Flowfuel Sdn Bhd v Harbans Singh A/L Sadhu Singh (BC-A52NCvC-17-07/2022)

Content

1 DALAM MAHKAMAH SESYEN DI AMPANG DALAM NEGERI SELANGOR DARUL EHSAN GUAMAN NO.: BC-A52NCVC-17-07/2022 ANTARA FLOWFUEL SDN BHD …PLAINTIF (NO. SYARIKAT: 908986-W) DAN HARBANS SINGH A/L SADHU SINGH …DEFENDAN

Schedule

Schedule A – Rental Payment Structure: Period Rental Amount March 2020 – Jan 2021 Free Feb 2021- Dev order approval RM 4,400 Within 6 months after DO approval RM 6,000 Following 2 years RM 9, 000 Next 1 year RM 11, 250 Every 3 years after that until 31 July 2035 increased by 5% [9] As for Lot 2, the defendant agreed to lease Lot 2 for 15 years. The key terms of the agreement are: i. Monthly rental is based on Schedule A; ii. RM 9,000 is paid as deposit, not treated as rental; iii. Condition Precedent (Clause 4) includes: a) State Authority/ third party consent (if required); b) Zoning approval (if needed); c) Development Order approval. iv. Registration of lease to be done by delivering Form 15A within 14 days. v. Termination applies in case of breach or non-compliance after remedy period.

