Ch'Ng Han Keong v Maju Puncakbumi Sdn Bhd (B-02(IM)(NCVC)-2436-12/2017)

This is an appeal against the decision of the learned High Court Judge dated 9.11.2017, who allowed the Plaintiffs’ application to enter summary judgment against the Defendant pursuant to Order 14 rule 1 of the Rules of Court 2012.

The Plaintiff had instituted a representative action on behalf of himself and 137 owners of serviced apartments (‘the owners’) to recover arrears of rental payment from the Defendant pursuant to Option Agreements between the Defendant and the owners.

For ease of reference parties will be referred to as they were in proceedings before the High Court.

The Plaintiff is a Malaysian citizen and owner of Unit No. C-21-08 which is one of a number of serviced apartments known as “The Arc @ Cyberjaya” (“the serviced apartment”). The Plaintiff filed this representative action in the High Court on behalf of himself as owner of the serviced apartment as well as on behalf of the other owners of the serviced apartment, totalling in all 137 owners. The list of the 137 owners on whose behalf the representative action was filed was duly attached to the Writ.

The Defendant is a developer company incorporated in Malaysia which sold units of the service apartment to the owners and which 3 thereafter rented the units of the serviced apartment from the owners to tenants.

The Defendant had entered into Option Agreement with the Plaintiff and other 137 owners respectively. Pursuant to the Option Agreement, the Defendant agreed to rent the units of the serviced apartments from the Plaintiff and the other 137 owners. (A sample copy of the Option Agreement dated 03.02.2012 was exhibited as CHK-1 in the Plaintiff’s Affidavit-In-Support affirmed on 27.07.2017).

The primary obligations of the Plaintiff and the Defendant in respect of the terms of the payment of rental are reproduced below. In the Option Agreement the Defendant is referred to as the “Vendor”, and the Plaintiff is referred to as “the Purchaser”. The rate of payment of rental as well as the due date of payment is provided in clauses 3.1 and 6.1 (a) of the Option Agreement as follows: Clause 3.1 “The Vendor shall pay to the Purchaser the rental at the rate stated in Section 4 of the First Schedule hereto (hereinafter referred to as ‘the Monthly Rental’), in arrears on a quarterly basis, the first of such payment shall be made on the first day of the fourth (4th) calendar month from the Commencement Date and thereafter payable quarterly on the first day of the relevant calendar month…” Clause 6.1 (a) “During the Term or the Renewed Term (as defined under Clause 9.1 herein), as the case may be, the Vendor hereby agrees and covenants with the Purchaser that the Vendor shall (a) pay or cause to be paid to the Purchaser the Monthly Rental in accordance with the Term hereof”. 4

Pursuant to clauses 3.1 and 6.1 (a) of the Option Agreement, the Defendant was obliged to pay the monthly rental once in every three months, and at the end of the third month, payment would be due on the 1st day of the fourth month. Thus, the due date for payment of rental was on the 1st day of the relevant calendar month every three months i.e. quarterly.

The Plaintiff had instituted this suit for himself as well as on behalf of 137 owners of the serviced apartment on the allegation that the Defendant had defaulted in the payment of rental to the Plaintiff and the 137 owners for a continuous period of not less than 60 days in breach of clause 10.5 of the Option Agreements. Clause 10.5 provides as follows: “If the Vendor fails to pay the Monthly Rental or the Revised Rental (as the case may be) in the manner and time as provided herein or as may be agreed upon between the parties hereto for a continuous period of not less than sixty (60) days, the Purchaser shall give notice in writing (“said notice”) specifying the Vendor’s aforesaid breach and requiring the Vendor to remedy such breach within thirty (30) days from the date the Vendor receipt of the said Notice (“Extended Payment Period”) subject to payment of interest of eight per centum (8%) per annum on the outstanding sum calculated on a daily basis from the first (1st) day of the Extended Payment Period until the Purchaser’s receipt of the outstanding sum from the Vendor and if the Vendor fails to remedy the said breach within the aforesaid period, then the Purchaser shall be entitled to terminate this Agreement whereupon the Vendor shall be liable to pay to the Purchaser a sum equivalent to the Monthly Rental or the Revised Rental (as the case may be) for the remaining period of the Term or the Renewal Term (as the case may be) as agreed liquidated damages.” 5

