Claims for unjust enrichment require invalidation of the underlying contract; a party cannot seek restitution without challenging the contract's validity.

Hashim Hamzah JCA:

Introduction

[1] This is an appeal by the Appellant against the High Court 's decision dated 15 July 2021 that entered judgment in favour of the Respondents premised primarily on unjust enrichment.

Background Facts

[2] Briefly, the background facts leading to this appeal are as follows.

[3] The 1st to the 5th Respondents were the operators of express bus companies, which were subsidiaries of the 6th Respondent. The Appellant was the owner of the buses and had entered into a series of lease and maintenance agreements with the 1st to the 5th Respondents, respectively, with respect to the use and maintenance of those buses.

[4] The 7th Respondent was the owner of a piece of land held under H.S. (D) 87546, PT No. 7929, Bandar Ampang, Daerah Hulu Langat, Negeri Selangor (hereinafter referred to as "the said Land").

[5] The 1st to the 5th Respondents had defaulted in their monthly payments under the lease and maintenance agreements, incurring a debt totalling RM32,920,575.06. As a result, the Appellant terminated the lease and maintenance agreements on 21 April 2016 and repossessed its 49 buses from the Respondents.

[6] After a series of negotiations, on 4 July 2016, the 1st to the 6th Respondents and the Appellant entered into a Settlement Agreement (hereinafter referred to as "the SA") to resolve the outstanding payment in a full and final settlement made up of the transfer of the said Land to the Appellant and payment of the balance of RM16,920,575.06 in 8 instalments.

[7] The transfer of the said Land was affected by way of a sale and purchase agreement made between the Appellant and the 7th Respondent dated the same day (hereinafter referred to as "the SPA").

[8] In the SA and the SPA, the agreed purchase price of the said Land was RM16 million.

[9] Subsequently, the 1st to the 6th Respondents, save for one instalment, had defaulted in paying the rest of the other instalment payments. In consequence, the Appellant terminated the SA and repossessed the leased buses except for one held by the Customs Department.

[10] The Respondents filed a suit at the High Court against the Appellant premised upon restitution based on unjust enrichment and coercion under the common law as well as ss 71 and 73 of the Contracts Act 1950 (hereinafter referred to as "the Contracts Act").

[11] The Respondents claimed that they had transferred the said Land to the Appellant at a value in excess of the debt owed by the 1st to 6th Respondents. The Respondents claimed that there was an overpayment to the Appellant of RM22,679,424.94 due to coercion and unjust enrichment. The Respondents ultimately sought for restitution thereof.

[12] The matter went to full trial. At the conclusion of the trial, the learned trial judge had allowed the Respondents' claim. Dissatisfied, the Appellant filed this appeal.

Issues

[13] We are of the view that there are two core issues in this appeal, namely:

a. whether the learned trial judge had erred on the threshold issue of the maintainability of the Respondents' claim for unjust enrichment and restitution when the Respondents elected not to challenge nor set aside the SPA, including the agreed purchase price of RM16 million for the said land; and

b. whether the learned trial judge erred in holding that the claims for unjust enrichment and coercion had been established and consequently ordered for restitution.

Our Findings

[14] After a comprehensive review of the appeal records and hearing all parties to this appeal, we have arrived at a unanimous decision as follows.

First Issue: Maintainability Of The Respondents' Claim

[15] Before us, the core issue, which we recognise as of significant importance, is whether the Respondents may claim against the Appellant for restitution based on unjust enrichment and coercion without invalidating or setting aside the SA and the SPA.

[16] In this case, it is important to note that the Respondents have acknowledged the validity of both the SA and the SPA, including the agreed pu