Chen Sheau yang v Smc Healthcare Sdn Bhd (S-02(NCVC)(W)-1795-09/2017)

Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 1 IN THE COURT OF APPEAL MALAYSIA HOLDEN AT KOTA KINABALU [APPELLATE JURISDICTION] CIVIL APPEAL NO: S-02(NCVC)(W)-1795-09/2017 BETWEEN CHEN SHEAU YANG …APPELLANT (NRIC NO: 570111-12-5469) AND SMC HEALTHCARE SDN BHD …RESPONDENT (Company No. 882709-T) [In the Matter of Suit No. BKI-22NCVC-34/4-2015 In the High Court of Sabah and Sarawak at Kota Kinabalu SMC Healthcare Sdn Bhd …Plaintiff And Chen Sheau Yang …Defendant] (NRIC No. 570111-12-5469) CORAM: ABDUL RAHMAN SEBLI, JCA KAMARDIN HASHIM, JCA KAMALUDIN MD. SAID, JCA Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 2 JUDGMENT OF THE COURT Introduction [1] This is an appeal by the Appellant/Defendant against the whole decision of the High Court at Kota Kinabalu in allowing the Respondent/Plaintiff’s claim and dismissing the Appellant/Defendant’s counter claim with costs. The Respondent/Plaintiff’s claim in the Court below was for a refund of the deposit of RM4,160,000.00, out of RM5,200,000.00 deposit paid by it to the Appellant/Defendant. [2] The Appellant/Defendant’s counter claim was for a declaration that he is entitled to forfeit the whole deposit of RM5,200,000.00 and for damages to be assessed for losses and damages suffered as a result of the Respondent/Plaintiff’s repudiation of the contract entered into between the parties and for alleged wrongful caveat of the subject land. [3] We heard the Appellant/Defendant’s appeal on the 18th July 2018. After considering the written submissions and the oral arguments from both parties on all the issues raised, we allowed the appeal. We now give our reasons for allowing the appeal. [4] For ease of reference the parties will be referred to as they were described in the Court below. Brief Background Facts [5] The factual matrix of this case is not much in dispute and had been summarised by both counsel. As they reflected an accurate description of Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 3 the background facts, we adopt them with the relevant and appropriate modifications. [6] The dispute between the parties centered around the sale and purchase of a piece of land belong to the Defendant known, as Country Lease No. 015003111, situated at Tanjung Aru, Kota Kinabalu, Sabah measuring 5.375 acres (‘the Land’). Sometime in April 2013, the Plaintiff’s senior officers viewed the Land with the Defendant. On the same day, the parties negotiated for the sale and purchase of part of the parcel of the Land measuring 4 acres at an agreed prices of RM52,000,000.00 (the Purchase Price’). [7] The Plaintiff issued a Letter of Intent to Purchase dated 26.4.2013 (‘the Letter of Intent’) to the Defendant for the 4 acres of Land. The express terms of the Letter of Intent, amongst others, stated that:

2. the learned Judge erred in failing to decide on the admissibility of the Respondent’s letter dated 25 February 2014 to Messrs Ronny Cham & Co and Messrs Ronny Cham & Co’s letter dated 26 February 2014 to the Respondent;

3. had the learned Judge looked into the issue of the admissibility of the Respondent’s letter dated 25 February 2014 to Messrs Ronny Cham & Co and Messrs Ronny Cham & Co’s letter dated 26 February 2014 to the Respondent, the learned Judge would have found that the letters are admissible and relevant;

4. the learned Judge erred in failing to consider the evidence of the Respondent’s letter dated 25 February 2014 to Messrs Ronny Cham & Co and Messrs Ronny Cham & Co’s letter dated 26 February 2014 to the Respondent even though they are relevant to the issue whether sale and purchase agreement which had been signed by the Appellant was binding on the Respondent;

5. the learned Judge erred by determining issues pertaining to the zoning and valuation of the subject land when the Respondent did not plead the material facts to raise these issue; Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 10

6. the learned Judge erred in failing to consider that material facts must be pleaded and where a vital issue was not raised in the pleadings it could not be allowed to be argued;

7. the learned Judge erred in failing to consider that allowing the Respondent to raise unpleaded issues was tantamount to trial by ambush, particularly when the Respondent had only handed over the bundles of documents and witness statements relied on by the Respondent on the first day of trial;

8. the learned Judge erred in allowing the opinion evidence of PW1, PW2 and PW5 to be admitted and had erred in failing to consider that the opinions of PW1, PW2 and PW5 are not relevant and hence not admissible;

9. the learned Judge erred in failing to consider that PW1 and PW5 have not been established to be experts whereby their opinions might be relevant;

10. the learned Judge erred in failing to consider that in respect of the opinions of PW1, PW2 and PW5, Order 40A of the Rules of Court 2012 had not been complied with and therefore their opinions ought not to have been admitted;