Schedule

Schedule A – Rental Payment Structure: Period Rental Amount March 2020 – Feb 2021 Nil March 2021- Dev order approval Nil 2 years after approval RM 2,000 Following 2 years RM 3, 000 Following 1 year RM 3, 750 Every 3 years thereafter Increased by 5% [10] The plaintiff then obtained site approval from KPDNHEP in April 2021 after stamping both agreements. The plaintiff alleged that the defendant demanded to become a party to the development project, but the plaintiff refused his demand. The plaintiff then alleged that the defendant then denied signing the agreements and did not agree to the terms of the agreements upon the plaintiff’s refusal to make him a party to the development project. [11] The plaintiff alleged that the defendant failed to perform his obligations under both agreements, whereby the defendant failed to sign Form 15A and Form 15B of the National Land Code and to provide the necessary documentation for the registration of the lease. The plaintiff also alleged that the defendant had lodged a police report against him for fraud and forgery, making him unable to continue with the proposed development project. [12] The plaintiff alleged that both of the agreements are void due to the defendant’s failure to comply with the terms and conditions of the agreement. Therefore, all the deposits made must be refunded. The plaintiff filed this action seeking a declaration that the Sub-Lease Agreement for Lot 1 and the Lease Agreement for Lot 2 are null and void, and claims RM 96,000.00 be paid to the plaintiff for the loss he suffered, general damages and exemplary damages and costs. [13] The defendant, on the other hand, alleged that there were no formalised agreements between the parties. All he signed were draft agreements. The defendant admitted to have received RM 36,000.00 from the plaintiff as rent/security pending finalisation of the agreements. The defendant also alleged that on 4 March 2021, the plaintiff alleged the agreements existed when asked, but the Sub-Lease and Lease Agreements were back dated to 27 March 2021 and stamped after payment of the penalties. The defendant also alleged that his signatures on the agreements were not witnessed. [14] The defendant also alleged that the approval of the development site proposal was granted by the KPDNHEP on 7 April 2021, and he was sent the original stamped agreements on 14 April 2021. However, he alleged that on 3 May 2021, he received a letter informing him that the plaintiff was not agreeable to the latest proposal of the rental rates. He then lodged a police report on 10 May 2021. [15] The defendant also filed for a counter-claim for the loss of use of the land and sought for damages for the loss of use of the land from December 2019 for Lot 1 for the amount of RM 4,400.00 per month and continuing and also for the damages of the loss of use of the land from December 2019 for Lot 2 for the amount of RM 2,000.00 per month and continuing and costs. ANALYSIS AND FINDINGS [16] The issues to be determined in this case are as follows: i. Whether there is a valid and binding Sub-Lease and Lease Agreements between the parties; ii. Whether the defendant has breached any terms of the agreements; iii. Whether the plaintiff’s claim is sustainable and is entitled for the refund of deposit, damages and interest; and iv. Whether the defendant is entitled for his counter-claim for loss of use. [17] It is trite law that a valid agreement depends upon the intention of the parties and that for there to be an agreement the parties must be ad idem. The Supreme Court speaking through Edgar Joseph Jr, SCJ in the case of Ayer Hitam Tin Dredging Malaysia Bhd v. YC Chin Enterprises Sdn Bhd [1994] 2 MLJ 754 held as follows: “In Smith v Hughes it was said that the existence of an agreement depends upon the intention of the parties, and that for there to be an agreement the parties must be ad idem, ie there must be a consensus between them. But bearing in mind the familiar saying that a person’s beliefs or his state of mind are just as much facts as the state of his digestion or the existence of a tangible object, from what factors may the existence of an agreement be inferred? The authorities show that such inference must be drawn from the language the parties have used, their conduct, regard being had to the surrounding circumstances, and the object of the contract. In other words, in its task of ascertaining the intention of the parties, the court will, generally speaking, apply an objective test; more particularly, it will ask itself, what would the intention of a reasonable men be if they were in the shoes of the parties to the alleged contract. As clear and helpful an enunciation of the principles as any which should guide the court in determining the ever-recurring question of whether there has been a contract between the parties is provided by Saville J in Vitol BV v Compagnie Europeene des Petroles 2 at p 576 in the following words: The approach of the English laws to questions of the true construction of contracts of this kind is to seek objectively to ascertain the intentions of the parties from the words which they have chosen to use. If those words are clear and admit of only one sensible meaning, then that is the meaning to be ascribed to them – and that meaning is taken to represent what the parties intended. If the words are not so clear and admit of more than one sensible meaning, then the ambiguity may be resolved by looking at the aim and genesis of the agreement, choosing the meaning which seems to make the most sense in the context of the contract and its surrounding circumstances as a whole. In some cases, of course, having attempted this exercise, it may simply remain impossible to give the words any sensible meaning at all in which case they (or some of them) are either ignored, that is to say, treated as not forming part of the contract at all, or (if of apparent central importance) treated as demonstrating that the parties never made an agreement at all, that is to say, had never truly agreed upon the vital terms of their bargain.” [18] In Lee Nyok Hon & Brothers Sdn Bhd v Metro Charm Sdn Bhd [2010] 1 AMR 501 CA, Abdul Malik Ishak JCA in his judgment said the following: “Indeed, the ‘intention of the parties’ is always equated with the meaning of the contract (Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors (2004) 219 CLR 165). And Lord Simon of Glaisdale in L Schuler AG v Wickman Machine Tool Sales Ltd [1947] AC 235 at p 263 rightly applied the following pertinent passage in Norton on Deeds, (1906) at p 43: …the question to be answered always is, ‘What is the meaning of what the parties have said?’ not, ‘What did the parties mean to say?’ …it being a presumption juris et de jure… that the parties intended to say that which they have said.” [19] The intention of the parties to conclude the agreements is clear. All terms have been set out in the agreements and signed by the parties. From the evidence of the parties and the witnesses called, there is no mention of the disagreement over any terms upon signing the agreements. All terms have been concluded by the parties. According to the evidence of PW3, the defendant signed the agreements and had never informed him that he did not agree to the terms of the agreements. PW3, in his evidence, explained for the practicality purposes, he put his signature later as he trusted the plaintiff, PW2 and the defendant. PW3 had also explained why the stamping of the agreement was backdated. Therefore, it is the Court’s finding that the plaintiff and defendant have agreed to the terms when signing the agreements. In fact, it is clear from the evidence that the defendant himself admitted in his email dated 4 March 2021 that he had signed the agreements but had not been given a copy, and declared the agreements as null and void. When the defendant in his email requested for the stamped agreements and declared it null and void, it clearly shows that the stamped agreements are the final agreements and are not draft agreements. It is illogical for parties to sign an agreement and send it for stamping and suddenly claimed it is merely a draft and not a finalised agreement. A stamped agreement would mean that the agreement has been finalised and signed by the parties. The defendant had never denied signing the agreement and had agreed with the plaintiff’s solicitor that his signature was not forged. Therefore, it is clear that both parties have signed the agreements on the agreed terms. Payment of RM 36,000.00 as a deposit has also been made by the plaintiff and received by the defendant. The defendant had never denied receiving the money, but he alleged that the money was paid as rental. [20] It appears now, it is only after signing the agreements that the defendant has changed his mind and alleged that the agreements as draft agreements and declared it to be invalid. This is clearly an afterthought move by the defendant for the reasons he knows best. It is untenable for the defendant to contend that they had not agreed to the terms of the agreements when there is no evidence that he was still negotiating on the terms. This Court agrees with the plaintiff’s submission that there is no evidence to show that the defendant executed the draft agreements subject to the agreements being finalised. At the risk of repetition, it is illogical for the defendant to ask for the stamped copy of the agreements if it has not been finalised. It is therefore the Court’s finding that the two Sub-Lease and Lease Agreements signed by the parties to be valid and enforceable agreements. [21] The next issue to be decided is whether the defendant has breached any terms of the agreements. The terms of the agreements include the approval from the trustees of the Sikh Temple Tapah and the registration of the sub-lease. It is clear from the evidence that the defendant has failed to meet the conditions, i.e., failed to sign Form 15A and Form 15B of the National Land Code and failed to provide the necessary documentation for the registration of the sub-lease. As per the evidence of the plaintiff, the defendant has failed to ensure that the leases were endorsed and registered. This has not been denied by the defendant. [22] It is the Court’s finding that the evidence shows that the defendant did not fulfil the conditional terms of the agreement within the stipulated time. The defendant had, in fact, terminated the agreement via e-mail. The act of the defendant is in clear breach of the terms agreed between the parties, i.e., to get the consent from the Sikh Temple and to submit the documents for registration of the lease. [23] The next issue is whether the plaintiff’s claim is sustainable and is entitled for the refund of the deposit, damages and interest. The parties have not disputed that RM 36,000.00 had been paid by the plaintiff to the defendant. The RM 36,000.00, according to the plaintiff, was paid as a deposit for the Sub-Lease Agreement for Lot 1 which requires RM 27,000.00 to be paid as a deposit and RM 9,000.00 for the deposit of the Lease Agreement for Lot 2. The terms of the agreements also provide that the agreement shall be conditional upon the fulfilment of the condition precedent as provided in Clause 4.1, amongst others that the approval must be obtained from the trusteed of the Sikh Temple of Tapah for the sub-lease within six months. [24] Clause 4.3 of the Agreement clearly provides that in the event the conditions precedent is unfulfilled within the extended approval period, and the parties are unable to arrive at a mutually acceptable solution as evidences by a written agreement between the parties, this agreement shall be terminated by the parties in writing and the parties shall have no further claim against each other save and except for any right which any party may have against the other for any antecedent breach of this agreement. [25] It is the Court’s finding that the defendant has breached the terms of the agreement by failing to abide by the condition precedents. The defendant had also in his e-mail wrote to the plaintiff’s solicitor to terminate the agreement and declared the agreement to be null and void. On top of that, the defendant had also lodged a police report alleging fraud and/or forgery against the plaintiff, making the plaintiff unable to proceed with the contract. [26] Based on the reasons, the defendant is therefore obliged to refund the deposit of RM 36,000.00 to the plaintiff. This is also in accordance with section 66 of the Contracts Act 1950 which provides that when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it. The Federal Court case of Tan Chee Hoe & Sdn Bhd v Code Focus Sdn Bhd [2014] 3 MLJ 301 held that when a contract becomes void, the party who has received any advantage under the contract or agreement is bound to restore it to the person from whom he received it. Ramly Ali FCJ in his judgment said the following: “[55] Section 66 of the Contracts Act 1950 is clear on this point, that when a contract becomes void (as in the present case) the party who has received any advantage under the contract or agreement is bound to restore it to the person to whom he received it. The advantage to be restored under the section refers to the advantage that he had actually received from the other person. If the advantage received was in the form of 10% deposit of RM1.6m, that same advantage must be restored or refunded to the plaintiff. If that cannot be done for whatever reason, then the defendant is bound to make compensation for it – either one, not both. In this regard illustration (d) to s 66 is instructive: (d) A contracts to sing for B at a concert for RM1,000 which are paid in advance. A is too ill to sing. A is not bound to make compensation to B for the loss of profits which B would have made if A had been able to sing, but must refund to B the RM1,000 paid in advance.” [27] As for the damages claimed for the amount of RM 60,000.00; i.e. RM 16,805.00 for legal fees (agreement and stamping) and RM 43,195.00 for the arrangement costs, it is the Court’s finding that only RM 16,805.00 will be allowed based on the plaintiff’s and PW3’s evidence that the payment was made for legal fees for the preparation stamping of the agreements. It is the Court’s finding that the travelling costs and the expenses claimed by the plaintiff are not supported by any evidence. It is trite law that the special damages must be strictly proved. Therefore, the claim for RM 43,195.00 is dismissed. [28] Based on the aforesaid reasons, it is the Court’s finding on a balance of probabilities that the plaintiff has proven its case against the defendant. The plaintiff’s claim is hereby allowed for RM 36,000 for the refund of the deposit and RM 16,805.00 claim for legal fees with 5% interest per annum from the date of the judgment to the full settlement and costs. [29] As for the counter-claim filed by the defendant, on a balance of probabilities, it is the Court’s finding that the defendant has failed to prove its case against the plaintiff. The counter-claim is hereby dismissed with costs. [30] After hearing the parties’ submissions on costs, costs for both main suit and counter – claim are fixed at RM 10,000.00 Date: 23 April 2026. (Fadzlin Suraya binti Mohd Suah) Judge Sessions Court Ampang, Selangor Darul Ehsan.