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2013 MarsdenLR 2882
HIGH COURT MALAYA KUALA LUMPUR
DESA TAKZIM SDN BHD – Appellant
Versus
WONG SOOK FONG & ORS – Respondent
[Originating Summons No: 24NCVC-353-02/2013]
Contracts are frustrated when supervening events render performance impossible, allowing for mutual release of obligations.
Headnote:(A) Contracts Act, 1950 - Sections 40 and 57(2) - Enforcement of Sale and Purchase Agreements - Plaintiff sought specific performance of agreements but failed to pay deposit to Defendants; upon lawful termination of agreements by Defendants, court found that they were frustrated due to supervening events, thus releasing both parties from obligations - Relying on misrepresentations regarding approvals caused reliance by Defendants leading to claims of induced entry into SPAs - Plaintiff's claims dismissed. (Paras 7-15)
(B) Misrepresentation - Representations made by solicitors as to approvals prompted Defendants' agreement to enter into contracts, failing to support claims made. (Paras 5 and 6)
Facts of the case:
The Plaintiff entered SPAs with Defendants for rehabilitation of properties post-liquidation of the original developer but failed to pay required deposits, leading to termination of the agreements by Defendants due to Plaintiff's breach and misrepresentation about approval for rehabilitation. The project was abandoned previously, and subsequent events made performance impossible.
Findings of Court:
The agreements were frustrated; supervening circumstances made contract performance impossible. No serious disputes of fact warranted a conversion of originating summons into a writ.
Issues: Validity of SPAs, breach by Plaintiff, reliance on misrepresentation, and frustration of contract.
Ratio Decidendi: The court found Plaintiff's failure to pay the deposit constituted a breach that justified termination, while the impossibility of performance arising from external events rendered the SPAs frustrated per the Contracts Act provisions.
Result: Plaintiff's Originating Summons dismissed with costs.
| Table of Content |
|---|
| 1. factual background of the spas and project. (Para 1 , 2) |
| 2. court's capability to resolve disputes without converting proceedings. (Para 4) |
| 3. claims and defences from plaintiff and defendants. (Para 5 , 6) |
| 4. determination of breach and frustration of spas. (Para 7 , 9) |
| 5. legal standards regarding contract performance and impossibility. (Para 8) |
| 6. court's reasoning on contract breach and frustration. (Para 10) |
[1] This is the Plaintiff's Originating Summons dated 14 February 2013 wherein the Plaintiff prayed for inter alia, specific performance of the Sale and Purchase agreements between the Plaintiff and the Defendants. The Plaintiff's claim in this suit is based on the Sale and Purchase agreements [collectively "SPAs"] entered into between the Plaintiff and the Defendants wherein the Plaintiff was appointed by the Defendants to rehabilitate the Defendants' shop houses which were only partially completed in 2004 following the liquidation of the developer and/owner of the project ["Bumiklass"].
[2]The relevant facts surrounding the suit herein are as follows:-
a) Save for the 1st Defendant who is the beneficial owner of the property identified as HS (D) 11099 PT No 32908, the rest of the Defendants are the registered owners of properties identified as HS(D) 111035 PT No 32945, HS(D) 111024 PT No 32933 and HS(D) 111025 PT No 32934, Pekan Baru Subang, Daerah Petaling, Negeri Selangor Darul Ehsan [collectively "Defendants' Properties"].
b) The said Defendants' Properties formed part of a commercial project known as Pusat Perniagaan Subang ["Project"], a Project spearheaded by Bumiklass which was wound up in 2004.
c) Following the winding-up of Bumiklass in 2004, the said Project was abandoned and there had been no attempts to rehabilitate and / or revive the same ["Abandoned Project"]; at least until a company known as Planbig Sdn Bhd ["PSB"] approached the Defendants and other owners and offered its services to rehabilitate and revive the Abandoned Project sometime in 2011.
d) Discussions were then held between PSB and the Defendants, as well the other owners in the Abandoned Project regarding the possible rehabilitation and completion of the said Abandoned Project by PSB, should they be appointed to carry out the rehabilitation works and / or revive the same ["Rehabilitation Works"].
e) The Defendants, who have fully settled their purchase price with Bumiklass and who in fact, have been properly registered as the legal proprietors of their respective units [save for the 1st Defendant who has not had the title registered under her name] were especially keen to appoint PSB as their contractor to carry out the Rehabilitation Works following PSB's representations that they had the requisite permit, consent and / or approval from the relevant authorities to carry out the said Rehabilitation Works.
f) The Defendants subsequently communicated their intention to appoint PSB to carry out the Rehabiltation Works on the Defendants' Properties, after which PSB had referred the Defendants to one Messrs Chiew & Ho. ["Messrs Chiew"] and informed the Defendants that they have to appoint Messrs Chiew as their solicitors as Messrs Chiew had been appointed by the relevant authorities to attend to all sale and purchase transactions involving the Abandoned Project.
g) In reliance upon PSB's representation, the Defendants proceeded to appoint Messrs Chiew to represent them in the sale and purchase of their respective units to PSB. However, when the time came for the Defendants to execute their respective SPA, the Defendants became aware for the first time of the Plaintiff's existence as the purchaser.
h) When questioned on the discrepancy, the Defendants were assured by their solicitors that PSB and the Plaintiff is actually one and the same and that they are interchangeable. Once again, relying on the representations given to them by their solicitors, the Defendants eventually executed the SPAs.
i) Pursuant to cl 2.1 (a) of the SPAs, the Plai