11. the learned Judge erred in admitting the opinions of PW1, PW2 and PW5 not as expert testimony but as evidence of fact; Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 11

12. that the learned Judge erred in only considering the letter of intent dated 26.04.2013 and the letter of undertaking dated 29.07.2013 in deciding the intent of the parties whether the sale and purchase agreement executed by the Appellant was binding;

13. the learned Judge erred in failing to consider that in its pleadings the Respondent did not admit that the parties had agreed to the terms as contained in the sale and purchase agreement and even denied that the Respondent had requested its solicitors to send the sale and purchase agreement to the Respondent;

14. the learned Judge erred in failing to consider that under cross examination, PW4 admitted that the sale and purchase agreement, which had been prepared by the Respondent’s solicitors, had been accepted by the Appellant and that the Respondent were informed of the fact;

15. the learned Judge erred in failing to consider that essentially PW4 had admitted that the terms of the sale and purchase agreement had been agreed between the Appellant and Respondent;

16. the learned Judge erred in failing to consider that agreement as to the terms of the sale and purchase agreement had been reached subsequent to the letter of intent dated 26.04.2013 and the letter of undertaking dated 29.07.2013; Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 12

17. the learned Judge erred in failing to consider that the letter of intent dated 26 April 2014 had been superseded by a subsequent letter dated 12 July 2013 from the Respondent and was therefore no longer operative;

18. the learned Judge erred in failing to consider that the terms of the sale and purchase agreement were agreed by the parties subsequent to the letter of undertaking dated 29.07.2013 and that the terms of the sale and purchase agreement superseded the letter of undertaking dated 29.07.2013;

19. the learned Judge erred in failing to consider that clause 16 of the sale and purchase agreement states: “This Agreement constitutes the only Agreement between the parties hereto and supersedes all previous negotiations understanding memorandum and/or contract both express and implied between the parties or commissioned estate or other agent, if any.”

20. the learned Judge erred in failing to consider that there is no evidence or correspondence from the Respondent or its solicitors, after the reaching of agreement on the terms of the sale and purchase agreement to state that until the sale and purchase agreement is not binding;

21. the learned Judge erred in failing to consider that the only officer of the Respondent, PW4, who gave evidence, does not have Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 13 personal knowledge of the circumstances of how the sale and purchase agreement was sent to the Appellant for his signing or the surrounding circumstances of the sale and purchase agreement;

22. the learned Judge erred in failing to consider that PW4 also does not have personal knowledge of the representations which had been made to the Appellant on behalf of the Respondent;

23. the learned Judge erred in failing to consider that PW4 could not and did not give evidence to suggest that it was made clear to the Appellant that until the Respondent Plaintiff signed the sale and purchase agreement, the parties were not bound by it;

24. the learned Judge erred in failing to consider that the Respondent had deliberately refrained from calling Datin Paduka Siti Sa’diah Sheikh Bakir and Encik Mohd Azhar Abdullah as witnesses and that these two individuals were negotiating the terms of the sale and purchase agreement on behalf of the Respondent with the Appellant;

25. the learned Judge erred in not drawing an adverse inference under section 114(g) of the Evidence Act 1950 against the Respondent for its failure to call Datin Paduka Siti Sa’diah Sheikh Bakir and Encik Mohd Azhar Abdullah as witnesses; Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 14

26. the learned Judge erred in finding that Mohd Azhar Abdullah was an employee of KPJ and seconded to the Respondent when there was no such evidence adduced;

27. the learned Judge erred in failing to consider that at the material time, Mohd Azhar Abdullah was the chief executive officer of the Respondent and therefore whether or not Mohd Azhar Abdullah could bind the Respondent was not the concern of the Appellant;

28. the learned Judge erred in failing to consider that no evidence was adduced by the Respondent to suggest that Mohd Azhar Abdullah, as the chief executive officer of the Respondent, had no authority to bind the Respondent and therefore the learned Judge had no basis to find that he had no authority;

29. the learned Judge erred in failing to consider that the Respondent had not raised any allegation that Mohd Azhar Abdullah had no authority to bind the Respondent in its pleadings and ought not to have permitted the Respondent from raising this allegation in any event;

30. the learned Judge erred in reversing the onus onto the Appellant to call Mohd Azhar Abdullah as a witness when in fact Mohd Azhar Abdullah should have been called as a witness by the Respondent;

31. the learned Judge erred in applying the cases of Deutsche Bank (Malaysia) Bhd v MBF Holdings Bhd [2015] 6 MLRA 583 and Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 15 Perbadanan Kemajuan Negeri Kedah v CBH Rubber Sdn Bhd [2016] 2 MLJ 215 which involved completely different facts;

32. the learned Judge erred in failing that there was no board of directors resolution of the Respondent authorizing the execution of the sale of purchase agreement when there was no evidence adduced by the Respondent of such fact;

