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2014 MarsdenLR 465
COURT OF APPEAL PUTRAJAYA
HONG LEONG BANK BERHAD – Appellant
Versus
TAN SIEW NAM & ANOR – Respondent
[Civil Appeal No: J-02-2059-2011]
The court determined that frustration of the loan agreement (LACA) was not applicable, as it maintained contractual obligations distinct from the foreclosure proceedings, affirming rights to recover paid amounts.
Headnote:(A) Contracts Act 1950 - Sections 15 and 66; Principles of appellate intervention. The appellant's appeal concerns a loan agreement package (LACA) under which legal claims arose from a sale and purchase agreement regarding a property. The High Court found the LACA void after a foreclosure by a third party, which was contested by the appellant. The appellant contended the High Court Judge failed to recognize that the subjects of the LACA were separate from the foreclosure. The High Court also elucidated that the developer's failure to assign titles due to their prior charge led to the appellate court's dismissal of the respondents' frustrations and counterclaims. The court held that the LACA and claims were not frustrated as they did not arise from any eventualities outside the parties' control. (Paras 22-40 and 86-88)
Facts of the case:
The respondents purchased a property through a sale and purchase agreement and obtained loans from the appellant for financing. Due to a foreclosure action instituted by a third party lender against the developer, the respondents contended that the LACA was void due to frustration, claiming built adverse consequences limiting their ownership rights. The appellant denied this assertion, emphasizing that there was always a separation of duties regarding title transfer obligations. (Paras 8-19 and 22-24)
Findings of Court:
The appellate court disagreed with the lower court's dismissal, affirming that the LACA was not affected by the foreclosure because rights were assigned distinctly, thus reaffirming the need for restitution of payments made by the respondents under the LACA. The court identified that the obligations of the developer to deliver the title remained irrespective of the appellant's loan position (Paras 37-39).
Issues: The principal issues included determining whether the LACA was void due to frustration, if the title obtained through foreclosure was incontestable, and whether the original agreement could still summon any obligations from one party to the other (Paras 22, 25-26).
Ratio Decidendi: The court opined that frustration cannot be claimed as both parties willingly bore responsibilities under the original agreements regulating their rights; therefore, the appellant maintained recourse of loan repayment and obligations distinct from any resulting foreclosure. The developer's rights in the original sale agreement remained actionable even if future performance was hindered (Paras 1 and 80-89).
Result: Appeal allowed; orders of the High Court set aside, and amounts paid to be reinstated (Paras 88-89).
| Table of Content |
|---|
| 1. appellate intervention standards. (Para 1 , 2 , 3 , 4 , 5) |
| 2. arguments regarding trial judge's decision. (Para 6) |
| 3. facts regarding the sale and loan agreements. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14) |
[1] This was an appeal by the appellant against the decision of the High Court at Johor Bahru after a full trial. The learned High Court Judge dismissed the appellant's claim and allowed the respondents' counterclaim.
[2] This appeal concerned specific findings made by the learned High Court Judge. This Court will not readily intervene with the findings of fact arrived at by the trial Court unless there is a fundamental misdirection that warrants appellate intervention. The law reports are replete with authorities setting out instances where appellate intervention was exercised. Abdul Malik Ishak JCA writing a separate judgment in Yoong Sze Fatt v. Pengkalen Securities Sdn Bhd , had this to say on this subject at pp 125 to 126 of the report:
"It would be ideal to set out, briefly, instances where the finding of facts by the trial Court was reversed by the appellate Court:
(a) non-consideration or insufficient or no judicial appreciation of material evidence constitutes 'insufficient judicial appreciation of relevant evidence' ( Asean Security Paper Mills Sdn Bhd v. CGU Insurance Bhd );
(b) where the audio visual advantage reserved to a trial judge had been missed or that the findings made by the trial judge do not accord well with the probabilities of the case (Len Min Kong v. United Malayan Banking Corp Bhd & Another Appeal, [1998] 2 MLJ 478, Maju Holdings Sdn Bhd v. Fortune Wealth (H-K) Ltd & Other Appeals; [2004] 4 MLJ 105; [2004] 4 CLJ 282; [2004] 6 AMR 319 and Gan Yook Chin & Anor v. Lee Ing Chin & Ors; [2005] 2 MLJ 1; [2004] 4 CLJ 309; [2004] 6 AMR 781);
(c) where the facts were misapprehended and the wrong principles of law were blindly applied by the trial judge (Lim Chor Ching & Ors v. Idris Abdul Karim & Another Appeal, [1998] 3 AMR 3182 );
(d) where there was a failure to assess the evidence with the documents at hand and view it against the probabilities of the case (Loo Hon Kong v. Loo Kim Lim, [2004] 4 CLJ 1);
(e) where there was a failure to consider the relevancy of contemporaneous documents (Eastern & Oriental Hotel (1951) Sdn Bhd v. Ellarious George Fernandez & Anor, [1989] 1 MLJ 35); and
(f) where the finding of facts was contrary to the documentary evidence (Associated Tractors Sdn Bhd v. Woo Sal Wa, [1997] 5 MLJ 441)."
[3] Abdul Wahab Patail JCA writing for this Court lucidly sets out the law governing appellate intervention in Perembun (M) Sdn Bhd v. Conlay Construction Sdn Bhd, , at pp 73-74, in this way:
"(7) There is almost no limit to the range within which cases in Court may vary. At one end there are cases that involve solely questions of law, and no facts are disputed. On the other there are cases that involve no law but all the facts are disputed. Within these cases there may be cases with disputed facts that involve solely interpretation and inferences leading to a conclusion on a finding on the disputed fact, and there may be other cases with disputed facts that involve solely oral evidence and the finding depends entirely upon an assessment of the credibility of witnesses who testified and were tested before the trial judge.
(8) Hence, the proper approach is that if (a) it is shown that the judgment cannot be explained or justified by the special advantage enjoyed by the trial judge by reason of having seen and heard the witnesses testify and being tested before him, and (b) an injustice is demonstrated to have been occasioned by any error by the trial judge, for example:
(a) the judgment is based upon a wrong premise of fact or of law;
(b) there was insufficient judicial appreciation by the trial judge of the evidence of circumstances placed before him;
(c) the trial judge has completely overlooked the inherent probabilities of the case;
(d) that the course or events affirmed by the
