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Contract Ii Case Review (Per & CC) PDF
Contract Ii Case Review (Per & CC) PDF
1) FACTS
a) Where the terms of the contract have been incorporated into an agreement,
the generalruleis that extrinsicevidencemay not be given to contradict, vary,
add to, or substract the said agreement. This generalrulewas expressed way
back inDavis v Symonds(1787) 1 Cox Eq Cas 402 at pp 404–405; and
inWilliams v Jones(1826) 5B & C 108.- Confined within four corners of the
document.
b) It limits what things can be taken into account when trying to interpret a
contract. Neither parties are allow to adduce extrinsic evidence (evidence not
contained in the document) to show that his intention has been misstated in
the document.“
c) It is firmly established as a rule of law that parol evidence cannot be admitted
to add to, vary or contradict a deed or other written instrument....” per P O
Lawrence J, 295 in Jacobs v Batavia and General Plantations Trust[1924] 1
Ch 287
USAHATEK SDN BHD V ASIA INSURANCE ( M ) BHD ( PALANIAPPAN
A/L SINNAPAN) TRADING UNDER THE NAME AND STYLE OF INSURE
TRAINING CENTRE , THIRD PARTY [2011] 7 MLJ 1[2010] MLJU 658
1) FACTS
1) FACTS
a) In this case the respondent company and its predecessor company owned a
cinema in Ipoh and had entered into an agreement with one
Ong Keng Huat and his partners to lease the land for a period of five years
from September 1, 1956.
b) Under Clause 4(e) of the agreement the lessees had a right to renew the lease
for a further period of 5 years from the expiration of the period. The option to
renew was not exercised but the respondent company subsequently on
February 14, 1968 gave a lease for 5 years of the land to the
appellant company retrospectively from September 1, 1966.
c) Under Clause 4(e) of this lease the appellant was given an option to renew
the lease for a further 10 year period upon giving the respondent a written 6
months' notice of the intention to renew.
d) Under the said Clause it was also provided that the lessor would grant to the
lessee at the expiration of the lease a further term of 10 years at the same rent
and containing the like covenants and provisoes as were therein contained. In
1971 the appellant gave the necessary notice to ask for the renewal of the
lease and sent a draft of the second lease to the respondent.
e) The respondent returned the draft lease but with Clause 4(e) containing the
covenant for renewal deleted. Although the second lease was not executed
the appellant continued to remain in possession of the premises.
f) The respondents wrote to the appellant on January 18, 1981 asking for vacant
possession of the premises by August 31, 1981.
g) The appellant refused to vacate contending that it had the right to perpetual
renewal under the first lease if the option to renew was exercised on each
occasion, and such perpetual lease would be valid for 99 years under section
221(3)(a) of the National Land Code.
h) The appellant applied for specific performance of the renewed lease with the
covenant for perpetual renewal inserted as a term of the agreement.
i) The learned trial judge dismissed the claim and the appellants appealed.
2) HELD
a) The words "containing the like covenants and provisoes as are herein
contained" constitute a general covenant and such words without more are
far from clear and fall short of the legal requirement to confer what in effect
would amount to a perpetual lease by means of perpetual renewals. In the
light of the words used the learned trial judge was correct in holding on the
true construction of Clause 4(e) of the lease that it does not confer on the
appellant the right to perpetual covenant for renewals;
b) The 1957 lease was part of the Agreed Bundle of documents and its existence
and contents were not in dispute. It should be classified as factual
background of the case known to the parties at or before the first lease was
executed and therefore admissible in evidence and the trial judge was entitled
to use it not for the purpose of construing the first lease but for showing
inconsistency between the factual background and the claim of the appellant
to perpetual renewal of the first lease.
QUALITY CONCRETE HOLDINGS BHD V CLASSIC GYPSUM
MANUFACTURING SDN BHD & ORS ( 2012 ) 5 CLJ 33
1) FACTS
2) HELD
a) Held, allowing the plaintiff’s appeal and dismissing the first defendant’s
cross-appeal:
b) The JC erred in holding that the amendment to prayer (1) was ambiguous and
cannot be entertained. The JC failed to appreciate the basis of the plaintiff’s
claim
c) It was wrong for the JC to dismiss the whole of the plaintiff’s claim when
there was ample evidence adduced that blatantly pointed to the breach
committed by the first and second defendants under the agreement and the
award letter
d) Where the terms of the contract have been incorporated into an agreement,
the general rule is that extrinsic evidence may not be given to contradict,
vary, add to, or substract the said agreement. However, extrinsic evidence
may be introduced to show to the world at large, so to speak, that the written
agreement did not represent the whole bargain between the parties. In order
to show whether there is a valid written agreement, parol evidence may be
admissible in order to show that the written agreement is not a valid contract
because there was never any agreement between the parties
e) There was no inconsistency between the oral agreement alluded to by Anne
Kung (’PW1’), the CEO (chief executive officer) of the plaintiff with cl 6 of
the agreement. Clause 6(b) of the six agreement merely stated that the said
sum to be paid progressively within six months from the date of the
agreement. But, it is silent as to ‘when and how’ the first defendant ought to
make its progressive payment to the plaintiff and this gap was filled in by the
oral agreement. Hence, the oral agreement fell squarely within the ambit of
proviso (b) to s 92 of the Act. It did not add or contradict cl 6(b) of the
agreement but on the contrary, complemented the agreement by proving the
‘back to back’ payment arrangement between the parties
f) The JC erred in holding that the plaintiff failed to plead the ‘full particulars’
of the fraudulent misrepresentation as envisaged under O 18 r 12 of the Rules
of the High Court 1980 . According to O 18 r 12(1), only the ‘necessary
particulars’ need be pleaded and not the ‘full particulars’ as required by the
JC (see paras 71 & 73).
g) The third defendant was the common director and shareholder of both the
first and the second defendants. By virtue of the false representation by the
third defendant, the plaintiff was defrauded (see paras 74 & 77).
h) The plaintiff’s claim against the second defendant for pre-liquidated damages
of RM50,000 ought to be allowed because there was evidence that the second
defendant abandoned the work after receiving RM700,000 from the plaintiff.
