MAJLIS PERBANDARAN AMPANG JAYA V. STEVEN PHOA & ORS.

1 MAJLIS PERBANDARAN AMPANG JAYA V STEVEN PHOA CHENG LOON & 81 ORS Federal Court 17 February 2006 [2006] 2 AMR 563 Federal Court Civil Appeal No 01-4-2004(W) Steve LK Shim, CJ; Abdul Hamid b Mohamad, Arifin b Zakaria, FCJJ Civil procedure — Prerogative writs and orders — Private law claim in negligence for pure economic loss against local authority — Whether remedy ought to have been claimed in public law rather than private law — Whether litigant not barred if, incidentally, determination of issues involved examination of public law issues Tort — Damages — Joint tortfeasors — Liability — Whether multiple defendants committing different acts of negligence would all be considered joi nt tortfeasors — Whether any tortfeasor whose act has been a proximate cause of injury must compensate for whole injury Tort — Negligence — Damages — Pure economic loss — Claim against local authority — Whether remedy ought to have been claimed in public l aw rather than private law — Whether litigant not barred if, incidentally, determination of issues involved examination of public law issues JUDGMENT Abdul Hamid Mohamad, FCJ I have the advantage of reading the judgment of the learned Chief Judge (Sabah & Sarawak). It saves me from having to narrate the background facts as well as having to deal with all the issues raised in the appeal. As I agree with the learned Chief Judge (Sabah & Sarawak) on other issues, I shall only deal with the issue of “post collapse” liability of the appellant (MPAJ). However, before going any further there is one point that I would like to make and, that is, regarding the provision of s 3(1) of the Civil Law Act 1956 which provides: “3 (1). Save so far as other provision has been made or may hereafter be made by any written law in force in Malaysia, the Court shall — (a) in West Malaysia or any part thereof, apply the common law of England and the rules of equity as administered in England on the 7th day of April 1956; (b) in Sabah, apply the common law of England and the rules of equity, together with statutes of general application, as administered or in force in England on the 1st day of December 1951; 2 (c) in Sarawak, apply the common law of England and the rules of equity, together with statutes of general application, as administered or in force in England on the 12th day of December 1949, subject however to subsection (3)(ii): Provided always that the said common law, rules of equity and statutes of general application shall be applied so far only as the circumstances of the States of Malaysia and their respective inhabitants permit and subject to such qualifications as local circumstanc es render necessary.” That provision was legislated, if I may so, by the British one year before the then Malaya obtained her independence and has remained the law of this country for half a century now. Whatever our personal views about it, it is the law and no court can ignore it. That provision says (I am only referring to common law) that the court shall apply the common law of England as administered in England on the given dates provided that no provision has been made or may hereafter be made by an y written law in force in Malaysia. Even then, it is further qualified that it is only applicable so far only as the circumstances of the states of Malaysia and their respective inhabitants permit and subject to such qualifications as local circumstances render necessary. Strictly speaking, when faced with the situation whether a particular principle of common law of England is applicable, first, the court has to determine whether there is any written law in force in Malaysia. If there is, the court does n ot have to look anywhere else. If there is none, then the court should determine what is the common law as administered in England on April 7, 1956, in the case of West Malaysia. Having done that the court should consider whether “local circumstances” and “local inhabitants” permit its application, as such. If it is “permissible” the court should apply it. If not, in my view, the court is free to reject it totally or adopt any part which is “permissible”, with or without qualification. Where the court rejec ts it totally * 590 or in part, then the court is free to formulate Malaysia's own common law. In so doing, the court is at liberty to look at other sources, local or otherwise, including the common law of England after April 7, 1956 and principles of comm on law in other countries. In practice, lawyers and judges do not usually approach the matter that way. One of the reasons, I believe, is the difficulty in determining the common law of England as administered in England on that