Eontat Sdn. Bhd. (Co. No.: 620797-M) v Budget Kitchen Sdn. Bhd. (Co. No.: 736501-A) (BA-12BC-4-02/2020)

I will refer to parties as they are in the Sessions Court (SC).

By a letter dated 7.7.2014 [Defendant’s Letter (7.7.2014)] from the defendant company (Defendant) to the plaintiff company (Plaintiff), the Defendant had agreed to perform certain construction work with regard to two warehouses [“Warehouse A” and “Warehouse B” (referred collectively in this judgment as the “2 Warehouses”)] to be built for the Plaintiff on a piece of land (Land).

The Plaintiff filed this suit in SC (This Action) against the Defendant in respect of Warehouse B. In This Action, the Amended Statement of Claim had pleaded, among others, as follows:

the Plaintiff had informed the Defendant regarding the Plaintiff’s intention for the 2 Warehouses to be built so that the Plaintiff could let out the 2 Warehouses (Plaintiff’s Intention);

the Defendant confirmed that the Defendant understood the Plaintiff’s Intention by - 2

preparing a detailed “Bill of Quantities” (BQ) regarding, among others, piling works to be performed on the Land by the Defendant (Piling

sending the Defendant’s Letter (7.7.2014). According to the Defendant’s Letter (7.7.2014), among others, the Plaintiff agreed to pay the Defendant a sum of RM224,000.00 for the Defendant’s work with respect to Warehouse B;

after the Piling Works had been completed by the Defendant, the Plaintiff appointed a contractor, “Solid Steel Structure” (SSS), to erect the steel structure for the 2 Warehouses;

after the construction of the 2 Warehouses, the Plaintiff discovered the following defects regarding Warehouse B (Defects) -

the floor sank;

cracks appeared on the floor and walls;

the entire toilet structure slanted to one side;

the metal wall of the upper portion of Warehouse B slanted;

the water pipe burst and water had leaked. This had caused the Plaintiff to pay for a hefty water bill; and

the drainage pipe (through which rainwater from the roof of Warehouse B would flow to the drain) had been disconnected and this had caused rainwater to flow haphazardly onto the ground;

for Warehouse B, the Plaintiff had paid to the Defendant a total sum of RM196,200.00 and there was a balance amount of RM26,360.00 due from the Plaintiff to the Defendant; 3

the Plaintiff had complained many times about the Defects to the Defendant but to no avail;

the Plaintiff had let out Warehouse B to Jalur Megamas Sdn. Bhd. (Tenant) by way of a tenancy agreement dated 26.6.2015 but the Defects became worse. In early 2016, the Tenant terminated the tenancy agreement and vacated Warehouse B;

the Plaintiff’s solicitors sent a demand dated 14.12.2018 to the Defendant regarding the Defects [Plaintiff’s Demand (14.12.2018)]. According to the Plaintiff’s Demand (14.12.2018), among others, if the Defendant did not rectify the Defects, the Plaintiff would engage a third party contractor to remedy the Defects;

by way of a letter dated 7.1.2019 [Defendant’s Reply (7.1.2019)], the Defendant’s then solicitors, Messrs KC Ooi & Associates, denied the contents of the Plaintiff’s Letter (14.12.2018);

the Plaintiff appointed an expert from Red Consult Engineers Sdn. Bhd. (RCE) to investigate the cause of the Defects. According to RCE’s “Structural Assessment Report” (RCE’s Report), the foundation of Warehouse B was not sufficient to support the building. Hence, RCE’s Report recommended Warehouse B to be demolished and rebuilt; and

the Plaintiff had claimed for, among others, the following special damages from the Defendant -

the Plaintiff’s payment of RM196,200.00 to the Defendant for

the Plaintiff had paid SSS a sum of RM220,000.00 for the steel structure of Warehouse B (Steel Structure Cost); and

RCE’s professional fees amounting to RM18,500.00 (RCE’s Fees).

The following witnesses testified at the trial of This Action: 4

Mr. Eng Kong Keng (SP1), a director of the Plaintiff;

Ir. Ng Chung Hoe (SP2), a civil engineer who had prepared RCE’s Report; and

Mr. Ng Boon Hing (SD1), the Defendant’s director.