Pursuant to clause 10.5 above stated, the Plaintiff and the other owners issued the First and Second Collective Notices of Demand dated 22.03.2017 and 03.05.2017 (Exhibits CHK2 &3) to demand the Defendant to remedy the said breach (default in payment) within 30 days from their receipt of the said notices by paying to the Plaintiff and the other owners the outstanding monthly rentals together with interest at the rate of 8% per annum on the said outstanding monthly rentals calculated on a daily basis from the date the said outstanding rentals are due to the Plaintiff and the other owners until the date of full settlement.

On the Defendant’s failure to remedy the breach within the stipulated time in the notices of demand, the Plaintiff and the owners issued notice of termination dated 05.06.2017 to terminate the Option Agreement and to claim for agreed liquidated damages.

At the High Court, the learned High Court Judge determined that pursuant to the Plaintiff’s application for summary judgment under Order 14 rule 1 of the Rules of Court 2012, the issues before the court are as follows:

Whether the Plaintiff had fulfilled the prerequisites of Order 14 rule 1? 6

(ii) In the event that the said prerequisites had been fulfilled, whether the Defendant had discharged the burden of proving that there were triable issues to defeat summary judgment? Findings and Decision Prerequisites of O14 Rules of Court 2012 [13] On the first issue, the learned High Court Judge was satisfied that the Plaintiff had fulfilled the prerequisites of Order 14 in that the Plaintiff had entered an appearance; the Statement of Claim had been duly served on the Defendant and the Plaintiff’s Affidavit in Support had complied with Order 14 rule 2 of the Rules of Court 2012 in that it had duly verified the facts on which the claim is based, and had duly stated the deponent’s belief that there is no defence to the Plaintiff’s claim. [14] Since the Plaintiff had fulfilled the prerequisites of Order 14 rule 1 and 2 of the Rules of Court 2012, the learned Judge ruled that the burden had shifted to the Defendant to prove there were bona fide triable issues. Bona Fide Triable Issues? [15] In defence against the Plaintiff’s application for summary judgment of its claim the Defendant had raised the following as issues to be tried:

whether the Plaintiff’s representative action is properly brought as the quantum of the claims and the remedies sought among the Plaintiff and the owners vary; 7

(ii) whether the Notice of Demand has been properly served on the Defendant in accordance with clause 10.5 of the Option Agreement?

(iii) whether there was a letter of authority by the Plaintiff and the owners to Myocho Kan Chee Tuen to serve the said notices to the Defendant;

(iv) whether the Defendant had received the Notices to remedy the said breach?

whether the Plaintiff’s claim for the unexpired term of the Option Agreement is against section 75 of the Contracts Act?

(vi) whether the Plaintiff can claim for aggravated exemplary damages?

