Lee Yoon Fah dan 1 Lagi v Vintage Forest Sdn Bhd (NO.B-02(NCVC)(W)-805-04/2018)

LEE YOON FAH (No. KP: 571016-10-6109)

CHEW KUI TONG (No. K/P: 620524-01-5607) .…PERAYU-PERAYU DAN VINTAGE FOREST SDN BHD (No. Syarikat: 925839-V) .…RESPONDEN [Dalam Perkara Guaman Sivil No. 22NCVC-665-12/2015 Dalam Mahkamah Tinggi Di Shah Alam] Antara Vintage Forest Sdn Bhd (No. Syarikat : 925839-V) .…Plaintif Dan 1. Lee Yoon Fah (No. KP: 571016-10-6109) …Defendan Pertama

Chew Kui Tong (No. K/P: 620524-01-5607) …Defendan Kedua 2 CORAM: TENGKU MAIMUN BINTI TUAN MAT, JCA (now CJ) MARY LIM THIAM SUAN, JCA HASNAH BINTI DATO’ MOHAMMED HASHIM, JCA JUDGMENT OF THE COURT Introduction [1] This was an appeal by the appellant (the defendant in the court below) against the decision of the High Court in allowing the respondent’s (the plaintiff’s) claim and in dismissing the appellant’s counterclaim. For the reasons set out below, we had unanimously dismissed the appeal. In this judgment, parties will be referred to as they were in the High Court. Background [2] The defendants are the joint registered proprietors of a plot of land known as Lot 3096, Mukim Lenggeng, Daerah Seremban, Negeri Sembilan, held under Geran No. 75427 (“the said land”). [3] Vide a sale and purchase agreement dated 26.12.2012 (“the SPA”), the plaintiff agreed to purchase the said land for a total consideration of RM3,461,625.00 payable in accordance with the terms of the SPA. The said land was unencumbered save for the legal charge by Public Bank Berhad (“the charge”). 3 [4] Prior to the SPA, the defendants had given a grant of easement dated 15.7.2011 to one Chen Chin Sang (“the easement holder”) wherein the easement holder was given certain easement rights of way over the said land, subject to the conditions stipulated in the grant of easement. [5] The easement holder’s rights were referred to in Recital C of the SPA and the grant of easement was attached as an annexure to the SPA. By clause 5 of the SPA, it was stipulated that the easement is binding on the plaintiff. [6]

20.12.2012 A sum of RM346,162.50 was paid to the defendants as deposit and part-payment of the purchase price.

18.3.2013 A sum of RM495,000.00, being the redemption sum to redeem the said land from the chargee, was paid to the defendants’ solicitors as part-payment of the purchase price. Pursuant to this redemption, the charge was discharged.