After a trial, the learned Sessions Court Judge, Puan Roszianayati Bt. Ahmad (SCJ), allowed This Action and adjudged as follows, among others (SC’s Judgment):

the Defendant shall pay to the Plaintiff a total sum of RM434,700.00 (SC’s Judgment Sum) which consists of the Plaintiff’s Payment, Steel Structure Cost and RCE’s Fees;

interest at the rate of 5% per annum on the SC’s Judgment Sum shall be paid by the Defendant to the Plaintiff from the date of SC’s Judgment until the date of full payment of SC’s Judgment Sum; and

“scale costs” of RM17,952.00.

The Defendant has appealed to this court against SC’s Judgment (This Appeal).

The following questions arise in This Appeal:

could the Defendant rely on a plan (which had only been marked at the trial of This Action for the purpose of identification as “ID20”) as evidence to support This Appeal?;

whether this appellate court should intervene regarding the following findings of fact by the learned SCJ (SC’s Factual Findings) -

the learned SCJ had accepted the expert opinion of SP2 regarding the cause of the Defects; and 5

the learned SCJ did not accept SD1’s testimony that the Defendant had constructed Warehouse B based on the Plaintiff’s instruction;

did the learned SCJ err in law when she decided that there was an implied term in the contract between the Plaintiff and Defendant (Contract) wherein the Defendant was bound by the Contract to do the Piling Works in such a manner that Warehouse B could be built so as be reasonably fit for occupation and use as a warehouse (Implied Term)? This issue discusses which of the following tests should be applied for the court to imply a contractual term -

the cumulative application of the “officious bystander” test and “business efficacy” test (2 Tests) as explained by Peh Swee Chin FCJ in the Federal Court case of Sababumi (Sandakan) Sdn Bhd v Datuk Yap Pak Leong [1998] 3 MLJ 151; or

Lord Hoffmann’s single test [whether a contractual term would be implied depends on what the contract, read against the relevant background, would reasonably be understood to mean (Single Test)] as decided in the following cases -

in a judgment of United Kingdom’s (UK) House of Lords in Investors' Compensation Scheme Ltd v West Bromwich Building Society and other cases [1998] 1 WLR 896 (Investors'

(ii) a judgment of the Privy Council delivered in Attorney General of Belize & Ors v Belize Telecom Ltd & Anor [2009] 2 All ER 1127 (AG of Belize’s Case);

if there was an Implied Term, did the Defendant breach the Implied Term?;

whether the Plaintiff’s failure to obtain “planning permission” from the “local planning authority” for the construction of Warehouse B under s 19(1) of the Town and Country Planning Act 1976 (TCPA), could invalidate the Contract under s 24(a) to (e) of the Contracts Act 1950 (CA); and 6

if the Defendant had breached the Implied Term, is there any ground for appellate intervention regarding SC’s Judgment Sum? C. Is ID20 admissible as evidence in this case?

The Defendant’s learned counsel, Mr. Devan A/L Narayanan Raman, had referred in his first and second written submission to ID20 as “exhibit P20”. According to Mr. Devan, SP1 had instructed the Defendant to construct Warehouse B based on ID20. Hence, the Defendant had completed the Contract based on ID20 (as instructed by the Plaintiff).

According to the Notes of Evidence in this case -

the Plaintiff’s learned counsel, Ms. Loo Hui Yee, had first referred ID20 to SP1 during SP1’s examination-in-chief. SP1 had testified that ID20 had been prepared by SP1’s architect friend named Mr. Tan; and

SP1 had been cross-examined by Mr. Devan on ID20.