(vii) whether the Option Agreement is against public policy? [16] The learned High Court Judge had ruled that there were no bona fide triable issues raised by the Defendant for the following reasons. [17] The Option Agreement was entered into voluntarily by both the parties. The Agreement was prepared by the Defendant’s solicitors. Clauses 3.1 and 10.5 imposed obligations on both parties. From the notices of demand there is evidence to support the Plaintiff’s claim that the Defendant had defaulted in the payment of rental income to the Plaintiff. 8 [18] The Plaintiff had fulfilled the requirements of clause 10.5 of the Option Agreement by the Collective Notices of Demand and the Notice of Termination of Agreement. The Collective Notices of Demand had been served on the Defendant via one, Myocho Kan Chee Tuen who was duly authorised to act on behalf of the owners. The Notices had contained the names of all the owners. The Notices had clearly stated that Myocho Kan Chee Tuen was “mandated by other owners of The Arc @ Cyberjaya (as listed herein) through proxy to act on their behalf”. (Exhibits CHK-2 and CHK-3). [19] The Notices of Demand are deemed to have been received by the Defendant as there is acknowledgment of receipt. Both Notices were addressed to the Defendant for the attention of Lim Chin Aik (Director). Both Collective Notices were stamped, “We hereby acknowledge receipt”, together with the signature and identity card number of the signatory. The first Collective Notice dated 22.3.2017 was signed by a person by the name of Carter. The Second Collective Notice dated 3.5.2017 was signed by a person by the name of Eileen. The Defendant does not deny that both Carter and Eileen are employees of the Defendant at the address stated in the Notices. The assertion of the Defendant is that the Notices ought to have been served on the party as stipulated in clause 10.5 of the Option Agreement. However, the employees had received the Notices on behalf of the Defendant. Thus, there is no issue that the Defendant had not received the Notices. [20] In respect of the Defendant’s contention that the Defendant did not receive Notice of Demand from five owners: Toh Choi Ling, Thong Mei Yoke, Tea Bee Ring, Pong Lian Hwa@ Hong Lian Hwa & Lin Sze Yin and Shashi Dave Nair & Dashavathi. There was no evidence of service by 9 post or acknowledgment of receipt adduced by the abovementioned five owners. However, all five owners abovementioned had tendered Notice of Demand via solicitors appointed by themselves. In the Notice of Termination, one of the owners i.e. Pong Lian Hwa @ Hong Lian Hwa & Lin Sze Yin had exhibited a proof of postage to the Defendant as evidence that the Notice of Demand had been served on the Defendant. [21] The representative action by the Plaintiff and 137 other owners is proper as the owners had entered into Option Agreement with the Defendant. All the 137 owners had issued a Letter of Authorisation to the Plaintiff to bring a representative action on their behalf. (Exhibit CHK-9) All the 137 owners have the same cause of action against the Defendant. A representative action such as this would have the benefit of avoiding a multiplicity of claims and saving in terms of time and costs of all parties. [22] From the particulars of the claims, it is apparent that the Option Agreement was entered by the owners with the Defendant at varying times. Consequently, the quantum of a claim would vary, according to the computation of the period of rental for the particular unit. This however, does not make it inappropriate for a representative cause of action. [23] While the claim by the owners is for breach of contract, the effect of the Defendant’s breach which affected 138 owners is a good reason for a claim in aggravated damages as it would serve as a lesson for developers in their relations with purchasers. [24] There is no issue of whether the Plaintiff’s claim for the unexpired term of the Option Agreement is against section 75 of the Contracts Act. It is clear from the evidence that the Defendant had defaulted in payment 10 of rental to the owners for a period of not less than 60 days. Notices of Demand had been served on the Defendant. On the failure of the Defendant to remedy the breach on the expiry of 60 days after the notice, a Notice of Termination had been served on the Defendant in compliance with clause 10.5 of the Option Agreement. Thus, the Option Agreement had been terminated and the issue of the Plaintiff’s claim for the unexpired term does not arise. [25] The Option Agreement does not contravene the Housing Development (Control and Licensing) Act 1969 and Housing Development (Control and Licensing) Regulation 1989. Both legislations have specific purposes i.e. to supervise and monitor development, construction, sale and delivery of premises from the developer to the purchaser. The Option Agreement for the rental of premises is not against public policy and therefore does not contravene section 24 of the Contracts Act. The Option Agreement was entered into voluntarily for mutual benefit of the parties. It is not immoral or illegal as to contravene section 24 of the Contracts Act. [26] Premised on the aforesaid grounds, the learned High Court Judge ruled that Defendant had failed to raise any serious triable issues. Consequently, the Plaintiff’s application for summary judgment against the Defendant (Enclosure 7) prayers (a) to (g)was allowed. In respect of prayer (d) the High Court awarded RM10 as exemplary damages as there were no direct excessive losses incurred by the Plaintiff. 11 OUR DECISION [27] After careful consideration of counsels’ oral and written submissions and the Appeal Records, we were unanimous in our decision that there are no merits in this appeal to warrant appellate intervention. We find no error of fact or law in the learned High Court judge’s finding that the Plaintiff’s application had satisfied the requirements of Order 14 rule 1 and 2 of the Rules of Court 2012. The Defendant had also failed to discharge the burden of proving that there were issues that merit a trial. We agree with the learned High Court Judge that summary judgment was appropriate on the facts and circumstances of this case. [28] The principles of law applicable to summary judgments are well established. Suffice for us to refer to a leading authority, the case of Cempaka Finance Bhd v Ho Lai Ying & Anor (2006) 3 CLJ 544, where the Federal Court had held: “(1) In the instant case, the Court of Appeal had put the burden on the plaintiff to prove his case in an O. 14 application. With respect, that could not be the correct proposition of law. In an application under O. 14 RHC, the burden is on the plaintiff to establish the following conditions: (i) that the defendant must have entered an appearance; (ii) that the statement of claim must have been served on the defendant; and (iii) that the affidavit in support must comply with r.2 of O.14 RHC in that it must verify the facts on which the claim is based and must state the deponent’s belief that there is no defence to the claim. Once those conditions are fulfilled, the burden then shifts to the defendant to raise triable issues. The law on this is trite. (National Company for Foreign Trade v Kayu Raya Sdn Bhd fold)” 12 [29] The learned High Court Judge made findings that the Plaintiff had fulfilled the requirements of Order 14 rule 1 and 2 of the Rules of Court

