Low Hock Lee v Big Way Car Services Sdn Bhd (PA-12BNCvC-24-11/2024)

This in an appeal against the decision of the Butterworth Sessions Court which partially allowed the Respondent's claim and the Appellant's counterclaim.

For ease of reference, the parties shall be referred to as they were designated in the trial court, namely the Appellant as the Defendant and the Respondent as the Plaintiff.

On 27.12.2019, both the Defendant (as landowner) and Plaintiff (as tenant) entered into a tenancy agreement ("the Tenancy Agreement") in respect of two (2) plots of land comprising Lot No. 7352 (Hakmilik No. GM 2216) and Lot No. 9200 (Hakmilik No. GM 3314), both in Mukim 14, District of Seberang Perai Selatan ("said Lands").

The tenancy was for a period of three (3) years, commencing on 01.03.2020 and ending on 28.02.2023, at a monthly rental of RM8,000-00 only.

On 15.12.2022, the Plaintiff commenced an action in the Butterworth Sessions Court, Penang seeking to rescind the Tenancy Agreement based on allegations that the Defendant had either fraudulently or recklessly represented that the said Lands would be suitable for the Plaintiff's specific purpose of constructing several buildings for a Proton 3S Centre after December 2019.

The Plaintiff prayed, inter alia, for a declaration that the Tenancy Agreement was validly terminated, damages, and costs.

In denying the claim, the Defendant counterclaimed for loss of rental, rectification costs, and damages sustained due to the early termination of the Tenancy Agreement.

On 12.11.2024, the learned Sessions Court Judge partially allowed the Plaintiff's claim, granting a declaration that the tenancy agreement was terminated by mutual consent and ordered the refund of a RM24,000-00 deposit, alongside an award of RM100,000-00 in nominal damages. Additionally, interest was awarded on the combined sum of RM124,000-00 at the rate of 5% per annum, calculated from the date of filing until the date of full realisation.

The learned Sessions Court Judge also partially allowed the Defendant's counterclaim, granting only rectification costs which were limited to nominal damages of RM50,000-00.

The learned Sessions Court Judge further ordered each party to bear its own costs.

Aggrieved by the decision of the learned Sessions Court Judge, the Defendant filed the appeal herein.

The issues raised in this appeal are as follows:

whether the tenancy agreement was terminated by mutual consent;

(ii) whether the Plaintiff is entitled to a refund of the deposit totalling to RM24,000-00;

(iii) whether the award of nominal damages in the sum of RM100,000-00 was justified;

(iv) whether interest at 5% per annum on the total sum of RM124,000-00 should accrue from the date of filing until full realisation; and

whether the learned trial judge erred in partially allowing the Defendant's counterclaim.

As issues (i) to (iv) are closely interlinked, they shall be addressed and determined together.

It was submitted by the Defendant that the learned Sessions Court Judge erred in law and fact in declaring that the Tenancy Agreement was terminated by mutual consent due to the following reasons :-

it is neither the Plaintiff's cause of action nor was it pleaded that the Tenancy Agreement was terminated by mutual consent before the trial court.

(ii) the Plaintiff's pleaded cause of action before the trial court is based solely on the alleged misrepresentation that induced them to enter into the contract or Tenancy Agreement.

(iii) the Plaintiff presented no evidence to the trial court showing that the Tenancy Agreement was terminated by mutual consent.

(iv) the declaration contradicts the Plaintiff's claims and evidence, which indicate that there has been neither a termination of the Tenancy Agreement nor any settlement offer.

In spite of the above, the Defendant specifically pleaded in paragraph 18(a) of the Statement of Defence and Counterclaim that the early termination of the Tenancy Agreement in August 2020 occurred with the Defendant's consent.

However, the Plaintiff denied this position in their pleadings, contending that the Tenancy Agreement was null and void due to the Defendant's fraudulent and reckless misrepresentations.

The alleged fraudulent and reckless misrepresentations concern the Plaintiff's construction of several buildings for the Proton 3S Centre on the Defendant's two plots of land ("the said Lands") and the status of the planning permissions approved by Majlis Bandaraya Seberang Perai ("MBSP").

According to the Plaintiff, their primary purpose in renting the said Lands—comprising Lot No. 7352 (Hakmilik No. GM 2216) and Lot No. 9200 (Hakmilik No. GM 3314), both in Mukim 14, District of Seberang Perai Selatan—was to construct several buildings for a Proton 3S Centre.

This purpose was made known to the Defendant, who represented that the said Lands would be suitable for the Plaintiff's specific purpose after December 2019, as the existing planning permission was set to lapse by that date.

