LOH KUAM HONG (NO. K/P: 650403-07-5125) KEWIRA JAYA SDN BHD (NO. SYARIKAT: 504851-V)

DALAM MAHKAMAH TINGGI MALAYA DI PULAU PINANG GUAMAN SIVIL NO. PA-22NCVC-159-07/2019 ANTARA LOH KUAM HONG ... PLAINTIF (NO. K/P: 650403-07-5125) DAN KEWIRA JAYA SDN BHD ... DEFENDAN (NO. SYARIKAT: 504851-V) GROUNDS OF JUDGMENT [1] [2] [3] Application This is the Defendant's application to strike out the Plaintiff's statement of claim (“SOC”) pursuant to Order 18 Rule 19(1) (b), (c) and (d) Rules of Court 2012 (“RC”). | heard and allowed the application. These are the grounds for my decision. Background Facts The background facts are as follows. The Plaintiff purchaser entered into a sale and purchase agreement with the Defendant developer dated 17.06.2013 (“SPA”) for the purchase of a condominium (“Property”) under the Setia Pinnacle Project for RM [4] [S] [6] [7] 835,900.00 (“Purchase Price”). The SPA was in the statutory form of Schedule H of the Housing Development (Control and licensing) Regulations 1989. Vacant possession was delivered in October 2017. Water Odour Soon after in December 2017, the Defendant complained to the Plaintiff that the water supplied to the Property had a foul smell. There followed a series of complaints about the quality of the water, but it remained unresolved despite the Defendant's efforts to address the issue. Tests Perbadanan Bekalan Air, the Plaintiffs and Defendant’s respective experts conducted tests. The general consensus was that the water contained bacteria known as “pseudomonas aeruginosa” and that the contamination was only traceable somewhere after the main source from Perbadanan Bekalan Air. Implication The Plaintiff is of the opinion that quality of the water supplied to the Property is below the acceptable standard according to law, while the Defendant is of the opinion that the water is fit for human consumption after the process of chlorination or boiling. Joint Management Board (“JMB”) In the meantime, the Joint Management Body (“JMB”) was set up on 23.09.2018 and the common property including the plumbing were vested in the JMB henceforth. Demand [8] It was not until after 1% years from the handover in February 2019 that the Plaintiff wrote to the Defendant demanding that the Purchaser bought the Property back from the Plaintiff at the same purchase price and make further compensations to the Plaintiff. For Purposes of Striking Out [9] As this is a striking out application, it is not necessary to make a finding on implication of the contaminated water at this stage of the proceedings, but to adjudicate on the basis of the Plaintiff's evidence taken at its highest — that the water is contaminated and not fit for human consumption. Statement of Claim & Prayers [10] The Statement of Claim (“SOC”) basically sets out the Plaintiff's complaint about the water quality and states that the Defendant is required to repurchase the Property from the Plaintiff. The prayers sought for an order to nullify the SPA and that the Defendant compensates the Plaintiff restiuttio ad intergurm comprising inter alia the purchase price (RM839,500.00), sums expended on renovations (RM100,000.00), maintenance charges paid (unspecified) and the loss of use of the Property (RM3,000.00/month). Not Pleaded [11] What is more pertinent though is what the Plaintiff had failed to plead. There are no references to the terms of the SPA relied upon — not even any implied terms — nor the alleged breaches thereof and there is no basis furnished for nullifying the SPA nor for claiming compensation restiuttio ad intergurm (as opposed to the conventional claim for damages for breaches of contract). Grounds for Striking Out [12] The Defendant, in their application to strike out the SOC, have to their credit gone out of their way to suggest the terms of the SPA and the basis for nullifying the SPA, that the Plaintiff might have been relying on. They then go on to submit that the claim is, nevertheless, bound to fail. Possible Clauses Relied On [13] The Defendant suggests that the Plaintiff may be relying on 2 clauses. First, Clause 26(1)(b) of the SPA, which reads as follows: “26(1) The Vendor shall let the Purchaser into possession of the said Parcel upon the following: (b) water and electricity supply are ready for connection to the said Parcel;...” [14] Second, Clause 29 of the SPA, which reads as follows: “29(1) Any defect, shrinkage or other faults ... which are due to defective workmanship or materials ... shall be repaired and made good by the Vendor ...” Possible Basis for Nullifying SPA [15] The Defendant then suggests that the Plaintiff may be seeking to nullify the SPA pursuant to section 40 Contracts Act (“CA”), which reads as follows: “40. Effect of refusal of party to perform promise wholly When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.” Bound to Fail [16] The Defendant goes on to submit that the Plaintiffs claim is bound to fail for 4 