The Plaintiff had entered an appearance, the statement of claim had been served on the Defendant and the Plaintiff’s Affidavit-in Support complies with the requirement of r 2 of Order 14 Rules of Court 2012. We find no reason to depart from the learned High Court Judge’s findings on this matter. [30] As the three requirements to enter summary judgment under Order 14 has been fulfilled by the Plaintiff, on the authority of Cempaka Finance (supra), the burden of proof is then shifted to the Defendant to prove to the satisfaction of this court that there are bona fide triable issues in the instant case to preclude summary judgment in favour of the Plaintiff. [31] It is noteworthy that the Plaintiff’s claim is premised on Option Agreements between the Plaintiff and the Defendant. The Plaintiff’s claim for himself and on behalf of 137 owners is premised on the breach of the Defendant’s obligation to pay rental in respect of the apartments rented from the owners pursuant to the Option Agreement. The quantum of rental in the Statement of Claim is premised on the amount due and owing to the Plaintiff and owners according to the relevant terms of the Option Agreement. The Defendant in their Defence and Affidavits have not denied their default in payment of the outstanding rental to the Plaintiff and the 137 owners. In essence, the claim of the Plaintiff is for rental income due and owing pursuant to the Option Agreement between the Defendant and the respective owners. [32] The Defendant has raised what was alleged as triable issues in an attempt to defeat the Plaintiff’s application for summary judgment. What 13 in law would amount to a triable issue? At this juncture it is useful to refer to several well-established authorities on this matter. In the case of Bank Negara Malaysia v Mohd. Ismail & Ors [1992] 1 MLJ 400, Mohamed Azmi SCJ said at p.408: “Under an O14 application, the duty of a judge does not end as soon as a fact is asserted by one party, and denied or disputed by the other on affidavit. Where such assertion, denial or dispute is equivocal, or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable in itself, then the judge has the duty to reject such assertion or denial, thereby rendering the issue as not triable.” [33] In the case of Jetara Sdn Bhd v Maju Holdings Sdn Bhd [2007] 3 MLJ 609, the Court of Appeal had stated at para [11] as follows: “In accordance with 014 r 3 all the respondent needs to show is that there is a triable issue as to a matter of fact or any real difficulty as to a matter of law. In Voo Min En & Ors v Leong Chung Fatt [1982] 2 MLJ 241, Salleh Abas FJ has said that it is not enough for the respondent in answer to the appellant’s application to sign final judgment to raise an issue or any issue. The respondent must raise such issue as would require a trial in order to determine it or in other words, the issue raised must be an arguable issue.” [34] To our mind the primary issue raised by the Defendant to oppose the Plaintiff’s application for summary judgement is the unsuitability of the representative action filed by the Plaintiff and the 137 owners. The reasons given by the Plaintiff are summarised as follows:

The claim for the rental payment due and owing to the Plaintiff and the 137 owners are for varying amounts as well as varying 14 remedies. The owners do not share a common grievance. Apart from the claims for outstanding rental payments, the Plaintiff has also made claims for vacant possession in respect of certain units. However, one of the claimants, Tan Ong Kiat had already received vacant possession of his unit.