The plaintiff had not committed any repudiatory breach and had not
instructed the second defendant to stop work (see paras 78–79).
i) In the context of the cross-appeal, the first defendant had failed to prove or
show that the first defendant had suffered damages. At all material times, the
first defendant was the ‘wrong doer’ for refusing to pay the plaintiff the first
progressive claim despite the evidence that showed that 30% of the said work
had been completed by the second defendant and that the plaintiff had even
paid the second defendant the sum of RM700,000 as partial payment
JAMIN TRADING SDN BHD & ANOR V SHELL MALAYSIA TRADING
SDN BHD ( 2011 ) 4 MLJ 662
1) FACTS
a) Pursuant to a sale and purchase agreement (‘SPA’), the second plaintiff sold
a piece of land to the defendant on which a petrol filling and service station
was erected.
b) The agreement gave the second plaintiff first option to operate the station but
at the second plaintiff’s request its associate company, the first plaintiff, was
appointed as the operator. In the course of their business relationship the first
plaintiff and the defendant entered into two successive five-year penjual
licence agreements.
c) Before the second penjual licence agreement (the ‘second agreement’)
expired the defendant issued the first plaintiff a show cause letter, alleging it
had breached the second agreement, and proceeded to terminate the
agreement.
d) The first plaintiff refused to hand over vacant possession of the station to the
defendant. The defendant subsequently acquired same through court
proceedings.
e) The show cause letter charged that the first plaintiff had breached cl 31.1 of
the second agreement by changing its business constitution without the
defendant’s prior written consent, to wit, that a director of the first plaintiff
had sold 100,000 of his shares in the company and resigned as director.
f) The plaintiffs denied shares in the first plaintiff were sold and said the
termination was bad in law; that they had a legitimate expectation the second
agreement would be renewed to maintain the first plaintiff as operator of the
station so long as it obtained the Petroleum Development Act (‘PDA’)
Licence to operate and that the defendant’s obligation under the SPA to offer
the second plaintiff first choice to operate the station was a continuing one.
g) The defendant counter-claimed for damages in trespass caused by the first
plaintiff’s refusal to hand over vacant possession of the station and also
claimed aggravated damages for loss of business and reputation. It denied it
had breached the SPA as the obligations of the parties thereunder had been
fully performed and the contract had come to an end. The defendant also said
the second agreement was lawfully terminated.
2) HELD
a) Held, dismissing the plaintiffs’ claim with costs, and allowing the
defendants’ counterclaim in prayers (b), (c), (d) and (e) with costs
b) The respective obligations of the parties to the SPA had been fully performed
when the purchase price was settled, the title in the land was transferred to
the defendant and the first plaintiff was appointed to operate the petrol
station (see para 13).
c) Nothing in cl 13 of the SPA intimated that the defendant’s obligation to offer
the second plaintiff first choice to operate the petrol station was a continuing
offer or that the option was indefinite. The defendant’s obligations under the
SPA were performed when it appointed the first plaintiff as operator of the
station. Thereafter the obligation no longer subsisted. The question whether
the defendant breached that obligation was a non-issue (see paras 18 & 19).
d) The allegation in the defendant’s show cause letter that the first plaintiff’s
constitution had changed due to its director’s disposal of 100,000 shares was
unfounded. The disposal of the shares was in Mega
Equity Sdn Bhd (‘MESB’) which did not tantamount to disposal of shares of
the first plaintiff. Only the shareholding of MESB changed with the disposal
of the shares. There was no change to the shareholding of the first plaintiff as
MESB remained as its shareholder
e) The resignation of the first plaintiff’s director without the defendant’s prior
written consent thereto was a breach of cl 31.1 of the second agreement
which entitled the defendant to terminate the agreement
f) There was no basis upon which the first plaintiff could claim legitimate
expectation that the defendant would renew the second agreement to
continue the first plaintiff as operator of the petrol station so long as the first
plaintiff renewed the PDA licence.
g) None of the cases cited by the plaintiffs showed that the doctrine of
legitimate expectation applied to a party’s rights under a private contract
CITIBANK BHD V PEMBANGUNAN CAHAYA TULIN SDN BHD
( RECEIVERS AND MANAGERS APPOINTED ) & ORS ( 2012 ) 9 MLJ 181
1) FACTS
a) The plaintiff sued the first defendant (‘D1’) as borrower, the second
defendant (‘D2’) as corporate guarantor and the third and fourth defendants
as personal guarantors to recover sums owing in respect of credit facilities
granted to D1. The defendants contended that D1 was not liable because the
plaintiff had breached a collateral contract and certain oral representations it
had made in relation to the grant of the facilities.
b) The defendants said there was a collateral oral agreement that D1 was to use
the facilities granted to
i. Acquire land, construct and furnish a 12 storey building (‘Wisma CY’)
for the plaintiff to lease for 40 years and
ii. Acquire another piece of land adjacent toWisma CY for the construction
of an 18 storey building, also to be used by the plaintiff(‘the second
building’).
c) The rental the plaintiff would pay to occupyWisma CY was to be set off
against the loan repayments under the credit facilities. The defendants
claimed the plaintiff breached several oral representations it had made,
among which was that it would leaseWisma CY for 40 years or at least until
the credit facilities were fully repaid. As the plaintiff terminated its lease of
the building after nine years, the anticipated income from lease rentals did
not happen and D1 found it difficult to service its loan repayments to the
plaintiff such that D1’s four associated companies (‘the associated
companies’) had to assist by making substantial advances to D1.