I accept Ms. Loo’s contention that ID20 could not be relied on by both the Plaintiff and Defendant in this case. This is because neither the Plaintiff nor the Defendant had called Mr. Tan to prove the making of ID20. Hence, ID20 constituted documentary hearsay evidence which was not admissible as evidence - please refer to the judgment of Abdul Hamid Mohamad FCJ (as he then was) in the Federal Court case of Capital Insurance Bhd v Cheong Heng Loong Goldsmiths (KL) Sdn Bhd [2005] 4 CLJ 1, at 20, 21-25 and 28. D. Whether appellate court should set aside trial court’s findings of fact

In support of This Appeal, Mr. Devan has submitted as follows, among others:

the Defendant was a mere contractor who did the Piling Works based on the Plaintiff’s instructions; and 7

the Defendant did not prepare the design of Warehouse B. Instead, the Defendant had relied on ID20 as instructed by the Plaintiff (through SP1).

It is not disputed that an appellate court should not intervene regarding a trial court’s findings of fact, especially regarding findings on credibility of witnesses, unless there is a “plain error of fact” by the trial court which has caused an injustice and which warrants an appellate intervention - please see the judgment of Steve Shim CJ (Sabah & Sarawak) in the Federal Court case of Gan Yook Chin & Anor v Lee Ing Chin & Ors [2004] 4 CLJ 309, at 317-321. This is because an appellate court has no audio-visual advantage -

to listen to the oral evidence of witnesses given at the trial; and

to assess the demeanour of witnesses.

I am of the view that the learned SCJ did not make any plain error of fact with regard to SC’s Factual Findings [as stated in the above sub-paragraph 7(2)]. On the contrary, SC’s Factual Findings can be supported by the following evidence and reasons:

in paragraph 6 of the Agreed Facts (AF), both the Plaintiff and Defendant had agreed that the Defendant had prepared the first draft of the BQ [BQ (1st Draft)] which was later amended by the Defendant to be the final copy of the BQ [BQ (Final)]. Indeed, it was stated at the upper right hand corner of the BQ (1st Draft) and BQ (Final) that both these documents had been prepared by the Defendant (not the Plaintiff);

the Defendant could have easily stated in the BQ (Final) that the Piling Works were based on ID20 and/or the Plaintiff’s instruction;

the Defendant’s Letter (7.7.2014) was prepared by the Defendant on the Defendant’s own letterhead. The Defendant’s Letter (7.7.2014) did not state that - 8

the Piling Works to be performed by the Defendant were premised on ID20 and/or the Plaintiff’s instruction; and

the Defendant would not be liable in any manner to the Plaintiff with regard to the works to be performed by the Defendant under the Contract (Exclusion Clause). If the Defendant had inserted an Exclusion Clause in the Contract, the Exclusion Clause would have been valid as Malaysia has no legislation which is similar to the Unfair Contract Terms Act 1977 in UK;

as agreed in paragraph 4 AF, the Defendant is a company in the construction industry and is a building contractor. The records of “Suruhanjaya Syarikat Malaysia” regarding the Defendant stated that the Defendant is in the business of a “General and Building Contractor”. Unlike the Defendant, the Plaintiff is in the business of manufacturing custom-made furniture for office and home. Clearly, the Plaintiff is not in any position to provide any design, drawing, plan and/or instruction for the Piling Works to be carried out by the Defendant regarding Warehouse B;

when the Defendant was served with the Plaintiff’s Demand (14.12.2018), the Defendant’s Reply (7.1.2019) stated as follows - “We refer to [the Plaintiff’s Demand (14.12.2018)] to [the Defendant] who have instructed us to act for [the Defendant] and to reply to [the Plaintiff’s Demand (14.12.2018)]. … Our clients agree that sometime in early 2015 your clients did point out to our clients some defects but the defects were not as serious as listed in [the Plaintiff’s Demand (14.12.2018)] and it was agreed at the material time that your clients shall appoint a new contractor to do the remedial works with our clients forgoing the claim for the balance sum of RM40,000.00. Therefore it is unfair that after more than 3 years later your clients would now again choose to claim against our clients for 9 the defects when the defects became worse and your clients have failed to do proper remedial works since 2015. Our clients also deny that after meeting with your clients in 2015 they have received any requests or demands from your clients for rectification works as claimed in your aforesaid letter. We have been instructed to inform that by reason above, our clients are not responsible and deny any liabilities to your clients for the defects, if any.” (emphasis added). The Defendant’s Reply (7.1.2019) had been sent by the Defendant’s then solicitors and did not allude to the allegation that the Piling Works were completed by the Defendant based on ID20 and/or the Plaintiff’s instruction (Defendant’s Allegation). If the Defendant’s Allegation were true, the Defendant’s Reply (7.1.2019) would have raised the Defendant’s Allegation so as to rebut the contents of the Plaintiff’s Demand (14.12.2018). Consequently, as the Defendant’s Reply (7.1.2019) did not refer to the Defendant’s Allegation, it was clear that the Defendant’s Allegation was a mere afterthought which had been made solely to stifle unlawfully This Action; and

