IN THE COURT OF APPEAL MALAYSIA
(APPELLATE JURISDICTION) CIVIL APPEAL NO. Q-02-106-2008
HOUSING DEVELOPMENT CORPORATION
Respondent RIAPLUS SDN. BHD.
[In the matter of High Court of Sabah & Sarawak at Sibu, Civil Suit No.
Housing Development Corporation
Riaplus Sdn. Bhd.]
A. Samah Nordin JCA Mohd Hishamudin Yunus JCA Aziah Ali JCA
JUDGEMENT OF THE COURT
This is an appeal against the decision of the High Court of Sibu given on 6 December 2007.
In its decision, the High Court of Sibu gave judgment in favour of the respondent/defendant, in that, it dismissed the appellant’s/plaintiff’s claim with costs.
Hence, there is this appeal by the appellant/plaintiff.
On 18 October 2011 we, unanimously, allowed the appeal with costs.
And we now give our grounds.
The appellant’s/plaintiff’s claim against the respondent/defendant is for a sum of RM3,120,000 pursuant to two agreements entered into between the appellant/plaintiff and the respondent/defendant, namely, –
(1) an agreement which the parties called the ‘Development Agreement’ made on 14 December 1994; and
(2) another agreement which the parties called the ‘Option Agreement’, also made on 14 December 1994.
The appellant/plaintiff was the owner of a 22.9 hectares piece of land.
Under the Development Agreement, the appellant/plaintiff engaged the respondent/defendant as a developer to construct 327 residential houses on the land in return for which the appellant/plaintiff would transfer 257 to the respondent/defendant.
Clause 2 of the Development Agreement provides as follows:
In consideration of clause 1 above, the Landowners shall, subject to clauses 11 and 16 herein retain 70 of the 327 sublots together with the completed houses thereon (hereinafter referred to as “the Landowners’ Sublots”) and shall transfer to the Developers the other 257 sublots together with the completed houses thereon (hereinafter referred to as “the Developers’ Sublots’) PROVIDED that if the number of sublots comprised in the Project is lawfully altered by the Relevant Authority, the number of sublots allocated to each Party shall be adjusted accordingly (to the nearest sublot) to accord with the ratio 70:257″.
By the Option Agreement the respondent/defendant offered to purchase the appellant’s/plaintiff’s 70 residential sublots under the Development Agreement at a total price of RM4,200,000.00 (which is equal to RM60,000.00 per sublot).
Under clause 3 of the Option Agreement, the appellant/plaintiff has to accept the respondent’s/defendant’s offer ‘in writing’ within 6 months from 14 December 1994.
Clause 7 of the Option Agreement, provides as follows:
7. Adjustment of Purchase Price
In the event that the number of sublots allocated to the parties are altered pursuant to the proviso to clause 2 of the Development Agreement, then the Purchase Price and the Schedule of Payment herein contained shall be adjusted accordingly.
There is no evidence of any acceptance by the appellant/plaintiff within the six-month period (this six-month period expired on 13 June 1995).
However, some eight months later after the expiry date, that is to say, on 16 February 1996, the respondent/defendant decided to purchase the
appellant’s/plaintiff’s sublots. It conveyed its intention to the appellant/plaintiff through the common solicitor of the parties, namely, Messrs David Allan & Teng Advocates.
The appellant/plaintiff accepted the offer and transferred the land to the respondent/defendant for the sum of RM4,200,000.00 as stated in the Option Agreement. The transfer was completed by the registration of the memorandum of transfer on 13 February 1997. The purchase price of RM4,200,000.00 was paid progressively by installments and was fully paid on 9 November 2000.
However, prior to the respondent/defendant communicating to the appellant/plaintiff of its intention to purchase (in February 1996), an event unbeknown to the appellant/plaintiff happened. What transpired was that on 7 December 1995, when the Land and Survey Department approved the layout plan and the subdivision, the Department increased the number of sublots approved to 572 units, instead of the proposed 327 units. The respondent/defendant, however, did not notify the appellant/plaintiff of the increment; and neither did the respondent/defendant forward to the appellant/plaintiff the approved layout plan.
However, in early January 2001 the appellant’s/plaintiff’s land officer made an inspection of the construction site. He then discovered that the number of sublots completed does not tally with the ‘proposed plan’ that they had in their possession. This prompted the appellant/plaintiff to ask the respondent/defendant to furnish them the layout plan that was approved by the Land and Survey Department (it is to be recalled that it was approved by the Department in 1995). The respondent/defendant supplied the appellant/plaintiff with the approved layout plan on 29 January 2001. Upon examining the approved layout plan, the appellant/plaintiff discovered that the number of residential sublots approved for the project had been increased: that it is now 572 sublots, and no longer 327 lots as originally proposed. Based on the entitlement ratio of 70 units to 257 units as between the appellant/plaintiff and the respondent/defendant, respectively, under the Development Agreement, the appellant/plaintiff now claims to be entitled to an additional 52 residential lots. And on the basis of RM60,000.00 per lot, the appellant/plaintiff now claims a further sum of RM3,120,000.00 as the balance of the purchase price due from the respondent/defendant.
