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2021 MarsdenLR 3773
HIGH COURT MALAYA KUALA LUMPUR
TRANSNASIONAL EXPRESS SDN BHD & ORS – Appellant
Versus
TAN CHONG INDUSTRIAL EQUIPMENT SDN BHD – Respondent
[Civil Suit No: WA-22NCVC-404-08/2017]
Unjust enrichment arises where coercion occurs in contractual agreements, leading to a significant imbalance in benefit exchanged, warranting restitution.
Headnote:(A) Contract Act 1950 – Sections 71 and 73 – Unjust enrichment claim – Plaintiffs claimed restitution of RM22,679,424.94 for overpayment; the court found coercion in setting the sale price of RM16 million, asserting unjust enrichment and applicability of restitution principles from previous cases. (Paras 8, 13, 19)
(B) Coercion – The court found that the Plaintiffs were pressured into agreeing to a sale price substantially below market value due to the repossession of assets, satisfying the conditions for coercion under Section 73. (Paras 14, 19)
(C) Findings of Court – The Defendant unjustly enriched to the tune of RM22,679,424.94 from the Plaintiffs’ distress and need for funds during a critical time. (Paras 17, 19)
(D) Issues – The court addressed whether the Plaintiffs were coerced into agreeing to the sale price and if the Defendant’s enrichment was unjust. (Paras 14, 19)
(E) Ratio Decidendi – The court held that the principles of unjust enrichment apply where coercion occurs, validating the Plaintiffs' calculation of losses and granting restitution. (Paras 19)
(F) Result – The Plaintiffs' claim for restitution was allowed with specific terms for payment and costs. (Paras 20)
JUDGMENT
A. Background Facts
[1] The 1st to the 5th Plaintiffs are the operators of the express bus companies which are subsidiaries to the 6th Plaintiff. The 7th Plaintiff is the owner of a piece of land held under H.S.(D) 87546, PT No 7929, Bandar Ampang, Daerah Ulu Langat, Negeri Selangor ("said land") and related to the rest of the Plaintiffs.
[2] The Defendant is the owner of the buses and had entered a series of lease agreements with the 1st, 2nd and 3rd Plaintiffs with respect to buses owned by the Defendant. The Defendant also entered several vehicle service maintenance agreements with the 1st, 2nd,3rd, 4th and 5th Plaintiffs to provide maintenance works for the buses.
[3] The 1st to the 5th Plaintiffs defaulted in their monthly payments under the lease agreement, then incurring a debt to the amount of RM32,920,575.06. Due to the default, the Defendant terminated the lease and maintenance agreements on 21 April 2016 and repossessed 49 buses from the Plaintiffs.
[4] Following the termination, a meeting was held on 22 April 2016 between the 1st to the 6th Plaintiffs and the Defendant to settle the said debt. A proposal was made by the Plaintiffs to settle the debt by transferring a piece of land to the Defendant. This was agreed by the 7th Plaintiff as the owner and consented to the Defendant lodging a private caveat on the said land.
[5] A series of meetings took place in early May 2016 between the Plaintiffs and the Defendant. On 4 July 2016, a Settlement Agreement (SA) was entered between the 1st to the 6th Plaintiffs and the Defendant. Under the terms of the SA, it was agreed, inter alia, that all the 1st to the 6th Plaintiffs shall be jointly and severally liable to the Defendant for the full settlement of the debt; that the 7th Plaintiff as the owner of the said land shall transfer the said land to the Defendant as part settlement of the debt; after taking into account the value of the land in the sum of RM16 million, the balance debt due, owing and payable is RM16,920,575.06 to be paid over a period of eight (8) monthly instalments. In the event of breach of any provision in the SA, the Defendant shall be entitled to inter alia terminate the SA and repossess the buses.
[6] Pursuant to the SA, a Sale and Purchase Agreement (SPA) was entered into between the 7th Plaintiff and the Defendant on 4 July 2016 on the sale of the said land to the Defendant. On 16 June 2017, the Defendant terminated the SA and repossessed 49 buses due the Plaintiffs has defaulted in making payment as agreed in the SA.
[7] On 11 August 2017, the Plaintiffs then instituted a suit against the Defendant on 12 August 2017 seeking, inter alia, a Declaration that the said land's value is RM55.6 million; or a sum of RM22,679,424.94 (overpayment) or (windfall) being the balance of the value of the said land to be paid to the 7th Plaintiff of RM22,679,424.94, through its amended Statement of Claim. The Plaintiffs also seek for an injunction against the Defendant for executing the SA until the disposal of the suit. The Defendant is to return RM877,000 being the compensation paid by the Government for the acquisition of part of the said land and to return of the busses. On 10 March 2021 that is on the 1st day of the trial, the Plaintiff confirmed that prayer at para 26 (a) and (c) are withdrawn whereas the rest of the prayer are maintained.
B. Analysis And Finding
[8] The Plaintiffs' claim is based on unjust enrichment under Common Law as well as s 71 and 73 of the Contract Act 1950 . The true value of the said land is substantial enough to settle the RM32,920,575.06 owing to the Defendant. It is the restitution of the excess/overpayment of RM22,679,424.94 as a remedy flowing from the unjust enrichment.
[9] The basis of the Plaintiffs' claim here is not to challenge the agreements including the agreed purchase price of RM16 million but they are seeking a remedy premised on unjust enrichment and/or coercion under Common Law as well as s 71 and