(ii) The requirement in respect of Notice of Demand which require the Defendant to rectify the breach must be issued by each of the Claimants pursuant to clause 11.5 of the Option Agreement. However, the Defendant did not receive Notices from five of the Claimants.

(iii) There is no letter of authority given to Myocho Kan to represent the claimants to issue the Notices on behalf of all the owners. [35] The learned High Court Judge had considered the Defendant’s objections in respect of the Notices and made the finding that the Notices were effective and Myocho Kan was duly authorised to act on behalf of the owners. In addition, we agree with the learned High Court Judge that the facts and the circumstances of the case are such that a representative action is suitable and appropriate. [36] All the owners have a common cause of action against the Defendant and the common relief of arrears in outstanding rental payment and damages for breach of the Option Agreement are the common relief. The action by 138 owners is against the same Defendant and premised on Option Agreements with the respective parties, in which the terms and conditions thereof are the same. The learned High Court Judge did not 15 consider the varying amounts of the claims by the respective owners to be a crucial factor that makes a representative action unsuitable. We do not disagree with him. Details of the 137 owners, unit numbers, period for which rentals are owed as well as the outstanding number of rentals owed to each owner totalling RM3,971,735.79 and the expiry date of the Option Agreement were stated clearly in the Statement of Claim. [37] The premise for a representative action pursuant to Order 15 r 12 is similarity of interest, which has been satisfied in the instant case. Order 15 r 12(1) of the Rules of Court 2012 states as follows:

Representative proceedings (O. 15 r 12) “(1) Where numerous persons have the same interest in any proceedings, not being such proceedings as are mentioned in rule 13, the proceedings may be begun and, unless the Court otherwise orders, continued by or against any one or more of them as representing all or representing all except one or more of them.” [38] There are similar authorities where a representative action by purchasers has been held to be suitable where the claims are in respect of common interests. In Cheong Kok Khuen and Ors v Kolektra Recreation Sdn Bhd [2010] MLJU 1236, the representative action was filed by the Plaintiff and 135 purchasers against the developer for a breach of a term in the Deed of Mutual Covenants entered into between the Developer and the 136 purchasers. In the case of Voon Keng & Ors v Sykt. Mazwina Development Sdn Bhd [1990]3 CLJ (Rep.) 329, the Plaintiff had filed a representative action on behalf of the purchasers including himself against the Developer to claim for agreed liquidated damages in respect of sales and purchase agreements with different 16 dates and where the claims are for different amounts due. The High Court held as follows: “In the circumstances of the present case, the plaintiffs were members of the same class, had a common grievance and that the relief sought was in its nature beneficial to all whom the plaintiffs represented and thus the representative action could continue although the amounts due to each of them may well be different in view of the different dates of the sales and purchase agreements.” [39] For the reasons above stated, we are of the considered view that the Plaintiff has the necessary locus to bring this application in a representative action and no triable issue has been raised on the locus of the plaintiff. [40] In respect of the other issues raised by the Defendant alleged to be triable issues viz. the validity of the Notices of Demand, the legality of the Option Agreement and the appropriateness of the claim for aggravated damages, the learned High Court Judge had considered the above-mentioned and made findings that they do not qualify as bona fide triable issues. We find no reason to depart from his lordship’s findings. (Refer to paras [17] to [20] and [23] to [26] of this Judgment). [41] For all the reasons stated above, we find no merits in this appeal. We affirmed the order of the High Court to enter summary judgment against the Defendant pursuant to Order 14 rule 1 of the Rules of Court

We dismissed this appeal with costs of RM7,000.00 subject to allocator. Deposit to be refunded. 17 Dated: 8 November 2019. (DATUK DR. BADARIAH SAHAMID) COURT OF APPEAL PUTRAJAYA Parties Appearing: For the Appellant: Simon Yap Tetuan Simon Yap and Christina Chan Law Practice Peguambela & Peguamcara No. 55-2 (2nd Floor) Jalan 30A/119 Taman Tanyton View Cheras 56000 Kuala Lumpur For the Respondent: Lim Chang Lim Ann Gie Tetuan Quah & Yeap Peguambela & Peguamcara Lot 1001-1002A, 10th Floor