Chong Thien Mew & 99 Others v Suara Wira Sdn Bhd

[2015] MLJU 701

Malayan Law Journal Unreported

HIGH COURT (KOTA KINABALU)

RAVINTHRAN PARAMAGURU J
CIVIL CASE NO: BKI-24-2/1-2012
30 January 2015

Roland Cheng (Roland Cheng & Co) for the plaintiffs.

Saiful Mokhtar (with Norashikin Ag Anak) (Jayasuriya Kah & Co) for the first and second defendant.
Sylvia Jawatin (S Jawatin & Associates) for the third defendant.

Ravinthran Paramaguru J:

JUDGMENT

Introduction

[1] The plaintiffs have purchased 78 parcels of shop lots in a five storey shopping complex known as the Megalong
Complex. The 1st defendant is the developer. The 2nd defendant was appointed as the manager of the complex
when it was opened in 2010. The 1st defendant has taken over the management since 1st June 2012. The 3rd
defendant is the local authority vested with the statutory duty to grant planning and building approval. The 3rd
defendant is also the owner of the lands on which the complex was constructed. The plaintiffs have alleged in this
suit that the 1st defendant had breached the Sale and Purchase agreement (SPA) in various ways. The alleged
breaches include imposing high service charges unfairly and amending the building plan to their detriment. The
action against the 2nd defendant is for breach of warranty to act as interim manager of the Megalong complex as
they are not authorized to practice as property manager under section 19 of the Valuers, Appraisers and Estates
Agents Act 1981. The action against the 3rd defendant is for breach of implied duties as land owner under the Land
(Subsidiary Title) Enactment 1972 (LSTE) and for approving the amendments to the original building in the
exercise of their statutory power.

Case for the plaintiffs

[2] The plaintiffs in the instant case had purchased 78 parcels in the Megalong Complex. Some of the plaintiffs are
co-owners of a single unit with the result that there are 100 plaintiffs in this action. The earliest of the 78 SPAs was
executed on 28th June 2007 while the latest SPA was executed on 20th December 2010. Although, the 78 SPAs
are largely similar, they are not identical and contain differences in respect of the number escalators per floor, in
respect of the penalty of RM250 a day for not opening the shop lots for business and the initial formula for
calculating service charges.

Summary of the plaintiffs evidence

[3] The Plaintiffs have called upon four witnesses to prove their case. These four witnesses are also the plaintiffs in
this suit. P.W. 1 is also the attorney for other Plaintiffs who did not give evidence. They said that the SPAs signed
by the plaintiffs are not identical and differed in respect of the following matters:
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1. Number of escalators per floor.

2. Provision of penalty for not opening business

3. Quantum of service charges

[4] PW1 and PW2 stated that there are 30 of the sales and purchase agreements that have express representation
that there will be 3 passenger escalators per floor from ground floor to 1st floor and from 1st floor to 2nd floor.
However, there are 48 other sales and purchase agreements which merely stated that there will be passenger
escalators . PW1 said that he purchased two parcels at the second floor. Even though his parcels are on the 2nd
floor, he said the missing escalator on the 1st floor had affected his shop lots as it reduced the accessibility and flow
of customer traffic to the 2nd floor through the 1st floor. PW2 s testimony is that the amended plan to reduce the
number of passenger escalators has affected his shop lot as he could not rent it out. PW3 testified that she
purchased her shop lot from the 1st defendant because of the representation in the building plans that showed that
the said shop lot is located near to the escalator on the 1st floor. However, when she took possession of her shop
lot, she realized that there is no escalator near her unit. She said that the 1st defendant had only installed two sets
of escalators from the ground floor to the 1st floor. According to her, there should have been three sets of
escalators. She testified that the building plans were amended without her knowledge. The missing escalator has
resulted in reduced customer traffic flow to PW3 s unit because it is a long walk from the nearest escalator. She
intended to commence her own business at that unit but because of the missing escalator she had to rent out her
parcel at a lower rental than expected. She also said the value of her property had diminished because of the
missing escalator. As for P.W. 4, he said his SPA did not specify the number of escalators.

