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2022 MarsdenLR 1944
HIGH COURT MALAYA PENANG
TEH POH HONG & ANOR – Appellant
Versus
KEJURUTERAAN HOCK KHENG SDN BHD – Respondent
[Suit No: PA-22NCvC-51-03/2022]
The responsibility for obtaining planning permission lies with the plaintiffs under the Sale and Purchase Agreement, and their failure to do so constituted a breach of contract.
Headnote:(A) Contracts Act 1950 – Sections 54, 55, and 68 – Sale and Purchase Agreement – Supplemental Agreement – Property law dispute regarding delivery of vacant possession and responsibilities for obtaining planning permission after the factory was damaged by fire – The court established that the responsibility to obtain planning permissions lies with the plaintiffs under cl 10.1 of the SPA. (Paras 39-46, 56-58)
Facts of the case:
The plaintiffs sought the court's declaration of rights over property and requested vacant possession of a factory post-fire damage, While the defendant claimed the plaintiffs did not fulfill obligations to obtain necessary planning approvals.
Findings of Court:
The court ruled that the plaintiffs breached their obligations under the agreement.
Issues
: The main issues included whether the plaintiffs were entitled to vacant possession and who was responsible for obtaining planning permission.
Ratio Decidendi:
The court emphasized that the plaintiffs, having been aware of governmental requirements, failed to comply, negating their claims for enforcement.
Result:
The plaintiffs' claims were dismissed; the defendant's counterclaim was allowed, and the supplemental agreement was declared terminated. (Paras 99-101)
JUDGMENT
Introduction
[1] This suit involves a property known as Lot 288 held under Geran Mukim No. 207, Mukim 3, Daerah Seberang Perai Selatan, Negeri Pulau Pinang measuring approximately 24,255.1656 square meter ("Land"), together with a unit of factory measuring approximately 100,000 square feet bearing an address at PMT 366, Jalan Tasek, Dua Kongsi, 14200 Sungai Jawi, Pulau Pinang erected thereon ("Factory").
[2] The Plaintiffs seek a declaration that they have rights and interest over the Land and the Factory. And that they are entitled to enjoy the exclusive use and possession of the Factory, including but not limited to carrying on and continuing their business in the Factory. They seek an order that the Defendant ("D") delivers vacant possession together with consent and approval from the relevant authority for the purpose of any work including but not limited to building work, planning as well as building plan for Parts A, B, C and D of the Factory to the Plaintiffs immediately.
[3] D's defence is essentially two-fold. Firstly, vacant possession of Part A of the Factory has already been delivered to the Plaintiffs. Secondly, D is not responsible for obtaining planning permission and approval of building plan for the reconstruction of the Factory because that is the Plaintiffs' responsibility.
[4] D has a counterclaim against the Plaintiffs as follows. The Plaintiffs' failure or refusal to obtain planning permission and approved building plan has precluded D from carrying out the reconstruction and restoration work of the Factory. Further, such failure or refusal on the part of the Plaintiffs amounts to a fundamental breach of the Supplemental Agreement dated 5 August 2021 ("Supplemental Agreement"). Accordingly, the Supplemental Agreement ought to be terminated. The balance purchase price of RM250,000 ("Balance Purchase Price") under the Sale and Purchase Agreement dated 28 May 2021 ("SPA"), that is withheld by the Plaintiffs' solicitor as stakeholder, ought to be released to D.
[5] After a full trial, I dismissed the Plaintiffs' claim and allowed D's counterclaim. Here are the grounds of my judgment.
Trial
[6] The witnesses who testified at the trial were:
Background Facts
[7] On 28 May 2021 via the SPA, D (as vendor) agreed to sell and the Plaintiffs (as purchasers) agreed to purchase the Land with the Factory erected thereon.
[8] On 7 July 2021 and prior to the completion of the SPA, the Factory was destroyed by fire ("Fire"). Under cl 22 of the SPA, the risk and the loss arising from the Fire lies on D. Under cl 9(e) of the SPA, the Land and the Factory shall be delivered on the completion date in substantially the same condition as it is at the date of the SPA, fair wear and tear excepted. Under clause 21 of the SPA, in the event of any material change in the condition of the Land and the Factory between the date of the SPA and the date of delivery of vacant possession, D shall upon notification by the Plaintiffs make good the same at D's cost and expense.
[9] The parties agreed to proceed with completion of the SPA on the basis that D will reconstruct the Factory. They entered into the Supplemental Agreement for the purpose of reconstruction and restoration of the Factory.
[10] The Supplemental Agreement provides as follows:
(a) Vacant possession of Part A of the Factory shall be delivered by D to the Plaintiffs on or before 30 September 2021 (clause 1(a));
(b) Vacant possession of Part B of the Factory shall be delivered by D to the Plaintiffs on or before 27 May 2022 (clause 1(b));
(c) Vacant possession of Part C and Part D of the Factory shall be delivered by D to the Plaintiffs on or before 30 November 2021 ("Cut-Off Date") (clause 1(c));
(d) D shall perform and complete the following reconstruction and restoration works at his own cost and expense before the Cut-Off Date (clause 2(a)):
(i) D shall replace all pillars and columns damaged by the Fire between Part B and Part C of the Factory on or before the Cu
