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2022 MarsdenLR 1878
HIGH COURT MALAYA SHAH ALAM
NORLIANA RAMLI – Appellant
Versus
KUEEN LAI PROPERTIES SDN BHD – Respondent
[Suit No: BA-22NCVC-167-04/2021]
Misrepresentation requires an untrue statement made to induce another party into a contract; mere disappointment in outcome does not equate to misrepresentation.
Headnote:(A) Contracts Act, 1950 – Sections 17 and 18 – Fraudulent Misrepresentation – The plaintiffs brought a class action against the defendant for alleged fraudulent misrepresentation regarding a housing development project. The court found no fraudulent misrepresentation, asserting that the defendant's representations were true at the material time. The alleged misstatements were deemed auxiliary and did not constitute grounds for misrepresentation. (Paras 9-29)
(B) Collateral Contract – The court examined whether the plaintiffs established the existence of a collateral contract based on representations made by the defendant. It concluded that representations were not assurances or guarantees, thus failing to establish a collateral contract. (Paras 40-48)
Facts of the case: The plaintiffs challenged the character of a development project after it was repurposed from a commercial center to an educational institution. They alleged misrepresentation based on various inducements for purchasing SOHO units.
Findings Of Court: This Court found that the defendant did not make any false representations, nor did the plaintiffs provide evidence for a collateral contract, leading to the dismissal of the claim.
Issues: Whether the defendant's actions constituted fraudulent misrepresentation and if a collateral contract existed.
Ratio Decidendi: The court emphasized that misrepresentation requires an untruthful statement made to induce a party into a contract. The events' outcomes must also be demonstrated as misrepresentation, which was not proven in this case.
Result: The plaintiffs' claims were dismissed with costs awarded to the defendant.
JUDGMENT
Introduction
[1] The plaintiffs (there are 252 plaintiffs in total) brought a class action against the defendant for fraudulent misrepresentation or in the alternative breach of a collateral agreement in relation to a housing cum commercial development project, which was developed by the defendant, known as the Tiara Imperio (hereafter 'the project'). The parties have gone through a full trial. On 19 October 2022, this Court dismissed the plaintiffs' action. The reasons for the decision are set out as below.
Background Facts
[2] The project comprises of three blocks, namely, Block A, Block B and Block C. Block A comprises of 533 units of small office home office (SOHO) in a 34-storey building. Block B comprises of 275 units of SOHO in a 18-storey building. Block C was initially planned as a commercial centre adjacent to Block A and B which would be linked by a sky-bridge between the SOHO units and the commercial centre.
[3] The plaintiffs are some of the purchasers from Blocks A and B respectively. The plaintiffs and the defendant entered into written contracts in the form of the Sale and Purchase Agreement under the Schedule H of the Housing Developer (Control and Licensing) Regulations 1989. The plaintiffs' claims were not premised on the Sale and Purchase Agreements. The plaintiffs' claims were premised on the "representations" made to them by the defendant (as the developer) before the plaintiffs entered into the Sale and Agreement.
[4] The plaintiffs averred that the defendant (or its agents(s), or its sales representative(ies) or its employee(ies)) had represented to them as follows:
(i) Block C was intended to be a commercial centre having amenities, such as banks, shops, hotel and convention centre;
(ii) The SOHO units could bring high rental yield because of one German-Malaysian Institute (GMI) had shown interest to rent some of the SOHO units for its students;
(iii) The maintenance fees charges would be RM0.22 psf;
(iv) There would be an eight-tier security service serving the project;
(v) A "high-end" lobby as depicted in the sales brochures; and
(vi) The project was a "high-end" development.
(the above representations have been paraphrased, and are hereafter collectively referred to as "the misrepresentation" or "the collateral contract")
[5] After the completion of the project, and upon delivery of vacant possession of the SOHO units, the plaintiffs discovered that Block C was no longer to be used as a commercial centre but was under renovation to become an international school, Kueen Lai Secondary International School (hereafter "the international school"). At present, Block C is occupied and operated by the international school.
[6] The plaintiffs were unhappy that Block C has been turned into a school, instead of what was represented to them at the time they entered into the Sale and Purchase Agreements to purchase the SOHO units. The plaintiffs averred that they had been fraudulently misrepresented to by the defendant, or in the alternative, the defendant had breached the collateral contract.
[7] The plaintiffs further averred that they purchased their respective SOHO units because of the representations made to them that Block C was to be developed as a commercial centre, as the SOHO units would be next to the commercial centre. This was the main enticement, or "major inducement" as the plaintiffs' counsel submitted, for the plaintiffs to purchase the SOHO units from the defendant.
[8] The plaintiffs also complained, among other things, that the maintenance charges turned out to be RM0.39 psf, instead of RM0.22 psf as represented to them, that there are no eight-tier security services provided by the defendant, that the development was not a "high-end" project, nor was there a "luxury" lobby as depicted in the sale brochures, and that there were no amenities provided as represented by the defendant.
The Findings Of This Court
[9] The issues to be tried, as agreed by the parties, are (i) whether the defe