the learned SCJ has not committed any plain error of fact by accepting SP2’s expert opinion because -

the question of whether the Piling Works completed by the Defendant would provide a sound foundation for the subsequent erection of the steel structure and construction of Warehouse B [Adequacy (Piling Works)] was a matter which required expert evidence under s 45(1) of the Evidence Act 1950 (EA). In this regard, SP2 is an “expert” on the Adequacy (Piling Works) within the meaning of s 45(1) EA because SP2 is a qualified civil engineer who has practised as a civil engineer since SP2’s graduation from “Universiti Putra Malaysia” in the field of civil engineering. SP2 has also obtained his “Professional Engineer” status in 2009. It is to 10 be emphasised that SP2’s expertise on the Adequacy (Piling Works) had not been challenged by the Defendant during SP2’s cross-examination;

according to SP2’s expert testimony, premised on the BQ (Final), the Defendant only did Piling Works for Warehouse B at 19 points. SP2 opined that the Piling Works for Warehouse B was not adequate because due to the size of Warehouse B, it is “normal practice” to have 54 piling points (not 19 piling points as done by the Defendant for Warehouse B);

SD1 does not possess any qualification, training and experience in civil engineering regarding the Adequacy (Piling Works). Hence, SD1 is not an “expert” on the Adequacy (Piling Works) as understood in s 45(1) EA and SP2’s expert opinion could not therefore be rebutted by SD1’s evidence; and

before the trial of This Action, the Defendant had been served with RCE’s Report and yet, the Defendant did not call any civil or structural engineer to give an expert testimony to rebut RCE’s Report and SP2’s expert evidence. E. Was there an Implied Term?

Mr. Devan has relied on the Single Test as expounded by Lord Hoffmann as follows:

it is decided in Investors' Compensation Scheme, at p. 912-913 - “But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1384-1386 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way 11 in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of “legal” interpretation has been discarded. The principles may be summarised as follows.

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

The background was famously referred to by Lord Wilberforce as the “matrix of fact,” but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter 12 of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] AC 749.

The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] AC 191, 201: “if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.” ” (emphasis added); and

the following judgment was delivered in AG of Belize’s Case, at [16] - 13 “[16] Before discussing in greater detail the reasoning of the Court of Appeal, the Board will make some general observations about the process of implication. The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It is the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed: see [Investors' Compensation Scheme]. It is this objective meaning which is conventionally called the intention of the parties, or the intention of Parliament, or the intention of whatever person or body was or is deemed to have been the author of the instrument.” (emphasis added).

The Single Test has been approved by the following Malaysian cases:

in the Federal Court case of Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597, at [43], Gopal Sri Ram FCJ has decided as follows - “[43] … The most recent statement of the guideline to interpretation of contracts statutes and other instruments is to be found in [AG of Belize’s Case], where when delivering the advice of the board, Lord Hoffmann said: …” (emphasis added); 14

according to a judgment of the Federal Court delivered by Zainun Ali FCJ in SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464, at [27] and [28] - “[27] In recent times, the restatement of principles in the landmark case of [Investors Compensation Scheme] (‘ICS’) provides a helpful starting point for the consideration of the relevant principles. The judgment of Lord Hoffmann is as reproduced below, where His Lordship stated that: … [28] However, there are reservations to a wholesale adoption and approval of the ICS principles. The applicability of the second ICS principle, specifically vis-a-vis the question of the admissibility of extrinsic evidence including pre-contractual negotiations, is doubted. This has been alluded to in the recent judgment of this court in Menta Construction Sdn Bhd v Lestari Puchong [2015] 6 MLJ 633 for reasons that I will not repeat here. Save for this reservation, the remaining ICS principles are good law.” (emphasis added); and

in That’s Life Sdn Bhd v Dato’ Haji Ismail Bin Karim [2020] 5 MLJ 235 (That’s Life Case), at [32] and [33], Hasnah Hashim JCA (as she then was) in the Court of Appeal followed the above decisions in Berjaya Times Squares and SPM Membrane Switch.