[5] In 12 of the 78 SPAs executed by the plaintiffs there is a clause in the Third Schedule (Mutual Convenants) to
the SPA that penalized parcel owners who did not open for business. It imposed a penalty of RM250 per day. PW1
stated that his agreement does not contain such clause but said that it is unfair because it did not apply to the
unsold vacant parcels owned by the 1st defendant. The 2nd defendant had been given a notice on 15th November
2010 about the intention of the 1st defendant to impose the penalty on parcel owners who had not commenced
business. However, the 2nd defendant did not say whether there was any demand from the 1st defendant or 2nd
defendant to pay penalty. Instead, the 2nd defendant s solicitors later received a letter saying that the penalty had
been waived.

[6] The plaintiffs witnesses testified that before standardization of the service charge to RM1 per sq ft and later to
RM1.25 per sq ft, there were eight 8 different rates of service charges prescribed in the SPAs. PW1 said the
plaintiffs were required to pay service charges at the rate of RM1.25 per sq ft. However, the same rate did not apply
to the anchor tenants . He found out from the cost certificate of the 2nd defendant that for the period between 1st
January 2011 to 31st December 2011, the anchor tenants paid much less. Based on the cost certificate for 2011,
the anchor tenants were imposed service charges as follows;

(a) Giant supermarket on ground floor @ RM0.20 per sq ft;

(b) 1st Floor Parklane @ RM0.75 per sq feet;

(c) 2nd Floor FoodCourt @ RM0.75 per square ft;

(d) Pizza Hut on ground floor @ RM0.75 per sq ft;

(e) A&W on ground floor @RM0.75 per sq ft;

(f) 1st Floor Anchor Tenant @RM0.75 per sq ft; and

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(g) 2nd Floor Anchor Tenant @RM0.75 per sq ft

[7] The other witnesses for the plaintiff aired the same grievance. They did not accept the explanation from the 1st
defendant that since the anchor tenants operated their own air conditioning units and that they also attracted
crowds to the complex, they should be charged with a lower rate. Their reasons are captured in the testimony of
P.W. 1 which is as follows:

.There is no reason to give special rate on service charges to the anchor tenant and to permit them to install their own air-
conditioning unit without offering the same terms to the Plaintiffs. I believe that if all the units let to the anchor tenants have
the same service charge rate, this will reduce the service charge to below RM1.25 per sq ft. I also believe that there is no
justification for giving preferential rates to the anchor tenant because they also benefit from the common area which is
maintained by the management service.

[8] The plaintiffs witnesses also said that under preamble 3 and 4 of the SPA, the Megalong complex is a five
storey commercial complex. However, without the consent of the Plaintiffs, the 1st defendant had on or about
January 2009 applied to the 3rd defendant for extension of an additional floor (6th floor). They said that the 1st
defendants have breached the terms stated in preamble 3 and 4 of the sales and purchase agreement.

[9] The plaintiffs witnesses also testified that under the SPA, service charges can only be collected by the 1st
defendant seven days after issuance of the notice to take possession which is 29th September 2010. However, in
the instant case, service charges were collected from 1st June 2010 onwards.

Summary of the defendants evidence

[10] The 1st and 2nd defendants called five witnesses. Liew Sui Yin (D.W. 1) who is a public accountant told the
court that he reviewed two financial statements of 1st defendant relating to the maintenance costs of the Megalong
Complex. The 1st defendant requested for the review. The first statement was for the period between 1st January
2011 and 31st December 2011. He was requested to comment whether the statement was fairly stated. The
second statement that he reviewed was the projected cost of maintenance for the period between 1st January
2012 and 31st January 2012. He was required to comment whether the projected statement were prepared based
on consistent assumptions with those of previous years . He found variances in the 2010 audited report and the
2011 draft report. He clarified that he did not perform an audit. However, he gave his opinion that the cost of
maintenance of the Megalong Complex is RM1.75 per sq ft.

