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2025 MarsdenLR 510
COURT OF APPEAL PUTRAJAYA
TECT HUAT DEVELOPMENT SDN BHD – Appellant
Versus
GOH CHENG HUAT & ORS AND ANOTHER APPEAL – Respondent
[Civil Appeal Nos : B-02(NCvC)(W)-352-03/2024 & B-02(NCvC)(W)-353-03/2024]
A co-owner lacks ostensible authority to bind other co-owners in a contract unless explicitly authorized, and an assessment of damages cannot occur without a prior finding of liability.
Headnote:(A) Contracts Act 1950 - Authority and breach of contract - Joint Venture Agreement (JVA) between developer and landowners for development of land terminated due to non-completion - Issue of ostensible authority of co-owner to bind others addressed - Court ruled D4 lacked authority to sign supplementary agreement on behalf of all co-owners (Paras 8, 10, 19).
(B) Assessment of damages - Court erred in conducting assessment after dismissing Plaintiff's claim, as no liability was established; damages awarded were null and void (Paras 22, 23).
Facts of the case:
The Plaintiff entered a JVA with landowners to develop land into residential and commercial lots. The project was not completed by the deadline, leading to termination. A supplementary agreement signed by one co-owner was disputed regarding its validity.
Findings of Court:
The Judge found that D4 had no authority to bind the other co-owners, and the Plaintiff's claim was dismissed. The assessment of damages was also ruled invalid.
Issues: The central issue was whether D4 had ostensible authority to bind the co-owners and whether the assessment of damages was appropriate after dismissal of the claim.
Ratio Decidendi: The court concluded that a legal document altering rights must be signed by all co-owners; D4's signature alone was invalid. The assessment of damages was improper without a finding of liability.
Result: Appeals allowed; High Court's order set aside.
[1] There are 2 appeals before us, namely,
(a) B-02(NCvC)(W)-352-03/2024 (Appeal 352) (TECT HUAT DEVELOPMENT SDN BHD v. GOH CHENG HUAT & 4 OTHERS); and
(b) B-02(NCvC)(W)-353-03/2024 (Appeal 353) (GOH CHENG HUAT & 4 OTHERS v. TECT HUAT DEVELOPMENT SDN BHD)
[2] In the High Court, TECT HUAT DEVELOPMENT SDN BHD was the Plaintiff whereas GOH CHENG HUAT & 4 OTHERS were the Defendants. We shall refer to the parties as Plaintiff and Defendants respectively. Thus, the Appellant in Appeal 352 is the Plaintiff whilst the Appellant in Appeal 353 are the Defendants.
The Facts
[3] The Defendants are the landowners of a parcel of agricultural land. The Plaintiff (a developer) and the Defendants executed a joint venture agreement dated 24 March 2014 ("JVA") pursuant to which the land was to be converted into residential and commercial category and subdivided into individual lots, and thereafter developed into terrace houses and shop-lots. The construction/development was to have been completed by 24 March 2019 ("completion date").
[4] As at the completion date, the land had been duly converted and subdivided into 25 lots - 20 residential and 5 commercial lots. However, the project was only at the planning stage, albeit that the development order ("DO") for the project was obtained in February 2016. In April 2019 the Defendants terminated the JVA.
[5] The Plaintiff challenged the termination claiming that Goh Ching Eng ("D4"), who is one of the co-owners had granted an extension of time of 30 months per a letter dated 29 November 2018 which has been described as the Supplementary Agreement ("SA") which was signed and sent by D4 to the Plaintiff via WhatsApp.
[6] Under the SA, the Plaintiff would do the following (See: paragraph 44 of the Statement of Claim):
a. The Plaintiff would compensate the Defendants the sum of RM1,000.00 per month as rental until the date of obtaining the Certificate of Compliance and Completion (CCC) for the Development, whereas under cl 2.9 of the JVA, the monthly rental was RM700.00 per month.
b. The Defendants would grant the Plaintiff an extension of time of 30 months from the date of the JV Agreement (24 March 2019), thereby extending the date for completion of the Development to 24 September 2021;
c. The Plaintiff would pay the Defendants a compensation of RM2,500.00 per month for the extension of time;
d. Liquidated compensation of late delivery of the Development, amounting to RM4,000.00 per month, would be paid by the Plaintiff to the Defendants after the extended completion date (Note: Under the JVA, the Liquidated Compensation was RM1,700.00 per month):
e. The Defendants had listed a shoplot unit that they were desirous of selecting for themselves (P.T. No 44608).
[7] The termination took place on 26 April 2019 (See: Messrs. Rama Velu's letter - dated 26 April 2019). There is no dispute that after 29 November 2018 (the date of the SA) the Plaintiff did not make any rental or any payments whatsoever to the Defendants. The Plaintiff referred to 2 meetings, 10 July 2018 and 13 Sept 2018. D4 attended both these meetings. Previously (before the SA) D4 collected the rentals that were payable under the JVA. D4 said he signed the SA at the request of the Plaintiff. The Plaintiff said that a sum of RM10,000.00 was paid to D4 as consideration for the extension of time. The Plaintiff said that D4 represented all the co-owners and had ostensible authority. D4 said that at the meeting he told the Plaintiff's representative (PW6) that he could not decide for all and had to get the consent of all the co-owners. D4 testified that the SA did not have the consent of all the co-owners.
The Issue
[8] The question for the Learned Trial Judge ("Judge") was whether D4 had ostensible authority to bind the other co-owners. The Judge found as a fact that D4 only had authority to attend meetings and collect rentals. The Judge held that D4 had no authority to bind the other co-owners. The Judge accepted as a fact that the su