In deciding whether a term should be implied in an agreement or not, the Federal Court has applied the 2 Tests in Sababumi, at p. 169-170, as follows: “Implied terms are of three types. The first and most important type is an implied term which the court infers from evidence that the parties to a contract must have intended to include it in the contract though it has not been expressly set out in the contact. … 15 Reverting to the first type of implied term which is dependent on a court drawing an inference as explained above, there are two tests to fix the parties with such an intention, ie that the parties must have intended to include such an implied term in the contract. The first test is a subjective test, as stated by MacKinnon LJ in Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 at p 227, that such a term to be implied by a court is 'something so obvious that it goes without saying, so that if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in the agreement, they would testily suppress his with a common "Oh, of course".' The second test is that the implied term should be of a kind that will give business efficacy to the transaction of the contract of both parties. The test was described by Lord Wright in Luxor (Eastbourne) Ltd & Ors v Cooper [1941] AC 108 at p 137, that in regard to an implied term, '… it can be predicated that "It goes without saying", some term not expressed but necessary to give the transaction such business efficacy as the parties must have intended'. Business efficacy in my opinion, simply means the desired result of the business in question. … Both tests in my opinion must be satisfied before a court infers an implied term. Thus, Lord Wilberforce in Liverpool City Council v Irwin & Anor [1977] AC 239 at p 254 spoke of an implied term as a matter of necessity, so that the element of 'business efficacy is inseparable'. Lord Simon of Glaisdale in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 16 ALR 363 described both tests as conditions the compliance of which the court must be satisfied, in addition to what I may describe as other requirements, of existing law. Closer to home, Chong Siew Fai J (as he then was) in Yap Nyo Nyok v Bath Pharmacy Sdn Bhd [1993] 2 MLJ 250 held that both tests must be satisfied. If the implied term was not necessary to give 16 business efficacy, the answer to the officious bystander, would have been a testy answer of 'Oh, don't talk rubbish'. The two tests referred to earlier are to enable the court to decide as to whether it should or should not infer that the implied term contended for is a term which parties to a contract must have intended to include in the contract.” (emphasis added).

I am of the respectful view that the 2 Tests should apply to decide whether a particular term can be implied in a contract. My reason are as follows:

the 2 Tests form the ratio decidendi in Sababumi. Until the Federal Court overrules the application of the 2 Tests in Sababumi, as a matter of stare decisis, I am bound by the Federal Court’s judgment in Sababumi;

the material facts of Berjaya Times Squares, SPM Membrane Switch and That’s Life Case (3 Cases) do not concern the question of whether a term should be implied in an agreement. Hence, the dicta expressed in the 3 Cases regarding the application of the Single Test is purely obiter. Furthermore, the 3 Cases did not refer to, let alone discuss, the 2 Tests as laid down in Sababumi;

