Phoenix Oasis Sdn. Bhd v Sl Land Sdn. Bhd (B-02(NCC)(W)-652-06/2020)

This is an appeal by the Appellant/Plaintiff against the decision of the Shah Alam High Court Judge (“Learned High Court Judge”) dated 1.6.2020 which dismissed the Appellant/Plaintiffs' claim. The Appellant/Plaintiff sued the Respondent/Defendant for the breach of a Joint Venture Agreement dated 18/07/2012 ("the said JV Agreement") whereby the Appellant/Plaintiff’s land described as H. S. (D) 203955 PT 1081, which is situated in Bandar Nilai Utama, Daerah Seremban, Negeri Sembilan (“the said Land A”) was to be transferred to the Respondent/Defendant for a consideration price of RM6,969,685.18, based on the sum of RM39.36 per square foot (“PSF”) and to be paid within 36 months from the date of receipt by the Appellant/Plaintiff of the Respondent/Defendant's written confirmation that the Acceptable Planning Permission and Acceptable Conversion Approval have been obtained.

There is also a cross appeal by the Respondent/Defendant against that part of the High Court’s decision where the Learned High Court Judge found that the agreed consideration of the said Land A, is RM39.36 PSF (“Original Consideration”) as per the said Joint Venture Agreement dated 18/07/2012 instead of RM19.00 PSF (“Reduced Consideration”) as contended by the Respondent/Defendant. 3

For ease of reference, parties will be referred to as they were in the proceedings before the High Court.

We heard the appeal and after due deliberation and having carefully considered the submissions of both parties, we found that there are merits in the appeal and unanimously allowed the appeal and dismissed the cross appeal with costs. We now give reasons for our decision in respect of the appeal and cross appeal.

The Defendant's company was incorporated a few months after the incorporation of the Plaintiff's company in the year 2011, to develop one Commercial Development Project called “Sentral Bazar” at Bandar Nilai Utama ("the said Project").

At all material times the Plaintiff and the Defendant had 2 common directors and shareholders namely, Yeoh Thiam Leong and Yeoh Thiam Soon who holds the following shares in the Plaintiff and the Defendant:-

(i) Yeoh Thiam Leong holds 60% shares in the Plaintiff and 35% shares in the Defendant; and

The said Project is to be carried out on three (3) adjacent lands held under H. S. (D) 203953 PT 1079, H. S. (D) 203954 PT 4 1080 and H. S. (D) 203955 PT 1081 respectively, all three lands are in Bandar Nilai Utama, Daerah Seremban, Negeri Sembilan, with the category of land use being for "industrial". The particulars and ownerships of the three (3) adjacent lands are as follows:- H. S. (D) 203955 “PT 1081” H. S. (D) 203954 “PT 1080” H. S. (D) 203953 “PT 1079” “Land A” measuring approximately “Land B” measuring approximately “Land C” measuring approximately

16764.9 square meters 16736.5 square meters 16450.7 square meters (Phoenix Oasis Sdn Bhd was the Proprietor)(“the Plaintiff”) (Yeoh Thiam Soon & Foong Wei Ching were the Proprietors) (Twenty Twenty Food And Beverage Sdn . Bhd. was the Proprietor)

The Plaintiff was the registered and beneficial owner of the said Land A measuring approximately 16764.9 square meters in area with the category of land use, being classified for "industrial".

The said Land A was charged to CIMB Bank Berhad ("CIMB") to secure the existing loan facilities granted to the Plaintiff ("the Existing Loan”).

On or about 18/07/2012, the Plaintiff and the Defendant signed the said JV Agreement for the Defendant, to develop 5 the said Land A and to this end, the said Land A was transferred to the Defendant for an agreed consideration price of RM6,969,685.18 based on RM39.36 per square foot and to be paid within 36 months from the date of receipt by the Plaintiff of the Defendant's written confirmation that the Acceptable Planning Permission and Acceptable Conversion Approval have been obtained.

On or about 27/02/2014, the Plaintiff and the Defendant subsequently entered into a Supplemental Agreement ("the said Supplemental Agreement").

