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2024 MarsdenLR 698
HIGH COURT SABAH & SARAWAK KOTA KINABALU
FASA HARMONI SDN BHD – Appellant
Versus
LEONG TONG KEW @ CHEN CHI MOY & ANOR – Respondent
[Civil Appeal No: BKI-12ANCVC-13-6/2023]
Effective service of notices is crucial in contractual obligations; failure to do so can render terminations invalid, especially amidst exceptional circumstances like the Covid-19 pandemic.
Headnote:(A) Rules of Court 2012 - Order 55 r 2 - Courts of Judicature Act 1964 - Appeal against decision of Sessions Court regarding validity of Default Notice and Opt-out Letter - Court found that service of Default Notice was defective, leading to invalidation of Termination - Emphasis on the necessity of proper notice for contractual obligations. (Paras 47-59)
(B) Contract Law - The court reiterated the importance of effective communication and service of notices in contractual agreements, particularly in light of the Covid-19 pandemic's impact on postal services. (Paras 56-57)
(C) Fairness and Justice - The court underscored the principle that it would be unjust to deprive the Respondents of their property when they had consistently made payments and were not properly notified of defaults. (Paras 57-59)
Facts of the case:
The Respondents purchased a property under a Sale and Purchase Agreement and later faced issues due to the Developer's winding-up. They were deemed to have opted out of a scheme due to non-payment of an Additional Contribution Sum, which they contested as they did not receive the Default Notice.
Findings of Court:
The court found that the Default Notice was never received by the Respondents, rendering the Termination invalid.
Issues: Whether the Default Notice was effectively served and the implications of its invalidation on the Respondents' rights.
Ratio Decidendi: The court ruled that proper notice is essential for enforcing contractual obligations, and the failure to serve the Default Notice invalidated the Termination.
Result: The appeal by the Appellant was dismissed with costs.
JUDGMENT
Enclosure 1
Introduction
[1] This is an appeal pursuant to O 55 r 2 of the Rules of 2012 (" ROC ") against the decision of the learned Session Court Judge ("SCJ") given on 13 June 2023 which granted the Respondent's Originating Summons dated 8 November 2022 under BKI-A54-12/11-2022 ("said OS") for the following orders:
(a) The 1st and 2nd Plaintiffs did not consent to opt out as per the Scheme of Arrangement dated 20 January 2020;
(b) The decision of the Defendant vide a letter dated 4 April 2022 to be invalid due to non-receipt;
(c) The property to be returned to 1st and 2nd Plaintiffs provided that the remaining balance be paid up to date within 3 months from today or any reasonable period agreed by both parties, whichever earlier; and
(d) Costs of RM2,500.00.
[2] The Appellant is the Defendant in the Court below and the Respondents are the Plaintiffs.
Brief Facts Of The Case
[3] By a Sale and Purchase Agreement dated 18 June 2010 ("SPA"), the Respondents purchased Lot No B-22-10, Tower B, 22nd Floor, Type D2, ("said Property") in Platinum Tower @ 1Sulaman ("said Project") from the Developer, Sagajuta (Sabah) Sdn Bhd ("Sagajuta") at the purchase price of RM190,600.00.
[4] The Respondents secured a loan from RHB Berhad to finance the purchase of the said Property.
[5] On 20 June 2016, Sagajuta was subsequently wound up and the said Project became an abandoned project.
[6] Pursuant to the High Court 's Order dated 20 January 2020 ("the Sanctioned Order") under Originating Summons No 24NCC-1/1-2020, the High Court had sanctioned the Scheme of Arrangement ("said Scheme") between Sagajuta and all the Scheme Creditors, including the Respondents herein and also appointed the Appellant to be the White Knight to rehabilitate the said Project.
[7] Under cl 3(f) of the Court 's approved and deemed signed Supplementary Agreement found in the said Scheme ("the deemed signed Supplemental Agreement"), Purchaser is required to pay to the Developer or the White Knight the Additional Contribution Sum within thirty (30) days from the date of the payment notice is issued to the Purchaser which accompanied by a copy of the requisite certificate of the same issued by the relevant Consultant.
[8] Pursuant to cl 3(g) of the deemed signed Supplemental Agreement in the event of failure to pay the said Additional Contribution Sum, the Purchaser shall be deemed as an Opt-out Purchaser (subject to 30 days' notice be given to the Purchaser on due date of payment notice). Consequently, the opt-out sum of RM40,326.00 will be refunded to Purchaser accordingly under cl 2(i) & 3(j) upon the issuance of the occupation certificate for the said Project.
[9] On 19 June 2021, the 1st and 2nd Respondents had executed a formal Supplemental Agreement with Sagajuta as the Developer and the Appellant as the White Knight of the said Project.
[10] Even before the execution of the formal Supplemental Agreement dated 19 June 2021, the Appellant had been in consistent communication with the Respondents via WhatsApp.
[11] Accordingly, pursuant to cl 3(f), the Respondents is required to pay the Additional Contribution Sum of RM85,400.00 ("said Additional Contribution Sum") progressively to opt-in into the said Scheme.
[12] The Appellant contended that it had repeatedly reminded the 1st and 2nd Respondents on various dates between 24 July 2020 until 10 February 2022 via WhatsApp and phone calls on the status of their payment for the said Additional Contribution Sum but to no avail. The 1st and 2nd Respondents had completely ignored the Appellant's reminders and demands. ROA p 154-160.
[13] Consequently, the Appellant had issued a Default Notice dated 18 October 2021 ("said Default Notice") in ROA p 27-28 under cl 2(i) of the Supplemental Agreement to the 1st and 2nd Respondents in accordance with cl 12 of the SPA in ROA p 184.
[14] According to cl 12 of the SPA, any notice, request or demand requiring to be served by either party shall be in writing and shall