the Single Test has not been followed by Lord Neuberger PSC in UK’s Supreme Court case of Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd & Anor [2016] AC 742. According to Lord Neuberger PSC in Marks and Spencer, at [22], [24] and [31] (concurred by Lord Sumption and Lord Hodge JJSC) - “[22] Before leaving this issue of general principle, it is appropriate to refer a little further to the Belize Telecom case, where Lord Hoffmann suggested that the process of implying terms into a contract was part of the exercise of the construction, or interpretation, of the contract. In summary, he 17 said at para 21 that “There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?” There are two points to be made about that observation. … [24] It is necessary to emphasise that there has been no dilution of the requirements which have to be satisfied before a term will be implied, because it is apparent that the Belize Telecom case [2009] 1 WLR 1988 has been interpreted by both academic lawyers and judges as having changed the law. … And in Foo Jong Peng v Phua Kiah Mai [2012] 4 SLR 1267, paras 34–36, the Singapore Court of Appeal refused to follow the reasoning in the Belize Telecom case at least in so far as “it suggest[ed] that the traditional 'business efficacy' and 'officious bystander' tests are not central to the implication of terms” (reasoning which was followed in Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] SGCA 43). The Singapore Court of Appeal were in my view right to hold that the law governing the circumstances in which a term will be implied into a contract remains unchanged following the Belize Telecom case. … [31] It is true that the Belize Telecom case [2009] 1 WLR 1988 was a unanimous decision of the Judicial Committee of the Privy Council and that the judgment was given by Lord Hoffmann, whose contributions in so many areas of law have been outstanding. However, it is apparent that Lord Hoffmann's observations in the Belize Telecom case, at paras 17-27, are open to more than one interpretation on the two points identified in paras 23-24 and 25-30 above, and that some of those interpretations are wrong in law. In those circumstances, the right course for us to take is to say that those observations should henceforth be treated as a characteristically inspired 18 discussion rather than authoritative guidance on the law of implied terms.” (emphasis added). I should point out that Lord Carnwath JSC has accepted the Single Test in Marks and Spencer, at [58]-[74]; and

the Court of Appeal in Singapore (its apex court) did not adopt the Single Test in the following two cases -

the judgment of Andrew Phang Boon Leong JA in Foo Jong Peng & Ors v Phua Kiah Mai & Anor [2012] 4 SLR 1267, at [29]-[36]; and

Sundaresh Menon CJ’s decision in Sembcorp Marine Ltd v PPL Holdings Pte Lte & Anor and another appeal [2013] 4 SLR 193, at [76] and [77].

Applying the 2 Tests as laid down in Sababumi, the learned SCJ did not err in law by deciding that there existed an Implied Term in this case. This is clear from the following reasons:

if an “officious bystander” was asked whether the Defendant as a party who had been appointed by the Plaintiff to do the Piling Works for the construction of Warehouse B, was obliged under the Contract to perform the Piling Works in such a manner that Warehouse B could be built so as be reasonably fit for occupation and use as a warehouse, the “officious bystander” would have answered unhesitatingly “of course”; and

it is necessary to give business efficacy to the Contract to have the Implied Term. If the Defendant did not perform the Piling Works in accordance with the Implied Term, Warehouse B could not be built and used by the Plaintiff (this was what had happened in this case).

The following High Court cases have implied terms in construction agreements: 19

Peh Swee Chin FCJ’s decision in Teh Khem On & Anor v Yeoh & Wu Development Sdn Bhd & Ors [1995] 2 MLJ 663, at 671-672;

the judgment of Suriyadi J in Hwa Chea Lin & Anor v Malim Jaya (Melaka) Sdn Bhd [1996] 4 MLJ 544, at 552; and

the decision of James Foong J (as he then was) in Dr Abdul Hamid Abdul Rashid & Anor v Jurusan Malaysia Consultants (sued as a firm) & Ors [1997] 3 MLJ 546, at 555-556. F. Did Defendant breach Implied Term?

In view of the existence of the Implied Term (as explained in the above paragraph 18), I am not able to accept the following submission by Mr. Devan:

no warranty had been provided by the Defendant to the Plaintiff regarding Warehouse B;

the Contract in this case was not a “Design and Build” agreement;

the Defendant did not do the earthworks, steelworks and roofing of Warehouse B (which were performed by third parties);

the Contract did not provide for the Defendant to do a soil test of the Land (Soil Test); and

the Plaintiff did not request the Defendant to do a Soil Test.

As correctly decided by the learned SCJ, the expert evidence of SP2 has proven on a balance of probabilities the Defendant’s breach of the Implied Term. G. Was Contract void for breaching TCPA?