[11] The second witness was Cindy Felicia Bazan (D.W. 2). Initially, she worked for Taylor Hobbs who were
appointed as Managing Agent by the 1st defendant in April of 2010. However, in June of 2010, Taylor Hobbs
ceased to manage the complex. The 2nd defendant was then appointed to manage the Megalong Complex. Cindy
Felicia Bazan remained at the management office as she accepted employment with the 2nd defendant. However,
she only worked for one month as the manager, ie in the month of July 2010. Thereafter, she resigned and joined
another company. She said that by April of 2010, the purchasers knew that they could take possession of their shop
lots at the Megalong Complex and start renovation works. She said she signed letters to notify parcel owners that
they can start renovation works after paying a deposit. She said that some parcel owners complained about the
service charges but they did not complaint about the escalator that was deleted from the building plan.

[12] The third witness called on behalf of the 1st and 2nd defendants was Hiew King Man. He is a civil engineer
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with Inovatif Jurutera Perunding Sdn Bhd who is the project consultant. His entire examination in chief consisted of
a single question and answer in his witness statement which is as follows:

Q : Refer to the letter appearing at page 200 of the Defendants BOD, Volume 2. 24 Have you ever seen this letter?

A : Yes. I signed this letter which is dated 24.05.2010. The letter is addressed to Majlis Daerah Penampang to apply for
the Occupation Certificate for Megalong shopping 27 complex. In the said letter, I confirmed that the building
project known as Megalong Mall had achieved practical completion since January 2010

[13] The fourth witness was Wong Shaoi Liong @ Alex. He is a director of both the 1st and 2nd defendants. He
testified that there were a few amendments made to the development project, which among other things, the 1st
defendant had substituted one of the escalators at grid lines 27 29 from the ground floor to the first floor with a
travelator from the basement car park to the ground floor. The 1st defendant also added two lifts and staircases. He
admitted that the plaintiffs or other purchasers of the parcels at the Megalong Complex were not consulted over the
amendment. He said the amendment did not affect the internal area of their respective parcels and that the 1st
defendant had a right to make amendments to the building plan under the SPA. He said the service charges rate
was increase from RM1.00 per sq ft to RM1.25 per sq ft because of higher expenses and it is based on the costs
certificate. He said under Clause 5.2 of the SPA and Clause 2.1.2 of the Third Schedule to SPA, the 1st defendant
was entitled to vary the service charge. He justified that lower rate of service charges imposed on the anchor tenant
and the mini anchor tenants because they operated their own air conditioning units. He said the biggest component
of the service charges were electricity costs.

[14] The fifth witness was Thien Chee Ming (D.W. 5). He is a Senior Executive at the Management Office of the
Megalong Complex. He started to work for the 2nd defendant in December 2010. When the 1st defendant took over
the management of the Megalong Complex in 2012, Thien Chee Ming was re-engaged to continue in the same
position. He prepared and identified the Debtors Report which showed the list of purchasers who still owed
insurance premiums and deposits to the 1st defendant. He said before the instant action was commenced, the
purchasers paid the standardized rate of RM1.00 per sq ft. However, after the action was filed, they were only paid
the original rate as stated in the SPA. He said a costs certificate was not prepared initially when the service charge
rate was increased because none of the purchasers requested it.

[15] The 3rd defendant called only two witnesses. The first witness was Alexander Gayo Gumisi @ Hilary (D.W. 6).
He works as an engineer with the 3rd defendant. He processed the approval of the Building Plan and Development
Plan for the Megalong Complex. He said planning approval was only granted after comments were obtained from
nine technical departments. He said developers had a right to amend their Building Plan. He said approval for
amendment would normally be given as long as the prescribed conditions are met and supported by comments
from the technical departments.

[16] The second witness for the 3rd defendant was Mohd Nizam bin Awang (D.W. 7). He is the District Surveyor.
He said that processing of subsidiary titles would normally take one year if there are no queries from the Lands and
Surveys Department. He said approval for subdivision can only be obtained after issuance of Occupation
Certificate.

Issues
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[17] The parties have not agreed on the issues for trial. However, based on the remedies prayed for by the parties,
I shall make a determination upon the following issues.

