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2021 MarsdenLR 306
COURT OF APPEAL PUTRAJAYA
SIMCITY-ETE VENTURE SDN BHD – Appellant
Versus
KOPERASI PEMBANGUNAN KAMPUNG TRADISIONAL TASEK PULAU PINANG BERHAD – Respondent
[Civil Appeal No: P-02(NCVC)(W)-1900-10-2019]
Unjust enrichment cannot arise from valid contractual transactions; contractual obligations must be adhered to, and claims must be properly pleaded to establish unjust enrichment.
Headnote:(A) Contracts Act 1950 – Unjust Enrichment – Co-operative Societies Act 1993 – Plaintiff's claim for recovery of land transferred under agreements as security; court determined that the transfer was as consideration for D3’s obligations; found D3 had unjustly benefited by retaining the land undeveloped without compensating the plaintiff. (Paras 22-70)
(B) Legal interpretation of unjust enrichment and contractual obligations; court held that D3 retained the lots pursuant to contracts and was bound to compensate the plaintiff for unpaid balance of consideration. (Paras 23-27)
Facts of the case: The dispute arose out of the plaintiff's claim for return of land transferred to D3 in an agreement after D3's failure to develop the project as promised, leading to allegations of unjust enrichment against D3. (Paras 1-10)
Findings of Court: D3 could retain the lots only upon settling the compensation owed to the plaintiff as the transfer was for consideration; the absence of cross-appeal by the plaintiff bound it to the High Court findings. (Paras 66-70)
Issues: Whether D3 benefitted unjustly at the plaintiff's expense and the validity of the plaintiff's claims on contracts. (Paras 22-45)
Ratio Decidendi: Unjust enrichment claims require proper pleading; D3 was obligated to pay the agreed consideration under the contracts despite allegations of unjust enrichment; a legally binding contract cannot be challenged on grounds of inadequate consideration. (Paras 36-49)
Result: Appeal partially allowed; D3 ordered to pay remaining consideration to the plaintiff. (Paras 68-70)
JUDGMENT
Introduction
[1] This is an appeal by Simcity-ETE Venture Sdn Bhd (the appellant/3rd defendant) against part of the decision of the Penang High Court dated 20 September 2019 which allowed Koperasi Pembangunan Kampung Tradisional Tasek Pulau Pinang Berhad (the respondent/plaintiff) claim for unjust enrichment and dismissed the appellant/3rd defendant counter claim for the removal of the private caveat lodge by the respondent/plaintiff and for the dismissal of the claim for damages thereof.
[2] For easy reference, parties in this appeal will be referred to as in the trial Court, the plaintiff and the 3rd defendant (D3). The other defendants will be referred to as D1, D2, D4, D5 and D6 when necessary.
Background Facts
[3] The plaintiff, a co-operative society registered pursuant to the Co-operative Societies Act 1993 is the registered owner of Lot 4232 PT24 (Formerly known as Lot 1054 and Lot 1331), Mukim 15, Tasek, Daerah Seberang Perai Selatan, Pulau Pinang (the said Land).
[4] In late 1995, pursuant to an agreement dated 1 December 1995, the plaintiff appointed Multi Track Properties Sdn Bhd (MTP), a developer to develop a housing project known as Taman Pekatra Indah (the said Project) on the said Land. Based on the agreement, MTP was obliged to complete the said Project by 1 December 1999. However, MTP failed to do so and the said Project was left suspended.
[5] The plaintiff thereafter appointed a new developer, Elite Domain Sdn Bhd (EDSB) to revive and complete the said Project. EDSB also failed to do so and the Project was again left suspended.
[6] Then, D1 approached the plaintiff and offered to take over and complete the said Project. As a result, a joint venture was established comprising the plaintiff, D1 and D2 culminating in the execution of an agreement known as the Property Management Agreement (PMA) dated 12 July 2007 entered between the plaintiff and D3 which is jointly owned by the D1 and D2. In gist, the plaintiff had appointed D3 as its Property Manager, stepped in as a 'white knight' to revive the said Project which had been abandoned for about 12 years.
[7] However, D3 failed to commence works as there were charges on the said Land that needed to be cleared before the said Project could be revived. Upon negotiations with the financiers, the redemption sum in respect of the charges were reduced from RM18,000,000.00 to RM800,000.00. The plaintiff had difficulty to raise the fund and requested D3 pay the redemption sum on their behalf.
[8] To settle the matter, the plaintiff and D3 agreed to sign an Additional Agreement (AA) dated 29 October 2008. Briefly, they had agreed that:
i. D3 to bear and pay the sum of RM800,000.00 on behalf of the plaintiff to discharge the charge over the said Land so that the abandoned project can be revived,
ii. D3 to pay the plaintiff additional consideration of RM500,000.00, and
iii. as a consideration and security of D3 making payments as set out in Recital of the AA, the plaintiff agreed to transfer to D3 all the development lots consist of 126 units of shophouses, 1 lot of business complex and 1 lot of the medium cost apartments in the said Project. Altogether 128 lots (the 128 Lots).
[9] Pursuant to the AA, the plaintiff on 1 February 2009 transferred the 128 Lots on part of the said Land to D3. As part of the promise, D3 should pay RM100,000.00 to the plaintiff upon transfer of the 128 Lots to D3 and to pay the balance upon completion of the said Project. However, plaintiff alleged that it only received the sum of RM65,000.00 under the AA and later a further RM1,000.00 under the PMA from the plaintiff.
[10] D3 failed to complete the whole of the said Project at any time. Upon request, various extensions of time were given by the plaintiff to D3. After nine years, the 442 units of buildings in the renamed Phases 1 to 5 were completed with the certificate of fitness for occupation issued by the local authority between 2009 and 2016. However, the 532 units