The Defendant made a payment of RM1,660,000.00 to CIMB Bank Bhd. through the Plaintiff on 03/03/2014. Thereafter, the Defendant made another payment in the sum of RM500,000.00 to the Plaintiff. The said Land A was subsequently redeemed from CIMB Bank Bhd.

After the signing of the said Supplementary Agreement, the Plaintiff and the Defendant entered into a Second Supplementary Agreement dated 16/02/2015 ("the said 2nd Supplementary Agreement") for the purpose of transferring and amalgamation of the said Land A with the other said two (2) pieces of Lands namely PT 1079 and PT 1080 into one title, pursuant to the said JV Agreement.

Later, on or about year 2017, the said Land A was amalgamated with the other said two (2) pieces of land, 6 namely, PT 1079 and PT 1080 into one document of title which is described as Geran Hakmilik No. 267772, Lot 65799, Bandar Nilai Utama, Daerah Seremban, Negeri Sembilan for the purpose of development and registered under the Defendant's name.

On or about 30/01/2019, the Plaintiff had filed a suit at the Shah Alam High Court to claim the outstanding consideration price of RM6,969,685.18 from the Defendant together with the interest and costs. The suit was dismissed by the learned High Court Judge. Hence this appeal and cross appeal.

The learned High Court Judge in his Grounds of Judgment dated 14/07/2020 held as follows:-

(a) That on the balance of probabilities the consideration price should be calculated at RM39.36 PSF pursuant to Clause 4.1 of the said Joint Venture Agreement dated 18/07/2012;

(b) That the payment paid by the Defendant in the sum of RM2,160,000.00 were indeed part payment towards the consideration price for the said Land A;

(c) There was no explanation on the difference of the sum of RM6,971,018.50 with the Plaintiff’s claim of 7 RM6,969,685.18; and

(d) That the Plaintiff had failed to give notice of remedy in accordance with Clause 17.2 of the said JV Agreement.

The learned High Court Judge, after a full trial, dismissed the Plaintiff's claim principally on the ground that the Plaintiff had failed to give a notice to remedy pursuant to clause 17.2 of the said JV Agreement. The learned High Court Judge had also found that the Defendant had made part payment of RM2,160,000.00 towards the consideration price and that the price for the said Land A is the agreed consideration price of RM39.36 PSF and not RM19.00 PSF.

Before us, the Plaintiff contended as follows:-

(a) That the learned High Court Judge relied on clause 17.2 of the said JV Agreement as the main ground to dismiss the Plaintiff's claim when it was not even pleaded in the Defendant’s Statement of Defence;

(b) That the said Clause 17.2 is not applicable to the Plaintiff's cause of action for recovery of the consideration price of the land as the land had already been transferred to the Defendant; 8

(c) That the learned High Court Judge erred in law and in fact in holding that the advances amounting to RM2,160,000.00 by the Defendant to the Plaintiff are in part payment towards the consideration price of the said Land A;

(d) That the learned High Court Judge was unduly influenced by the slight difference between the Plaintiff's claim of RM6,969,685.18 and the evidence of PW2 that the consideration price yet to be paid was RM6,971,018.50;

(e) That the Defendant's notice of cross-appeal is incompetent as that it seeks not to vary the decision of the High Court but to challenge the finding of facts which has to be brought by a separate notice of appeal; and

(f) That the learned High Court Judge was right in finding that the agreed consideration price was RM39.36 PSF and not RM19.00 PSF as alleged by the Defendant. THE DEFENDANT’S CONTENTIONS BEFORE THIS COURT

The Defendant in response, contended inter alia as follows:- 9

(a) that the Plaintiff had failed to give notice to remedy in accordance with Clause 17.2 of the said JV Agreement thus depriving the Defendant, an opportunity to remedy the breach as required in the said JV Agreement;

(b) the Plaintiff admitted that the Plaintiff started to calculate the Completion Period after the Acceptable Planning Permission and Acceptable Conversion Approval have been obtained which is not in accordance with the relevant clauses stated in the said JV Agreement. Thus, the Defendant contended that the Plaintiff's claim is misconceived as according to the said JV Agreement, the Completion Period shall be calculated after the Plaintiff received the written confirmation from the Defendant that the two approvals have been obtained;