Amendment B

[18] In Prayer 2(a) of the Statement of Claim, the plaintiffs have applied for a declaration that Amendment B is
contrary to the SPAs. Amendment B refers to the amendment of the building plan wherein one of the three original
escalators was removed. In the Fourth Schedule of the 30 of the SPAs, it is stated that the developer would provide
3 passenger escalators per floor from ground floor to 1st floor and from 1st floor to second floor . In the remaining
48 SPAs, the number of escalators is not stated. It is also stated that the Fourth Schedule is part of the SPA. The
building plan provided three escalators from the ground floor to the 1st floor. It was approved on 23rd February
2005. It was annexed to the SPA. The 1st defendant obtained approval from the 3rd defendant who is the local
authority to amend the building plan by deleting one escalator between the ground floor and the 1st floor (the so-
called Amendment B). The plaintiffs witnesses said that the representation in the building plan about the provision
of three escalators had influenced their decision to purchase their respective parcels in the complex. In fact, one of
them, P.W. 3 even said that he bought his shop lot because it is located near the escalator that was deleted from
the plan. Although counsel for plaintiffs conceded that a representation in a brochure is not part of the SPA, he said
the number of escalators was a key selling point. The main ground for the grievance of the plaintiffs is the perceived
reduced flow of customer traffic from the ground floor to the upper floors. Only 12 parcels out of the 78 parcels in
question are located on the 1st floor. However, it was argued that not only the business of parcel owners on the 1st
floor was affected by the removal of the proposed third escalator but that the 2nd floor parcel owners were also
affected. It was also submitted on their behalf that the removal of the third escalator constituted a major internal
amendment . However, the plaintiffs did not tender any evidence to show that the flow of traffic to the upper floors
had been affected by the removal of the third escalator. Instead counsel for the plaintiffs urged the court to draw
such an inference because the said complex which is known as the Megalong Complex is a long complex as its
name suggests. He also submitted that the 1st defendant had saved RM448,000.00 by removing the said escalator
from the plan. Counsel for the 1st and 2nd defendant submitted that plaintiffs have no reason to complain about the
removal of the third escalator because it was replaced by a travelator or a moving walkway from the basement car
park to the ground floor. The original plan did not provide for a travelator. He submitted that the travelator would
result in enhanced flow of customer traffic to the complex and benefit all the parcel owners. He also submitted
based on the evidence of the 1st defendant s witnesses that the anchor tenant, ie Giant Supermarket which is
located near the aborted escalator had wanted it removed. He proceeded to submit that the operation of the Giant
Supermarket would bring in more customers to the complex and benefit all the parcel owners.

[19] In my view, regardless of the increased or decreased flow of customers because of the decision of the 1st
defendant in respect of Amendment B, the dispute between the parties should be addressed from a contractual
standpoint. I shall now consider the clauses in the SPA that govern amendment to the building plan.

[20] The argument of counsel for the plaintiffs is that Amendment B was made without the consent of the plaintiffs.
The fact that the consent was not obtained by the 1st defendant is common ground. However, counsel for 1st and
2nd defendants submitted that consent is not necessary for Amendment B under the SPA. I shall set out the
clauses cited by the parties:

Clause 1

Building plans means the plan submitted as shown in the Second Schedule.and which includes such reasonable
amendments/revisions thereto or other plans as may from time to time be made by the Developer or such amendments
thereto as may be required;
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(emphasis supplied)

Clause 2

The Purchaser hereby confirms as his signature hereto signifies that he has inspected the Layout Plan, the Building Plans
and Brief Specifications hereto before or at the time of execution hereof and hereby confirms that the Developer shall be
entitled from time to time to make such amendments, variations or substitutions thereto as may be required by the
Appropriate Authority or as its Architects shall consider expedient or necessary. Such alterations shall not annul this
Agreement or be subject of any claim for damages or compensation by or against any party to the Agreement. (emphasis
supplied)

Clause 6.5

The said Parcel shall be constructed in good and workmanlike manner in accordance with the specifications described in
the Fourth Schedule hereto and in accordance with plans which have been or will be submitted for approval by the
appropriate authority and the Developer where necessary.

