Syarikat Perumahan Negara Berhad v Haluan Menang Sdn Bhd (BA-24NCvC-371-03/2022)

Haluan Menang Sdn. Bhd.

Cosmic Master Development Sdn. Bhd. …Defendan-Defendan GROUNDS OF JUDGMENT Introduction [1] The Plaintiff seeks the following reliefs in their Amended Originating Summon (OS) at enclosure 13: 30/10/2024 14:44:28 BA-24NCvC-371-03/2022 Kand. 44 S/N e1Kzo1ve5kGsXn8VV4v4Jw i. A declaration that the Plaintiff is the owner of the lands held under GM 3779 Lot 189189, GM 3780 Lot 189190 and GM 3781 Lot 189191 (previously known as GM 864 Lot 1158, GM 865 Lot 1991 and GM 785 Lot 2156) in Mukim Plentong, District of Johor Bahru, Johor Darul Takzim ("the said Lands"); ii. A declaration that the 1st Defendant is a bare trustee of the lands held under GM 3779 Lot 189189, GM 3780 Lot 189190 and GM 3781 Lot 189191 (previously known as GM 864 Lot 1158, GM 865 Lot 1991 and GM 785 Lot 2156) in Mukim Plentong, District of Johor Bahru, Johor Darul Takzim; iii. A declaration that the "Power of Attorney" dated 25.07.2011 is null and void; iv. A perpetual mandatory injunction against the 1st Defendant to execute and complete one "Irrevocable Power of Attorney" with the Plaintiff within seven (7) days from the date of this order; v. That the Plaintiff is given the liberty to seek further orders from the Court; vi. That the cost will be borne by the Defendants; and vii. Other reliefs this Honourable Court deems appropriate. [2] After hearing all parties, I allowed the application and made the following declarations and orders, in brief:

That the Plaintiff is the owner of the said lands;

First Defendant (D1) is a bare trustee of the said lands;

The Power of Attorney dated 25.7.2011 is null and void;

An injunction to compel D1 to execute an irrevocable Power of Attorney with the Plaintiff within fourteen (14) days of this order; S/N e1Kzo1ve5kGsXn8VV4v4Jw

The Plaintiff will add an indemnity clause in the new Power of Attorney to safeguard D1 interest;

The Plaintiff will bear the cost of preparing and filing the Power of

Attorney; and The cost of this application will be borne by the second Defendant (D2) RM2000 paid to Plaintiff (subject to the allocator fee). [3] D2 was dissatisfied with the above orders and has now appealed to the Court of Appeal. Below are my reasons. The Salient Facts [4] Plaintiff is a wholly owned company of the Minister of Finance Incorporated (MOF Inc.), and D1 is the registered proprietor of the said lands. [5] On 22.1.2007, Plaintiff entered into a Development Agreement with D2 appointing them (D2) as the "Design and Build" contractor to develop and complete a development project known as "Projek Taman Seri Molek Perdana, Johor Bahru" (the said Project). [6] D1 and D2 subsequently entered into a sale and purchase agreement on 6.6.2007 to develop the said properties into a mixed residential project for a purchase price of RM12,160,000.00. The transfer is yet to be registered. It is undisputed that the said purchase price was paid in full by the Plaintiff, who, therefore, claims to be the beneficial owner of the said properties. [7] In consideration for the Development Agreement, the Plaintiff agreed to pay RM100,000,000.00 to D2 and subsequently, D1 signed a S/N e1Kzo1ve5kGsXn8VV4v4Jw "Power of Attorney (Limited)" on 6.6.2007 (the 1st PA) to appoint D2 as D1's "Attorney" to carry out the Project. [8] The 1st PA, particularly clause 10, provides that D2 is to substitute Plaintiff as the Attorney. This is to effectively grant Plaintiff the same powers as Attorney to the Project. [9] In order for the Plaintiff to commence work on the said Project, D2 executed a Limited Power of Attorney (by Deed of Substitution) dated 3.10.2007, based on clause 10 of the Power of Attorney (PA) and clause 2.1.3 of the Development Agreement, appointing the Plaintiff as D2's "Attorney" and granting the Plaintiff the same powers conferred on D2. This Limited Power of Attorney purportedly remains in force and is irrevocable during the existence of the Development Agreement. [10] Following that, Plaintiff and D2 entered into a "Project Business Collaboration Agreement" (the Collaboration Agreement) dated 25.7.2011 to expedite the completion of the said Project, where Plaintiff agrees to cooperate with D2 and allow D2 to have full authority in controlling and managing the said Project, including securing the necessary financing to complete the Project and to assume all responsibilities subject to the Plaintiff successfully recovering all monies express in the Collaboration Agreement. [11] The Collaboration Agreement provides that the Plaintiff shall request D1 to revoke the 1st PA and create a fresh Power of Attorney to D2 subject to D2 paying the Recovery Sum to the Plaintiff and D2 forwarding the Corporate Guarantee and Directors Guarantee in favour of the Plaintiff. S/N e1Kzo1ve5kGsXn8VV4v4Jw [12] D2 was then conferred a Power of Attorney dated 25.7.2011 (referred to by parties as the 3rd PA) by D1 and the 3rd PA states, inter alia, as follows:

The Plaintiff is the beneficial owner of the land, having fully paid the Land Costs.

The Power of Attorney is revocable in the event the full recovery sum of RM75,559,182.00, which is inclusive of the Land Cost and the 9% per cent agreed profit to the Plaintiff, is not paid by D2 to Plaintiff within the completion date as stated in the Collaboration Agreement.

The Donor (D1) shall not revoke the Power of Attorney during the subsistence of the Collaboration Agreement. [13] It was submitted, nevertheless, that D2 had failed to make the agreed payments of the full recovery sum to the Plaintiff. To mitigate the default, Plaintiff and D2 executed a Supplementary Agreement dated 22.4.2016 wherein both parties agreed that the sum due and owing to Plaintiff as of 1.3.2016 is RM61,950,782.00 with an interest of 10% per annum from 31.3.2014 until full settlement. D2 again failed to make payments, and multiple time extensions were requested. [14] Eventually, a notice dated 30.10.2019 was issued by the Plaintiff to D2 stating that the Collaboration Agreement has expired due to the failure and neglect of D2, and a letter of demand was sent on 24.1.2022 to D2. [15] The Plaintiff commenced a civil suit against D2 and obtained a Judgment in Default of Appearance in Shah Alam High Court Suit No BA- 22NCVC-97-03/2022 for the amount of RM61,950,782.00 with 10% interest and an amount of RM90,756,834.17 with 5% interest. S/N e1Kzo1ve5kGsXn8VV4v4Jw [16] D2 attempted to set aside the Judgment in Default; however, as it is now, it was unsuccessful, and the judgment is still valid and enforceable. [17] D2 vehemently objected to the OS and contended that there was a legitimate dispute between D2 and Plaintiff over the Housing Developer's Account (the HDA), which D2 contended should be held by joint signatories of Plaintiff and D2. Instead, the signatory parties were the Plaintiff and Bank Kerjasama Rakyat Malaysian, which resulted in D2 having no knowledge of any income going into the HDA. [18] Since D2 was allegedly unaware of the amounts paid to the HDA, they cited some examples to show that they were entitled to deduct a certain amount paid into the HDA, which Plaintiff had utilized. Therefore, D2 argued that they no longer owed the Plaintiff anything. Reproduced the relevant submissions by D2 as follows (enclosure 32):

Currently, a total of 686 units have been sold and end-financing has been obtained where the total collection from sales is RM79,266,722.00 and there is also a balance amount of RM14,755,131.91 being collected as the CCC has been obtained. This amount should be channelled to the HDA (Exhibit "CKS- 2", Enclosure 25).

As of 21.3.2011, from the works completed up to Interim Certificate No. 26, the outstanding amount for the works completed by the 2nd Defendant is RM5,581,000.00 and the amount held in retention sum is RM4,392,000.00 which needs to be deducted from RM75,559,182.00.