Based on this representation, the said Lands would be free from any restrictions ("sekatan") once the prior planning permission expired.

Relying on these assurances, the Plaintiff deemed the said Lands suitable and consequently entered into the Tenancy Agreement.

The Plaintiff subsequently appointed Messrs Arkitek Ku Azhar to submit the building plans to MBSP on 13.07.2020.

However, this application was rejected by MBSP due to a subsisting building plan for the demolition and reconstruction of a 28-storey office building previously submitted by Perunding ALM Architects Sdn Bhd on behalf of the developer, Oriental Eagles Sdn Bhd.

That prior plan had been approved by MBSP on 13.04.2016 and remained valid until 15.03.2021.

Consequently, the Plaintiff's building plans could only be approved if the Defendant (as the registered proprietor of the said Lands) and Perunding ALM Architects Sdn Bhd formally withdrew the existing building plan and cancelled the prior approval.

A perusal of the Statement of Claim and the Reply and Defence to Counterclaim reveals that the Plaintiff's cause of action is strictly founded upon fraudulent and reckless misrepresentation by the Defendant, which allegedly induced the Plaintiff to enter into the Tenancy Agreement.

In other words, the Plaintiff pleaded that but for the Defendant's misrepresentations, they would not have executed the Tenancy Agreement.

As misrepresentation forms the core of the Plaintiff's claim, s.19 of the Contracts Act 1950 ("CA 1950") is directly applicable.

According to s.19(1) CA 1950, when consent to an agreement is caused by coercion, fraud, or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

Consequently, if the alleged misrepresentation by the Defendant is proven, the Tenancy Agreement becomes voidable at the option of the Plaintiff. The Plaintiff would then be entitled to rescind the Tenancy Agreement pursuant to s.65 of the CA 1950 and claim damages.

In the Statement Of Claim, the Plaintiff prayed, inter alia, for a declaration that the Tenancy Agreement was validly terminated.

However, the underlying pleadings and correspondence tell a completely different story.

The contemporaneous letters exchanged between the parties and their respective solicitors demonstrate that the Plaintiff consistently focused on the Defendant's alleged misrepresentation and repeated demands for damages, losses, and the refund of rental deposits.

Crucially, prior to the litigation, neither the Plaintiff nor its legal counsel ever expressed an intention to terminate the Tenancy Agreement, much less by mutual consent.

Although these letters were formally drafted by the Plaintiff's solicitors, the key terms "terminate" or "termination" are conspicuously absent.

Instead, the letters repeatedly asserted allegations of misrepresentation and demanded remedies for damages, losses, and the refund of rental deposits.

Consequently, the learned trial judge erred in her finding of fact when she held that: "Thus, the Plaintiff decided to terminate the tenancy agreement. The Defendant consented to the termination and agreed to, inter alia, refund the deposit RM 24,000 00 paid by the Plaintiff."

The learned Sessions Court Judge further erred when she granted a declaration that the Tenancy Agreement was terminated by mutual consent, when such relief was never prayed for by the Plaintiff.

As discussed above, a perusal of the pleadings reveals that the Plaintiff was fundamentally seeking to rescind the Tenancy Agreement rather than its termination.

This is evident from the cause of action—which is grounded in fraudulent and reckless misrepresentation—as well as the reliefs sought, namely damages, losses, and the refund of rentals paid from March 2020 to July 2020. All of these remedies point directly to the consequences of rescinding a voidable contract under s.65 of the CA 1950.

Consequently, the Plaintiff's prayer for a declaration that the Tenancy Agreement was validly terminated is legally misconceived and/or jurisprudentially flawed.

Undeniably, there is a vast difference in law between the termination of a Tenancy Agreement by mutual consent and rescission of a Tenancy Agreement.

It therefore follows that the learned Sessions Court Judge also erred when she granted a declaration that the Tenancy Agreement was terminated by mutual consent. This relief was not only unpleaded and never prayed for by the Plaintiff, but also constituted an entirely new, inconsistent, and radical departure from the pleaded case.

However, the Plaintiff argued that the general prayer for relief under paragraph 24(f) of the Statement of Claim—which sought "any other relief or order as the court deems fit"—clothed the learned Sessions Court Judge with the necessary jurisdiction.

It was thus asserted by the Plaintiff that the learned Sessions Court Judge possessed the discretionary power to grant any remedy in the interest of justice pursuant to the aforesaid paragraph 24(f), notwithstanding the lack of a specific prayer for mutual termination.