In support of its claim, the appellant/plaintiff relies on clause 2 of the
Development Agreement and clause 7 of the Option Agreement.
The respondent/defendant resisted the appellant’s/plaintiff’s claim. In disputing the appellant’s/plaintiff’s claim, the respondent/defendant relies on clause 8 of the Option Agreement. This clause states –
8. Transfer of Land
Upon the provision of an acceptable bank guarantee or other similarly acceptable facilities mentioned above being so arranged, the Landowners shall immediately transfer the legal title in the whole of the Said Land (including the Landowners’ Sublots) to the Developers. Whereupon notwithstanding any other provision contained in the said Development Agreement but subject to clauses
6.1 and 6.2 thereof, the Landowners’ legal or beneficial interests and rights in the Said Land or under the said Development Agreement shall be extinguished. Provided that:-
8.1 clauses 18, 19, 20, 21, 28, 29 and 30.1 of the said Development Agreement shall continue to apply; and
8.2 clauses 18 and 19 thereof shall also apply to the Landowners’ Sublots as if the words “Landowners Sublots” were substituted therein for the words “Developers’ Sublots”.
The learned High Court Judge accepted the respondent’s/defendant’s argument. The learned High Court Judge said in his grounds of judgment –
There is merit in the case for the Defendant in its reliance on clause 8 of the Option Agreement
The learned Judge reasoned as follows:
Where, as here, the rights and obligations of the parties have been reduced into writing, in the form of the Development Agreement and the Option Agreement, it is incumbent upon the court to look at them for what they are stated to be, construed as a whole in their plain and ordinary meaning (see NATIONAL COAL BOARD v. WM NEILL & SONS (ST HELEN)  1 AII ER 555). Clearly, the reference in clause 7 of the Option Agreement to the proviso in clause 2 of the Development Agreement must refer to ‘completed houses’ because the proviso cannot swallow the substantive provision of clause 2. To hold otherwise would render the substantive provision of clause 2 of the Development Agreement ineffectual which would manifestly be in consistent with its plain and ordinary meaning. Hence, the purchase price of RM4,2000,000.00 under the Option
Agreement calculated on the basis of the Plaintiff’s entitlement of 70 lots with completed houses thereon at an agreed price of RM60,000.00 per lot cannot be varied upwards simply because of the numerical increase ultimately approved by the relevant authority. Conversely, it would have been equally ridiculous for the Defendant to have sought a proportionate refund had the number of lots approved been less than that which was stated in the Development Agreement.
At the risk of repetition, it cannot be overemphasized that the all-encompassing words ‘notwithstanding any other provision contained in the said Development Agreement but subject to clauses 6.1 and 6.2 thereof, the Landowners’ legal or beneficial interests and rights in the Said Land or under the said Development Agreement shall be extinguished’ render the proviso to clause 2 of the Development Agreement ineffectual. The Plaintiff’s reliance on it is, therefore, misplaced.
In my judgment, the Plaintiff has failed to establish its claim and the action is accordingly dismissed with costs to be taxed.
With respect, we are unable to agree with the learned Judge.
In allowing this appeal, we accept the submission of the appellant/plaintiff that it is entitled to its claim of an additional payment of RM3,120,000 by reason of clause 2 of the Development Agreement read with clause 7 of the Optional Agreement. The meaning of these two provisions is clear. There is no ambiguity. It is a fact that there has been an alteration of the number of sublots allocated to the parties pursuant to clause 2 of the Development Agreement, and therefore ‘the Purchase Price and the Schedule of Payment… shall be adjusted accordingly.’ In our judgment the respondent cannot rely on clause 8 of the Optional Agreement as it had withheld a crucial information from the appellant/plaintiff when it made the offer to purchase in February 1996, that information being the fact that the Land and Survey Department had increased the number of approved sublots from 327 units (as proposed) to 572 units (an increment of 122 units).
We, therefore, set aside the order of the High Court.
Instead, we allow the appellant’s/plaintiff’s claim for the additional payment of RM3,120,000. There shall be order in terms as per prayers (a) and (b) of paragraph 19 of the statement of claim.
[Appeal allowed with costs here and below of RM20,000 to the
(Dato’ Mohd Hishamudin Yunus)
Judge, Court of Appeal The Palace of Justice Putrajaya
Date of decision: 18 October 2011
Date of written of Judgment: 4 June 2012
Encik Raymond Lau (Messrs Susanna & Lau) for the appellant
Encik K.Y Lim and Cik Julie Pao (Messrs Huang & Co.) for the respondent