There is an amount of money that has been collected and channelled to the HAD, totalling RM8,398,400.00 as of 23.8.2016 and before that, an amount of RM4,500,000.00 was also channelled to the HDA, and utilized by the Plaintiff and, this amount should also be deducted (Exhibit "CKS-3", Enclosure 25). S/N e1Kzo1ve5kGsXn8VV4v4Jw

Furthermore, from the sale of the houses from the said Project, which is 866 units, there is an amount of RM14,755,131.91 which is being deposited into the HDA, therefore, there is no question of the 2nd Defendant owing Plaintiff (Exhibit "CKS-4", Enclosure 25). [19] D2 disputed the termination of the Collaboration Agreement and contemplated challenging it in Court. D2 had filed an action against Plaintiff and Hong Xin Construction in Johor Bahru High Court (JA- 22NCVC-5-01/2020) but was struck out when the Court ordered security for cost of RM100,000.00 to be paid to Plaintiff, and the matter is now pending in the Court of Appeal. [20] In view of the above, D2 now contends that the current position or disputes between D2 and Plaintiff involved issues and conflicts that are unsuitable to be determined summarily via affidavit evidence and should be adjudicated through proper writ action. Analysis and Findings [21] The issue before this Court is solely the effect of the terms in the 3rd PA on both the Plaintiff and D2 to justify a grant of the declaratory relief sought by the Plaintiff in the OS. As for D1, their status as registered owners holding the land in trust for the Plaintiff after full payment of the purchase price is undisputed. Their concerns relate only to their legal obligations to pending or incoming actions by third-party purchasers. [22] The crux of the matter was, therefore, the interpretation of the terms and conditions set out in the agreement between the Plaintiff and D2. [23] Inarguably, it is trite that the parties are bound by the four corners of the contract/agreement. S/N e1Kzo1ve5kGsXn8VV4v4Jw [24] The Federal Court in Catajaya Sdn Bhd v Shoppoint Sdn Bhd & Ors [2021] 3 CLJ 159 on a question of whether termination clauses ought to be construed strictly, which was answered in the positive, it was discussed at length as follows: "[39] … We are of the view that when interpreting a written agreement, the Court must identify the intention of the parties to the agreement. Thus, the terms of the SSA represents the true intention of the parties, defining the obligations and commitments of the parties under the agreement. … [55] In so far as construction of the terms of an agreement, the role of the Court is merely to interpret the terms by examining the words and language used as well taking into consideration the factual matrix of the case. The Court must not even attempt to improve the words used in the clauses which the parties have made themselves, however desirable the improvement may be. His Lordship Dato Gopal Sri Ram JCA (as he then was) in Charles Grenier Sdn. Bhd. v Lau Wing Hong [1997] 1 CLJ 625 elucidated: ... a party to a contract who, after having concluded his bargain, entertains doubts as to the wisdom of the transaction may be in the unfairly advantageous position to invent all sorts of imaginary terms upon which disagreement may be expressed when the more formal document is being prepared in order to escape from his solemn promise. Businessmen would find the law to be a huge loop-hole and commerce would come to a virtual standstill. … [57] The terms and conditions of an agreement that have been agreed to by the parties of the agreement cannot be simply brushed aside and ignored. This Court through the judgment of Azahar Mohammad FCJ in the case Lucy Wong Nyuk King & Anor v. Hwang Mee Hiong [2016] 4 CLJ 813; [2016] 3 MLJ 689 explained the principle of construing a contract as follows: S/N e1Kzo1ve5kGsXn8VV4v4Jw ... it is an established principle of construing a contract that, among others, a contract must be construed as a whole, in order to ascertain the true meaning of its several clauses, and also, so far as practicable, to give effect to every part of it. Each clause in an ordinary commercial contract should be so interpreted as to bring