33. the learned Judge erred in failing to consider that the Appellant is entitled to rely on ostensible authority and/or the indoor management rule and is not concerned with whether there was any board of directors resolution of the Respondent authorizing the execution of the sale and purchase agreement;

34. the learned Judge erred in applying the cases of Skyline Trading Co v Tiow Yoke Lan [1969] 2 MLJ 212 and Nai Yau Juu v Pasdec Corporation Sdn Bhd [2005] 5 CLJ 304 which involved completely different facts and principles of law;

35. the learned Judge erred in law and in fact in failing to find that there was a binding contract entered between the Appellant and the Respondent;

36. the learned Judge further erred in failing to construed the letter of undertaking dated 29.07.2013 in its proper context (even if it were still operative) and ought to have found that the Respondent was not permit to resile from the sale and purchase agreement once the terms had been agreed and finalized; Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 16

37. the learned Judge erred in law and in fact in failing to find that the Respondent was estopped from denying that there is a concluded and/or binding contract;

38. the learned Judge erred in failing to consider that the Appellant had given unchallenged evidence about his dealing with Datin Paduka Siti Sa’diah Sheikh Bakir and Mohd Azhar Abdullah and their representations to him;

39. the learned Judge erred in finding that the Appellant in respect of his dealings with Datin Paduka Siti Sa’diah Sheikh Bakir and Mohd Azhar Abdullah and their representations to him to be hearsay and inadmissible when in fact the Appellant had given direct and admissible evidence;

40. the learned Judge erred in failing to consider that the Respondent’s silence for a period of around 6 months after the Appellant had signed the sale and purchase agreement and given the executed memorandum of transfer and the title deed to the Respondent’s solicitors encouraged the Appellant to assume that the Respondent was going to sign the sale and purchase agreement as a formality;

41. the learned Judge erred in failing to consider that the Respondent had further encourage the Appellant to perform his obligation under the sale and purchase agreement found at section 5 of the Fourth Schedule to the sale and purchase agreement: Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 17 “The Vendor shall assist the Purchaser in an application for zoning approval from the Ministry of Health for the construction of a hospital.”

42. the learned Judge erred in finding that the Respondent had wanted a standalone type of hospital and had ignore the fact that under the terms of the sale and purchase agreement, the Respondent had agreed that the land use of the subject land be for high density residential development which includes commercial/medical centre and condominium development;

43. the learned Judge erred in failing to find that the Respondent had repudiated the sale and purchase agreement and that the Appellant had lawfully forfeited the deposit;

44. the learned Judge erred in finding that the Appellant’s claim for damages to be assess for wrongful caveat by the Respondent to be pre-mature on the ground that the matter of the caveat is under appeal by the Respondent;

45. the learned Judge erred in failing to consider that the Respondent had wrongfully caveated the subject property even though the Respondent is arguing that there was no binding contract for the sale and purchase of the subject land; and

46. the learned Judge erred in disallowing the Appellant from calling Brenndon Soh as a witness.”. Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 18 [23] Before us, the learned counsel for the Defendant canvassed the following six (6) grounds of appeal:

1. Five (5) copies of Sale & Purchase Agreement (please initial every printed page);

2. Four (4) copies of the Memorandum of Transfer; and

3. One (1) copy of the CKHT 2A. Upon execution, kindly return all copies of the above documents to us as soon as possible. We further confirm that the original document of title has been deposited by the Vendor in our office as stakeholder. Furthermore, we would be grateful if you could kindly provide us a certified true copy of your most update Form 49 and a certified true copy of the Company Resolution on the acquisition of the land. In addition, we enclose herewith our Note of Charges amounting to RM1,703,924.00 being our professional legal fees, stamp duty and disbursement costs in respect of the above matter. Kindly acknowledge receipt by signing and returning to us the duplicate copy of this letter. Thank you. Yours faithfully sgd.” [28] What transpired later according to the Defendant, was that out of the blue, he received a letter from the Plaintiff dated 18.8.2014 stating that the Plaintiff was unable to proceed with the execution of the SPA. The said Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 22 letter is at pages 359-360 of the Appeal Record Volume 2(1), which we reproduce below: “KPJ SABAH SPECIALIST HOSPITAL (formerly known as Sabah Medical Centre) SMC HEALTHCARE SDN. BHD. (882709-T) (A Member of KPJ Healthcare Berhad) Lot No. 2, Off Jalan Damai, Luyang, 883300 Kota Kinabalu, Sabah, Malaysia. Tel: 088-211 333 Fax: 088-272 622 www.kpjsabah.com ______________________________________________________ Our Ref: SMCH/CEO/2013-(117) 18 August 2014 BY HAND / EMAIL Mr. Freddy Chen Sheau Yang NRIC No. 570111-12-5469 P.O. Box 20090 Luyang 88757 Kota Kinabalu Sabah, Malaysia Dear Mr. Chen, LETTER OF UNDERTAKING LETTER OF INTENT TO PURCHASE DATED 26.04.2013 INTENDED PURCHASER : SMC HEALTHCARE SDN BHD (882709-T) INTENDED VENDOR : CHEN SHEAU YANG [NRIC NO. 570111-12- 5469] PURCHASE PRICE : RM52,000,000.00 PROPERTY : A PORTION OF COUNTRY LEASE NO. 015003111 MEASURING FOUR (4) ACRES LOCATED AT TANJUNG ARU, KOTA KINABALU, SABAH, MALAYSIA We refer to our letter dated 29 July 2013 on the above subject matter. Kindly be informed that after due deliberation and consideration, we are unable to proceed with the execution of the Sales and Purchase Agreement with you for the above property in view of the following reasons:

1. Land Status – is a Residential Special (Ridge Conservation and NOT a Commercial Status as required. Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 23

2. Acquisition of the land requires co-ownership. Hence, will need joint name in the land title. Sub-division will not be easy as it involves approval by State Authority and time consuming.

3. The current access is via a 300 meters of reserve railway road and that will need the approval from the Railway Authority.

4. Geotechnical condition of the site will require DBKK High Risk Development Technical Committee Approval and additional associated cost for Slope Protection and Conservation.

5. Upgrading of the storm water discharge and waterway towards the dual carriage, beyond which, the monsoon drain are to be developed. In considering the above salient issues the prominent infrastructure works in particular the access for the development will be a constraint for the Purchaser. Accordingly, since all these have not been fulfilled, we would like to issue notice of termination of intention to buy the above property and would appreciate if you could refund in full our deposit amounting Ringgit Malaysia Five Million Two Hundred Thousand (RM5,200,000.00). Thank you. Yours faithfully, SMC HEALTHCARE SDN. BHD. HAJI ABDOL WAHAB BIN BABA Deputy Chairman/Director C.C. YB Datin Paduka Siti Sa’diah Sheikh Bakir Chairman Madam Mah Lai Heng Executive Director Encik Mohd. Azhar bin Abdullah Chief Executive Director” [29] The Defendant accepted the termination of the SPA and wrote to the Plaintiff vide letter dated 4.3.2015 which stated, inter alia: “3. We have our client’s strict instruction to state that as a result of the chronology of events coupled with the terms and conditions of the letter of Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 24 intent and/or the letter of undertaking and performance by our client of his obligations as stated hereinabove it is our client’s position that there was in law and in fact a contract for the sale and purchase of the Property on the terms and conditions as contained in the sale and purchase agreement duly signed by our currently in your possession.

4. Your perusal to sign the sale and purchase agreement is in breach of the letter of intent and/or the letter of undertaking and your agreement to sign the sale and purchase agreement upon our client fulfilling your request to obtain the zoning approval for the Property.