(c) thus, the Plaintiff's claim against the Defendant is defective and wrongful in law because the Plaintiff is confused as to when the calculation for the 36 months started to run;

(d) that the amount claimed by the Plaintiff against the Defendant in the sum of RM6,969,685.18 is misconceived and that the Plaintiff themselves was uncertain about the total claim against the Defendant;

(e) that the Learned High Court Judge was correct in his Judgment to find that there was no explanation for the difference of the sum of RM6,971,018.50 as testified by 10 PW2, the sum of RM6,961,019.00 as stated in the email dated 18/02/2019 and the sum of RM6,969,685.18 claimed by the Plaintiff vide the Statement of Claim;

(f) that the Learned High Court Judge was correct in law and in fact, in deciding that the payment of RM2,160,000.00 were indeed part payment towards the Consideration Price. Pursuant to Clause 4.2 of the said JV Agreement, which provides that "any payments made by the Developer (Defendant) and any progress payments from the sale of Unit paid towards the Existing Loan, for and on behalf of the Proprietor (Plaintiff) shall be deemed to be payment towards the Consideration Price. It is hereby agreed that the Consideration Price shall be paid firstly to settle the Existing Loan in full and thereafter to settle the Balance Consideration Price to the Proprietor (Plaintiff)";

(g) that the Learned High Court Judge was correct, in holding that he did not see how the conversion/reclassification of the payment of 2 advance payment amounting to RM2,160,000.00 into a loan to both the directors altered the situation. Furthermore, PW1 had admitted in his testimony that there was no resolution from the Plaintiff to carry out such reclassification; and 11

(h) that the Learned High Court Judge was correct in his Judgment to find that there was no explanation for the difference of the sum of RM6,971,018.50 as testified by PW2, the sum of RM6,961,019.00 as stated in the email dated 18/02/2019 and the sum of RM6,969,685.18 claimed by the Appellant/Plaintiff vide the Statement of Claim.

(i) that the cross appeal filed by the Defendant is not on substantive finding of facts as the Plaintiff's claim was dismissed on the grounds that the Plaintiff had failed to give notice to remedy in accordance with Clause 17.2 of the said JV Agreement and hence, the claim is pre-mature. The filing of the cross appeal by the Defendant is to vary the finding of the Learned High Court Judge on the finding of the calculation of the Original Consideration. Hence, the preliminary objection ought to be rejected;

(j) that the finding by the learned High Court Judge on the issue of calculation of the Original Consideration should be varied to RM19.00 PSF instead of the sum of RM39.36 PSF although the Learned High Court Judge dismissed the Plaintiff's claim based on the ground that the Plaintiffs claim is premature; and 12

(k) The existence of the said 2nd Supplementary Agreement that was signed between the Defendant and the Plaintiff was not disputed. The Learned High Court Judge should take into consideration of the evidence in terms of documentary and oral evidence before him especially the fact that both parties had agreed to reduce the Original Consideration to the Reduced Consideration of RM19.00 PSF pursuant to the execution of the said 2nd Supplementary Agreement as well as the fact that the said Land A was transferred into the name of the Defendant based at the consideration of RM19.00 PSF. THE LAW

It is trite law that the specific finding of facts by the learned High Court Judge as a trier of facts should not be disturbed by an appellate court such as this Court herein unless that finding was plainly wrong: See Ming Holdings (M) Sdn Bhd v Tuan Syed Azahari bin Noh Shahabudin & Anor [2010] 4 MLJ 577; [2010] 6 CLJ 857 (FC) paras 41- 48;

We were mindful of the limited role of the appellate court in relation to findings of facts made by the court of first instance. In the case of Lee Ing Chin v. Gan Yook Chin & Anor [2003] 2 CLJ 19; [2003] 2 MLJ 97 where the Court of Appeal held as follows:- “ ….. an appellate court will not, generally speaking, intervene unless the trial court is shown to be plainly 13 wrong in arriving at its decision. But appellate interference will take place in cases where there has been no or insufficient judicial appreciation of the evidence.” (Emphasis added)

Reference is also made to the decision of the Federal Court in Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 4 CLJ 309 where the Federal Court held that the test of "insufficient judicial appreciation of evidence" adopted by the Court of Appeal was in relation to the process of determining whether or not the trial court had arrived at its decision or findings correctly on the basis of the relevant law and the established evidence.