18.4.2013 The balance purchase price of RM2,620,462.50 was paid to the defendants’ solicitors as stakeholders as required under Clause 2.0 of the SPA. 4 [7] Despite the full payment of the purchase price and the signed Memorandum of Transfer (“MOT”) and all other relevant documents for the registration of the MOT being in the custody of the plaintiff’s solicitors, the SPA could not be completed and the transfer of title could not be effected to the plaintiff due to the easement holder’s caveat on the said land, which was lodged on 4.3.2013. [8] Vide letters dated 26.4.2013, 29.04.2013 and 12.06.2013 to the defendants’ solicitors, the plaintiff’s solicitors requested for the defendants to remove the caveat so that the plaintiff could register the MOT. [9] In reply to the plaintiff’s letters, the defendants, by their letter dated 21.6.2013 stated that they will ‘endeavor our level best to remove the third party’s caveat as expeditiously as possible so that the Sale and Purchase Agreement can be completed soonest’. [10] The defendants then via their solicitors’ letter dated 3.7.2013 notified the easement holder that if he does not remove the easement holder’s caveat by 5.7.2013, the defendants would institute legal proceedings to have the said caveat removed. The defendants took the stand that the easement holder had not complied with the terms of the grant of easement and explicitly stated in their said solicitors’ letter that the easement holder was “devoid of any caveatable interest”. [11] The easement holder’s solicitors replied on 5.7.2013, insisting that the easement rights contained in the grant of easement must be registered in favour of the easement holder for the following reasons: 5 a) Form 17A of the National Land Code to register the easement was executed by parties as far back as July 2011, i.e. about the time when the grant of easement was executed; and b) The defendants’ refusal to return the duly registered Form 17A despite many reminders by the easement holder’s solicitors led the easement holder to enter the caveat to protect his interest. [12] By a letter dated 14.8.2013, the defendants wrote to the plaintiff’s solicitors as follows: “We have our client’s instruction to inform you that since the caveator is willing to remove the caveat on condition that grant of easement (as provided in the SPA) is registered, to expedite and facilitate the presentation and registration of your client as the owner, our client is prepared to cooperate and have the easement registered”. [13] In its response by way of a letter dated 16.8.2013, the plaintiff stated among others that the registration of the easement holder’s interest is irrelevant to the completion of the SPA. [14] By their letter dated 30.8.2013, the defendants reiterated that they had no objections to the registration of the easement holder’s interest. 6 The First Suit - Originating summons No. 1724 [15] On 28.10.2013, the plaintiff filed an Originating Summons No. 24NCVC-1724-10/2013 (“OS 1724”) against the defendants and the easement holder. The primary issue in OS 1724 was whether the easement holder had a registrable interest on the land. [16] The gist of the plaintiff’s complaint against the easement holder in OS 1724 was that there was inordinate delay on the part of the easement holder in lodging the caveat and that the easement holder had breached the easement agreement. As against the defendants, the plaintiff’s claim in OS 1724 was for an order of specific performance of the SPA, in the context of the defendants’ refusal to take any steps to have the easement holder’s caveat removed so that the transfer could be registered; as the full purchase price had been paid. [17] In opposing OS 1724, the defendants contended that:

it was not their obligation to register the interest of the easement holder or to remove the easement holder’s caveat in order to complete the SPA;

(ii) the defendants at all material times were ready to complete the SPA as the easement holder was prepared to withdraw his caveat on condition that his easement rights are registered; and