5. In light of the above, our client accepts your repudiation of the contract for the sale and purchase of the Property and as a result, our client has instructed us to state that he will exercise his legal right to forfeit the Deposit sum as damages for the loss of bargain that our client has been made to suffer as a result of repudiation.” [30] Learned counsel for the Plaintiff raised an objection to the admissibility of the two letters on the basis that they were privileged communications between solicitor and client. In his submission, learned counsel for the Plaintiff submitted that the issue of admissibility of the two letters had no bearing on the Plaintiff’s case on the ground that the confirmation of the acceptance of the terms and conditions of the draft SPA was provided by the CEO, Mohd Azhar Bin Abdullah, who is employee of KPJ and not a director of the Plaintiff, and no weight should be given to those letters. With due respect, we disagree. [31] We had perused the appeal record especially the oral evidence and the correspondences between the parties. We observed that the CEO was involved from the beginning together with the Chairman, YB Datin Paduka Siti Sa’diah Sheikh Bakir in the discussions and negotiations to purchase Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 25 the Land. We agree with the learned counsel for the Defendant that the two letters were admissible and the learned High Court Judge erred in law and in fact when his Lordship treated the two letters as irrelevant and/or inadmissible. [32] On the issue of privileged communication raised by learned counsel for the Plaintiff, we are of the view that the letters must be confidential in nature as stated by Lord Scott in a celebrated case of Three Rivers District Council v. Governor and Company of the Bank of England (No. 5) [2005] 4 All ER 948: “[24] First, legal advice privilege arises out of a relationship of confidence between lawyer and client. Unless the communication or document for which privilege is sought is a confidential one, there can be no question of legal advice privilege arising. The confidential character of the communication on document is not by itself enough to enable privilege to be claimed but is an essential requirement.” [33] In Minter [Pauper) v. Priest [1930] All ER Rep. 431, Lord Atkin held that: “Confidential communications passing between solicitor and client are doubly guarded in the law. It is important to emphasise the twofold nature of the protection given; for they are commonly said to be privileged and the word unfortunately tends to confuse two entirely distinct rights. In the first place, they are protected from disclosure whether by production of documents or in oral evidence. This protection is part of the law of evidence. It has no direct relation to the question whether the communication itself constitutes a cause of action. Neither the solicitor nor the client need be party to the action in which the question of evidence arises. Also it matters not whether the action be for defamation, fraud Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 26 (subject to limitations to be discussed), breach of trust, breach of contract or otherwise; if the communication comes within the prescribed rule it is inadmissible in evidence. The object is no doubt to enable the persons concerned to communicate freely without fear of exposing themselves or other to actions. But the right to have such communications so protected is the right of the client only. In this sense it is a “privilege”, the privilege of the client. If the client chooses to withdraw the veil, the law interposes no further difficulty. The communications are then available as evidence. Once the communications have been admitted in evidence the second protection comes into force. This affects the question how far the communications can form part of a cause of action. They have become evidential; are they actionable? The protection here is limited. As far as I know it is confined to actions of defamation. I am not aware of any authority which would prevent a client from revealing communications made to him by his solicitor for the purpose of bringing an action of fraud, breach of trust, or negligence against him; just as the communications may, if disclosed by the client, be used as evidence in any actions by or against a third party. In actions of defamation, however, the communications are “privileged”. To what extent this protection goes is in dispute in this case. The defendant’s contention, relying on the recent decision of the Court of Appeal in More v. Weaver (1), is that the communications are absolutely privileged, so that no action of defamation can be brought upon them. The plaintiff’s contention is that the privilege is only a qualified privilege, i.e., that they receive only the ordinary protection of other confidential communications, namely, that the occasion on which they are made is a privileged occasion, and the plaintiff to succeed must prove express malice. The main question in this case is whether the words complained of were confidential communications between solicitor and client so as to be entitled to the twofold protection I have mentioned. The test for such protection has been defined in different words in a number of cases. I think that it is best expressed in two phrases used in the Court of Appeal Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 27 in the leading case of O’Shea v. Wood (11), LINDLEY, L.J. ([1891] P. at p. 289), adopts the language of COTTON, L.J., in Gardner v. Irvin (12), “professional communications of a confidential character for the purpose of getting legal advice.” KAY, L.J., at the same page refers to the language of KINDERSLEY, V.C., in Lawrence v. Campbell (13) (4 Drew. At p. 490), and adopted by SELBORNE, L.C., in Minet v. Morgan (14) (L.R. 8 Ch. At p. 368), communications passing as “professional communications in a professional capacity.” The lord justice prefers the former phrase, and emphasises the importance of the confidential character. As to this it is necessary to avoid misapprehension lest the protection be too limited. It is apparent that if the communication passes for the purpose of getting legal advice it must be deemed confidential. The protection of course attaches to the communications made by the solicitor as well as by the client. If, therefore, the phrase is expanded to professional communications passing for the purpose of getting or giving professional advice, and it is understood that the profession is the legal profession, the nature of the protection is, I think, correctly defined. One exception to this protection is established. If communications which otherwise would be protected pass for the purpose of enabling either party to commit a crime or a fraud the protection will be withheld. It is further desirable to point out, not by way of exception but as a result of the rule, that communications between solicitor and client which do not pass for the purpose of giving or receiving professional advice are not protected. It follows that client and solicitor may meet for the purpose of legal advice and exchange protected communications, and may yet in the course of the same interview make statements to each other not for the purpose of giving or receiving professional advice but for some other purpose. Such statements are not within the rule: See per LORD WRENBURY O’Rourke v. Darbishire (15) ([1920] A.C. at p. 629). Not all communications, therefore, passing between solicitor and client are protected. How is the question of protection from disclosure to be determined, when there is a dispute. It the judge admits the evidence of what was said or written he Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 28 destroys the protection; if he does not hear the evidence he cannot determine the dispute. It is necessary also to remember that this dilemma is presented for solution to the judge alone. The question is one of admissibility of evidence; and on all such questions it is for the judge to decide after hearing if necessary evidence on both sides bearing on any contested question of fact relevant to the question. Thus the question whether a confession is voluntary or a deposition admissible as a dying deposition are questions to be determined by the judge and not the jury. Cf. Bartlett v. Smith (16) (11 M. & W. at p. 486). Fortunately the procedure is settled by opinions expressed in this House which appear to me to be authoritative.”