Paragraphs 6 and 7 of the Amended Defence in This Action had pleaded that the Plaintiff did not obtain the necessary approval for the construction of Warehouse B. 20

I reproduce below the definitions of “development”, “local authority”, “local planning authority” and “planning permission” in s 2(1) as well as ss 19(1), 26(1)(b), 27(1), (8),

and 31(1) TCPA: “ "development" means the carrying out of any building, engineering, mining, industrial, or other similar operation in, on, over, or under land, the making of any material change in the use of any land or building or any part thereof, or the subdivision or amalgamation of lands; and "develop" shall be construed accordingly; … “local authority” means any city council, municipal council, municipality, district council, town council, town board, local council, rural board, or other similar authority established by or under any written law; … “local planning authority”, in relation to an area, shall be construed as provided in section 5 and, in relation to any land or building, means the local planning authority, as so construed, for the area in which the land or building is situated; … "planning permission" means permission granted, with or without condition, to carry out development; Prohibition of development without planning permission. 19(1) No person, other than a local authority, shall commence, undertake, or carry out any development unless planning permission in respect of the development has been granted to him under section 22 or extended under subsection 24 (3). … Offences relating to unauthorized development. 26(1) A person who, whether at his own instance or at the instance of another person - … 21

commences, undertakes, or carries out, or permits to be commenced, undertaken, or carried out, any development in contravention of section 19 or 20; … commits an offence and is liable, on conviction, to a fine not exceeding five hundred thousand ringgit or to imprisonment for a term not exceeding two years or to both and, in the case of a continuing offence, to a further fine which may extend to five thousand ringgit for each day during which the offence continues after the first conviction for the offence. Enforcement in the case of contravention of section 19. 27(1) This section shall apply where it appears to the local planning authority that any development has been or is being undertaken or carried out in contravention of section 19. …

If no application is made under subsection (3) within the time allowed or if the application is refused, the local planning authority shall serve on the owner, occupier, or the person who, in the opinion of the local planning authority, is carrying out the development, a notice in the prescribed form requiring any or all of them to comply, within the period specified in the notice or within such further period as the local planning authority may allow, with such requirements, to be specified in the notice, as the local planning authority thinks fit in order that the land be restored as far as possible to the condition it was in before the development was commenced.

Subject to subsection (10), any person who fails to comply with any requirement of a notice under subsection (2) or (8) within the period allowed commits an offence and is liable, on conviction, to a fine not exceeding one hundred thousand ringgit or to imprisonment for a term not exceeding six months or to both and to a further fine which may extend to five thousand ringgit for each day 22 during which the failure is continued after the first conviction for the offence. Execution by authorized person 31(1) If any requirement of any notice served under any of the provisions of sections 27, 28, 29 and 30, other than a requirement to discontinue any development or activity, is not complied with within the period specified in the notice or within any further period that may have been allowed by the respective local planning authority, an authorized person may, with or without workmen, enter upon the land to which the notice relates and take such steps as may be necessary to execute the notice, including the demolishing or altering of any building or works and the removal of any goods, vehicles, or things from any building or from the land.” (emphasis added).

Section 24 CA states as follows: “24 What considerations and objects are lawful, and what not The consideration or object of an agreement is lawful, unless -

it is forbidden by a law;

it is of such a nature that, if permitted, it would defeat any law;

it is fraudulent;

it involves or implies injury to the person or property of another; or

the court regards it as immoral, or opposed to public policy. In each of the above cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.” 23 (emphasis added).

Section 19(1) TCPA provides that no person shall “commence, undertake, or carry out” any “development” [as defined in s 2(1) TCPA] unless the person has obtained “planning permission” [as understood in s 2(1) TCPA] from the “local planning authority” [defined in ss 2(1) and 5(1) TCPA to mean the local authority].