(iii) it was the plaintiff who refused to register the easement holder’s right of way on the said land. 7 [18] The defendants counterclaimed against the plaintiff for damages for an alleged breach of contract premised on the following grounds: a) that the plaintiff refused to comply with the terms of the easement agreement; b) that the plaintiff failed to release the balance purchase price of RM2,629,462.50 to the defendants; and c) that the defendants were deprived of their right to enjoy the fruits of the sale which was, and still is, kept in the plaintiff’s solicitors account as stakeholders. [19] The defendants also counterclaimed against the easement holder on the following grounds: a) the easement holder’s caveat was entered in bad faith after the SPA was executed; and b) as a result of the caveat, the plaintiff refused to allow the release of the balance purchase price to the defendants. [20] On 24.6.2014, the High Court dismissed OS 1724 and the defendants’ counterclaim against the plaintiff and the easement holder on inter alia, the following grounds: a) the easement holder has a claim to a registrable interest in the said land under section 321(1)(a) of the NLC and thus has a caveatable interest; b) the easement holder did not sit on his rights; c) the caveatable interest of the easement holder discloses serious questions to be tried; 8 d) the easement was binding on the plaintiff. The High Court noted that the defendants were ready, able and willing to forward the duly executed Form 17A so that the easement may be registered; e) the plaintiff was not entitled to an order of specific performance as it will have to take its interest subject to the easement rights of the easement holder; and f) the defendants’ counterclaim against the plaintiff and the easement holder ought to be dealt with by way of a writ action. The defendants were granted leave to file a separate writ action in respect of the counterclaim. [21] Aggrieved with the decision of the High Court in OS 1724, the plaintiff appealed to this Court. [22] The defendants, on the other hand, took the view that by the High Court’s decision in OS 1724, “the SPA was rendered null and void and of no further effect”. The defendants sought the plaintiff’s undertaking to return all the relevant documents, whereupon the defendants would then refund the purchase price. [23] The plaintiff disagreed with the defendants’ position. It contended that the defendants had wrongfully repudiated the SPA and refused to accept the defendants’ repudiation of the SPA. 9 [24] By way of three cheques, the defendants proceeded to refund the full purchase price of RM3,461,625.00 to the plaintiff. The plaintiff returned the three cheques, and stood by its position that the SPA is subsisting. [25] On 10.3.2015, this Court dismissed the plaintiff’s appeal against the High Court’s decision in OS 1724. The plaintiff decided to accept the decision of the High Court and to have the easement holder’s interest registered and to proceed with the transfer of ownership. By a letter dated 18.6.2015, the plaintiff requested the defendants to forward the duly executed Form 17A of the NLC to register the easement holder’s interest. [26] Purporting to rely on this Court’s decision in dismissing the plaintiff’s appeal, the defendants by their solicitors’ letter dated 29.6.2015 terminated the SPA. The defendants again attempted to refund the full purchase price by way of three cheques. [27] The plaintiff contended that the defendants’ reliance on this Court’s decision to terminate the SPA was misconceived and misplaced. The plaintiff returned all three cheques and retained all the documents to effect the transfer of the said land pending the defendants’ fulfilling their obligation to deliver a duly executed and stamped Form 17A. [28] As no reply was forthcoming from the defendants, the plaintiff on 19.10.2015 forwarded two copies of Form 17A for the defendants’ execution which were to be returned within 10 days. 10 [29] By a letter dated 28.10.2015, the defendants stated that they were not required to comply with the plaintiff’s demand as they had terminated the SPA, resulting in the plaintiff filing the present suit. The Present Suit [30] In the present suit, the plaintiff’s claim against the defendants was for inter alia, a declaration that the said SPA is valid and not null and void, an order of specific performance, an order that the defendants do execute a valid and registrable grant of easement (Form 17A) of the said land to the third party and for the defendants to deliver Form 17A to the plaintiff and/or the plaintiff’s solicitors for their onward transmission to the third party and/or the third party’s solicitors. [31] The defendants resisted the plaintiff’s claim. In their defence and counterclaim, the defendants alleged that the plaintiff had breached the SPA, by among others, refusing to comply with the agreement and by failing to allow the release of the balance purchase price of RM2,620,462.50. The defendants prayed for a declaratory relief that the SPA was null and void in line with the High Court and this Court’s decision on 24.6.2014 and 10.03.2015 respectively and for the plaintiff to return all the relevant documents in relation to the transfer of the said land. [32] The plaintiff then filed an application for summary judgment for a decree of specific performance, whilst the defendants applied to strike out the plaintiff’s claim. 11 [33] The High Court dismissed the plaintiff’s application for summary judgment and allowed the defendants’ application to strike out the plaintiff’s claim primarily on the grounds of res judicata. Against both decisions of the High Court, the plaintiff appealed to this Court. [34] This Court allowed the plaintiff’s appeal against the striking out and remitted the matter for trial with directions that the following issues be determined:

whether the plaintiff has breached the SPA entitling the defendants to terminate the SPA;

(ii) whether the plaintiff is entitled to specific performance of the SPA, and if so, whether the defendants are required to register the interest of the easement holder by executing Form 17A; and