Bearing in mind, the above principles distilled from the above authorities, we will now c o n s i d e r the Plaintiff’s appeal.

In paragraph 25 of the Grounds of Judgment, the Learned High Court Judge held as follows:- "[25] Evidence was also led by the plaintiff that a sum of RM10,000.00 was further paid as partial payment on land cost (as stated in B p.4) but again PW2 told the Court that this too was treated as an advance. According to PW2 a sum of RM6,971,018.50 being the consideration price was 14 yet to be paid. The Plaintiff put up a claim of RM6,969,685.18. There was no explanation for this difference."

In respect of the above paragraph of the Learned High Court Judge’s Grounds of Judgment, we respectfully find that the slight difference between the Plaintiff's claim of RM6,969,685.18 and the sum of RM6,971,018.50, being the amount stated in the evidence of PW2 that the consideration price yet to be paid was RM6,971,018.50, is not so sufficiently material and serious as to warrant the dismissal of the Plaintiff’s case and as such, the learned High Court Judge had misdirected himself on this issue.

We are of the considered opinion that the Learned High Court Judge fell into error and misdirected himself in dismissing the Plaintiff’s case when the learned High Court Judge could have deducted the sum of RM10,000.00 from the Plaintiff's claim and allow the balance of the Plaintiff’s claim.

Further, we are of the considered view that the Learned High Court Judge has failed to appreciate that the difference is inconsequential and is capable of correction. This is because the consideration price claimed by the Plaintiff was computed based on the formula stated in clause 4.1 of the said JV Agreement. Clause 4.1 provides for the computation of the consideration price of the said Land A as follows:- "… Consideration Price calculated at the rate of Ringgit Malaysia Thirty-Nine and Sen Thirty Six per 15 square foot (RM39.36 psf) only of the said Land. In computing the Consideration Price, the area of the said Land shall be the area according to the Issue Document of Title of the said Land as at the date of the Agreement." (Emphasis added)

The area of the said Land A in the Issue Document of Title is measured in square metres. As such, in computing the Consideration Price, one needs to convert square metre to square feet accordingly. We find that the minor difference is a result of the conversion process. In any event, the consideration price can be mathematically computed, by applying the stipulated formula.

Another main ground for the dismissal of the Plaintiff’s case was the Learned High Court Judge’s reliance on clause 17.2 of the said JV Agreement when such clause was not pleaded in the Defendant’s Amended Statement of Defence. Thus, the Learned High Court Judge’s reliance on the unpleaded clause 17.2 is a grave error on his part.

A perusal of the Defendant's Amended Statement of Defence clearly showed that the issue of the Plaintiff’s failure to give notice to remedy under clause 17.2 of the said JV Agreement was never pleaded. (See pages 52-56 of Enclosure 4).

Clause 17.2 of the said JV Agreement reads as follows: - "If either party shall 16

(a) materially breaches any part of this Agreement and fails to remedy the same within twenty-one (21) working days from the service of any written notice by the other party complaining of such breach;

(b) Then the other party shall be entitled to terminate this Agreement and claim damages for any consequential loss and damage suffered, whether economic or otherwise but without prejudice to the claims in respect of antecedent breach and all provisions which are applicable in the event of termination of this Agreement."