d) The associated companies filed related suits against the plaintiff for losses
incurred as a result of their having to make advances to D1. Those suits were
heard together with the instant mainsuit. In their counterclaim, the defendants,
inter alia, sought a declaration that the plaintiff was estopped from asserting
any rights under the credit facilities against D1 and that D1’s acceptance to
restructure the facilities, because of its difficulty in repayment, was procured
through economic duress.
e) The defendants also claimed for depreciation in the value of the land
acquired for the second building on account of the building not being built.
f) The four oral representations the defendants alleged the plaintiff had
breached were:
i. The plaintiff would remain a tenant of D1 at Wisma CY until all credit
facilities repayable by D1 were settled (‘the lease duration
representation’);
ii. The plaintiff would pay for the increase in utilities, assessments, quit rent
and sewerage charges (‘the outgoings representation’)
iii. The plaintiff would not take action against the associated companies in
respect of facilities granted to them pending restructuring of those
facilities (‘the restructuring representation’) and
iv. The plaintiff would lease the second building and the lease rental would
be used to off-set repayment of facilities granted to acquire the land on
which the building was built (‘the second building representation’).
g) The plaintiff contended that, unlike in the case of Wisma CY, it had only
agreed to fund the acquisition of the land for the second building; that the
building itself was the defendants’ own project and there was no agreement
for the plaintiff to lease the building.
2) HELD
a) Held, allowing the claim and dismissing the counterclaim and the claims of
D1’s associated companies:
b) The sub lease granted by D1 to the plaintiff was for a term of ten years with
an option to renew.Not only was there no contractual obligation on the
plaintiff ’s part to occupy the premises for a fixed duration of 40 years, but
even for the first ten year sublease the plaintiff had the right to terminate it at
any time by giving notice (see para 28).
c) The plaintiff was within its rights when it opted to terminate the sub-lease
and it was not in breach. It did not help the defendants if they chose to
interpret a ten year lease with options to renew for another three terms of ten
year lease to be a 40 year lease with no break or exit clause (see paras 63 &
65).
d) Nowhere in any of the letters between the parties was it expressed that there
was a binding collateral contract or an agreement/understanding that the
plaintiff would stay inWisma CY for 40 years or at least until D1 had fully
repaid the facilities (see para 116).
e) Evidence of the lease duration representation was rejected because the same
was not capable of coming within any exception to s 92 of the Evidence Act
1950 and, in fact, had the capacity to contradict, vary, add to or subtract from
the terms of the agreement to lease, the sublease and the other facility
documents that confirmed the duration of the sublease (see para 89).
f) The proposed second building was a project for D1’s own development and
not a second building for the plaintiff. Based on the terms and conditions of
the letters of offer, D1 was under a clear obligation to repay the facilities
whether or not the second building was constructed (see para 214).
g) Having accepted and declared that the plaintiff would not be liable for further
payments in respect of outgoings, the defendants’ claim for increased
outgoings could not be maintained as there had been accord and satisfaction
with respect to the claim. The defendants were also estopped from making
such a claim (see para 130).
h) No restructuring representation had been made that had been breached by the
plaintiff. The restructured loans with D1, D2 and the associated companies
were on terms mutually agreed upon and the defence of economic duress did
not avail the defendants and the associated companies
SAMAWORLD ASIA SDN BHD & ANOR V RHB BANK BHD ( 2008 ) 6 CLJ
44
1) FACTS
a) This is an appeal against the decision of the learned Judge High Court at
Kuala Lumpur given on 26/1/05 after a full trial.
b) The 1st appellant is SamaWorld Asia Sdn Bhd (hereinafter referred to as the
1st defendant). The 2nd appellant is Lim Kut Sheong @ Lim Tuck Fatt
(hereinafter referred to as the 2nd defendant). The respondent
is RHB Bank Berhad, previously known as DCB Berhad (hereinafter referred
to as the plaintiff).
c) The plaintiff bank claimed against the 1st and 2nd defendants:
i. The sum of RM3,645,154.48;
ii. Interest on the principal of RM3,000,000.00 at the rate of 2.0% per
annum above the plaintiff's costs of funds calculated on a daily basis
from 1.10.1996 to the date of full payment;
iii. Additional default interest on the outstanding interest charged on the
sum of RM3,000,000.00 at the rate of 3.0% per annum over and above
the plaintiff's costs of funds calculated on a daily basis with monthly
rests from 1.10.1996 to date of full payment.
d) The 1st defendant was at all material times a customer of Rakyat Merchant
Bankers Berhad (RMBB). On or about 4.11.1992 RMBB granted a RM3.0
million short term loan facility to the 1st defendant. Pursuant to the granting
of the said loan facility the 1st defendant executed a Short Term Loan
Facility Agreement with RMBB on or about 12.11.1992. By a memorandum
of deposit of shares, dated 12.11.1992, the 1st defendant deposited and
charged by way of a first fixed charge 10.0 million shares
of SamaWorld (Malaysia) Sdn Bhd in favour of RMBB to secure the
repayment by the 1st defendant to RMBB, on demand, of the debt
outstanding under the said loan facility, together with other charges arising
out of or incidental to the taking or realization of the said security for the said
loan facility.
e) The 2nd defendant was a director of the 1st defendant. By a written and
continuing guarantee dated 12.11.1992 executed between the 2nd defendant,
the 1st defendant and RMBB, the 2nd defendant unconditionally and
irrevocably guaranteed the repayment by the 1st defendant of the whole of
the said loan together with interest thereon and all costs charges and all other
sums payable by the 1st defendant under the provisions of the said loan
agreement.
f) The 1st defendant agreed, inter alia, under section 6.1 of the said loan
agreement, to repay to RMBB the amount of the principal and the prescribed
interest thereon by one lump sum on or before the expiry of the three months
from the date of the first drawdown of the said loan facility.
