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2022 MarsdenLR 1951
HIGH COURT MALAYA KUALA LUMPUR
LOW SAU YING – Appellant
Versus
ONE CORE INDUSTRIAL RESOURCES SDN BHD – Respondent
[Civil Appeal No: WA-12BNCVC-31-03/2022]
A termination of a contract must strictly adhere to the terms agreed upon, and deviation or misrepresentation of those terms by either party invalidates the termination.
Headnote:(A) Contracts – Interpretation of Terms – The court emphasized strict adherence to the terms of the harvest agreement and found that the defendant's termination based on unfavorable weather was not valid under the stipulated terms. The defense's shifting rationale for termination was rejected. (Paras 19-31)
(B) Appeal – Nature of Review – An appellate court operates on the premise of a re-hearing and will consider the findings of the trial judge only on specific grounds of misdirection or misapprehension. (Paras 16-18)
Facts of the case: The plaintiff claimed RM400,000 for balance consideration from a harvest agreement and damages for cut trees after the defendant terminated the agreement citing poor harvest due to weather, while the defendant counter-claimed for refunds under the same agreement, contending the plaintiff's actions contributed to the frustrating circumstances. (Paras 2-14)
Findings of Court: The trial court's dismissal of the plaintiff's claims except for RM2,000 for utilities was reversed. The contract was deemed validly subsisting despite defendant's assertions. (Paras 15, 36)
Issues: Whether the harvest agreement was validly terminated and if the plaintiff was entitled to the balance consideration. (Paras 19-35)
Ratio Decidendi: The court held the termination was invalid as the grounds listed were not encompassed by the force majeure clause of the contract. The defendant's refusal of a permit due to plaintiff's actions and Covid-19 were not valid for termination under the agreement. (Paras 24-27)
Result: The appeal is allowed, ordering the defendant to pay RM400,000 to the plaintiff. The lower court's decision on the utilities claim is affirmed.
JUDGMENT
Introduction
[1] In this judgment, parties are referred to as they were before the trial court. This is an appeal by the plaintiff against the decision of the learned Sessions court Judge in dismissing part of her claim.
[2] The plaintiff commenced an action against the defendant for a declaration in respect of an agreement to harvest fruits on the plaintiff's orchard. The plaintiff also claimed against the defendant for the sum of RM400,000.00 being the balance consideration due and payable under the harvest agreement, the sum of RM130,000.00 as damages for loss of certain fruit trees which were allegedly cut down by the defendant and RM2,000.00 for unpaid utilities bill. The defendant in turn filed a counter-claim against the plaintiff for refund of the consideration for the unexpired period under the harvest agreement as well as for special damages.
[3] At the conclusion of the trial, the learned Sessions court Judge allowed the plaintiff's claim for utilities bills amounting to RM2,000.00 with RM6,000.00 cost but dismissed the other claims The learned Sessions court Judge also dismissed the defendant's counter-claim. The plaintiff appealed against the decision of the learned Sessions court Judge but the defendant did not file any appeal.
[4] At the hearing of the appeal before this court, the plaintiff abandoned her claim for RM130,000.00 as damages for loss of certain fruit trees which were allegedly cut down by the defendant.
Brief Facts
[5] The plaintiff is the owner of an orchard in Mukim Pelangai, Pahang. There were durian and other fruit trees planted in the orchard. On 10 January 2019, the defendant and the plaintiff entered into a harvest agreement. Pursuant to the agreement, the plaintiff allowed the defendant to harvest the fruits in the orchard for the period of 6 years commencing on 16 March 2019 and expiring on 15 March 2025. The consideration payable by the defendant to the plaintiff for the 6-year harvest was RM600,000.00.
[6] As of the date the agreement was signed, the defendant has paid the plaintiff the total sum of RM200,000.00. The remaining balance consideration in the sum of RM400,000.00 was payable in two yearly equal instalments of RM200,000.00 each, namely on 22 March 2020 ("2nd Instalment") and 22 March 2021 ("3rd Instalment") respectively.
[7] The defendant defaulted in payment of the 2nd Instalment. Some 4 months after the due date for that instalment, the defendant gave notice to terminate the harvest agreement. In the notice of termination dated 28 July 2020, the defendant stated the circumstances of the termination as "due to unfavourable weather" which has resulted in very poor harvest of durian.
[8] The defendant further demanded for a refund in respect of the unexpired portion of the period under the harvest agreement which the defendant termed as the "Paid Period", that was the period between 6 July 2020 and 15 March 2021 for which the sum of RM200,000.00 has been paid when the agreement was signed. This was made purportedly pursuant to cl 7 of the harvest agreement.
[9] After the notice of termination was issued, the plaintiff went to inspect the orchard. Upon inspection, the plaintiff found a number of fruit trees were cut down without her consent. The plaintiff also found that the defendant has not been paying the utilities bill for the orchard. The plaintiff then commenced the action against the defendant
[10] In its statement of defence, the defendant claimed that the fruit trees at the orchard were in bad condition and generally not properly cared for. After taking possession of the orchard, the defendant took actions to properly care for and fertilise the fruit trees to ensure plenteous harvest in order to get reasonable returns from the orchard. The defendant also built a new shed at the orchard.
[11] The defendant further pleaded that since the tenure of the harvest agreement was for 6 years for a consideration of RM600,000.00, the RM200,000.00 which has