. [34] The Federal Court in Dato’ Anthony See Teow Guan v. See Teow Chuan [2009] 3 MLJ 14 ruled that to be a privileged communication under section 126 of the Evidence Act 1950, there must be a confidential nature in the communication such as legal advice or communication with a view to obtain legal advice. In the present appeal before us, the two impugned letters were not of a confidential nature or that the letters contained legal advice or were communication made to obtaining legal advice. The letter dated (25.2.2014) was a letter merely to inform the solicitors that the draft SPA was acceptable than and instructed a copy to be forwarded to the Defendant for his approval. Whereas, the letter dated 26.2.2014 was a letter from the solicitors informing the Plaintiff that the Defendant had finalised and signed the draft SPA and the memorandum of transfer. We therefore agreed with the learned counsel for the Defendant’s submission that the two letters were not confidential and cannot be privileged and ought to be admitted as evidence. Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 29 [35] In respect of the issue whether a binding contract had been concluded, the Plaintiff denied that it had been. The Plaintiff in their pleading denied that they had requested the legal firm to send the SPA duly signed by the Defendant to them. This is against the evidence given by their own witness in court. From the record, the Plaintiff’s witness, Hj Abdol Wahab Bin Baba (PW4), Deputy Chairman/Director of the Plaintiff had admitted that the Plaintiff had been informed and was aware that the Defendant had accepted the proposed terms of the SPA from the Plaintiff and that the Plaintiff’s solicitors had forwarded the finalised SPA to the Defendant (see pages 116-117 of the Appeal Record Volume 1). The final SPA was later signed by the Defendant and was sent to the Plaintiff’s solicitors together with the signed memorandum of transfer and the original copy of the title deed of the Land. [36] The Plaintiff held the view that the Letter of Intent dated 26.4.2013 and the Letter of Undertaking dated 29.7.2013 bound the parties. The Letter of Intent, inter alia, stated that the terms of the sale were subject to contract, the terms shall remain in force and effect upon the Defendant’s acceptance until a formal SPA was drawn up and signed and that the execution of the SPA was subject to approval of the Plaintiff’s Board of Directors and satisfactory valuation by the Plaintiff’s valuer. Whereas, the Letter of Undertaking issued by the Plaintiff and accepted by the Defendant stated, inter alia, that the deposit paid by the Plaintiff shall be deemed to be part of the purchase price upon execution of the SPA and that in the event the Plaintiff decided not to proceed with the execution of the SPA, the Defendant shall be entitled to forfeit RM1,040,000.00 from the deposit and the balance of RM4,160,000.00 shall be refunded to the Plaintiff. Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 30 [37] Clause 16 of the SPA is in the following terms: “This Agreement constitutes the only Agreement between the parties hereto and supersedes all previous negotiations, understanding, memorandum and/or contract both express and implied between the parties or commissioned estate or other agent, if any.”. [38] We agreed with the learned counsel for the Defendant that the contents of the Letter of Intent and the Letter of Undertaking had thus been superseded and no longer operative. Once the finalised SPA had been held binding on both parties, the Plaintiff could not any longer rely on the contents of the two letters. [39] The next question to ask is whether parties were bound by the finalised SPA even though the Plaintiff did not sign it. Was the Plaintiff permitted to decide not to proceed with the sale and purchase of the Land and whether the Plaintiff was estopped by their conduct from denying that there was a concluded and binding contract of sale over the Land between the Plaintiff and the Defendant. [40] We observed from the record that the Defendant throughout the negotiations and dealings before the finalised SPA was drafted dealt with either Encik Mohd Azhar Bin Abdullah, the CEO of the Plaintiff and/or with Datin Paduka Siti Sa’diah Binti Sheikh Bakir, Chairman of the Plaintiff. Yet the Plaintiff did not call these two material and important witnesses for reasons best known to them. On the other hand, the Plaintiff put the onus on the Defendant to call the two witnesses and for the failure to call them, the Plaintiff urged the learned trial Judge to invoke adverse inference under section 114(g) of the Evidence Act 1950 to which the learned trial Judge Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 31 agreed. We were of the considered view that the learned trial Judge erred on this issue. The learned trial Judge had misdirected himself in law and fact on this point. [41] We agreed that these two witnesses from the Plaintiff were the only two persons who could explain the reasons for them not to proceed with the finalised SPA at a very late stage. There was no explanation why these two material and important witnesses were not called by the Plaintiff. We are of the considered view that adverse inference under section 114(g) should be invoked by the learned trial Judge against the Plaintiff rather than against the Defendant. (see Deutsche Bank (Malaysia) Bhd v. MBF Holdings Bhd [2015] 6 MLRA 583, Perbadanan Kemajuan Negeri Kedah v. CBH Rubber Sdn Bhd [2016] 2 MLJ 215, and Narappan a/l Muthusamy v. R Sivam a/l Ramasamy [2014] 4 MLJ 428. [42] In Sarah Sayeed Majangah (t/a sole proprietor under the name and style of Sayfol International School) v. Lembaga Getah Malaysia [2016] 3 MLJ 812, it was held by this Court that there was a valid and enforceable lease agreement for the reasons that the contract prima facie was concluded by the first Defendant in a letter dated 10 September 2012 and that the parties had moved to an advanced stage fit for execution and had reached consensus ad idem well before 4 April 2013. [43] In Lim Keng Siong v. Yeo Ah Tee [1983] 2 MLJ 39, the appellant argued that the agreement to sell the Land was not binding until they signed and delivered the contract to the Respondent. The Federal Court in dismissing the appeal, held that: Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 32 “The incontrovertible facts which gave rise to the findings made by the learned Judge show very clearly that all the terms and conditions of sale necessary to conclude a contract had been agreed upon by the parties of March 3, 1976. There was no stipulation that the contract was not to be binding until execution of a formal contract, indeed to make the formal execution of the contract an essential condition for its conclusion.” [44] In Charles Grenier Sdn Bhd v. Lau Wing Hong [1996] 3 MLJ 327, the Federal Court through Gopal Sri Ram JCA held that: “Unless the approach we have stated is adopted, a