g) The said loan facility was, pursuant to a written notice of drawdown, released
on 16.11.1992 and became due for full settlement on 16.2.1993. On or about
13.6.1994 RMBB granted an extension of time for the repayment of the said
loan facility up to 31.5.1995.
h) Pursuant to the Banking and Financial Institutions Act, 1989 and by order of
court dated 7.11.1996 all interests, assets, rights remedies and liabilities of
RMBB (previously vested into BSN Merchant Bank Berhad vide the order
dated 22.7.1995) were further vested and transferred to the plaintiff as of
1.10.1996. It was also ordered that any accounts, agreements, contracts or
instruments to which RMBB was a party shall have effect as from 1.10.1996
as if the plaintiff has been a party thereof instead of RMBB. As at 30.9.1996,
the 1st defendant remained indebted to BSN Merchant Bank Berhad in the
sum of RM3, 645,154.48 vide the said short term loan facility originally
granted by RMBB.
i) BSN Merchant Bank Berhad had on 22.8.1996 issued a letter, through its
solicitors, to the 1st defendant demanding payment of the sum of RM3,
576,277.83 being the outstanding amount due and payable as at 31.7.1996,
together with interest thereon, but the 1st defendant failed to make payment
thereof.
j) Pursuant to the provisions of section 14.1 of the said loan agreement, the
plaintiff, through its solicitors, by letter dated 10.10.1996 terminated the said
loan facility, and declared all outstanding sums owing under the said
agreement due and payable, immediately.
k) On 15.10 1996, the plaintiff, through its solicitors, issued a letter of demand
to the 2nd defendant demanding payment of RM3,576,277.83, being the
outstanding balance owing by the 1st defendant as at 31.7.1996, and interest
thereon. However, the 1st and 2nd defendants failed to repay the sums
claimed by the plaintiff.
l) The defence, in a nutshell, is that there is an oral collateral agreement
rendering the defendants not liable to repay the sums claimed by the plaintiff,
because the proceeds from the sale of the 10 million shares
in SamaWorld Malaysia charged to RMBB shall be the sole method of
repayment of the short term loan facility. It was pleaded in the defence that
there was a collateral contract to the short term loan facility agreement dated
12.11.1992 and the memorandum of deposit of shares dated 12.12.1992
between the plaintiff and the 1st defendant.
m) RMBB had made numerous efforts to sell the shares but could not find any
buyer. We pause at this juncture to observe that, irrespective of the existence
of such a collateral contract, the defendants surely cannot hope to escape
from liability for repayment of the loan if the shares could not be sold! There
can be no commercial practice or custom that would impute such a favorable
term in favour of a borrower for the repayment of such a large loan in a
written contract, let alone an alleged oral collateral contract. It is to be further
observed that the said shares are not of a public listed company and cannot
be readily sold in the open market.
n) By a letter dated 15.8.92(Record of Appeal, page 488) the 1st defendant had
given to RMBB as a merchant bank, a mandate to help sell 20 - 30 million
shares in the 1st defendant's subsidiary, SamaWorld Malaysia Sdn Bhd,
owned by the 1st defendant. The mandate was non exclusive and the 1st
defendant agreed to pay 2% commission to RMBB.
o) The letter of offer for the RM3.0 million short term loan dated 4.11.92
(Record of Appeal, page 493) and the short term loan facility agreement
dated 12.11.92 (Record of Appeal, page 417) discloses the following:-
i. The purpose of the facility is a bridging loan for the funding of the
project in Genting Highlands (called SamaWorld Theme Park) of the 1st
defendant's subsidiary SamaWorld Malaysia, before receipt of the
proceeds of sale of the 1st defendant's shares in SamaWorld Malaysia to
investors.
ii. The loan shall be repaid within three months from the drawdown.
iii. The 1st defendant shall execute a memorandum of deposit of shares
whereby the 1st defendant charges 10 million of its shares
in SamaWorld Malaysia to RMBB.
p) On 12.11.92 the 1st defendant did execute the said memorandum of deposit
of shares (Record of Appeal page 466). The memorandum of deposit of
shares is over only a portion of the 20 - 30 million shares that the 1st
defendant had earlier mandated RMBB to sell vide letter dated 15.8.92.
q) The defendants allege that there was an oral collateral contract containing the
following terms:
i. The loan shall be utilized to settle the debt owed by a related company of
the 1st defendant known as SamaWorld Corporation Sdn Bhd to RMBB
under a separate facility granted to the
said SamaWorld Corporation Sdn Bhd.
ii. The proceeds from the sale of the 10 million shares
in SamaWorld Malaysia charged to RMBB shall be the sole method of
repayment of the loan facility.
r) The defendants also allege that the loan sum of RM3 million was paid to
Hwang DBS Securities Sdn Bhd at the instructions of Zarul Ahmad Zulkifli,
RMBB's former company secretary and Head of Corporate Affairs, and there
is a total failure of consideration as they do not know what happened to the
money. The defendants counterclaimed against the plaintiff on the alleged
oral collateral contract.
s) The existence of the alleged oral collateral contract by the defendants
whereby the plaintiff is to look solely to the proceeds from the intended sale
of shares in SamaWorld Malaysia for repayment of the loan is diametrically
contrary to and in complete disregard of the express terms of:
i. The short term facility agreement dated 12.11.92,
ii. The guarantee ( by the 2nd defendant) dated 12.11.92, and
iii. The memorandum of deposit of shares dated 12.11.92, which were all
standard loan documents that set out the liability of the 1st defendant and
2nd defendant as borrower and guarantor, respectively, for the RM3
million loan.
t) It is incredible that the plaintiff will have no recourse to the defendants for
repayment of the loan even if the plaintiff could find no buyer for the shares
in SamaWorld Malaysia and the shares are practically worthless!!
u) The main issue before the trial judge was whether there was the oral
collateral contract as alleged by the defendants, which is a question of fact.
