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2010 MarsdenLR 1408
COURT OF APPEAL PUTRAJAYA
BALAKRISHNAN DEVARAJ & ANOR – Appellant
Versus
ADMIRAL COVE DEVELOPMENT SDN BHD – Respondent
[Civil Appeal No: W-02-883-2006]
Misrepresentation under the Contracts Act 1950 allows rescission of a contract if the misrepresentation is material and induces the party to enter the contract, regardless of the representor's intent.
Headnote:(A) Contracts Act 1950 - Section 19(1) - Misrepresentation - Appeal against High Court's dismissal of claim for rescission of sale and purchase agreement for condominium - Finding of misrepresentation by defendant regarding beach access led to plaintiffs' claim for rescission and damages - Plaintiffs induced by false representations made regarding property features - Court found that misrepresentation was material and actionable. (Paras 43, 54, 58)
(B) The court confirmed that a misrepresentation must relate to an existing fact and must induce the afflicted party to enter into a contract. The motive of the representor is immaterial unless determining fraud. (Paras 16, 18, 24)
(C) The intent of the representor must also be deduced from the circumstances under which the representation was made. Misrepresentation encompasses innocent misstatements as well. (Paras 26, 51)
(D) Further, the absence of due diligence by the representee does not absolve the representor's responsibility for misrepresentation. (Paras 12, 22)
Key Points: - Misrepresentation under the Contracts Act 1950 requires a false statement of existing fact that induces the affected party to enter into the contract (!) (!) . - A misrepresentation is material if it is likely to induce a reasonable person to enter into the contract (!) (!) . - The remedies for misrepresentation include rescission of the contract and restitution to restore the parties to their original position (!) (!) .
What is the legal test for misrepresentation under the Contracts Act 1950?
How to determine if a misrepresentation is material and induces a contract?
What are the remedies available for misrepresentation in a sale and purchase agreement?
| Table of Content |
|---|
| 1. background facts of the case. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 2. arguments on misrepresentation and its remedies. (Para 16 , 43 , 44 , 48 , 49 , 51 , 52 , 53) |
| 3. court’s analysis on misrepresentation. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42) |
| 4. legal principles on rescission. (Para 54 , 55 , 56 , 57) |
Introduction
[1] In this appeal we shall refer the parties to what they were referred to in the High Court. Thus, Balakrishnan a/l Devaraj and Girija Devy a/p Gopinath Nair shall be referred to as the plaintiffs, while Admiral Cove Development Sdn Bhd shall be referred to as the defendant.
[2] This is an appeal against the decision of the High Court sitting at Kuala Lumpur ("trial Court") after a full trial. The trial Court dismissed the plaintiffs' claim with costs We heard the appeal and we unanimously allowed it in favour of the plaintiffs.
Background Facts
[3] The plaintiffs are husband and wife and they reside at Bandar Sunway, Petaling Jaya, Selangor
[4] The defendant, on the other hand, is a developer of a condominium project known as the "Marina Bay Condominium" at Mukim Sri Rusa, daerah Port Dickson, Negeri Sembilan ("condominium").
[5] Sometime in March 1995, the first plaintiff visited the defendant's office at Sungei Wang Plaza. That visit was chronicled neatly in the witness statement of the first plaintiff in this way (see p 58 of the appeal record):-
Sometime in March 1995, I heard about the Marina Bay project developed by the defendant from some friends So, on or about early March 1995, I went to the defendant's office at Sungei Wang Plaza in Kuala Lumpur to make further inquiries At the defendant's office, I saw a miniature model of the Marina Bay project displayed in a casing. I was very attracted to the project since the condominium has sandy beach front and have direct access to the sandy beach which is similar to Mutiara Bay in Penang and Regency in Port Dickson. There I met one Mr Tan Sin Chong who introduced himself to me as the General Manager of the defendant.
[6] On 17 March 1995 during the official launch of the condominium at the Shangri-La Hotel, Kuala Lumpur, the first plaintiff was shown by a servant or agent of the defendant a miniature model and a printed brochure of the proposed condominium project showing a sandy beach front, umbrellas, relaxing easy chairs and sale boats close to the beach. And on the same day - that was on 17 March 1995, the first plaintiff selected a unit of the condominium and paid an earnest deposit of RM5,000.
[7] By a sale and purchase agreement dated 31 July 1995, the plaintiffs agreed to purchase from the defendant and the defendant agreed to sell to the plaintiffs a unit of the condominium.
[8] During the negotiations to purchase a unit of the condominium from the defendant, the first plaintiff made it explicitly clear to the defendant through its servants or agents at the official launch that the purpose of purchasing a beach front property was to enable the plaintiffs and/or their guests and children travelling from Petaling Jaya and Kuala Lumpur to come for weekends and during the holidays and gain access to the sea for swimming and to be able to relax and lay about on the beach immediately upon exiting the back door of his own unit.
[9] In order to induce the plaintiffs to enter into the sale and purchase agreement, the defendant through its servants and agents at the official launch represented to the first plaintiff that the plaintiffs will be able to swim directly upon exiting his own unit.
[10] Induced by and acting in reliance upon the aforesaid miniature model and/or brochures and/or the representations made by the servants and agents of the defendant, the plaintiffs entered into the sale and purchase agreement.
[11] The plaintiffs discovered that the representations made by the defendant through its servants and