If “planning permission” has not been obtained for any “development” on a piece of land and the development has been carried out, the following four consequences (4 Consequences) may arise:

a breach of s 19(1) TCPA amounts to an offence which is punishable under s 26(1)(b) TCPA - please refer to Everest Aisvaram Sdn Bhd v Majlis Bandaraya Shah Alam [2020] 9 MLJ 545, at [47];

the local authority may issue a notice pursuant to s 27(1) and (8) TCPA to the following persons -

land owner;

occupier of the land; and/or

the person who, in the opinion of the local planning authority, is carrying out the development on the land - to reinstate the land “as far as possible to the condition it was in before the development was commenced” [Local Authority’s Section 27(8) Notice] - Everest Aisvaram, at [48];

failure to comply with a Local Authority’s Section 27(8) Notice is tantamount to an offence which is punishable under s 27(9) TCPA - Everest Aisvaram, at [49]; and

by virtue of s 31(1) TCPA, the local authority may enter the land and demolish the building in question. 24

I am of the view that the Plaintiff’s failure to obtain planning permission for the construction of Warehouse B does not invalidate the Contract because -

there is nothing in TCPA which prohibits the making of a contract to erect any building on a piece of land. I cite the following judgment of Mahadev Shankar JCA in the Court of Appeal case of YK Fung Securities Sdn Bhd v James Capel (Far East) Ltd [1997] 2 MLJ 621, at 667 - “Whether the contracts were illegal or otherwise is a matter for this court to decide. The trial judge found as a fact that these contracts were valid because prior to the KLSE circular, there was nothing in the KLSE rules prohibiting such contracts. We agree. We would go further and state that what the law does not specifically prohibit, it permits.” (emphasis added);

the Plaintiff’s failure to obtain planning permission for the construction of Warehouse B only attracts the 4 Consequences which do not invalidate the Contract; and

as explained in the above sub-paragraphs (1) and (2), the Contract in this case does not fall within any one of the paragraphs (a) to (e) of s 24 CA because -

the Contract is not forbidden by TCPA;

the Contract is not of such a nature that, if permitted, the Contract would defeat TCPA;

the Contract is not fraudulent;

the Contract does not involve or imply injury to any person or property; or 25

the court does not regard the Contract as immoral or opposed to public policy. H. Should there be appellate intervention regarding SC’s Judgment Sum?

It has been decided in Asia File Products Sdn Bhd v Brilliant Achievement Sdn Bhd & Ors [2019] 2 AMR 908, at [14], as follows: “[14] As an appellate court hearing This Appeal under O 56 r 1(1) RC, I adopt the following approach:

as a general rule, an appellate court is reluctant to intervene in respect of a lower court’s assessment of compensatory damages - please see Mohamad Ariff J’s (as he then was) judgment in the Court of Appeal in Goo Sing Kar v Dato’ Lim Ah Chap & Ors [2013] 3 MLJ 374, at paragraphs 29-31 (assessment based on an undertaking to pay damages regarding ex parte injunctions); and

exceptionally, an appellate court may only set aside a subordinate court’s quantification of compensatory damages if -

the lower court has acted on a wrong principle of law; or

the subordinate court has awarded an amount of compensatory damages which is so extremely high or so extremely low and this sum constitutes an entirely erroneous estimate of compensation to which a plaintiff is entitled - please see Edgar Joseph Jr FCJ’s judgment in the Federal Court case of Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777, at 799 (assessment of damages for breach of contract).” (emphasis added). 26

In this case, the Defendant’s Reply (7.1.2019) had admitted the existence of the Defects. Furthermore, in view of the Defects, the Defendant had waived its right to claim from the Plaintiff the balance of payment due from the Plaintiff to the Defendant - please refer to in the Defendant’s Reply (7.1.2019).

I am of the view that there should not be any appellate intervention regarding SC’s

the learned SCJ had correctly applied s 74(1) CA in arriving at SC’s Judgment Sum. Mr. Devan has not persuaded me that the SC had committed any error of law in respect of the quantification of SC’s Judgment Sum; and

the SC’s Judgment Sum was not so extremely high which constituted an entirely erroneous estimate of compensation to which the Plaintiff was entitled. I. Outcome of This Appeal

Premised on the above evidence and reasons, This Appeal is dismissed with costs. WONG KIAN KHEONG Judge High Court of Malaya Shah Alam, Selangor Darul Ehsan DATE: 2 APRIL 2021 Counsel for Appellant: Mr. Devan A/L Narayanan Raman (Messrs Devan & Associates) Counsel for Respondent: Ms. Loo Hui Yee (Messrs TS Teoh, Anthoa & Co)