The learned trial judge found, at the conclusion of the trial, that the
defendants had failed to prove on a balance of probabilities the existence and
the terms of the alleged oral collateral contract.
v) The defendants main ground of appeal before us is that the learned trial judge
failed to properly evaluate all the oral evidence before him, preferring instead
to rely purely on documents and to draw inferences therefrom. The
defendants allege that the learned trial judge failed to properly test or
examine the documents critically against the oral evidence in deciding there
was no collateral contract.
w) The law views with suspicion collateral contracts, the sole effect of which is
to vary or add to the terms of the principal contract. Collateral contracts must
be proved strictly. The terms of such contracts and the existence of a contrary
intention on the part of all the parties must be clearly shown.
x) The parol evidence rule in section 92 of the Evidence Act, 1950 provides that
no evidence of any oral agreement shall be admitted for the purpose of
contradicting any terms of a written agreement. Nevertheless, under proviso
(b) thereof:
y) "the existence of any separate oral agreement, as to any matter on which a
document is silent and which is not inconsistent with its terms, may he
proved, and in considering whether or not this proviso applies, the court shall
have regard to the degree of formality of the document.'
z) (emphasis provided)
aa) We are unanimous that the learned trial judge's findings, that the collateral
agreement and terms as claimed by the defendants have not been proved,
should not be disturbed. His approach to the issue on the collateral contract
was correct in law and in fact. We are satisfied that he had judicially
appreciated all the evidence placed before him and had analysed the oral
evidence as against the indisputable documentary evidence. He set out in his
grounds, inter alia:
ab) "It must be observed firstly that since the fact of an oral contract is a fact
asserted by the Defendants, and is disputed by the other party, and the
defence, the onus is upon the Defendants to prove upon a balance of
probabilities the existence and the terms of the oral contract, in particular,
that the sale from the proceeds of the 10 million shares
in SamaWorld Malaysia charged to RMBB under the Memorandum of
Deposit shall be the sole method of repayment of the facility."
ac) Thereafter, after carefully considering the oral testimony of the witnesses as
well as the documentary evidence before him, he concluded:
ad) "It is evident that the Defendants have failed to prove on a balance of
probabilities the existence of an oral collateral contract that the sole source of
repayment of the facility is from the sale of the charged shares, and the
defence on this ground must fail."
ae) The learned trial judge further found:
af) " Although it was averred by the 2nd defendant that he had only agreed to
guarantee up to a limit of Rml,000,000.00 and not Rm3,000,000.00 there is
no evidence advanced and no submissions made on this point. The Court
therefore considers the alternative averment in paragraph 12 of the 2nd
Defendant's defence as abandoned.
ag) In the upshot, we are unanimous that the 1st defendant's and the 2nd
defendant's appeal is without merits. The appeal is dismissed with costs. The
decision of the trial judge is affirmed.
ah) Deposit of this appeal to respondent on account of taxed costs.
GEK LAU CHOON THEATRICAL COMPANY V HU KIANG YAN ( 1937 )
MLJ 25
1) FACTS
1) FACTS
a) This appeal turns upon a pure question of fact. The learned trial Judge had
made a finding of fact that the appellant had failed to adduce sufficient
evidence to satisfy the burden of proving the existence of the alleged oral
collateral contract.
b) His Lordship had also found that, as a matter of fact, the appellant had
breached the sale and purchase agreement in not making payment of the
balance purchase price within the extended time granted by the respondent
and that accordingly the termination of the agreement as well as the
forfeiture of the deposit sum pursuant to the letter dated 19.12.2011 were
valid and lawful.
c) For the reasons discussed above, we are satisfied that the learned trial Judge
had not fallen into error or fundamentally misdirected himself in law or on
the facts in coming to the conclusion as he did.
d) There are no reasons for this Court to interfere with the findings of fact
arrived at by the court of first instance. Based on the foregoing reasons and
discussion, we dismissed the appeal with costs. Our decision in this appeal
applies equally to Civil Appeal No. W-02(NCVC)(W)-1846-10/2014 which
is also dismissed with costs.
e) We fix costs at RM30,000.00 to be paid to the respondents in both the
appeals.
f) The deposits shall be returned to the appellant.
TAN CHONG AND SONS MOTOR COMPANY LTD V YANG CHIN LANG
( 1967 ) 1 MLJ 123
1) FACTS
a) In this case, the plaintiffs sued the defendant on a letter of guarantee. The
facts were that one Yang Pin Joo was appointed the agent and authorized
dealer of the plaintiffs, who were the sole distributors of certain Japanese
cars. Credit facilities were given to Yang Pin Joo but he became heavily
indebted to the plaintiffs.
b) The plaintiffs threatened to cancel his agency and to sue him to recover the
debts unless he found a guarantor. Yang Pin Joo then spoke to his father the
defendant and the father agreed to guarantee Yang Pin Joo’s acccount to the
extent of RM100,000.
c) Later the defendant signed a letter of guarantee and it was on this that he was
sued, as Yang Pin Joo failed to clear his debts.
d) Evidence was given at the trial of the threat to cancel the agency and to sue.
e) It was contended for the defendant that such evidence was inadmissible as no
evidence could be given to add to, contradict or vary the contents of the letter
of guarantee.