date. Another reason which may even be more dominant, is that both lawyers and judges alike do not see the rational of Malaysian courts applying “archaic” common law of England which reason, in law, is difficult to justify. As a result, quite often, most recent developments in the common law of England are followed without any reference to the said provision. However, this is not to say that judges are not aware or, generally speaking, choose to disregard the provision. Some do state clearly in their judgments the effects of that pr ovision. For example, in Syarikat Batu Sinar Sdn Bhd & 2 Ors v UMBC Finance Bhd & 2 Ors [1990] 2 CLJ 691, Peh Swee Chin J (as he then was) referring to the proviso to s 3(1) said: 3 We have to develop our own common law just like what Australia has been doing, by directing our mind to the “local circumstances” or “local inhabitants”. In Chung Khiaw Bank Ltd v Hotel Rasa Sayang [1990] 1 MLJ 356 the Supreme Court, inter alia, held: “(4) Because the principle of common law has been incorporated into statutory law as contained in s 24 of the Contracts Act 1950, the trend on any change in the common law elsewhere is not relevant. Any change in the common law after April 7, 1956 shall be made by our own courts.” In the judgment of the court in that case, deliver ed by Hashim Yeop A Sani CJ (Malaya), the learned Chief Justice (Malaya), said, at pp 361-362: “Section 3 of the Civil Law Act 1956 directs the courts to apply the common law of England only in so far as the circumstances permit and save where no provision has been made by statute law. The development of the common law after April 7, 1956 (for the States of Malaya) is entirely in the hands of the courts of this country. We cannot just accept the development of the common law in England. See also the major ity judgments in Government of Malaysia v Lim Kit Siang” [1988] 2 MLJ 12 — added]. That case is an example where our statute has made specific provisions incorporating the principles of common law of England. However, it shows the effect on the applicatio n of the common law in England. In the instant appeal, we are dealing with a situation where no statutory provisions have been made. In Jamal b Harun v Yang Kamsiah & Anor [1984] 1 MLJ 217 (PC) a “running down” case in which the issue of itemisation of d amages was in question, Lord Scarman, delivering the judgment of the board, inter alia, said: “Their Lordships do not doubt that it is for the courts of Malaysia to decide, subject always to the statute law of the Federation, whether to follow English case law. Modern English authorities may be persuasive, but are not binding. In determining whether to accept their guidance the courts will have regard to the circumstances of the states of Malaysia and will be careful to apply them only to the extent that t he written law permits and no further than in their view it is just to do so.” As early as 1963, this provision had been criticised. Professor LC Green, in an article “Filling Lacunae in the Law” (1963) MLJ xxviii, commented: “Apart from any problem that might arise from the fact that this legislation attempts, to some extent at least, to introduce a supplementary English common law or equity which may have become out of date and which may no longer be applicable in England, the situation in Malaysia and Singapore is today different from what it was at the time of the enactment of the Ordinances. In view of the increased political stature of the two territories, an 4 in anticipation of further changes likely to be effected with the establishment of Malaysia, it is now perhaps evidence of an out of date attitude as well as contrary to national prestige to make provisions for the supplementation of the local law in the event of lacunae by means of reference to any “alien” system, whether it be that of the former imperial power or not.” It is not the function of the court to enter into arguments regarding the desirability or otherwise of the provision. That is a matter for Parliament to decide. As far as the court is concerned, until now, that is the law and the court is duty bound to apply it. In so doing, the provision is clear that even the application of common law of England as administered in England on April 7, 1956 is subject to the conditions that no provision has been made by statute law and that it is “permissible” considering the “circumstances of the States of Malaysia” and their “respective inhabitants”. That is not to say that post April 7, 1956 developments are totally irrelevant and must be ignored altogether. If the court finds that the common la w of England as at April 7, 1956, is not “permissible”, it is open to the court to consider post April 7, 