The Learned High Court Judge in paragraph 27 of his Grounds of Judgment held as follows:- "YTL admitted that the plaintiff did not give such notice. It was the case for the plaintiff that the defendant had breached clause 4.1 of the JVA. In SPM Membrane (supra) it was held that the notice to remedy must be given as it was provided for in the contract before either party can terminate the said contract. Here, the defendant was not given the opportunity to remedy the breach as required in the JVA." (See page 14 of Enclosure 8)

It is trite that parties are bound by their pleadings. The Defendant cannot rely on a defence which is not pleaded. On this, we are of the respectful view that it is not the duty of the court to invent or create a cause of action or a defence under the 17 guise of dispensing justice for the litigants so as not to be alleged of being biased towards one against the other. The litigants know best as to what they desire and it is not for the court to pursue a perfunctory approach to determining a dispute by concocting or generating cause or causes of action which were not pleaded in the first place.

We find support in RHB Bank Bhd. v. Kwan Chew Holdings Sdn Bhd [2010] 1 CLJ 665; [2009] 3 MLRA 162 where the Federal Court held, inter alia, that: "[33] Second, the proposition of the Court of Appeal was not even pleaded by the respondent. The respondent's cause of action against the appellant was for breach of contract. Nowhere in the respondent's pleading, expressly or by implication, can we detect a claim for breach of a joint venture agreement arising out of a fiduciary duty placed upon the appellant in the capacity as principal of an agent. It is a cardinal rule in civil litigation that the parties must abide by their pleadings. This is trite as can be seen from the decision of this court in Menah Sulong v. Lim Soo & Anor [1983] CLJ (Rep) 263; [1970] 1 MLRA 1; [1983] 1 CLJ 26 where Ong Hock Thye CJ said: I think it is necessary in this case to emphasise once again that the Courts should give their decision in strict compliance with the pleadings. As Loard Radcliffe said in Esso Petroleum Co Ltd v. Southport Corporation[1956] 2 WLR 81, 91 18 If an Appellate Court is to treat reliance as pedantry or mere formalism I do not see what part they play in our trial system.” (Emphasis added)

Another reason why we find that the Learned High Court Judge further fell into error, in dismissing the Plaintiff’s action is when he found in paragraph 13 of the Grounds of Judgment, that there was an admission made by the Defendant that the consideration price had not been paid in full. This is what the Learned High Court Judge held: - "[13] YTS told the Court that the plaintiff never gave any notice or request for the payment of the consideration price after the expiry of the 36 months period. He admitted that he had not paid it in full " (See page 7 of Enclosure 8) (Emphasis added)

In the light of our findings that the Learned High Court Judge has relied on an un-pleaded material issue to dismiss the Plaintiff’s case notwithstanding the admission of the Defendant that the consideration for the said Land A has not been paid in full, we are of the considered view that the decision of the Learned High Court is wrong in law and fact.

On the issue of the 2 advances amounting to RM2,160,000.00, we are in agreement with the Plaintiff’s contention that the Learned High Court Judge erred in law and in fact in holding that the advances amounting to RM2,160,000.00 paid by the Defendant to 19 the Plaintiff are in part payment towards the consideration price for the said Land A.

It is not disputed that the Defendant had made the following two part payments namely:-

(a) The first payment of RM1,660,000.00 was stated in the Payment Voucher of the Defendant dated 03.03.2014 (at page 130 of Enclosure 6) as 'Advance to Phoenix Oasis to settle the land loan (PT1081)'. It is not disputed that the amount had been paid to redeem the said Land A from CIMB Bank; and

(b) The second payment of RM500,000.00 was also recorded in the payment voucher of the Defendant dated 19.11.2014 as being paid to the Plaintiff as 'Advance Payment' (at page 132 of Enclosure 6).

In paragraphs 20 and 21 of his Grounds of Judgment the Learned High Court Judge in reliance of clauses 4.2 and 4.3 of the said JV Agreement, concluded that the said advance of RM1,660,000.00, which was used to redeem the said Land A, was made pursuant to clause 4.2 of the same Agreement and the second advance of RM500,000.00 which was in the form of cash were made pursuant to clause 4.3 of the same Agreement. (For clauses 4.2 & 4.3 of the said JV Agreement, see page 110 of Enclosure 6).