2) HELD
1) FACTS
a) In this case the respondent was a squadron leader in the Royal Australian Air
Force. He wanted to buy a car and get the benefit of exemption from duty in
Malaysia and Australia. He would have obtained the exemption if
the motor car was taken out of Malaysia and if it complied with the
Australian Design Regulations.
b) He agreed to buy a car from the appellants and signed a Buyer's Order which
contained a condition that no guarantee or warranty of any kind whatsoever
was given by the company. However the respondent only bought the car on
the representations of the appellant's salesman that the car conformed to the
Australian Design Regulations.
c) The car supplied did not comply with the Regulations and the respondent had
to sell the car for $6,500.00 thereby incurring a loss of $11,219.54
($17,719.54–$6,500.00). The respondent also lost the fiscal advantage of
importing the car to Australia duty free. The respondent claimed damages for
breach of warranty. The learned trial judge found that there had been a
warranty and this was breached by the appellants.
d) He awarded general damages of $10,500.00 with interest at 8% from the date
of the writ to the date of payment and costs of the suit at the Subordinate
Court's scale. No special damages were awarded as these were not pleaded
and an application for amendment of the pleadings was refused.
e) The appellants appealed to the Federal Court contending that they were not
liable or that the damages were too high while the respondents
cross-appealed on the ground that the damages were too low and that he was
entitled to interest from the date of accrual of the cost of action and to costs
of the suit at the High Court scale and to special damages. At the hearing of
the appeal, counsel for the appellants accepted the findings of facts by the
learned trial judge.
f) The appeal was therefore confined to legal issues on liability and quantum
only.
2) HELD
1) FACTS
2) HELD
1) FACTS
2) HELD
1) FACTS
a) In this case on the facts found by the learned trial judge the appellants had
orally agreed to allow the respondents to occupy the premises for as long as
they wished on payment of $14,000 as tea money.
b) Two written agreements of tenancy were later executed but they did not refer
to the appellants' promise.
c) A dispute arose as to payment of rent and the appellants eventually sued for
vacant possession, arrears of rent, mesne profits and damages.
d) In their defence the respondents claimed that under the oral agreement they
were entitled to stay in the premises as long as they wished and so long as
they paid the rent regularly.
e) The learned trial judge dismissed the appellant's claim and ordered the
appellants to register a lease in favour of the respondents for 28 years. He
assessed the rent at $293.40 per month in the light of the increase of
assessment.
f) The appellants appealed and the question that arose was whether the
evidence of the oral promise could be given in view of sections 91 and 92 of
the Evidence Act.
HOYTS PTY LTD V SPENCER
1) FACTS
a) A landlord has promised orally not to exercise the right to termination in the
principal contract if tenant signed the contract; landlord ended up terminating
the main contract, whereas tenant's appeal was dismissed by the Court.
SHANKLIN PIER LTD V DETEL PRODUCTS LTD ( 1951 ) 2 KB 854
1) FACTS
a) The Plaintiffs were owners of a pier in Shanklin on the Isle of Wight. They
entered into a contract with contractors to have the pier repaired and painted.
Under the contract the plaintiff had the express right to alter the contract.
b) The Defendant company director approached the Plaintiffs with a new
painting product for the pier.
c) After much persuasion, the Plaintiffs amended their contract with the
Contractors to allow for the paint in the renovation. After several months, the
paint flaked off and did not last. The Plaintiffs brought a claim for damages.
2) ISSUE
a) Whether the Plaintiff was entitled to bring a claim against the Defendant
company, who was not party to the contract to undertake renovation ?
3) HELD
1) FACTS
a) Lord Rusell said in “Gillespie Bros. & Co v. Cheney, Eggar & Co (1896) 2
Q.B. 59” , “…although when the parties arrive at a definite written contract
the implication or presumption is very strong that such contract is intended to
contain all the terms of their bargain, it is a presumption only, and it is open
to either of the parties to allege that there was, in addition to what appears in
the written agreement, an antecedent express stipulation not intended by the
parties to be excluded, but intended to continue in force with the express
written agreement.”.
INDUSTRIAL & AGRICULTURAL DISTRIBUTION SDN BHD V GOLDEN
SANDS CONSTRUCTION SDN BHD ( 1993 ) 3 MLJ 433
1) FACTS
a) The defendant purchased two units of excavators from the plaintiff and used
them on its worksite.
b) After two months, the defendant requested the plaintiff to take back the
excavators, on the ground that they were not suitable for the purpose for
which were bought.
c) The defendant sought to rely on an 'oral collateral warranty' given by the
plaintiff to the effect that if the excavators were found to be unsuitable, they
could be returned to the plaintiff without incurring any financial liability.
d) There was a dispute as to whether such a collateral condition actually existed,
and the plaintiff brought an action for damages for, inter alia, the
depreciation in value of the excavators as a result of the defendant's use of
the excavators during the two-month period.
2) HELD
1) FACTS
a) The relationship between the parties begun when the bank ('the defendant')
provided two murabaha facilities to the plaintiff, to redeem and acquire more
shares in a company called 'Kumpulan Guthrie Berhad'. The plaintiff
defaulted under the agreements and sought deferment of payment of the
outstanding (exhs MR3 and MR5).
b) Due to repeated breaches by the plaintiff, the bank offered to restructure the
murabaha facilities to assist him in meeting his outstanding obligations to
the bank and the two murabaha facilities were restructured into a revolving
al-Bai Bithaman Ajil facility ('BBA facility agreement').
c) However the plaintiff defaulted in the first instalment under the BBA facility
agreement and hence, this suit in encl 5 by the bank to enter a summary
judgment under O 14 of the Rules of the High Court 1980 for a sum of
USD18,521,806.13 or its equivalent in Ringgit Malaysia.
d) The plaintiff, did not dispute the default or the amount outstanding, instead
alleged an existence of collateral agreement and attempted to challenge the
validity of the BBA facility agreement on various grounds, inter alia, for
want of compliance with the principles of Shariah.