The Federal Court case of Lim Eng Kay v. Jaafar Mohamed Said [[1982] 2 MLJ 156 as well as the Court of Appeal cases of Tan Tek Seng @ Tan Chee Meng v. Suruhanjaya Perkhidmatan Pendidikan & Anor [1996] 1 MLRA 186, Pentadbir Tanah Daerah Pontian & Ors v. Ossons Ventures Sdn Bhd [2009] 6 MLJ 182 and Zulkiflee SM Anwar Ulhaque & Anor v. Arikrishna Apparau & Ors [2014] 3 MLJ 553 were cited to support their contention thereof.

In short, the Plaintiff argued that judges may grant appropriate relief based on the facts of the case, and that such general prayer should not be treated as mere ornament to the pleadings, devoid of utility.

While it is accepted that appropriate remedies may be granted by the courts under a general prayer for relief based on the established facts of a case, the facts in the present appeal do not demonstrate a termination of the Tenancy Agreement by mutual consent.

On the contrary, as discussed earlier, the facts point exclusively toward the rescission of the Tenancy Agreement by the Plaintiff.

At the risk of repetition, suffice for this court to refer to the Statement of Claim, the Reply and Defence to Counterclaim, and the correspondence issued by the Plaintiff and its solicitors. These documents are completely silent on the concept of termination, let alone mutual consent.

Had the facts of this case established a termination of the Tenancy Agreement by mutual consent, the Plaintiff's arguments would be sustainable. Regretfully, that is not the case here.

Further, allowing the invocation of an omnibus/ a general prayer for relief despite facts unsupported by evidence would mean providing a safety net for litigants to remedy oversights in drafting their claims. This would inevitably defeat the fundamental principle of law that parties are bound by their pleadings.

In addition thereto, it is trite that a relief is ancillary to and forms part and parcel of a cause of action, rather than an independent cause of action. Consequently, a subsisting cause of action must exist before a plaintiff can claim any relief in a suit (see Hock Hua Bank Bhd v Leong Yew Chin [1987] CLJ Rep 126).

Since the cause of action here is grounded strictly in misrepresentation, the relief naturally flowing from it is the rescission of the Tenancy Agreement, not its termination.

Therefore, the arguments raised by the Plaintiff are entirely devoid of merit. In any event, the authorities cited by the Plaintiff are clearly distinguishable from the facts of the present case.

Moving on, the learned Sessions Court Judge made a finding of fact that under cross examination, the Plaintiff through the testimony of PW1, had resiled entirely from its pleaded case.

PW1 admitted that the Plaintiff's claim was not based on misrepresentation. PW1 testified that the Plaintiff did not erect new buildings on the said Lands but had merely carried out renovations and built an extension that did not involve demolishing the existing structure.

Thus, the evidence adduced at trial established facts that fundamentally differed from those pleaded by the Plaintiff, thereby constituting a radical departure from their pleaded case. Moreover, under cross-examination, PW1 explicity agreed that the pleadings were wrong.

Given that the Plaintiff's alleged misrepresentation strictly pertained to the construction of several buildings for a Proton 3S Centre, the allegations forming the Plaintiff's cause of action completely collapsed, simply because the alleged misrepresentation was never in respect of mere renovation works on the existing buildings erected on the said Lands.

Consequently, the Plaintiff's sole cause of action in misrepresentation was effectively abandoned and left unproven.

The learned Sessions Court Judge was thus left with no legal foundation upon which to grant any relief as prayed for by the Plaintiff, let alone a declaration that the Tenancy Agreement was terminated by mutual consent-a relief neither prayed for by the Plaintiff nor supported by the facts of the case.

The proper course of action for the learned Sessions Court Judge was to dismiss the Plaintiff's claim in its entirety.

As such, the learned Sessions Court Judge erred in law when she partially allowed the Plaintiff's claims.

Accordingly, the orders in favour of the Plaintiff listed under paragraphs 15 (a), (b), (c), and (d) of the Sessions Court judgment are wholly unsustainable and are hereby set aside by this Court. Issue (v): whether the learned trial judge erred in partially allowing the Defendant's counterclaim

In its submission, the Defendant prayed that his counterclaim be fully allowed with interest at 5% per annum and costs, itemised as follows: (a) RM56,000-00 for the rentals from March to July 2020 and the rental deposit; (b) RM48,000-00 as general damages in lieu of a sixmonth notice of termination; and (c) RM148,480-00 as the estimated rectification costs.

Now, in the absence of misrepresentation, the Tenancy Agreement remains valid and is not voidable at the option of the Plaintiff pursuant to s.19(1) of the CA 1950.