The Learned High Court Judge proceeded to hold in paragraph 21 of his Grounds of Judgment as follows: - 20 "I do not see how the conversion into a loan to both the directors altered the situation. PW2 did not explain this and the auditor was not called. Hence, there was no satisfactory evidence to support this contention." (See page 11 of Enclosure 8)

We take the view that the Learned High Court Judge had clearly disregarded the subsequent events that occurred when the two common directors of the Defendant namely Yeoh Thiam Soon and Yeoh Thiam Leong, decided to reclassify the 2 advances as advances to the directors instead of applying the advances to reduce the consideration price of the said Land A in accordance with clauses 4.2 and 4.3 of the said JV Agreement.

The direct consequence of this reclassification had the effect of creating a debt by the Plaintiff to the directors namely Yeoh Thiam Soon and Yeoh Thiam Leong. As the advances were from the Defendant, the reclassification also had the effect of creating a debt owed by Yeoh Thiam Soon and Yeoh Thiam Leong to the Defendant. As a result, the Learned High Court Judge clearly ignored the fact that those 2 advances could no longer go towards reducing the consideration price of the said Land A.

There is also cogent evidence that Yeoh Thiam Soon and the Defendant acted on this reclassification in the following manner: -

(a) Yeoh Thiam Soon relied on the said debt and presented a winding-up petition against the Plaintiff; 21

(b) The Defendant declared a dividend to Yeoh Thiam Soon and Yeoh Thiam Leong and a substantial part of the dividend amounting to RM2,160,000.00 was set off against the debt owed by Yeoh Thiam Soon and Yeoh Thiam Leong to the Defendant. For Winding-Up Petition, see pages 187-197 of Enclosure 6. For Defendant's Resolution to declare dividend, see page 140 of Enclosure 6;

(c) In view of the said reclassification and the conduct of Yeoh Thiam Soon and the Defendant above, the Defendant is now estopped from relying on clauses 4.2 and 4.3 of the said JV Agreement;

(d) The conversion or reclassification of the loan was supported by the testimony of PW2 and the contemporaneous documents;

(e) PW2, Yvonne Lim Lee Hwa, testified and explained the conversion of the 2 advances into loans to both the said directors. She was the Account Manager of the Defendant who was subpoenaed to testify on behalf of the Plaintiff. She was the person who prepared the account and did the relevant entries in the Standard Ledger of the Defendant; Reclassification of Loan

(f) PW2 testified that she was asked by the auditor to 22 reclass or to treat the said sum of RM2,160,000.00 as a loan from the Defendant to Yeoh Thiam Leong and Yeoh Thiam Soon as directors of the Defendant. PW2 referred to the Defendant's Standard Ledger at page 5 of Enclosure 7, where the Plaintiff's account was credited with the total of RM2,160,000.00 and the balance became "0" (item 4);

(g) The amount of RM2,160,000.00 was then debited in the director's account at pages 6 and 7 of Enclosure 7. Yeoh Thiam Leong's account was debited with RM756,000.00 (see page 6 of Enclosure 7, item 3) which is 35% of RM2,160,000.00 in accordance with his shareholdings in the Defendant. Yeoh Thiam Soon's account at page 7 of Enclosure 7, item 1 shows RM1,404,000.00 was debited in accordance with his shareholdings of 65% in the Defendant; Declaration of Dividend to offset the loans to directors

(h) PW2 then explained how the amount of RM2,160,000.00 was offset by the declaration of dividend of RM2,500,000.00 by the Defendant. The resolution for the declaration of dividend is at page 140 of Enclosure 6;

(i) PW2 further explained that 'the directors declare RM2.5 million dividend and they use this dividend to 23 offset their loan of RM2,160,000.00 and the balance is paid by company cheque' (see page 129 of Enclosure 5);

(j) Out of the RM2.5 million, Yeoh Thiam Leong's share of dividend was 35% i.e. RM875,000.00. This amount was offset against the loan of RM756,000.00 leaving the balance dividend of RM119,000.00. The Defendant then issued a cheque of RM119,000.00 to Yeoh Thiam Leong. This amount of RM119,000.00 is reflected in the Standard Ledger at page 6 of Enclosure 7, item 5, entry on 30.12.2016; and

(k) On the other hand, Yeoh Thiam Soon's share of dividend was 65% i.e RM1,625,000.00. This amount was offset against the loan of RM1,404,000.00 leaving the balance dividend of RM221,000.00. This amount was paid by the Defendant to Yeoh Thiam Soon and it was reflected in the Standard Ledger at page 7 of Enclosure 7, item 3, entry on 30.12.2016.