2) HELD
1) FACTS
a) The first appellant ('Kluang Wood') was a licensed housing developer and the
registered proprietor of a piece of land in Johor ('the land'). The second
appellant ('Chew') was a director of the first appellant. Chew was introduced
to one WP Pang ('Pang') who was the southern regional manager of the first
respondent ('Hong Leong').
b) In early 1983, the appellants negotiated with Hong Leong for banking
facilities to enable them to develop the land into a housing estate. A formal
application was made, seeking RM4.5m as a bridging loan and RM21m as
end-finance.
c) According to Chew, during the negotiation between him and Pang, Pang
agreed that Hong Leong would furnish Kluang Wood with a bridging loan
and a syndicated end-finance.Pang had represented to him in the course of
their negotiation that for a finance company of Hong Leong's repute, the
amounts of the end-finance and the bridging loan would not be a problem.
On 26 October 1983, the first respondent approved the application vide a
letter of approval.
d) By that letter, Hong Leong had expressly or impliedly represented
to Kluang Wood that a bridging loan of RM3.5m and an end-finance facility
of RM26m had been approved, with Hong Leong's share of the
end-finance being RM5m.
e) Kluang Wood pleaded that Hong Leong had further represented that the
initial drawdown of the said end- finance facility would be in the first quarter
of 1984. As security for the bridging loan, Kluang Wood created a charge
over the land in Hong Leong's favour, and Chew and the other directors
executed a letter of guarantee. In January 1984, Hong Leong prepared a
placement memorandum for syndication of the end-finance of RM26m.
f) However, no end-finance at all, including Hong Leong's RM5m, was made
available to Kluang Wood though the bridging loan of RM3.5m had been
fully utilized by Kluang Wood. Hong Leong then took out a writ against the
guarantors including Chew for recovery of the bridging loan ('the Johor
Bahru suit'). A final judgment under O 14 of the Rules of the High
Court 1980 was obtained against Chew and other guarantors.
g) Hong Leong was also granted an order for sale of the land, which was later
sold to the second respondent, a wholly owned subsidiary of Hong Leong.
On this, the appellants alleged that Hong Leong had acted in bad faith and/or
fraudulently in the exercise of its power of sale in that it had at all times
formed the intention to purchase the land by itself or through the agency of
another. However, the part of the appeal was abandoned by the appellants.
h) The appellants claimed that Hong Leong's failure to provide the
end- finance of RM26m as represented in its letter of 26 October 1983
caused the failure of the project and also disabled Kluang Wood from
servicing the interest on the bridging loan. They further alleged
that Hong Leong was negligent and acted in breach of its duty when it
represented to Kluang Wood that the end-finance of RM26m would be made
available to house buyers and that the first drawdown would be in the first
quarter of 1984. They also pleaded that the representations
of Hong Leong constituted a collateral warranty and in breach of the said
warranty, Hong Leong had caused them loss and damage. The respondents
argued that they owed no duty of care to the appellants on the alleged
representation. They contended that the appellants were estopped from
litigating the principal cause of action in the suit on the ground of res judicata,
as the issues raised by the appellants have already been litigated
by Hong Leong in the Johor Bahru suit.
i) The trial judge had found that Hong Leong had represented
to Kluang Wood that availability of the end-finance was certain, that the first
drawdown thereof would be in the first quarter of 1984, and that Pang had
been negligent in making the representations.
j) Pang's oral representations were held to constitute a collateral warranty
which was breached when no part of the end-finance came from Hong Leong.
The trial judge also held that Hong Leong's plea of res judicata succeeded in
that the claims of Kluang Wood and Chew in this action on negligent
misrepresentations and alternatively for breach of collateral warranty could
not be litigated upon because there was privity of interest
between Kluang Wood and Chew in the Johor Bahru suit, Chew being a
director and agent of Kluang Wood.
k) The trial judge dismissed the appellants' action, against which the appellants
appealed. Hong Leong cross-appealed against the trial judge's findings
that Kluang Wood's inability to service the interest on the bridging loan was
due to Hong Leong's failure to secure and provide the end-finance; the
agreement between Hong Leong and Kluang Wood contained in the letter
placed upon Hong Leong an obligation to secure and provide the
end- finance; Pang had represented the provision of end-finance and that it
would be a certainty; and the representations were negligently made and/or
were capable in law of giving rise to a collateral warranty.
2) HELD
a) Held, allowing Kluang Wood's appeal and dismissing Hong Leong's cross-
appeal:
b) (Per Lamin PCA) Since the management committee clearly approved both
the bridging loan and the end-financing, the clear wording of the approval
must be given effect to. The condition that stated that the 'total
end-financing facilities to be syndicated by HLFB' must be capable of
conveying the meaning that the first respondent undertook to organize and to
make available the said facilities. Pang's oral representation substantiated by
the certainty of availability of the end-finance conveyed by the letter of 26
October 1983 together with the undisputed fact that no end-finance at all was
available must constitute a fundamental breach by the first respondent that
went to the root of the contract
c) (PerChong Siew Fai CJ (Sabah & Sarawak)) Hong Leong's contractual
obligations could properly be ascertained from its letter of offer
which Kluang Wood had accepted. This letter showed Hong Leong's
commitment to the end-finance of RM26m as it stated that Hong Leong had
'approved' the end-finance of RM26m. There was nothing in the letter
indicating the approval being subject to any condition precedent or
to Hong Leong being able to get the syndicated loan. In the circumstance, all
such terms and conditions in the letter relating to the management of the
end-finance by Hong Leong, the total amount of the end-finance to be
syndicated and Hong Leong's participation therein reinforced the stipulation
that the end- finance would be furnished
d) (Per Chong Siew Fai CJ (Sabah & Sarawak)) The representations contended
to have been made by Pang to Chew were that for a financial institution
like Hong Leong to procure a syndicated end- finance of RM21m would
present no problem and that the availability of the syndicated loan was not
qualified. Relying on the aforesaid representations, Kluang Wood applied for
and obtained approval of the facilities including the availability of the
syndicated end-finance. Since Chew was not challenged about Pang making
the representations and Pang did not give evidence, the learned trial judge
was justified in concluding that Pang had made the representations and that
they were 'unrebutted and unchallenged'
e) (Per Chong Siew Fai CJ (Sabah & Sarawak) and Mohamed Dzaiddin FCJ) It
was stipulated that the end-finance would be 'drawdown in proportion to the
work-in-progress as certified by the project's architect'. However, there was
no evidence to show that the architect's certificate required under the said
letter had been issued. On the evidence, the first drawdown might have been
furnished had the requisite certificate been issued. Therefore, no blame ought
to be attributed to Hong Leong.This, however, did not apply to Hong Leong's
total failure of making available the end-finance after the first quarter of
1984. In this respect, there had been a fundamental breach
by Hong Leong that went to the root of the contract. The trial judge rightly
found that failure of the project was not due to any poor planning and
mismanagement thereof. Hong Leong could not use the lack of architect's
certificates as an excuse for its own fundamental failure
f) (Per Chong Siew Fai CJ (Sabah& Sarawak)) Although the notes of evidence
did not show that Chew had used the word 'certainty' in his testimony, it was
not unfair or unreasonable for the trial judge to conclude that what Pang had
represented to Chew gave the latter the impression of certainty of the
availability of the end-finance. The facts and the circumstances and the
manner in which the trial judge treated the representations showed that she
was fully aware that a case of making statements negligently had to be made
out. The trial judge was right in finding that Pang had been negligent in
making the statements upon which Kluang Wood had acted (see pp 223A–C
and 225E); Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC
465 followed.
