JCW

[Strata Management Act/Whether the AGM or EGM of a Management Corporation can be injuncted and/or postponed by the Court – whether it is an offence and/or holding of AGM or EGM (when called) is mandatory, jurisdiction of the Court ; whether prevention of voting rights in an AGM or EGM in respect of sub-judice matters and/or disputed charges is proper] Justin was the counsel for the Appellants in all 3 Appeals herein. The Court of Appeal allowed all 3 Appeals. The said Court of Appeal decision is of significance and/or importance where amongst others :   (i)     It deals with the issue as to whether the Court has power to injunct and/or postpone an AGM which ought to be held annually under the Strata Management Act 2013  (SMA) and also an EGM which ought to be held when properly requisitioned by proprietors.   (ii)    The Court examined paragraphs 10 and 11 of the 2nd Schedule of the SMA and also Regulations 34 (1) and (2) of the Strata Management (Maintenance and Management) Regulations 2015(SMR) and held that :   “Based on the provisions provided in the SMA and the Schedule, we are  of the considered view that there is no express provision in the SMA to allow for the AGM and/or EGM to be postponed or a blanket prohibition of any AGM or EGM until full and final disposal of the Suit below”   (iii)   The Court of Appeal also referred to the previous High Court decision in Perbadanan Pengurusan Anjung Hijau v Pesuruhjaya Bangunan Dewan Bandaraya Kuala Lumpur [2017] 11 MLJ 554 which held that even if a statutory provision is mandatory, the Court may still be able to extend time under paragraph 8 of the Schedule of the Courts of Judicature Act 1964 and held that this decision could no longer be relied on by the 1st Defendant as it had been reversed by the Court of Appeal  and instead “clearly shows the opposite that no such power or jurisdiction exists”.   (iv)   The Court of Appeal also held that a perusal of the alleged causes of action of both the Statement of Claim and the 1st Defendant’s Co-Defendant Action clearly show that the alleged causes of action have got nothing to do with any alleged issue of AGM and/or EGM. In fact, the Plaintiffs can still pursue their claim against the Defendants even if the AGM and/or EGM is called. The Court also held that “there can be no serious issues relevant for the injunctions ordered by the Learned High Court Judge”   (v)     The Court of Appeal further held that the excuse given by the 1st Defendant that they are unable to prepare proper accounts for the AGM is without basis and the records show that the Report and Financial Statements of Jaya One Management Corporation as at 31/12/2020 have been finalised since on or about 30/8/2021 and  even if the financial report was not fully ready at the material time, the management account is sufficient enough for an AGM (see paragraph 7 of COB’s letter dated 15/11/2021).   (vi)   The Court of Appeal further stated that since 15/12/2021(High Court Orders) until today, there was no AGM held for the Jaya One Development which consists of about 908 parcel proprietors and neither can any parcel proprietors call for any EGM to address any issues concerning the development which may not even concern the Suit.   (vii)  The Court further took the view that it is the statutory duty of the 1st Defendant to hold the AGM yearly and to also hold the EHM required by parcel owners , instead of acting against its duty.   (viii) On the separate issue of an injunction filed by the 2nd Defendant (Appellant) against the dismissal of the said injunction to injunct the 1st Defendant from voting in the AGM by reason of disputed Invoices for sewerage charges imposed by the 1st Defendant, the Court held that the injunction ought to be allowed against the 1st Defendant.   (ix)    The Court of Appeal held that it is not proven that there are such sewerage charges in arrears as the 1st Defendant’s claim is still before the Court and pending determination before the Court. The Court agreed with the 2nd Defendant’s counsel’s submission that the 1st Defendant cannot rely on Paragraph 21(2) of the Second Schedule of the SMA to prevent the 2nd Defendant from voting when the sums due under the purported sewerage charges are disputed and sub-judice pending Court proceedings.   (x)     The Court of Appeal further held that there was no Invoice issued to the 2nd Defendant before the Suit was filed by the Plaintiffs and certainly before the said 1st Defendant’s Notice of Claim was filed and it is trite law that the 1st Defendant cannot improve their claim with facts that transpire after the date of pleading.   (xi)    The Court of Appeal also held that the 1st Defendant’s action shows that the 1st Defendant intends to use such purported outstanding sewerage charges to prevent the 2md Defendant from voting in the AGM and/or any general meeting of the MC and that :   “The aforesaid conduct by the 1st Defendant shows that their Co-Defendant’s Action is wrong and premature without Invoices and it was not bona fide” (xii) The Court of Appeal held that it will cause more prejudice and injustice to the 2nd Defendant by preventing the 2nd Defendant from voting by reason of the alleged sewerage charges which would be irreparable and cannot be adequately compensated by damages. (xiii) The 2nd Defendant also offered to deposit the disputed claim of outstanding sewerage charges into Court pending the disposal of the 1st Defendant’s Co-Defendant claim and there were bona fide issues to be tried and balance of convenience clearly favours the grant of an injunction in favour of the 2nd Defendant.