Factual analysis reveals that the sum of RM56,000-00—representing rentals for the months of March 2020 to July 2020 and the rental deposits—had been paid over by the Defendant to the Plaintiff during settlement discussions. Although the Plaintiff ultimately rejected the Defendant's proposed amicable settlement, the Plaintiff retained this sum and failed to return it to the Defendant. Instead, the Plaintiff proceeded with its allegations of misrepresentation and claims for damages.

Consequently, as rightfully contended by the Defendant, the Plaintiff breached the Tenancy Agreement by failing to pay the rentals for the months of March 2020 to July 2020.

Furthermore, by retaining and refusing to refund the sum of RM56,000-00 (comprising the rentals and rental deposits), the Plaintiff clearly manifested its intention to terminate the agreement before the expiration of the agreed term, thereby executing an early termination.

The provisions for early termination are strictly governed by Clause 13 of the Second Schedule to the Tenancy Agreement.

Pursuant to Clause 13(a), the Plaintiff shall provide six (6) months' prior written notice to the Defendant to effect an early termination. Crucially, the Plaintiff failed to comply with this requirement.

Hence, in lieu of the requisite six-month prior notice for early termination, the Plaintiff shall pay to the Defendant the equivalent of six (6) months' rental, amounting to the sum of RM48,000-00 calculated at the monthly rate of RM8,000-00.

Also, pursuant to Clause 13(a), the rental deposit shall be forfeited by the Defendant.

The requisite sums under Clause 13(a) are in addition to the outstanding rentals due for the months of March 2020 to July 2020.

Next, pertaining to the claim of RM148,480-00 being estimated rectification costs by the Defendant for the demolition of the kitchen, store, toilet and handwash area by the Plaintiff, this Court adopts the principles enunciated by Wong Kian Keong J (as his Lordship then was) in KTL Sdn Bhd & Anor v. Leong Oow Lai & Other Cases [2014] 1 LNS 427 which was later adopted and referred to by the Court of Appeal in Damansara Realty (Pahang) Sdn Bhd v Om Cahaya Mineral Asia Bhd & Another Appeal [2021] 5 CLJ 283 ("Damansara Realty") and Presto Supermarkets (Subang) Sdn Bhd & Ors v Attic Holdings Sdn Bhd [2024] CLJU 405 ("Presto Supermarkets").

In KTL Sdn Bhd & Anor v. Leong Oow Lai & Other Cases (supra) His Lordship held as follows: "34. If a document is classified as a Part C Document, the party adducing that document bears the evidential burden to satisfy the court on a balance of probabilities the following 2 conditions of admissibility of that document (2 Conditions of Admissibility):

in accordance with the rule against documentary hearsay, the maker of the Part C Document has to be called as a witness - the Federal Court's judgment in Capital Insurance Bhd v. Cheong Heng Loong Goldsmiths (KL) Sdn Bhd [2005] 4 CLJ 1, at 20, 21-25 and 28. If the maker of a Part C Document cannot be called as a witness, the party adducing that document has to satisfy the court regarding the application of any one of the exceptions to the hearsay rule such as ss. 32(1)(a) to (h) [s. 32(i) and (j) EA only apply to criminal proceedings according to s. 32(2) EA ], 33 to 37, 73A(1), (2) and/or 90A(1) EA [s. 90C EA provides that s. 90A EA shall prevail over, among others, any other provision of EA relating to the proof of evidence]; AND

"primary evidence" of the Part C Document as understood in s. 62 EA must be adduced in court as required by s. 64 EA - the SupremeCourt's decision in KPM Khidmat Sdn Bhd v. Tey Kim Suie [1994] 3 CLJ 1; [1994] 2 MLJ 627, at 631. It is to be noted that Explanation 3 of s. 62 EA provides that a document produced by a computer (in compliance with s. 90A EA) is primary evidence. If "primary evidence" of a Part C Document is not available, s. 64 EA provides that "secondary evidence" [within the meaning of s. 63(a) to (e) EA] of the Part C Document can only be admitted as evidence if there is proof of the application of any one of the paragraphs in s. 65(1)(a) to (g) EA."

In short, two (2) conditions must be satisfied prior to the admissibility of a document classified under Part C of the Bundle of Documents.

Firstly, the document needs to be introduced through its maker(s), who can then be cross-examined regarding his or their personal knowledge of the contents.

Secondly, in compliance with s.62 and 64 of the Evidence Act 1950, the said document must be proved by primary evidence or secondary evidence (where applicable).

However, in Gee Eng Wah v Teoh Eng Keong & Anor [2020] 1 MLRA 22, Kamaludin Md Said JCA when delivering the judgment of the Court of Appeal, upheld the High Court's decision to allow the quotation be marked as exhibit, even though the maker was not called, and also allowed the estimated rectification costs based on the said quotation.