reasons. First Point — No Breach [17] First, Clause 26(1)(b) SPA only places an obligation on the Defendant to ensure that water was ready for connection and Clause 29(1) SPA only places an obligation on the Defendant to make good construction defects. Read together, the Defendant's obligation extends to ensuring the plumbing works when water flows through the pipes and to repairing plumbing defects, if any e.g. leakages, blocks etc. But that is as far as it goes. The obligations do not extend to guaranteeing the quality of the water that flows though the pipes. As such, there has been no breach of either Clause 26(1)(b) or Clause 29(1) SPA. [18] | do not agree with the Defendant’s reasoning. | can envisage a situation where the contamination may be caused by defects in the plumbing. For example, the poor design or quality of the plumbing may create an environment for the bacteria to flourish. Second Point — Wrong Party [19] Second, the Plaintiff has sued the wrong party as the Defendant developer has handed over control over the said common property to the JMB on 23.09.2018. The Plaintiff should thus be suing the JMB. [20] | do not agree with the Defendant's reasoning. If the problem stems from the construction of the plumbing system or maintenance thereof prior to the handover to the JMB, then | don’t think that the Defendant would have divested themselves of that liability when control was passed over to the JMB. But if the problem is caused by poor maintenance of the plumbing system after the handover to the JMB, then the liability may rest with the JMB. Not to be discounted is the possibility that the problem may involve both the Defendant and the JMB. [21] In this case, the Defendant is simply assuming that the complaint is one of maintenance after the handover to the JMB and, as such, the claim should be directed towards the JMB. Third Point — No Total Failure of Consideration / No Nullification [22] Third, even if it were a breach of Clause 26(1)(b) or Clause 29(1) SPA, it is not a ground for nullifying the SPA because it is not a total failure of consideration; and, in any event, section 40 Contracts Act 1950 (“CA”) only permits the Plaintiff to terminate and not nullify the agreement (LSSC Development Sdn Bhd v Thomas Iruthayam & Anor. [2007] 2 CLJ 434 (“LSSC’)). [23] In LSCC, the Court of Appeal addressed a similar issue — in fact, it was even worse as there was no water flowing at all, no electricity or certificate of fitness there — held as follows: “[13] In the first place, as | have already demonstrated, at common law the right to "rescind" a contract by way of termination only arises when there has been a total failure of consideration. In the second place, as pointed out by Lords Wilberforce and Diplock in Photo Production, where there is a breach of contract there is no right in an innocent party to reverse the transaction to status quoante; there is only a right to recover damages for breach of contract. In the third place, the position is no different under the Act as | shall now demonstrate by reference to its relevant provisions. [14] Section 40 is the first provision. This is what it says: When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. [15] Next is s. 56(1) which reads: When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. [16] Notice that s. 40 uses the phrase "in its entirety" to describe the extent of the breach. So, the contract breaker must have "refused to perform... his promise in its entirety" before "the promisee may put an end to the contract". This is a reproduction of the common law. To re-call, at common law: Where the event resulting from the failure by one party to perform a primary obligation has the effect of depriving the other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the contract, the party not in default may elect to put an end to all primary obligations of both parties remaining unperformed. See, Photo Productions, per Lord Diplock. [17] Now | turn to s. 56(1). It uses the phrase "fails to do any such thing at or before the specified time" to describe the nature of the breach which would bring a particular fact pattern within it to make a contract voidable. The question, then, in each case must be this: Did the defendant fail to perform every part of his promise? If the answer is "No", thens. 