[Consequential Order to extend time after first order given by the Court of Appeal was breached] Justin was the counsel for the Defendants/Appellants in this case. In this case, pursuant to the Defendants’ 1st Appeal (CA), the following order was made by CA on 25.8.2021 [CA’s Order (25.8.2021)], among others: (1)the Defendants’ 1st Appeal (CA) was dismissed {Paragraph (a) [CA’s Order (25.8.2021)]}; and (2)the HC’s Dismissal (Defendants’ Striking Out Application) was varied wherein the Plaintiffs were required to join Mr. Soo and Ms. Lim as co-plaintiffs or co-defendants in the Suit within 14 days from the date of CA’s Order (25.8.2021) {14 Days Period [Paragraph (b)]} and if the Plaintiffs fail to do so, the Suit shall stand as struck off {Paragraph (b) [CA’s Order (25.8.2021)]}. Pursuant to Paragraph (b) [CA’s Order (25.8.2021)], on 2.9.2021 the Plaintiffs filed an application to join Mr. Soo and Ms. Lim as parties in the Suit [Plaintiffs’ Joinder Application (HC)]. The Plaintiffs’ Joinder Application (HC) was supported by an affidavit purportedly affirmed on 2.9.2021 by the second plaintiff (2nd Plaintiff) before a Commissioner for Oaths, Tengku Fariddudin bin Tengku Sulaiman (CFO). The Defendants objected to the Plaintiffs’ Joinder Application (HC) on the ground that, among others, the 2nd Plaintiff’s affidavit had not been affirmed before the CFO. The learned HC Judge struck out the Plaintiffs’ Joinder Application (HC) with - (1)no order as to costs; and (2)liberty to file a fresh Plaintiffs’ Joinder Application (HC) subject to “direction” (arahan) which may be obtained by the Plaintiffs from the CA with regard to the 14 Days Period [Paragraph (b)] (time period for the Plaintiffs to join Mr. Soo and Ms. Lim as parties in the Suit) The following three questions shall be decided in this judgment: (1)whether the CA is functus officio and cannot extend the 14 Days Period [Paragraph (b)]. This issue discusses the CA’s discretionary power under r 93 read with r 1A of the Rules of the Court of Appeal 1994 (RCA); (2)can the CA vary Paragraph (b) [CA’s Order (25.8.2021)] and order the Plaintiffs to file an application in the HC to join all relevant parties in the Suit within 14 days from the date of the order of this CA on 18.4.2023 (instead of the requirement for the Plaintiffs to obtain an order from the HC to join Mr. Soo and Ms. Lim in the Suit)? This concerns an interpretation of the purpose of CA’s Order (25.8.2021); and (3)whether the CA can vary Paragraph (b) [CA’s Order (25.8.2021)] pursuant to - o(a)r 105 RCA; and o(b)s 69(4) and (5) of the Courts of Judicature Act 1964 (CJA); without any appeal or application by the Plaintiffs to the CA. The Court stated that they were not able to find any previous Malaysian case which has decided on the above questions. The Court inter-alia allowed the variation of the Court Order and amongst others ordered that the Plaintiffs shall file an application to join all relevant parties in the HC within 14 days from the date of this order of CA (18.4.2023) and upon such a failure, the Suit shall be struck out