(iii) whether the plaintiff’s claim is barred by res judicata. [35] After a full trial, the learned High Court judge held that the specific issues in OS 1724 and the present suit were different and that the doctrine of res judicata did not apply. In arriving at such finding, the learned trial judge applied a contextual approach by comparing the present suit and the relief sought herein, with OS 1724. [36] The learned trial judge found that in OS 1724, the primary issue revolved around the easement holder’s rights, namely whether the plaintiff was entitled to a decree of specific performance, disregarding the easement holder’s rights and interest, whereas, the issues in the present case were whether the plaintiff had breached the SPA and whether the defendants were 12 entitled in law to terminate the SPA. The learned judge also found that the reliefs sought in OS 1724 and in the present suit were different. In respect of OS 1724, the plaintiff sought for, inter alia, a declaration that the easement holder has no interest in the land and an order of specific performance of the SPA on that basis. While in the present suit, the plaintiff sought for an order of specific performance of the SPA based on the purported termination by the defendants and to enforce the SPA in light of the High Court’s pronouncement in OS 1724 that the plaintiff must take its interest subject to the easement rights of the easement holder. [37] The learned trial judge held that the plaintiff had not breached the SPA and that the easement holder’s right was no longer an issue in the present suit as the plaintiff had accepted the decision of the High Court in OS 1724 that was affirmed by this Court. The High Court noted that the plaintiff was prepared to complete the SPA by registering the easement holder’s interest and that it was the defendants who had chosen to terminate the SPA in reliance of the High Court and this Court’s decision in OS 1724. [38] The learned judge further held that the defendants failed to prove their counterclaim. In so deciding, the learned trial judge stated that the defendants’ decision to terminate the SPA was ostensibly done solely on the basis of the decisions of the High Court and this Court in OS 1724 and not because of the matters as pleaded by the defendants in their counterclaim, such as the plaintiff’s alleged refusal to comply with the easement agreement and the plaintiff’s failure to allow the release of the balance purchase price of RM2,620,462.50. Moreover, the defendants had also failed to prove the 13 loss that they had allegedly suffered as a result of the plaintiff’s alleged breaches of the SPA. [39] The plaintiff’s claim was consequently allowed and the defendants’ counterclaim was dismissed. Hence, the appeal before us. THE APPEAL [40] Before us, learned counsel for the defendants canvassed the following three grounds of appeal:

whether the plaintiff’s present suit is barred by the doctrine of res judicata;

(ii) whether the defendants were ready, willing and able to complete the said SPA and is now estopped from stating otherwise; and

(iii) whether the defendants received the full purchase price and thus are mere trustees. [41] For brevity, we do not wish to set out the submission of the respective parties. Suffice to state that it was argued for the defendants that the learned judge has misapplied and misstated the principle of res judicata and that the learned judge erred in failing to consider that the defendants were eager to conclude the SPA even before the plaintiff filed OS 1724. [42] In urging the Court to dismiss the defendants’ appeal, learned counsel for the plaintiff submitted that the learned judge committed no appealable error to warrant our appellate intervention. 14 Our Decision [43] It is a trite principle of law that an appellate court will not readily interfere with the findings of fact arrived at by the court of first instance to which the law entrusts the primary task of evaluation of the evidence. And that we are only under a duty to intervene in a case where a trial court has so fundamentally misdirected itself, that one may safely say that no reasonable court which had properly directed itself and asked the correct questions would have arrived at the same conclusions (see Gan Yook Chin