1956 developments or even the law in other jurisdictions or sources. The point I am making, if I may borrow the words of Hashim Yeop A Sani, Chief Justice (Malaya) in Chung Khiaw Bank Ltd, supra, is that “We cannot just accept the development of the common law of England” . We have to “direct our mind to the “local circumstances” or “local inhabitants”,” to quote the words of Peh Swee Chin J in Syarikat Batu Sinar Sdn Bhd & 2 Ors, supra. Claim for post-collapse economic loss As I agree with the Chief Judge (Sabah & Sarawak) that s 95(2) protects MPAJ from claims for pre -collapse period, it is not necessary for me to discuss the issue. So, I shall confine myself to the post-collapse period. The High Court had found MPAJ liable for the post -collapse period and that s 95(2) of the Street, Drainage and Building Act 1974 ( “S, D & B Act 1974” ) does not cover MPAJ. The Court of Appeal reversed that finding p urely on the ground that it is a matter under public law and not private law. The learned Chief Judge (Sabah & Sarawak) disagreed with the Court of Appeal and held that the claim could be made under private law as well. While I agree with his finding of la w, in my view, since the Court of Appeal merely “assumes” that MPAJ was liable for post-collapse period, this court should go one step further and decide whether on the facts, MPAJ should be held liable for the pure economic loss suffered by the respondent s/plaintiffs. In this respect, I shall confine my discussions to the liability of MPAJ, a local authority, for economic loss suffered by the respondents for its failure to take remedial actions after the collapse of Block 1. The judgment of the High Court on this point is rather brief. This is what the learned judge said: “To consider whether the fourth [MPAJ — added] defendant is liable for the acts and/or omissions committed post -collapse, it is necessary to disclose some events that transpired after th e collapse of Block 1. After the Highland 5 Towers calamity there were efforts by the fourth defendant to stabilize the hill slope on Arab Malaysian land to ensure that no accident of the kind that caused the collapse of Block 1 would occurred (sic) to Block 2 and 3. In January 1995, there was a briefing called by the fourth defendant which was attended by the fifth defendant and some others. They were told by the fourth defendant that a master drainage plan for the entire area to accommodate all landowners i n the vicinity of Highland Towers would be prepared. It was announced that the consultant engaged by the fourth defendant, M/s EEC would be ready with the master drainage plan within 3 months from date of the briefing. It was obvious that any master draina ge plan for the area must cater for the East stream. It was substantially due to this East stream not properly attended to that Block 1 collapsed. In fact this concern of the East stream, from the chronology of events as set out, was highlighted by JPS fro m the very beginning of the development of the Highland Towers project. Thus the task to incorporate the East stream into the comprehensive master drainage plan falls upon the fourth defendant who is the body in charge of this watercourse. But after a per iod of 1 year there was no sight or news of this plan. After numerous reminders by the fifth defen dant of such a plan, the fourth defendant on March 29, 1996 held another briefing. This time, the fourth defendant informed the attendees that a new firm of c onsultant, by the name of KN Associates, was engaged to replace the previous. Again the fourth defendant gave an assurance that a comprehensive drainage plan of the area would be forthcoming with this replacement of consultant. Sad to say, until the time w hen all evidence for this case was recorded by this court, no comprehensive master drainage plan for the Highland Towers and its surrounding area was adduced by the fourth defendant. In fact this defendant offered no explanation as to why its promise was n ot met. These delays had affected the fifth defendant who insists that without a master drainage plan of the area approved and implemented by the fourth defendant, and the retaining walls on their land as well as those on Highland Towers site are corrected or rectified, then very little can be done by anyone to secure the stability of the slope behind Block 2 and 3. Despite this pressing need and the obvious knowledge of the urgent requirement for a master drainage plan (for otherwise the fourth defendant would not have initiated steps to appoint consultants for this work soon after the collapse of Block 1) to secure the stability of the slope so as to ensure the safety of the 2 apartment blocks, the fourth defendant did