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2025 MarsdenLR 5557
HIGH COURT SABAH & SARAWAK KOTA KINABALU
CARA KAYA SDN BHD – Appellant
Versus
EXCELRUN SDN BHD – Respondent
[Case No: BKI-22NCVC-84-6/2024]
The interim management corporation is bound to enforce mutual covenants, requiring consent for any change in use of property, making unilateral changes without agreement impermissible.
Headnote:(A) Sale and Purchase Agreement - Property Law - The questions referred by the Court included whether the Plaintiff could change the use of Parcel B without the Defendant's approval and whether the Plaintiff was entitled to damages for loss of rental. (Paras 2, 16)
(B) Contractual Obligations - The Defendant, as the interim management corporation, is bound by the Mutual Covenants to enforce regulations governing use, and the Plaintiff must obtain consent for changes. (Paras 21, 29)
Facts of the case:
The Plaintiff purchased Parcel B as a car park area and sought changes in use without mutual agreement, citing full payment and status as a beneficial owner. (Paras 4, 17)
Findings of Court:
The Court found that the Defendant had not overstepped its boundaries and was obligated to uphold the covenants. (Paras 33, 43)
Issues: The Court addressed whether the Plaintiff could unilaterally change the use of property and the entitlement to damages. (Paras 1, 2)
Ratio Decidendi: The Plaintiff's assertions of being a bare trustee were dismissed, emphasizing that the Defendant retained enforceable rights under the SPA, obliging the Plaintiff to seek approval for changes. (Paras 19, 43)
Result: Plaintiff's action was dismissed with costs.
| Table of Content |
|---|
| 1. parties have a legal dispute over property use. (Para 1 , 2 , 3 , 4 , 5 , 6 , 10 , 11 , 12) |
| 2. plaintiff claims beneficial ownership of parcel b. (Para 16 , 17 , 18) |
| 3. trustee obligations not applicable to current case. (Para 19 , 20 , 21 , 22 , 23) |
| 4. previous approvals do not bind future decisions. (Para 24 , 25 , 26) |
| 5. mutual covenants govern property use agreement. (Para 27 , 28 , 29 , 30 , 31) |
| 6. ongoing duties under sale and purchase agreement. (Para 32 , 33 , 34 , 35) |
| 7. legal requirements for planning permission addressed. (Para 36 , 37) |
| 8. defendant's obligations to enforce covenants affirmed. (Para 38 , 39 , 40 , 41) |
| 9. no breach established; plaintiff's claims dismissed. (Para 42 , 43) |
| 10. claim for damages lacks sufficient evidence. (Para 44 , 46) |
[1] Both parties agreed that their dispute could be determined by the Court on questions of law/construction of documents without a trial pursuant to O 14A of the Rules of Court 2012.
[2] These were the questions:
(i) whether the Plaintiff as purchaser of Parcel B within the Lintas Station building is legally entitled to change the use of Parcel B without the agreement and/or approval from the Defendant which is the interim manager of the common property of the Lintas Station building;
(ii) whether the Plaintiff as purchaser of Parcel B within the Lintas Station building is legally entitled to change the use of Parcel B without the agreement and/or approval from the Defendant which is the interim manager of the common property of the Lintas Station building; and
(iii) whether the Plaintiff is entitled to damages to be assessed for the loss of rental and 5% gross revenue.
[3] For context, the Defendant is the developer of a 7-storey commercial-cum-multistorey car park building known as "Lintas Station.
[4] The Plaintiff purchased the 4th floor of Lintas Station from the Defendant as the developer vide a sale and purchase agreement dated 29 July 2013 ("SPA") containing Mutual Covenants in The Second Schedule which is specifically agreed to be read, taken and construed as an essential part of the SPA.
[5] The subject property is also referred in the SPA as Parcel B.
[6] The Plaintiff has paid the purchase price for Parcel B in full, and was given vacant possession of the 4th floor.
[7] By para 5(a) of the Mutual Covenants, the Plaintiff covenanted that it would use Parcel B as a car park area until the requisite approvals have been obtained for its use as a hotel.
[8] Clause 19(1) of the Mutual Covenants states:
"The Purchaser and his successors-in-title, permitted assigns, nominees, beneficiaries, tenants or otherwise to the said Parcel shall be bound by the terms of the Mutual Covenants referred to in the Second Schedule and the House Rules of Lintas Station which contains the terms and conditions regulating the use of the said Building by the unit owners and occupiers thereof and necessitated by the nature of the said Parcel being part of a sub-divided building, and the Purchaser and his successors-in-title, permitted assigns, nominees, beneficiaries, tenants or otherwise covenant that all persons occupying or coming onto the said Building shall be bound by the terms thereof."
[9] Clause 19(2) of the Mutual Covenants states:
"The terms of the Mutual Covenants shall upon the issuance of the subsidiary title to the said Parcel be deemed (so far as they are not inconsistent or contradictory) to be incorporated as the by-laws to be enforced by the management corporation for the said Building with unconditional consent of the Purchaser now given."
[10] On 8 October 2017, the local authority Dewan Bandaraya Kota Kinabalu gave its approval for the conversion of Parcel B to a hotel.
[11] On 13 September 2018, the Plaintiff told the Defendant that it wanted to change the use of Parcel B to office lots in view of unfavourable economic times. The Defendant agreed.
[12] Thus, the original use of Parcel B as a car park area was converted, with the consent of the Defendant p
