Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 MarsdenLR 365

SESSION COURT SHAH ALAM
MY U PROPERTIES SDN BHD – Appellant
Versus
KELANA KUALITI SDN BHD & ANOR – Respondent
[Civil Suit No: BA-A52NCVC-357-07/2020]

Petitioner Advocates:Lex Teo,Izzati Zarifah,Bruce ,Respondent Advocate: Ezryl Azlyzan,Shahir Ab Razak,Mohamad Danish

Contracts for real estate services rendered by unlicensed agents are void and unenforceable under statutory provisions, preventing recovery of commissions.

Headnote:(A) Valuers, Appraisers and Estate Agents Act 1981 - Sections 22B and 22C - Contract Act 1950 - Sections 24, 66 and 71 - Plaintiff appointed as estate agent under letter of appointment - Claim for commission denied due to lack of license - Court found appointment void ab initio due to illegality - Plaintiff's claim dismissed as each party was aware of the illegality. (Paras 66-93)

(B) Illegality in contract law - Contracts entered into for illegal purposes are unenforceable - Courts will not assist parties in illegal agreements. (Paras 72-82)

(C) Principle of unjust enrichment - Not applicable where parties are in pari delicto. (Paras 88-92)

Facts of the case:
Plaintiff claimed unpaid commission from Defendants under an appointment letter for real estate services, despite not holding a valid license. (Paras 1-14)

Findings of Court:
The appointment letter was deemed void as it contravened statutory provisions requiring a valid license for real estate practice. (Paras 66-76)

Issues: Whether the Plaintiff was entitled to claim commission despite the illegality of the contract. (Paras 18-20)

Ratio Decidendi: The court held that the contract was void due to illegality as per sections of the Act and the Contract Act, emphasizing that courts do not enforce illegal agreements. (Paras 66-76)

Result: Plaintiff's claim dismissed; each party to bear its own costs.

Judgement Key Points

Key Points: - Contracts for real estate services by unlicensed agents are void and unenforceable under statutory provisions (!) (!) (!) . - Unlicensed agents cannot recover commissions or fees for services rendered as it is statutorily prohibited (!) (!) (!) . - The principle of unjust enrichment is not applicable where both parties are in pari delicto regarding the illegal contract (!) (!) (!) . - Courts will not enforce illegal agreements and must take notice of such illegality even if not explicitly pleaded (!) (!) (!) . - Both parties were aware of the lack of license and proceeded with the agreement, constituting equal fault (!) (!) (!) .

What is the enforceability of a contract for real estate services rendered by an unlicensed agent?

What rights does an unlicensed agent have to claim commission under a void contract?

Does the principle of unjust enrichment apply when both parties are at fault for an illegal contract?

JUDGMENT

(After Full Trial)

Yong Leou Shin SCJ:

A. Introduction

[1] This action is emanated from a commission claim made against the Defendants pursuant to their breach of a letter of appointment/letter of award granted to the Plaintiff in their capacity as estate agents.

[2] After full trial, this court declined Plaintiff's claim and ordered that each party shall bear its own costs.

[3] Dissatisfied, Plaintiff filed an appeal.

B. Salient Facts

[4] Through a Letter of Appointment dated 1 January 2019 ("the letter of appointment"), the Plaintiff has been appointed as an agency for the sale and purchase of real estate for a Development project in Saujana Perdana Phase 3D2 Tresna Teratai, Sungai Buloh, Selangor ("the project") and the properties involved are double storey terrace houses (Double Storey Terrace House) ("the said houses").

[5] Based on Clause C in the appointment letter, the Second Defendant through its subsidiary which is the First Defendant has agreed to pay the Plaintiff a commission amounting to 2.5% of the net sales price exclusive of 6% sales and service tax for each house which was sold by the Plaintiff.

[6] Before the Plaintiff was given the appointment letter, the Plaintiff's representatives SP-1 and SP-2 met with the Defendants' representatives Mr Badrull Fairus bin Hashim around December 2018 where according to the Plaintiff, Mr Badrull confirmed that the Plaintiff need not use another company with license for this purpose. In other words, the Plaintiff can use the Plaintiff's own company even though the Plaintiffs company does not have a license from The Board of Valuers, Appraisers, Estate Agents and Property Manager/ Lembaga Peniiai, Pentaksir, Ejen Harta Tanah & Pengurus Harta (LPPEH). [Questions and Answers 16 WSSP 1 referred to]

[7] Throughout the material time, the Plaintiff has performed the Plaintiff's duties according to the scope of duties under the said appointment letter and the Defendants have enjoyed the results of the Plaintiff's efforts in providing sales service for the project.

[8] Nevertheless, in a meeting held on 14 May 2019, the Plaintiff was informed by the Defendants' representatives that the Plaintiff's service would be terminated effective 31 May 2019. and the commission money was reduced to a rate of 1.5% without any consent from the Plaintiff.

[9] The Plaintiff through his solicitor, Messrs Lee Gan Teo & Wong issued a Letter of Claim dated 29 June 2020 {"Said Letter of Claim") to the Defendant informing that the Plaintiff has the right to demand payment of outstanding commission amounting to RM194,555.25.

[10] As of October 2019, the Plaintiff has sold fourteen (14) units of houses for the project but accordingly, the Defendants still refused, failed and/neglect to pay the commission money to the Plaintiff.

[11] On 1 October 2019, 14 invoices were issued for the commission payment under the Letter of Award, for the alleged completion of work as a real estate agent under the letter of award (see p 13 Bundle C)

[12]. The Defendants however were said to have been deliberately ignoring the claims and/or invoices that have been sent to the Defendants by the Plaintiff.

[13] On 27 July 2020, since there was still no payment made by the Defendants to the Plaintiff, the Plaintiff initiated a lawsuit against the Defendants.

[14] Plaintiff claims for RM194,555.25 against the Defendant for alleged outstanding payment of commission.

[15] In the Defendant's defense, the Defendant states that the Plaintiff is not eligible to claim the commission because the Plaintiff at the material time was not a registered agent pursuant to s 22C of the Valuers, Appraisers and Real Estate Agents Act 1981.

C. Cause Papers And Witnesses

[16] The cause papers marked and tendered into court are as follows:

[17] The following witnesses were called during trial:

Plaintiffs Witnesses
a. Hoi Seng Huat - Director (SP1) - Witness Statement of SP1 marked as ("WSSP1")
b. Lim Soo Yong - Director (SP2) - Witness Statement of SP2 marked as ("WSS

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