When faced with these conflicting decisions from the Court of Appeal, this court decides to follow the later decision, as it represents the current and existing state of the law.

As such, the principles in Damansara Realty (2021) and Presto Supermarkets (2024) being more recent decisions, must prevail over Gee Eng Wah v Teoh Eng Keong & Anor (supra), which was decided in 2020.

Turning to the present appeal, the Defendant bore the evidential burden of proving the estimated rectification costs pleaded in the counterclaim. Although the original quotation was produced, the Defendant did not call its maker to testify, thereby depriving the Plaintiff of the opportunity to cross-examine the witness.

Accordingly, as the Defendant failed to satisfy the first condition of admissibility established in KTL Sdn Bhd & Anor v Leong Oow Lai & Other Cases (supra), the learned Sessions Court Judge did not err in refusing to mark the quotation as an exhibit, leaving it properly classified as as IDD56.

Furthermore, the maker should have been called to be cross-examined by the Plaintiff in view of several "flaws" in the said quotation.

Specifically, as submitted by the Plaintiff: (i) the quotation was dated 07.03.2022, meaning it was prepared after the filing of the Writ and Statement Of Claim on 15.02.2022 (ii) the subject title on the quotation was written as "Jobs at Lot 7352, Bukit Tambun (Food Court)" even though the Defendant had never once pleaded the usage of the said Lands as a food court and (iii) no particulars of the maker were stated in the said quotation, save and except a signature and corporate stamp of Santa Construction affixed therein.

The learned Sessions Court Judge therefore did not err in holding that, due to the insufficient evidence adduced by the Defendant, the estimated rectification costs prayed for in the counterclaim were not proven. Nonetheless, the learned Sessions Court Judge made a finding of fact that the Plaintiff had admitted to the demolition of the Defendant's kitchen, store, toilet and handwash area.

In those circumstances, the learned Sessions Court Judge rightfully relied on Chandran G Nair & Ors v Affin Bank Bhd [2014] 8 CLJ 434, which held that a court may award nominal damages if there was insufficient evidence adduced to prove actual damage.

Accordingly, the learned Sessions Court Judge was therefore fully justified in awarding nominal damages in the sum of RM50,000-00 for rectification costs to the Defendant under the counterclaim.

Based on the aforesaid analysis and findings, the appeal is partially allowed with costs of RM5,000-00 subject to allocator fees.

The judgment of the learned Sessions Court Judge is hereby set aside, save and except for the order awarding nominal damages of RM50,000-00 awarded to the Defendant.

By virtue of s.29 of the Courts of Judicature Act, 1964, this Court in its exercise of appellate jurisdiction, orders that the Plaintiff shall pay to the Defendant under the counterclaim: -

RM56,000-00 being rentals for March 2020-July 2020 and the rental deposit;

(ii) RM48,000-00 as general damages in lieu of a six-month notice of termination; and

(iii) interest on the sum RM154,000-00 at the rate of 5% per annum from the date of filing of the counterclaim until full realisation.

It is further ordered that the sums paid by the Defendant to the Plaintiff under the Sessions Court judgment, amounting to RM91,444-93, be fully refunded to the Defendant. Counsel(s): Mr. SC Tan from Messrs SC Tan for the Appellant. Ms. Kartini Devi from Messrs. HNG & Partners for the Respondent. Case(s) referred to: Lim Eng Kay v. Jaafar Mohamed Said [[1982] 2 MLJ 156; Tan Tek Seng @ Tan Chee Meng v. Suruhanjaya Perkhidmatan Pendidikan & Anor [1996] 1 MLRA 186; Pentadbir Tanah Daerah Pontian & Ors v. Ossons Ventures Sdn Bhd [2009] 6 MLJ 182; Zulkiflee SM Anwar Ulhaque & Anor v. Arikrishna Apparau & Ors [2014] 3 MLJ 553; Hock Hua Bank Bhd v Leong Yew Chin [1987] CLJ Rep 126; KTL Sdn Bhd & Anor v. Leong Oow Lai & Other Cases [2014] 1 LNS 427; Damansara Realty (Pahang) Sdn Bhd v Om Cahaya Mineral Asia Bhd & Another Appeal [2021] 5 CLJ 283 ("Damansara Realty"); Presto Supermarkets (Subang) Sdn Bhd & Ors v Attic Holdings Sdn Bhd [2024] CLJU 405 ("Presto Supermarkets"); Gee Eng Wah v Teoh Eng Keong & Anor [2020] 1 MLRA 22; Damansara Realty (2021) and Presto Supermarkets (2024); Chandran G Nair & Ors v Affin Bank Bhd [2014] 8 CLJ 434.