them into harmony with the other clauses of the contract (see National Coal Board v. Wm Neill & Son (St Helens) Ltd [1984] 1 All ER 555 which was cited in Royal Selangor Golf Club v. Anglo-Oriental (M) Sdn Bhd [1990] 1 CLJ 995; [1990] 3 CLJ (Rep) 37 and Mulpha Pacific Sdn Bhd v. Paramount Corporation Bhd [2003] 4 MLJ 357; [2003] 4 CLJ 294). In Australian Broadcasting Commission v. Australasian Performing Right Association Limited [1973] 129 CLR 99, it was held that the whole of the contract has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. … [65] In interpreting a clause in an agreement, it is pertinent to take into consideration the context of the agreement as a whole, to examine the relevant clauses in detail and to consider the relevant factual matrix to give guidance as to the true intent of the parties.." [25] On this premise, I reproduce the following pages in the 3rd PA (enclosure 2, pages 122-123) for ease of reference: S/N e1Kzo1ve5kGsXn8VV4v4Jw S/N e1Kzo1ve5kGsXn8VV4v4Jw S/N e1Kzo1ve5kGsXn8VV4v4Jw [26] The cooperation between the parties is made clear in the agreements they enter into, and they are clear about their intentions as to how the collaboration or alliance works to develop and benefit from said lands. [27] In the circumstances, the understanding as in the 3rd PA must be construed as a whole within its four corners that reasonably reflect the parties' intention. [28] Therefore, the declaration sought by the Plaintiff that they are the beneficial owner of the said lands and that D1 is merely a trustee is technically undisputed. [29] D2's argument regarding the alleged dispute over whether they still owe the Plaintiff any amount is irrelevant to this application. Their complaints were properly brought for adjudication through a series of litigations between them, and D2 may continue to pursue all remedies available to it. In the meantime, however, the legal status in relation to the amount owed and the subsequent impact of D2's non-payment, which has affected the existing PA on the duties and obligations of the parties, must be respected and observed. [30] Consequently, I also find that in view of the default judgment dated 6.4.2022, which has not yet been set aside, the 3rd PA is conditional on the full repayment of the sum of RM75,559,182.00 (clause E of the PA). [31] After D2 had failed to complete the Project, the Plaintiff had hired a third party to complete it. As a result, it was necessary to revoke the 3rd PA and create a new PA so that the Plaintiff could complete the Project. Again, it is undisputed that all parties knew that creating a new PA was S/N e1Kzo1ve5kGsXn8VV4v4Jw necessary to move forward and complete the Project for the collaboration to work. I agree with Plaintiff that without the PA, Plaintiff cannot fulfil its obligations and is exposed to the risk of litigation with third-party purchasers. [32] As the 3rd PA is revoked and declared null and void, to empower Plaintiff to do all acts that may be necessary to effectuate the completion of the Project, D1 is hereby ordered to execute a fresh PA in favour of Plaintiff with additional indemnity clause to be included to safeguard D1's interest in case of future possible litigation. [33] With regard to D1's submissions, I agree with Plaintiff that their unsubstantial reasoning for opposing this application cannot be accepted as they are blowing hot and cold on their clear position in the agreed scheme. Conclusion [34] Having heard all parties, perused all affidavits and read the submissions filed, enclosure 13 is hereby allowed with additional orders as indicated earlier in paragraph 2, and the cost of this application, RM2000, will be borne by D2, subject to the allocator fee. Dated this: 21st October 2024 ~ signed ~ (NOOR HAYATI BINTI HAJI MAT) Judicial Commissioner Shah Alam High Court NVCV 9 S/N e1Kzo1ve5kGsXn8VV4v4Jw Counsels: For the Plaintiff: Aawaisha Steven Asokan Pillai Messrs Sidek Teoh Wong & Dennis For the First Defendant: Simon Tay Lai Eng Messrs Tay L.E. & Co. For the Second Defendant: Manian K. Marappan together with May Soh May En Messrs Manian K. Marappan & Co. S/N e1Kzo1ve5kGsXn8VV4v4Jw