party to a contract who ̶ ̶ after having concluded his bargain ̶ ̶ entertains doubts as to the wisdom of the transaction, may be in the unfairly advantageous position to invent all sorts of imaginary terms upon which disagreement may be expressed when the more formal document is being prepared in order to escape from his solemn promise. Businessmen would find the law to be a huge loophole and commerce would come to a virtual standstill. The law leans in favour of upholding bargains and not in striking them down willy-nilly, and its declared policy finds expression in the speech of Lord Wright in Hillas & Co v Arcos Ltd [1932] All ER Rep 494 where he said: Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is, accordingly, the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 33 so far as there are appropriate implications of law, as, for instance, the implication of what is just and reasonable to be ascertained by the court as matter of machinery where the contractual intention is clear but the contract is silent on some detail. This principle applies not only to documents drafted by laymen, but also to those prepared by lawyers (see Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] 129 CLR 99). We have examined the two letters that passes between the parties. We are unable to find that the parties intended that there should be no concluded contract until a formal sale and purchase agreement had been executed by them. On the contrary, we find their objective intention to be travelling in quite the opposite direction. They have identified the parties to the transaction with sufficient clarity. So too the property, the price and the terms they considered essential. Such an agreement is termed as an ‘open contract’. It is enforceable as if it was embodied in a document with all the attendant solemnity. In order to give it effect, the law will ̶ ̶ acting out of necessity (see Liverpool City Council v Irwin [1977] AC 239) ̶ ̶ imply terms into the contract for sale in order to make it work. See Rojasara Ramjibhai Dahyabhai v Tani Narottamdas Lallubhai [1986] 3 SCC 300, where it was held that there was to be implied in a contract for the sale of land, a covenant on the part of the vendor to do all things necessary to give effect to the agreement. Dr Geoffrey Cheshire in the 10th edition of his work, The Modern Law of Real Property, describes an open contract as follows: If contract for sale specifies merely the names of the parties, a description of the property and a statement of the price, it is called Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 34 an open contract. When this form of contract is made, the parties are bund by certain obligations implied by the law. The phrase ‘subject to the sale and purchase agreement’ relied on by counsel for the appellant does not, in our judgment, point to an intention that no contract was to come into existence until a formal sale and purchase agreement had been prepared and executed. Rather, it is, when read in the context of the correspondence and the objective aim of the transaction ̶ ̶ and this is how we read them ̶ ̶ indicative of an intention to merely formalize the agreement already concluded between the parties.”. [45] Back to the present appeal before us, we observed that the parties had already agreed on the terms of the final sale and purchase agreement. The finalised SPA was forwarded to the Defendant and had been duly signed by him. The Defendant had also signed the memorandum of transfer and had deposited the original title deed with the Plaintiff’s solicitors. The formal sale and purchase agreement was merely waiting to be signed by the Plaintiff but out of the blue some six months later the Defendant was informed that the Plaintiff did not wish to proceed with the sale and purchase of the Land. We were of the considered view that based on the facts of this case, there was a concluded and binding contract as between the parties. We agreed with the learned counsel for the Defendant that the learned trial Judge erred in law and in fact in not finding that a concluded and binding contract had been formed between the parties. [46] Therefore, we are of the view that the Plaintiff was estopped from denying that there was a concluded and binding contract for the sale and purchase of the Land. Our view is fortified by the Federal Court case of Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 35 Boustead Trading (1985) Sdn Bhd v. Arab-Malaysian Merchant Bank [1995] 3 MLJ 331 where Gopal Sri Ram JCA (as he then was) said: “Before we conclude on the law upon the subject at hand, there are two elements of the doctrine of estoppel which we think require clarification and restatement. The first concerns the effect which the representation or encouragement had upon the mind of the person relying upon the estoppel; the second has to do with the requirement that such a person should have acted to his detriment. The traditional view adopted by jurists of great learning is that a litigant who invokes the doctrine must prove that he was induced by the conduct of his opponent to act in a particular way. However, having undertaken a careful examination of the authorities, we are of opinion that this requirement is not an integral part of the doctrine. All that a representee (which term includes one who has received encouragement in the sense we have discussed earlier) need do is to place sufficient material before a court from which an inference may fairly be drawn that he was influenced by his opponent’s actings. Further, it is not necessary that the conduct relied upon was the sole factor which influenced the representee. It is sufficient that ‘his conduct was so influenced by the encouragement or representation …. that it would be unconscionable for the representor thereafter to enforce his strict legal rights’ (per Robert Goff J in Amalgamated Investment [1982] 1 QB 84 at p 105). Taking now the requirement of detriment, it is quite apparent that in the early development of the doctrine, there are to be found in the judgments of eminent judges statements indicating that one who relies upon an estoppel must prove that he relied upon his opponent’s conduct and in consequence acted to his detriment. And this view had found its way into the equity jurisprudence of Maloay9isa. (See, for example, Wong Fuat Eng v Then Thaw En & Anor [1965] 2 MLJ 213.) as has been seen, the former requirement, namely, that there ought to have been reliance Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 36 was exploded by the decisions in Amalgamated Investment, in Taylor Fashions, in Societe Italo-Belge (sub nom ‘The Post Chaser’) and Lim Teng Huan. We take this opportunity to declare that the detriment element does not form part of the doctrine of estoppel. In other words, it is not an essential ingredient requiring proof before the doctrine may be invoked. All that need be shown is that in the particular circumstances of a case, it would be unjust to permit the representor or encourager to insist upon his strict legal rights. In the resolution of this issue, a judicial arbiter would, when making his assessment of where the justice of the case lies, be entitled to have regard to the conduct of the litigant raising the estoppel. This may, but need not in all cases, include the determination of the question as to whether the particular litigant had altered his position, although such alteration need be to his detriment.”. [47] Based on the facts of the present appeal, we are of the view that the Plaintiff’s action in backing out of the sale and purchase agreement at a very late and advanced stage amounted to a repudiation of the contract. Section 2 of the Third Schedule of the SPA provides that:

2. Remedies of the Parties upon Default DEFAULT BY PURCHASER a. In the event of any default in the payment of the Payment of Balance of Purchase Price when the same shall become due and payable the Vendor shall be entitled to terminate this Agreement by 14 days written notice. Upon such termination of this Agreement, the Vendor shall be entitled to forfeit absolutely the sum of RM5,2000,000.00 as agreed liquidated damages. Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 37 [48] Therefore, we are of the view that the Defendant’s forfeiture of the deposit of RM5,200,000.00 as agreed liquidated damages was lawful and the Plaintiff’s action ought to have been dismissed with costs by the learned trial Judge. [49] We are now come to the final issue of wrongful caveat. The facts were not disputed that after deciding not to proceed with the sale and purchase of the Land, the Plaintiff proceeded to caveat the Land on 5.9.2014 and was registered on the title on 11.9.2014. We agreed that after claiming that there was no binding contract, the Plaintiff did not have any caveatable interest in the Land and therefore the caveat was wrongly entered. The Plaintiff’s caveat was removed by the Assistant Collector of Land Revenue, Kota Kinabalu on 2.6.2016, nearly 2 years after it was entered. The learned trial Judge erred in stating in his Ruling that the matter involving damages for wrongful caveat was under appeal and therefore it was premature to order for damages for the simple reason that there was no stay granted over the matter. Conclusion [50] Based on the above discussion and having examined the appeal record and perused the submissions of both parties, we held the view that the learned High Court Judge had failed to take cognisance of the vital facts and points of law raised by the Defendant in arriving at his decision which warranted an appellate intervention. We are also of the view that there was insufficient judicial appreciation of the evidence and the relevant law on the part of the learned trial Judge. Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 38 [51] Based on the aforesaid, we unanimously allowed the appeal with costs of RM60,000.00 here and below to be paid by the Plaintiff to the Defendant subject to payment of the allocator fee. Deposit to be refunded. The decision of the High Court was set aside and we allowed judgment to be entered on the counter claim except prayer 2 of the Defendant’s counter claim. We further ordered that the matter be remitted back to the High Court to assess the damages for prayer 3 of the counter claim for wrongful caveat. [52] We therefore ordered accordingly. Dated: 24 September 2018 signed (KAMARDIN BIN HASHIM) Judge Court of Appeal Malaysia Counsel/Solicitors For the Appellant/Defendant: Chung Jiun Dau Messrs Chung & Associates Lot No: 57, 2nd Floor, Block G Asia City Phase 1 B 88000 Kota Kinabalu SABAH Civil Appeal No: S-02(NCVC)(W)-1795-09/2017 39 For the Respondent/Plaintiff: Catherine S.P. Chau Messrs Catherine Chau & Associates Lot 9-1, 1st Floor, Block B Lorong Rampai, Taman Cantik Mile 3, Jalan Penampang 88200 Kota Kinabalu SABAH