Clause 6.11

The Developer shall construct the said Parcel in accordance with the specifications set out in the Fourth Schedule of this
Agreement. No changes thereto or deviation there from shall be made without the consent of the Purchaser except such as
may be required by the appropriate authorities or certified by the Developer s Architect or Engineer to be expedient or
necessary. The costs of such changes or deviations shall be borne by the Developer and no claim whatsoever may be
made against the Purchaser. Such amendment shall not annul this Agreement nor be subject to any claim for damages by
or against any party to this agreement. (emphasis supplied)

10.1(1)

It is expressly agreed and declared that the position of the said Parcel in relation to the other parcels as shown on the
layout plan and the measurement boundaries are not guaranteed to be correct.

Clause 10.2

Any amendments to the plans, building plans, layout plans and /or to the complex as may be required by the Appropriate
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Authority or as may be certified to be expedient or necessary by the Developer s Architect or Engineers shall not annul this
contract of sale nor be subject to any claim for damages for compensation by or against any party to the agreement.

[21] The argument of the plaintiffs is that their consent should have been obtained before any amendment to the
plan is applied for. In my opinion, in respect of the dispute in question, the requirement of consent is not relevant.
As can be seen above, the only clause that mentions consent in respect of amendment to the building plan is
clause 6.11. However, clause 6.11 only refers to the construction of the parcels. The construction of the parcels
must be in accordance with the building plan unless consent is obtained from the purchasers. However, in the
instant case, Amendment B was in respect of a common facility located outside the parcels purchased by the
plaintiffs. Similarly, clause 6.5 also refers to construction of the parcel , ie it must be in accordance with the plan.
Counsel for the plaintiff also submitted that clause 2 which deems that the purchasers would have inspected the
plan at the time of the execution of the SPA cannot apply as in the instant case the plaintiffs had no knowledge of
Amendment B until the parcels were delivered. I agree with him that deeming provision cannot apply for subsequent
amendments. However, the SPA does not provide that purchasers have a right to inspect and give consent to every
amendment subsequent to the execution of the SPA. In fact, in clauses 2 and 10.2, it is envisaged that
amendments could be made pursuant to the requirement of the Appropriate Authority but no provision was made
for the consent of the purchasers. In the instant case, it is not the 1st defendant s case that Amendment B was
made at the behest of the Appropriate Authority. No evidence was tendered to that effect. However, counsel for the
1st and 2nd defendants relied on the definition section of building plan in Clause 1 and argued that the developer is
entitled to make reasonable amendments . The provision defines a building plan as including such reasonable
amendments/revisions thereto or other plans as may from time to time be made by the Developer or such
amendments thereto as may be required . It can be inferred that amendments thereto as may be required refers to
amendment required by the Appropriate Authority as referred in clauses 2 and 10.2. However, it must be noted that
amendments that can be made by the developer and amendments that may be required are disjuncted by the word
or . Therefore Clause 1 grants the developer a contractual right to make reasonable amendments from time to time.
In fact, the Layout Plan is defined similarly in Clause 1. It grants the developer the right to make reasonable
amendments . However, I hasten to add that amendments that are made to the individual parcels are subject to
clause 6.11 which requires that the consent of the purchasers must be obtained unless it was an amendment
required by the Appropriate Authority. In the instant case, the purchasers are challenging an amendment in respect
of a common facility, ie the removal of one of the three escalators from the building plan. Since the challenge is by
the plaintiffs, the burden is on them to prove that Amendment B is not reasonable. An objective standard must be
applied to determine whether the amendment is reasonable in the circumstances. In my opinion, the amendment is
reasonable for the following reasons. The project in question is a large one. A total of 420 parcels were constructed
in the complex. The definition of building plan clearly envisaged that amendments need to be made from time to
time by the developer. However, the SPA protected changes in the building plan that affected the individual parcels
as the consent to the purchasers must be obtained as I stated earlier. In this case, the dispute is only in respect of a
common facility, ie the deletion of one escalator in the building plan. There are two other escalators providing
access to the 1st floor. The number of escalators from the 1st floor to the 2nd floor was not changed. Furthermore,
the developer via the same amendment provided two additional lifts to the 1st floor. Finally, as pointed out by
counsel for 1st and 2nd defendants, the removed escalator was replaced by a travelator from the basement car
park to the ground floor. The reason advanced by the 1st defendant was that the travelator would facilitate
movement of customers from the car park to the ground floor. In my view, this argument is valid as the anchor
tenant, ie Giant Supermarket is located on the ground floor. I also find merit in the submission of counsel for 1st and
2nd defendants that the attraction of large numbers of customers to the Giant Supermarket would indirectly benefit
all the parcels owners in the complex. Furthermore, there is no evidence that the 1st defendant as developer had
removed the third escalator selfishly to save costs as it was expended on the travelator. Furthermore, the 1st
defendant had to cancel some prime lots as well because of the changes. On the other hand, the plaintiffs have not
adduced any evidence that suggest that more customers would patronize their parcels had the 1st defendant built
three escalators instead of two. The plaintiffs also failed to tender any expert evidence that supports their argument
that the parcels on the upper floor had decreased in value merely because the number of escalators was reduced.
On the other hand, the counsel for 1st defendant pointed out that based on admitted agreements, that a parcel
which was sold in January of 2008 with the express statement that the complex provided three escalators fetched a
lower price than a parcel without such a statement in July of 2008. This only means that the value of the parcels
had not depreciated but appreciated instead. In conclusion, I find that the removal of the third escalator in the
building plan is reasonable. In the premises, the prayer for declaration that Amendment B is contrary to the SPAs
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should be refused.