nothing after the respective consult ants were unable to meet their commitments. The plaintiffs and all other relevant parties are kept waiting because of the fourth defendant. This is certainly inexcusable and definitely a breach of the duty of care owed by the fourth defendant to the plaint iffs for not even fulfilling its obligation towards maintenance of the East stream. For this I find the fourth defendant liable to the plaintiffs for negligence. Lastly, the plaintiffs have also alleged that the fourth defendant failed to take any action against the Tropic in clearing the fifth defendant's land. I shall be elaborating in detail the acts of Tropic when I analyse the position of the fifth 6 defendant and Tropic. For the present moment, suffice me to say that I do not consider the fourth defend ant liable to the plaintiffs in respect of the action committed by Tropic. As for the claim of the plaintiffs on the fourth defendant for failing to prevent vandalism and theft to Block 2 and 3, I allow it and my reasons will be intimated in the later part of this judgment.” Analysis — Nuisance By the acts and/or omissions of the fourth defendant elaborated above, I also find that the fourth defendant is an unreasonable user of its land in failing to maintain the East stream post collapse which is under its care. Its acts and or omissions are foreseeable to cause a damage to the plaintiffs — its neighbour. For this, I find the fourth defendant is also liable to the plaintiffs for nuisance. The sum total of it all is the failure of MPAJ to fulfil its promise to come up with and implement the master drainage plan. As found by the learned judge, there were efforts made by MPAJ to stabilise the hill slope on Arab Malaysian land to ensure that no accident of the kind that caused the collapse of Block 1 would o ccur to Blocks 2 and 3. A consultant was engaged to prepare a master drainage plan. After a year and no such plan was produced, a new consultant was appointed to prepare the same. Yet it never materialised. It is for this reason that the learned judge foun d MPAJ liable for negligence to the plaintiffs. It must be clarified that here I am only concerned with the failure or delay on the part of MPAJ to come up with and to implement a master drainage plan in an effort to stabilise the hill slope on the Arab Malaysian land. The question is, does this failure or delay amount to actionable negligence against a public authority, the MPAJ, for pure economic loss? Let us now look at cases decided by Malaysian courts on pure economic loss. First the case of Kerajaa n Malaysia v Cheah Foong Chiew & Ors [1993] 2 MLJ 439. In that case, the plaintiff claimed damages resulting from the negligence of the defendants in superintending and supervising buildings constructed for the plaintiff by Sri Kinabalu Sdn Bhd. All the de fendants were employees or agents of the consultant firm, Sigoh Din Sdn Bhd, which was responsible for superintending and supervising the construction. The plaintiff alleged that all the three defendants had failed to carry out their duties to superintend and supervise the construction, causing the plaintiff to suffer substantial losses in repairing the buildings in order to make them safe for occupation. The third defendant applied to strike out the plaintiff's action under Order 18 r 19 of the Rules of th e High Court 1980 (RHC 1980). The senior assistant registrar struck out the action against the third defendant. The plaintiff appealed to the judge in chambers. The learned judge dismissed the appeal. Very interesting arguments were forwarded by learned co unsel for both parties including the effect of s 3 of the Civil Law Act 1956, the issue of public policy and exception to Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] 2 All ER 575. 7 Unfortunately, the judgment proper is rather brief. On economic lo ss, the learned judge merely said: “(3) Kerugian yang dialami oleh plaintif adalah kerugian atau kehilangan ekonomi tulen (pure economic losses), dan defendan ketiga tidak boleh dikenakan tanggungan (liability) di bawah tort di atas kerugian yang * 595 dialami oleh plaintif dalam kes ini oleh kerana tiada siapapun yang cedera atau tiada harta kepunyaan orang lain rosak akibat daripada perbuatan atau salahlaku oleh defendan ketiga. Keputusan yang dibuat oleh Dewan Pertuanan (House of Lords) dalam kes Murphy v Brentwood DC dan lain-lain kes lagi yang membuat keputusan yang sama, adalah sangat munasaba h, berpatutan dan sepatutnya diterima sehingga bila -bila masapun. Mahkamah di negara ini menerima keputusan dan pendapat itu dan tiada kemungkinan membuat pendapat yang berlainan, walaupun apa yang dikatakan oleh peguam pihak plaintif bahawa