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2022 MarsdenLR 592
HIGH COURT MALAYA KUALA LUMPUR
NIDTHIA PANNIR CHELVAM – Appellant
Versus
ICON CITY DEVELOPMENT SDN BHD – Respondent
[CIvil Suit No: WA-22NCVC-444-07/2018]
Misrepresentation in property sale entitles the buyer to rescind contracts when reliance on false representations is proven, binding external representations as collateral agreements.
Headnote:(A) Contracts Act 1950 – Section 18 – Misrepresentation as per the Contracts Act includes positive assertions not warranted by information – The Plaintiff purchased 2 apartments in reliance on representations of an integrated township – The Defendant failed to complete the promised amenities hence misrepresented the project. (Paras 18, 33)
(B) Collateral Agreement – Section 92(b) of Evidence Act 1950 – Oral representations making representations binding as collateral agreements to sale and purchase agreements – The representations supplement the formal agreement and are valid. (Paras 39-43)
Facts of the case: The Plaintiff bought apartments based on representations by the Defendant of a fully integrated township, but the promised amenities were not developed, leading to claims of misrepresentation. (Paras 1-10)
Findings of Court: The court found that the Defendant's failure to deliver on the promised development amounted to misrepresentation and a breach of contract. (Paras 33, 44)
Issues: The court addressed whether there was misrepresentation leading to purchase decisions and the validity of external representations as collateral to contracts. (Paras 16-17)
Ratio Decidendi: Representations made by the Defendant created an inducement to purchase, which constituted misrepresentation. Collateral agreements recognized by Malaysian law allowed the Plaintiff to rescind. (Paras 18, 42)
Result: The Plaintiff's claim for rescission and refund was granted. (Para 44)
JUDGMENT
[1] The Plaintiff purchased 2 units of apartment ("the said properties") at a development called the Icon Residenz @ Icon City ("the said project") developed by the Defendant.
[2] The Plaintiff alleges fraudulent misrepresentation on the part of the Defendant on the description and nature of the project and / or in the alternative a breach of collateral contract with regards to the project.
Brief Facts
[3] The said project was launched sometime in the 3rd quarter of 2011 by Mah Sing Group Berhad of which the Defendant is the fully owned subsidiary. The project was for the construction of commercial as well as residential units on a plot of land with the size of 19.5 acres.
[4] It is the contention of the Plaintiff that in various media publication and brochures as well as a model of the project displayed at the Defendant's office and explanations from the Defendant's sales executives the project was touted as a fully integrated residential and commercial development which would include offices, restaurant and more importantly a shopping mall, a boutique hotel surrounded by park which would include walking and jogging track.
x[5] In short according to the Plaintiff the impression given was that the project would provide the convenience of living in a city within a city with all the necessary conveniences for shopping as well as recreation and a seamless lifestyle.
[6] Another feature touted was for easy entrance and exits to the said area with constructions of flyovers linked direct to the main highways. It was also highlighted that the approval for the same had already been obtained.
[7] The annual reports also highlighted such features as 10 feet high ceiling, security system with audio video intercom and automatic rubbish chute in each unit of the apartment.
[8] It is based on this representations the Plaintiff signed 2 separate sale and purchase agreements dated 27 May 2012 and 7 June 2013 for 2 unit of apartments. The apartments were completed and vacant possession was handed to the Plaintiff on 8 September 2016.
[9] The Plaintiff contends that the Defendant failed to complete the project as represented especially on the failure to construct the shopping mall, a hotel and the flyovers as promised and failed overall to provide an integrated township with a seamless living.
[10] Further there was also a failure to provide the apartments with high ceilings of 10 feet, a security system comprising of an audio video intercom, automatic rubbish chute in each unit as well as various other defects including cracks on the walls and poor tiling.
[11] The Plaintiff therefore seeks to annul both the sale and purchase agreements for misrepresentations and or in the alternative for a breach of contract.
[12] In its defense the Defendant admitted that the Plaintiff had purchased the 2 units of apartment as claimed. The Defendant contends that whatever that was agreed between the parties was spelled out in the sale and purchase agreements and the Plaintiff had executed the agreements with full awareness of the terms
[13] Further the Defendant contends that the newspaper articles were published by 3rd parties and did not form part of agreement between the Plaintiff and the Defendant.
[14] The Defendant avers that the Mall and Hotel are part of the Phase 2 of the project which was still in the planning stage and whatever reports published with regards to the 2nd phase has to be taken as a projection of the whole project and not as a representation. Further the construction of the flyovers are subject to the approval of the various authorities for which the Defendant have documents to apply for approval.
[15] Finally the defects highlighted by the Plaintiff in the apartments are subject to clause on the defect liability period and do not form part of any representations made.
The Issues
[16] Having regards to the facts as derived from the pleadings and the evidence of the witnesses the Court concluded that the main issue to be consider