[Assessment of Damages – effect of previous consent order, abandoned medium costs apartment replaced by high end condominium, unjust enrichment, etc] This is an Appeal emanating from an assessment of damages, where the Court of Appeal dismissed the Appeal against the High Court decision where the Learned High Court Judge agreed with the respondent's/defendant's expert valuation report and rejected the appellant's /plaintiff's expert valuation report and the High Court also dismissed the appellant's/plaintiff's claim for liquidated ascertained damages (LAD) or alternatively loss of rental. After a series of litigation and appeal leading to the Federal Court , the Plaintiff did not succeed on specific performance and merely obtained damages against the Defendants The Grounds of Judgment of the Court of Appeal involves the important consideration of the question of law as to amongst others : (i)the effect of a Consent Order earlier entered by parties on the assessment of damages and whether it has now become academic and/or superseded (ii) unjust enrichment and whether the valuation should be based on a medium costs apartment (project abandoned) or a high end condominium ( built) (iii) effective date of valuation i.e. whether it should be based on the date of breach of contract or the Federal COurt decision binding parties (iv) whether the Plaintiff can still claim for LAD and/or rental when they are not entitled to specific performance The Court of Appeal held amongst others as follows :  (1)  Upon analysing the contemporaneous matters of the Court of Appeal Grounds of Judgment in Antara Vista Sdn Bhd v Rumaya Properties Sdn Bhd [2017] MLJU 1964; the Broad Grounds of the Federal Court decision and also the terms of the Consent Order, the Court is of the considered view that the Court of Appeal Order which was affirmed by the Federal Court should be the basis of assessment of damages before the High Court. (2) Based on the Court of Appeal Grounds of Judgment, the Court agree with learned counsel for the defendants' submission that the Court of Appeal  had directly ruled and held that "a monetary compensation would be the appropriate remedy to be awarded to the plaintiff in relation to the 18 units of medium-costs apartments that formed the subject matter of the 18 principal agreements". By this specific reference, the only inference that can be drawn is that the Court of Appeal is of the view the damages to be assessed should be based on the value of the medium- cost apartment in Vista Damansara and not the high -end condominium in Boulevard Residence. (3) It is pertinent to note that the Court of Appeal in Antara Vista did consider the issue of unjust enrichment and the differences between the development of Vista Damansara and Boulevard Residence. From the excerpt of the  of the Federal Court's Broad Grounds, the Federal Court took into account relevant factors to award damages in lieu of specific performance to the Plaintiff including amongst others "the present status of the subject matter" and "the element of unjust enrichment" (4) As to the element of "unjust enrichment"  it is crystal clear that the order of specific performance would unjustly enrich the Plaintiff. From the undisputed facts, the plaintiff paid a total sum of RM2,657,950 under the SPAs to purchase the medium costs apartments and If the order of specific performance is allowed, the value of 18 high end condominium as certified by the Plaintiff's valuer is in the whopping sum of RM12,822,0000 a nearly five fold increase comparing to the transacted value. (5) The Consent Order should be read in a purposive manner. From the choice of words used in the Consent Order, it's obvious that the 1st defendant desires to proceed with the development of Boulevard Residence and at the same time agreed to preserve the Plaintiff's right to make a claim against the 2nd defendant. Based on the scheme the intention was to preserve the status quo in the event that the Plaintiff succeeds in getting the specific performance order of the SPAs (6) Once the Court of Appeal and the later Federal Court disallowed the Specific Performance Order to the Plaintiff, the purpose of the Consent Order  can no longer stand. It has became academic or superseded by the apex court's decision. The Consent Order is no longer enforceable in the assessment of damages since the purpose of the order is overtaken by event or in other words became obsolete. (7)  The effective date of valuation for the assessment of damages should be as at the date the contract is lost i.e. the date when the land was transferred on 11/3/2008 and not the date of the Federal Court decision on 28/8/2019 (9) The Plaintiff's claim for LAD and/or alternatively rental of the 18 medium costs apartment do not arise at all in view of the fact that the plaintiff is not entitled to specific performance of the units. In other words, the claim for LAD or loss of rental is only possible if the Plaintiff is entitled to physical possession of the units and there is a delay in the delivery of vacant possession, which is not the case here. It is not disputed the 2nd defendant has abandoned Vista Damansara's development and no longer has the ability to deliver vacant possession of units to the Plaintiff under the SPAs.

[LAD – delay to deliver vacant possession due to TNB not completing electricity supply works] Chooi Peng and Victor (with Iris) acted as counsel for the Appellant/Defendant. The High Court allowed the Appeal against the judgment against the appellant after a full trial. Amongst others, the High Court held that the Defendant had successfully established that all the extensions of times were issued by the Engineer based on the opinion given by the Architect by reason of delay by TNB. The Court held amongst others that it was unfair for the Defendant to be liable to pay LAD when the delay in delivery was clearly not attributable to the Defendant. Instead, TNB had admitted that the said electricity provider had delayed in completing electricity supply work for the project.

[Loan Agreement – denial of signature and handwriting expert; stamping issue] Alvin was the counsel for the Plaintiff in this case. The High Court granted Summary Judgment against the Defendant in this case in respect of a moneylending transaction vide Loan Agreements. The key points raised in the High Court Grounds of Judgment include:   (i)Signature Authentication: The Defendant's denial of his signature on the loan agreements is deemed untenable due to the absence of a police report or a report by a handwriting expert suggesting forgery (refer to para 18 of the Grounds). (ii)Reliance on Loan Agreement Terms: Despite a lack of other supporting evidence regarding the disbursement of the loan sum to the Defendant, the Plaintiff is entitled to rely on the terms of the loan agreement, which state that the loan sums were disbursed and acknowledged by the Defendant (refer to para 20 of the Grounds). (iii) Basis of Cause of Action: The Plaintiff's cause of action does not depend on whether the loans are listed in the assets and liabilities of the Deceased's Last Will; rather, it is based on the loan agreements. The Plaintiff's right to commence the action is substantiated under Section 8(1) of the Civil Law Act 1956 and Section 59 of the Probate and Administration Act 1959 (refer to paras 21 and 22 of the Grounds). (iv) Late stamping: The delay in stamping on the loan agreements  is not considered a valid defence to the Plaintiff's claim (refer to para 31 of the Grounds). (v) Anticipatory Breach and Repudiation: The Defendant's failure to repay the loan in accordance with the repayment timeline agreement is construed as an anticipatory breach and repudiation of the entire obligation to pay the full loan amount. The Plaintiff is justified in accepting this repudiation and claiming immediate payment (refer to paras 32 and 33 of the Grounds)