keadaan di Mal aysia berlainan dengan keadaan di United Kingdom. Hakim dalam kamar ini juga berpendapat bahawa adalah tidak berpatutan dan tidak munasabah jika pekerja -pekerja, termasuk juga pekerja -pekerja mahir yang bekerja di bawah seseorang atau syarikat pemborong bi naan, bertanggungan (liable) kepada tuan ampunya bangunan yang berkenaan di atas kecuaian yang membawa kepada ketidaksempurnaan bangunan yang berkenaan asalkan ianya tidak menyebabkan kecederaan kepada diri seseorang atau harta benda orang lain.” Two year s later, as a High Court judge, I had occassion to decide the case of Nepline Sdn Bhd v Jones Lang Wootton [1995] 1 AMR 451; [1995] 1 CLJ 865. In that case, a firm of registered real estate agents and chartered valuer was sued for damages for failure to disclose the fact to the appellant (tenant) that the premises was subject to “a foreclosure proceeding then pending in court” . The court made an order for sale of the said premises and the appellant demanded the return of the deposit. The respondent contended that it was a case of mere omission and not a positive statement made by the respondent and t hat the claim was for pure economic loss. It is in that case that I took the approach mentioned earlier in this judgment. I then tried to determine the common law of England on the subject as on April 7, 1956, and then considered the provision to s 3(1) of the Civil Law Act 1956. This is what I had said then: “I therefore ask the question whether local circumstances would require the respondent, an estate agent, a professional who advertised premises for rent, who knew that the premises was a subject matte r of a pending foreclosure action, to owe a duty of care to the appellant, who answered to the advertisement and subsequently entered into a tenancy agreement for a period of two years, to disclose the fact that the premises was subject to a pending foreclosure action? I do not have the slightest doubt that the answer should be in the affirmative. This is not a case of a friend telling another friend that there is a house for rent. This is a case of a professional firm, holding out to be a professional wi th 8 expertise in its field, earning its income as such professional. They know that people like the appellant would act on their advice. Indeed, I have no doubt that they would hold out to be experts in the field and are reliable. It would be a sad day if t he law of this country recognises that such a firm, in that kind of relationship, owes no duty of care to its client yet may charge fees for their expert services. In the circumstances, I think I am fully justified in taking the view that the defendant in this case owed a duty to the plaintiff to disclose that there was a foreclosure proceeding pending. I think the provision of s 3 of the Civil Law Act 1956, especially the proviso thereto, allows me to do so. Learned counsel for the respondent, referring to numerous texts and authorities, stressed the need for some control mechanism narrower than the concept of reasonable foreseeability to limit a person's liability for pure economic loss. He argued, correctly I must says, that subsequent to Anns's case there are a number of cases, including Caparo which steered clear of it and were termed as the “retreat from Anns's cases. First, I must say that I agree with him that the claim in the present case (for the refund of the deposit paid) is for pure economic loss. It is not for an injury to person or property. Secondly, generally speaking, I also agree that there is a need to limit recoverability of damages for pure economic loss. The reasons for judicial reluctance to impose liability in such cases are conveniently listed by RP Balkin a nd JLR Davis in the Law of Torts from pp 421–424. These are: (i) the fear of indeterminate liability; (ii) disproportion between defendant's blameworthiness and the extent of his liability; (iii) interrelationship between liability in tort and contract; (iv) the need for certainty; and (v) the effect of insurance. Considering these factors, it is a wise policy to limit liability in pure economic loss cases, generally speaking. However, I am of the view that such fears do not arise in this case. Here the amount claimed is definite. It is a definite amount which had been paid by the appellant. It is that amount only which the appellant now seeks to recover. So, even using the two tests which learned counsel for the respondent urged me to apply, I think, on t he facts of this case, the respondent is liable.” My record shows that appeal to the Court of Appeal (Court of Appeal Civil Appeal No 4-90-95) was dismissed on January 6, 1997. Unfortunately there is no written judgment of the Court of Appeal.