56(1) has no application. In my judgment, given the facts of the present instance, ss. 40 and 56(1) should be read together. When that is done, the question that arises for determination is whether the instant defendant refused to perform its promise in its entirety by not doing any of the things it promised to do within the time specified by the contract. On the facts that question must receive a negative response. [18] Here, the defendant promised to convey the land and house. It did that. All that it did not do is to connect the electricity and water and obtain the certificate of fitness. This did not in my judgment amount to a failure or refusal to perform the contract in its entirety or a failure to do any of the things it had promised. It follows that this is not a case where there was a fundamental breach by the defendant which resulted in the plaintiffs being deprived of - to borrow the words of Lord Diplock in Photo Productions - substantially the whole benefit which it was the intention of the parties that they should obtain from the contract. The defendant's breach did not go to the root of the contract. The contract was therefore not "voidable" under s. 56(1). Hence, the plaintiffs were not entitled to terminate it. Their termination was therefore not lawful. [24] | agree with the Defendant. The Court of Appeal decision of LSSC is correct and binding on this Court. The option to pursue the conventional claim for damages for breach of contract or even specific performance to make good the defects is there; but the Plaintiff has, for reasons only known to himself, rebuffed them. Fourth Point — Estoppel [25] Fourth, even if the Defendant could rescind the SPA, he is estopped from so doing by his actions that only served to affirm the SPA, coupled with the time lapse of 1 % years (TTDI Jaya Sdn Bhd v. Yew Hong Teng [2017] 1CLJ 436 (“TTDI’)). [26] In TTDI, the Court of Appeal addressed a similar issue — where the developer had been called to attend to 160 defects but apparently not to the satisfaction of the purchaser — held as follows: “[56] Even assuming for one moment that we were wrong in our evaluation of evidence as stated above and the facts disclosed that there was in fact total failure of consideration to warrant a rescission of the SPA, the next issue we have to consider was whether the plaintiffs were still entitled to the relief in the form of a rescission of the SPA, given the facts that the plaintiffs had through their various conduct chosen to affirm the terms of the SPA. In short whether the doctrine of estoppel by conduct would apply to the plaintiff in the instant case. [57] In order to resolve this issue, we had sought guidance from the Federal Court case of Boustead Trading (1985) Sdn Bhd v. Arab Malaysian Merchant Bank Bhd [1995] 4 CLJ 283 where the court had stated as follows: The time has come for this Court to recognise that the doctrine of estoppel is a flexible principle by which justice is done according to the circumstances of the case. If is a doctrine of wide utility and has been resorted to in varying facts patterns to achieve justice. Indeed, the circumstances in which the doctrine may operate are endless. 10 [58] The facts as shown in para. 37 were significant to demonstrate to the court that the plaintiffs had exercised their rights pursuant to the SPA to affirm the terms and conditions of the SPA. The plaintiff could not at this stage claim that there was total failure of consideration especially when they had sat on their rights to pursue a claim for rescission. The plaintiff had further exercised their rights under cl. 25(1) to request the defendant to rectify the 160 defects complained in the Complaint Forms No. 01463. [59] The plaintiffs would therefore be estopped from denying that they had taken vacant possession of the property pursuant to the SPA. The plaintiffs were deemed to have taken vacant possession of the property on 13 October 2004, which was 14 days after receiving the defendant's notice dated 29 September 2004 under cl. 23(4) of SPA. [27] | agree with the Defendant. The Court of Appeal case of TTDI is correct and binding on this Court. The Plaintiff by engaging the Defendant to rectify the complaints for 1 % years since accepting vacant possession is estopped from terminating the contract. Findings [28] While | may not agree with the Defendant's reasoning on the first two points above mentioned, they were merely hypothetical considerations. The fact remains that the SOC did not disclose a cause of action against the Defendant to begin with. 11 [29] Further, the third and fourth points would have, in any event, seen an end to the Plaintiff's claim. [30] |, therefore, find that the Plaintiffs claim to nullify the SPA and to claim compensation restiuttio ad intergurm is bound to fail. No Application to Amend SOC [31] The Plaintiff is adamant that the only remedy he wants is to nullify the SPA. The Plaintiff has intentionally not sought for any alternative remedies of damages for breach of contract or for specific performance to make good the alleged defects. Decision [32] For the above reasons, | allow the Defendant’s application to strike out the SOC. Dated 27" August 2020 Judicial Commissioner High Court of Malaya, Penang 12 PEGUAM Peguamcara Plaintif: Tetuan Phee, Chen & Ung Peguambela & Peguamcara No.11B, Jalan Tavoy 10050 Pulau Pinang Peguamcara Defendan: Tetuan B.C. Teh & Yeoh Peguambela & Peguamcara Unit 3 & 4, 4th Floor Canton Square No.56, Cantonment Road 10250 Pulau Pinang 13