From the evidence adduced, we find that it is clear that the total sum of RM2,160,000.00 w h i c h w a s i n i t i a l l y paid by the Defendant, had been treated as loans to Yeoh Thiam Soon and Yeoh Thiam Leong as directors of the Defendant and the said loans were 'repaid' by them through the declaration of RM2.5 million dividends.

Thus, the Learned High Court Judge’s finding that he did not see how the conversion of the 2 advances into a loan to both the said 24 directors altered the situation is erroneous especially in the light of the testimony of PW2 and the various evidences adduced. We are also of the considered opinion that the Learned High Court Judge was plainly wrong in arriving in his decision and committed a serious appellate error that justify our intervention as the Learned High Court Judge has made erroneous finding of facts based on the evidence before him and applied the relevant laws incorrectly.

The Defendant filed a notice of cross-appeal against the Learned High Court Judge's finding of fact that the agreed consideration is the Original Consideration that is RM39.36 PSF of the Land A as per the Joint Venture Agreement instead of the Reduced Consideration of RM19.00 PSF as contended by the Defendant.

The Plaintiff has on 8.02.2021 served a notice of preliminary objection against the Defendant's notice of cross-appeal as the essence of the cross-appeal is against the Learned Judge's finding of facts on the agreed consideration price is based on RM39.36 per square foot. The Defendant contends that the agreed rate should be based on clause 1(a) of the Second Supplementary Agreement dated 16.02.2015 at RM19.00 PSF.

Having heard arguments, we found that there are no merits in the Plaintiff’s preliminary objection and we accordingly dismissed it. 25

In respect of the Cross Appeal, having perused the Notes of Proceedings and considering the documentary and oral evidences adduced, we are of the considered opinion that the Learned High Court Judge was right in holding that the agreed consideration is the Original Consideration, that is RM39.36 PSF and not the Reduced Consideration of RM19.00 PSF as contended by the Defendant.

The Defendant contended that the Plaintiff is bound by the four corners of their pleadings and the fact that they did not inform the Court about the existence of the 2nd Supplementary Agreement whereby the price of the Land A has been changed to RM19.00 PSF and that the transfer of the said Land A, was in fact carried out, based on RM19.00 PSF, has clearly showed that the Plaintiff did not come to this Court with clean hands. With respect, we find that such a contention to be without merit as the Plaintiff’s pleaded case is grounded on the claim for the Original Consideration as stated in the said JV Agreement. As such, there is no necessity for the Plaintiff to plead the existence of the 2nd Supplementary Agreement.

The Defendant further contended that the existence of the 2nd Supplementary Agreement that was signed between the Defendant and the Plaintiff was not disputed. The Defendant further submitted that the Plaintiff had testified that the 2nd Supplementary Agreement which had changed the consideration of the said Land A, from the Original Consideration to the Reduced Consideration and that the sum of RM19.00 PSF was 26 utilised for the purpose of transfer of the land and the stamp duty paid, was also based on RM19.00 PSF.

We are of the considered opinion that there is no merits in this contention of the Defendant that the learned High Court Judge is wrong in law and in fact in deciding that the consideration for the said Land A, is the Original Consideration without taking into account, the existence of the 2nd Supplementary Agreement which stated that the consideration should be the Reduced Consideration.

During cross-examination of DW1, Yeoh Thiam Soon, we noted that he admitted that the Reduced Consideration of RM19.00 PSF as stated in the 2nd Supplementary Agreement is only to facilitate the transfer of said Land A from the Plaintiff to the Defendant for the purpose of the amalgamation of the various Lands.

