the amount of damages and it does not provide for the dismissal of a claim for damages after the completion of the evidentiary hearing. In Nirwana Construction Sdn Bhd v. Pengarah Jabatan Kerja Raya Negeri Sembilan Darul Khusus & Anor [2008] 4 MLJ 157, Gopal Sri Ram JCA (as he then was) held that once it is held that the party is entitled to recover damages, what follows is an exercise of the assessment of those damages. If at that stage he or she is unable to evidentially establish the measure of damage suffered, nominal damages will be awarded. Hence we are of the view that the 17 learned judge was correct in reversing the finding of the Deputy Registrar that the plaintiff had failed to prove the loss and damage suffered.” C. Orders of this Court

I, therefore, make the following orders: -

Nominal Damages of RM 10,000.00 to be paid by the Defendant to the Plaintiff; and

No order as to costs. Dated 6th October 2021 Dato’ Indera Mohd Arief Emran bin Arifin Judicial Commissioner High Court of Malaya, Kuala Lumpur Civil Division NCvC 8 18 S Maniarasan & Fatin Nadhirah Othman (counsel for the Plaintiff) Messrs. Adam Abdullah & Mani (Kuala Lumpur Advocates and Solicitors Christie Soosay Nathan & Jusween Kaur (counsel for the Respondent) Messrs. Christie Soosay Nathan & Associates Advocates and Solicitors