[Guarantee – whether Director signed the same as a personal guarantee or on behalf of the Defendant company] Justin acted as counsel for the Plaintiff in this case. In this case, Summary Judgment was entered against the Defendant based on a Guarantee.  The High Court amongst others held that : (i) The Defendant's argument that it did not order the goods and cannot be made liable for Ire-Tex's debt is misconceived as a guarantee is a contract to perform the promise or discharge the liability of a third person under Section 79 of the Contracts Act (ii) The Defendant's denial that it executed the Corporate Guarantee dated 30/4/2016  on the basis that it is a personal guarantee by its signatories is not accepted as the Defendant issues a Circular Resolution dated 27/5/2016 which ratified the Corporate Guarantee and provided authority to any of the Defendant's directors to sign the Corporate Guarantee on behalf of the Defendant. (iii) The Defendant argues that the Corporate Guarantee is not executed in the Defendant's common seal. As this defence is not pleaded it must fail. Further, the Circular Resolution  do not support such a defence where the said Resolution provides that authority is given      (a) for any director of the Defendant to sign the Corporate Guarantee     (b) to affix the Defendant's common seal onto the Corporate Guarantee, "if so required" As such, the fact that the common seal was not affixed does not mean that the signatories signed the Corporate Guarantee in their personal capacities.

[Construction of Contract – comparison of clauses in the event of breach and whether remedy of specific performance is available] Justin was the counsel for the Appellant/Defendant in this case. ON appeal, the High Court allowed the Appeal and struck out the Respondent/Plaintiff’s case. The Court amongst others held as follows : (i)As the remedy of specific performance is available to the Defendant ( the Purchaser) when there is a breach of Section 5.02 (2) by the Plaintiff but was not available to the Plaintiff ( the Vendor) when the Defendant breaches Section 5.03 (1), it is only logical and commonsensical to interpret the two clauses together to mean that the option for specific performance is only available to the Defendant when the Plaintiff breaches the Second Agreement, but it is not an option or election available  to the Plaintiff (ii)Section 5.03 of the Second Agreement ought to be construed strictly. Where a particular breach is anticipated by an agreement and a specific remedy is provided in that event, the contractual remedy must be seen as being intended as a substitute for, and not as a supplement to , those at common law (iii) Based on interpretation of contract, oral evidence by witnesses is irrelevant and unnecessary

[CCC , vacant possession, LAD & force majeure] Justin & Chooi Peng were the counsel for the Appellant in this case. The Court inter-alia held that : (i) The architect’s letters did not qualify as valid certificates of extension of time which would justify the first respondent’s delay in delivering the vacant possession of the said properties to the appellant because: (a) the letters made no mention of the SPAs and specifically cl 13.1.1 of the SPAs which the first respondent relied heavily upon; (b) the letters did not state that in the opinion of the architect, the events in the said letters were events beyond the developer’s control ;and (c) the letters did not state any opinion at all and merely state that there would be delays in the completion of the construction works . (ii) The breaches caused by the main contractor’s restructuring exercise were not force majeure events and were not beyond the first respondent’s control in the said project under cl 13.1.1 of the SPAs. Contractors were under the control of their employers, and the employer such as the first respondent could not utilise their contractor’s breaches or defaults, to gain extension of time (iii)Pursuant to cl 13.2.2 of the SPAs, the appellant would be deemed to have taken the possession of the said properties within 14 days from the date of the first respondent’s letter, which would be on 13 January 2016. The parties had voluntarily entered into the SPAs and had conducted their affairs in accordance with the terms and conditions of the SPAs. The sanctity of the contract entered between parties should be preserved. There was merit in the first respondent’s contention that cl 13 of the SPAs merely required the first respondent to physically complete works and provide a certificate of practical completion by the architect as sufficient to provide vacant possession and that it would matter not, if the said properties was not connected with the essential utilities (iv)Whether the damage was quantifiable or otherwise, the court had to adopt a common-sense approach by considering the genuine interest which an innocent party may have and the proportionality of a damages clause in determining reasonable compensation. Section 75 of the Contracts Act 1950 provided that reasonable compensation must not exceed the amount so named in the contract. Consequently, the impugned clause that the innocent party sought to uphold would function as a cap on the maximum recoverable amount.