DW1 himself also admitted during cross-examination that as far as the entitlement is concerned, the price is the entitlement of the Plaintiff in the said JV Agreement. This is what he said:- “PC: But as far as the price is concerned, the entitlement is concerned, that is the only entitlement of the Plaintiff The price. No other. DW1: In the JV Agreement, yes.”

Further, DW1 also admitted that both the audited account and the ledger of the Plaintiff had confirmed that the consideration for 27 the said Land A, is the Original Consideration. “PC: So in fact the audited account ... am I right to say that the audited account of the Plaintiff also confirm that this is the price of the consideration, 39.36? DW1: Yes. PC: Correct? Is audited account confirmed that, right? Am I right? DW1: Yes. PC: In fact Dato' that even the ledger of the Plaintiff ... the ledger, the computer accounting software that you maintain in the Defendant also has this figure of 39.36 as the consideration? Am I right? DW1: I'm not very sure about that but I supposed so.” (Emphasis added)

DW1 also confirmed that the 2nd Supplementary Agreement was prepared by a lawyer by the name of Ricky Tan. The Defendant could have called the said Ricky Tan as their witness since he was in the meeting and had prepared the said Supplementary Agreement and thus is a material witness to prove DW1's testimony that the Original Consideration for the said Land A, had been reduced to the Reduced Consideration. We find that the Learned High Court should have invoked an adverse inference against the Defendant for failing to call the lawyer to testify under section 114(g) of the Evidence Act 1950.

Besides that, the Defendant's Account Manager, PW2, Yvonne Lim Lee Hwa testified that she was not informed of the reduction or to update the account to reflect the purported 28 reduction of the consideration of the said Land A.

Further, DW1 had admitted that the Plaintiff paid the Real Property Gain Tax in respect of the said Land A, based on the Original Consideration and he, as the director and shareholder of the Plaintiff had issued a cheque from his personal fund to contribute his portion to pay for the Real Property Gains Tax.

Clauses 1(a) and (b) of the 2nd Supplementary Agreement (at page 136 of Enclosure 6) clearly shows that the purpose of the transfer of the said Land A and that the Plaintiff's entitlement shall remain the same as follows: -

(a) The Parties agree that the JV Partner shall execute all reasonable documents at the expense and cost of the Developer to give intention to the transfer and amalgamation of the said Land A pursuant to the JV and for this purpose, the consideration of the transfer shall be in the sum of RM19.00 PSF amounting to the total sum of RM3,364,356.00 (approximately 177,071.40 sq. ft); and

(b) For avoidance of doubt, the JV Partner entitlements and rights and interest shall remain the same in the JV and shall be distributed in the manner provided therein.

In the light of the above, we find that there is cogent evidence that there was no reduction of the Original Consideration of the 29 said Land A, to the Reduced Consideration as alleged by the Defendant. The Defendant’s contention is inconsistent with all the relevant contemporaneous documents.

In respect of the Cross Appeal, we are of the considered opinion that the Learned High Court Judge did not err in arriving in his decision and did not commit any appellate error that justify our intervention as the Learned High Court Judge has made finding of facts based on the evidence before him and applied the relevant laws correctly.

Premised on the reasons enumerated above, we find that there are merits in the appeal and the appeal is allowed with costs. In the premises, we order that judgment be entered against the Defendant in the following terms:-

(a) For the sum of RM6,959,685.18;

(b) Interest at the rate of 5% per annum on the said sum of RM6,959,685.18 from 09.02.2016 until the date of judgment; and

(c) Interest at the rate of 5% per annum on the said sum of RM6,959,685.18 from the date of judgment until full and final settlement. The decision of the High Court dated 1.6.2020 is set aside. 30

In respect of the cross appeal filed by the Defendant, we find that there are no merits in the cross-appeal. In the premises, we dismissed the cross-appeal with costs.

We award global costs to the Plaintiff, in the sum of RM35,000.00 subject to allocator. Dated: 12th October, 2021 sgd (LEE HENG CHEONG) Judge Court of Appeal, Malaysia For the Appellants : Mr. Chong Phow Yew together with Mr. Lee Han Meng For the Respondents : Mr. Richard Tee together with Ms. Caryn Shua