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2022 MarsdenLR 1710
COURT OF APPEAL PUTRAJAYA
LIM CHON JET @ LIM CHON JAT & ORS – Appellant
Versus
WEE AI HUA & ANOR – Respondent
[Civil Appeal No: S-02(NCvC)(W)-492-03/2019]
The court affirmed the validity of the assignment from the Controller of Housing to the plaintiffs and interpreted the guarantee to include broader indemnification obligations beyond the specific performance guarantees originally assigned.
Headnote:(A) Civil Law Act, 1956 – Section 4(3) – Housing Development (Control and Licensing) Act 1978 – The validity of the Deed of Assignment 2015 was upheld, confirming its compliance with the requirements for absolute assignment; the court found the defendants' guarantee was intended to indemnify the plaintiffs against losses from breaches by the developer. (Paras 12-41)
(B) Guarantee – Interpretation – Upon examining the Guarantee, the court determined it assured completion of the housing project and indemnified the plaintiffs against damages due to the developer's breaches of the Sale and Purchase Agreements (SPAs). (Paras 46-56)
(C) Limitation of Actions – The court held that the plaintiffs' claims were not barred by the Sabah Limitation Ordinance, with the limitation period commencing only from the assignment date. (Paras 58-60)
Facts of the case: Plaintiffs failed to recover damages from the developer and sought indemnity from the defendants under the guarantee, following the assignment of rights by the Controller of Housing. The appeal addressed the validity of the assignment, interpretation of the guarantee, and limitation issues. (Paras 1-11)
Findings of Court: The appeal was upheld, reinstating the plaintiffs' rights under the assignment and confirming the defendants' obligation to indemnify for specified losses. Amounts awarded reflected remaining liabilities to the plaintiffs with interest. (Paras 61-63)
Issues: 1) Is the Deed of Assignment an absolute assignment under the Civil Law Act? 2) Did the Guarantee indemnify the plaintiffs for the developer's breaches? 3) Are the plaintiffs' claims barred by limitation? (Paras 12-14)
Ratio Decidendi: The court affirmed that the Deed of Assignment met the legal criteria for valid assignment and interpreted the Guarantee as encompassing broader indemnity obligations than the lower court determined, underlining the protective intent of social legislation. (Paras 30-36)
Result: Plaintiffs' appeal allowed with costs; defendants ordered to pay RM3,253,644.67 plus interest. (Paras 61-63)
JUDGMENT
Introduction
[1] This is an appeal by Lim Chon Jet @ Lim Chon Jat and 45 others (appellants/plaintiffs), who are appealing against the whole decision of the Learned High Court Judge (LHCJ) delivered on 14 February 2019. In his decision, the LHCJ dismissed with cost the appellants'/plaintiffs' action seeking to enforce the statutory guarantee/indemnity against Wee Ai Hua and Wee Kok Hui (respondents/defendants).
[2] For ease of reference, parties in this appeal will be referred to as in the trial Court, the plaintiffs and the defendants.
Brief Background Facts
[3] In 2002, a developer company, Yusen Jaya Sdn Bhd (Yusen Jaya) applied to the Controller of Housing (COH) for amongst others, a licence to develop a housing project called Taman Bukit Saujana Springfields Homes located at Jalan Bantayan, Off Jalan Tuaran Mile 31/2, Kota Kinabalu, Sabah (the Housing Project).
[4] Yusen Jaya was required under the provisions of the Housing Development (Control and Development) Enactment 1978 (the 1978 Enactment) and the Housing Development (Control of Licensing of Developers) Rules 1980 (the 1980 Rules) to furnish several documents and standard forms in support of their application. Amongst all these documents which had been furnished by Yusen Jaya to the COH, was the Letter of Guarantee of completion of housing development by Directors dated 11 June 2002 (the Guarantee). The 1980 Rules had been repealed and replaced with the Housing Development (Control and Licensing) Rules 2008.
[5] The Guarantee was in the prescribed form, found in Appendix B of Schedule A in the 1980 Rules. The Guarantee was signed by the directors of Yusen Jaya, namely, T'en Kuet Fah (TKF), the first and second defendants. Subsequently, the defendants with or without TKF had issued 5 identical letters of guarantee upon request from the COH. In 2009, TKF resigned as Yusen Jaya's director. Whereas, the first and second defendants were and still are the directors of Yusen Jaya. The defendants did sign the subsequent letters of guarantee after the resignation of TKF.
[6] The plaintiffs are buyers of 46 residential houses in the Housing Project. On various dates, the plaintiffs entered into a sale and purchase agreement (SPA) with Yusen Jaya. It was not disputed that there was a delay in completing the Housing Project by Yusen Jaya.
[7] Upon taking possession of the houses, the plaintiffs discovered that there were structural defects in their houses. They filed usual complaints warranted under the SPA which Yusen Jaya failed to remedy. As a result, the plaintiffs commenced a suit No K22-79-2006-I (Suit K-79) against Yusen Jaya claiming inter alia, liquidated ascertained damages (LAD) for late delivery of the houses and damages for breach of contract on the ground that the construction of the houses which they had purchased were seriously defective.
[8] The plaintiffs' claim for LAD was based on the number of days of delay calculated from the date of the SPA until the date of the issuance of the Occupation Certificates (OC). The delays ranged from 47 days to 246 days as can be seen in the reported case at p 606 of Lim Chon Jet & Ors v. Yusen Jaya Sdn Bhd, [2011] 5 MLJ 239.
[9] The plaintiffs obtained judgment against Yusen Jaya for damages in failing to construct the houses in accordance with the SPA which included LAD for late delivery of the houses. The total damages awarded against Yusen Jaya in Suit K-79 was RM4,593,372.67 (Judgment Sums).
[10] The plaintiffs' solicitors had by their letter dated 24 February 2011 requested the COH to process payment for the plaintiffs' Judgment Sums and their entitlement to be indemnified under the Guarantee. When the COH failed to pay the plaintiffs the Judgment Sums, the plaintiffs sued the COH and 2 others in Suit BKI-22NCvC-32-12/2013 (Suit BKI-32). However, sometimes in February 2015, the plaintiffs and the COH came to a compromise. In consideration of the COH assigning all rights under the Guarantee to t