g) (Per Chong Siew Fai CJ (Sabah & Sarawak)) If additional evidence on the
collateral warranties fall within the scope of proviso (b) to s 92 of the
Evidence Act 1950, it may be admitted in evidence. In considering whether
the proviso applies, the nature of the written agreement and its surrounding
circumstances must be considered. The matters about certainty of the
end-finance and Pang's utterances giving rise to the impression of such
certainty are not in the letter. Further, the utterance about the timing of the
first drawdown was admissible as no time-frame about the first drawdown
was given in the said letter. As a result of breach of the collateral warranty
by Hong Leong, the trial judge rightly held that the failure of the project was
due to unavailability of the end-finance (see p 226D–H).
h) (Per Chong Siew Fai CJ (Sabah & Sarawak)) Hong Leong's plea was in fact
a plea of res judicata by way of estoppel to the two entire causes of actions.
In the face of such allegations by Hong Leong, the trial judge and this court
were entitled to look at the reasons for the decision and the notes of evidence
of the trial judge in the Johor Bahru suit to determine whether the two
questions constituting the causes of actions had been determined. However,
the grounds or reasons for the decision in the Johor Bahru suit were not
exhibited in this case. Hence, it had not been established that the two
questions or causes of action had been adjudicated upon, the burden of which
lies on the party who alleges it, ie Hong Leong (see p 228D–G).
i) (Per Chong Siew Fai CJ (Sabah & Sarawak)) The point on
whether Kluang Wood and Chew were estopped from raising the second
claim of fraudulent or improper exercise of power of auction sale on the
ground that such claim could have been raised as a counterclaim in the
charge action commenced by Hong Leong against Kluang Wood need not be
dealt with. The auction sale under which the fraudulent or improper exercise
of the power of sale was alleged to have arisen took place after the making of
the sale order. Therefore, the allegations could not possibly be raised in the
charge action. Further, the trial judge had held that the allegations
constituting the second claim failed; and the appeal relating to this second
claim had been abandoned. Therefore, the contention had no merit and must
fail (see p 230D–G).
j) (Per Chong Siew Fai CJ (Sabah & Sarawak)) Whether there is sufficient
connection to constitute privity of interest would depend on an examination
of the interests of the parties and the fairness of binding them by a decision in
which they were not represented. With regards to Kluang Wood, there was
no valid ground for holding that Kluang Wood was in privity of interest with
Chew in the Johor Bahru suit or that they were so linked as to make the
doctrine of res judicata applicable (see p 232D–E).
k) (Per Chong Siew Fai CJ (Sabah & Sarawak)) An agent who has contracted
for a disclosed and named principal cannot sue on the contract. This is so
even if he is the real principal, unless the other party has affirmed the
contract with knowledge of that fact. In the instant case, Chew, to the
knowledge of Hong Leong, negotiated for Kluang Wood throughout. The
right of action to which the collateral warranty gives rise is personal as
between the two contracting parties concerned. As between them, breach of
the warranty may form the basis of an action for damages, but it does not
normally entitle a non- contracting party to sue thereon. Therefore, Chew
could not sue on the two causes of action .
HEILBUT SYMOONS & CO V BUCKLETON ( 1913 ) AC 30
1) FACTS
a) The defendants, Heilbut et al, were merchants during the rubber trade boom
of the 1910’s who claimed to underwrite shares in a rubber trading
corporation (‘Filisola Rubber and Produce Estates Ltd’).
b) The claimant, Buckleton, contacted this corporation to enquire about shares
purchasing, to which a manager at Hilbut et al responded positively,
insinuating the creation of a new rubber company, which persuaded
Buckleton to make a sizable purchase for shares in the organization.
c) The subsequently formed rubber production company proved to have far
fewer available resources than anticipated and thus suffered greatly in its
initial performance, causing Buckleton to sue for breach of warranty as the
company’s original representation had implicated far greater resources.
2) ISSUE
3) HELD
a) At first instance, the Court contended that Heilbut et al had made an innocent
misrepresentation, however, upon appeal it was determined that no
fraudulent misrepresentation had occurred as the defending party had not
been ‘reckless’ as to the truth of the statement regarding their resources pool
and further there was no clear intent that their remarks regarding their
resources should amount to a binding contractual promise to act in parallel to
their written agreement.