(P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1; Sivalingam a/l Periasamy v Periasamy & Anor [1995] 3 MLJ 395). [44] In Watt or Thomas v Thomas [1947] AC 484, Lord Thankerton, at pp 487-488, had stated thus on the duty of the appellate court: “…the principle embodied therein is a simple one, and may be stated thus: I. Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge’s conclusion; II. The appellate court may take the view that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence; III. The appellate court, either because the reasons given by the trial judge are not 15 satisfactory, or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court. It is obvious that the value and importance of having seen and heard the witnesses will vary according to the class of case, and, it may be, the individual case in question.”. [45] We have examined the grounds of judgment of the learned trial judge with the above principles in mind. On res judicata, the learned judge had applied the correct approach by examining OS 1724 and the underlying proceedings in determining and concluding that the doctrine of res judicata does not apply in the circumstances of this case. The learned judge had identified with precision the issues that have been decided in OS 1724 and the issues to be determined and the relief sought in the present suit before coming to the conclusion that OS 1724 and the present suit are two different and distinct proceedings. His Lordship noted that in the present suit, the plaintiff is seeking relief based on a completely different factual matrix, as seen from the relevant portion of his judgment reproduced below: “[34] The primary issue in OS 1724 was whether the Easement Holder had a registrable interest to maintain the Easement Holder’s Caveat. It was in this context that the Plaintiff’s claim for specific relief was dismissed. The factual circumstances in which the present suit has been framed is completely different. The Plaintiff is prepared to register the rights of the Easement Holder. 16 The question now is whether the Plaintiff has breached the SPA and whether the Defendants are entitled in law to terminate the SPA. The issue of whether the SPA had been breached by the Plaintiff was never considered in OS 1724. Neither did the court in OS1724 consider whether the SPA is void. Hence, the specific issues in OS1724 and the present suit are very different and the doctrine of res judicata does not apply.”. [46] We agreed with the learned judge and we found that His Lordship was correct in his evaluation of the facts and the application of the law. Suffice if we refer to the judgment of this Court in the case of HLE Engineering Sdn Bhd v HTE Letrik Bumi JV Sdn Bhd [2015] 2 MLJ 661, where at pg 665, Abang Iskandar bin Abang Hashim JCA (as he then was) said, with which we respectfully endorse: “[12] … in deciding whether a matter is caught by res judicata, the earlier judgment must with precision, determine the point in issue. Support for this proposition can be found in the decision of the Court of Appeal in the case of Farlim Properties Sdn Bhd v Goh Keat Poh & Ors And Other Appeals [2003] 4 MLJ 654; [2003] 4 CLJ 505 where it was held as follows: When the plea of res judicata is raised, it is necessary to identify with precision the issue that was decided in the earlier proceeding. In other words, the earlier judgment must, necessarily and with precision, determine the point in issue.”. 17 [47] The learned judge found that there was no breach of the SPA on the part of the plaintiff. The learned judge gave reasons for such finding and we found that the following findings were not perverse and were supported by evidence: “[37] I do not find any breach of the SPA on the part of the Plaintiff. The Plaintiff had merely sought declaratory and specific relief from the High Court in OS1724 on grounds that the Grant of Easement does not bind it. When the High Court found otherwise and held that the Plaintiff must take its interest subject to that of the Easement Holder, the Plaintiff was ready to accept that and proceed with the SPA in accordance to the High Court’s pronouncement. The Defendants’ sole justification for their change in position is the High Court and the Court of Appeal decision. But neither in these decisions did the courts find that the Plaintiff had breached the terms of the SPA or that the SPA had become void. I agree with the submissions of learned counsel for the Plaintiff that the High Court’s refusal in OS1724 to grant specific performance does not in itself render the SPA null and void. The discretion to grant specific performance depends on the facts and circumstances of each case. In OS1724, the court refused to grant specific performance as the interest of the Easement Holder had to be taken into account and not because the Plaintiff had breached the terms of the SPA. …”. [48] We found no appealable error on the part of the learned judge in exercising his discretion in granting the specific performance of the SPA. His Lordship had taken into consideration – 18

the fact that the plaintiff is the beneficial owner of the said land and enjoys all the rights and privileges as the legal owner and has full proprietary rights that can be enforced against the world at large as the plaintiff has paid the full purchase price of the said land; and

(ii) the fact that the plaintiff is ready, able and willing to complete the SPA in accordance with the decision of the High Court and this Court in OS 1724. [49] On the defendants’ allegation that the plaintiff has breached the SPA by failing to allow the release of the balance purchase price of RM2,620,462.50, the learned judge noted that this matter was not raised when the defendants terminated the SPA. The learned judge further noted that the defendants have not explained in evidence nor in their pleadings as to the loss that they have suffered as a result of the plaintiff’s alleged breaches of the SPA, and hence concluded that the defendants have failed to establish their counterclaim. Conclusion [50] In light of all the above, we were not persuaded by the defendants’ arguments that the learned judge erred in his decision. The learned trial judge had come to his decision correctly on the basis of the relevant law. There was sufficient evidence to justify His Lordship’s decision, which justification we found to be satisfactory. The learned judge has not fundamentally misdirected himself as to warrant appellate intervention. To 19 conclude, we found no reason to disturb the findings of the learned trial judge in allowing the plaintiff’s claim and in dismissing the defendants’ counterclaim. The defendants’ appeal was accordingly dismissed with costs. Dated: 24th December 2019 signed (TENGKU MAIMUN BINTI TUAN MAT) Judge Court of Appeal Counsel/Solicitors For the Appellants: M. Kunasegaran Messrs. Kuna & Co. For the Respondents: Datuk Malik Imtiaz (Surendra Anand and Wong Chee Wai with him) Messrs. Chang Haryati