Amendment C

[22] In Prayer 2(a) of the Statement of Claim, the plaintiffs have applied for a declaration that Amendment C is
contrary to the SPAs. Under Amendment C, the 1st defendant applied to add an additional floor to change the five
storey complex to a six storey complex. The amendment to the building plan to add another floor was approved by
the 3rd defendant on 21st May 2009. The approval was valid for two years only. The 1st defendant has to date not
constructed the additional floor. As the approval lapsed on 20th May 2009, the 1st defendant cannot construct the
additional floor unless a fresh approval is obtained. However, in my opinion, this issue is not academic as the 1st
defendant is at liberty to submit another application for the construction of the additional storey. The witnesses from
the 3rd defendant who is the approving authority stated that the 1st defendant has every right to amend their plan
by adding another floor as long as all the technical requirements are met. D.W. 8 (Chairman of the 3rd defendant)
said as follows:

Q : Regarding amendment of the building plan in particular Amendment C, is the 1st Defendant entitle to do
amendment to their building plan?

A : The 1st Defendant has every right to amend their building plan.

Q : If the 1st Defendant has every right to amend their building plan, is the 3rd Defendant also has the right to approve
it after the recommendation from the relevant government departments?
A : Yes, if the amendment complies with all technical requirements.

[23] It is also common ground that the 1st defendant has not submitted an application for subdivision of strata titles
under the Land (Subsidiary Title) Enactment 1972. In the premises, the 1st defendant is still at liberty to submit
another application to the 3rd defendant for the addition of the sixth floor. Therefore, the issue of the validity of
Amendment C is not academic merely because the approval had lapsed. The resolution of the validity of
Amendment C has practical utility. Otherwise, in the event, the 1st defendant obtains approval for Amendment C
again, the plaintiffs would be compelled to institute another action. For the above reasons, I shall consider whether
the declaratory prayer under clause 2(a) should be granted.

[24] It is common ground that the plaintiffs consent to Amendment C was not obtained. According to the
defendants witnesses, the 1st defendant had planned to construct a futsal and food court on the proposed
additional floor. The 1st defendant cannot rely on clause 2 as Amendment C which would result in an additional
floor obviously cannot be the requirement of the Appropriate Authority. Therefore, the remaining question is whether
the 1st defendant is contractually entitled under other clauses of the SPA to expand the complex by adding another
floor without consulting or obtaining approval of the plaintiffs who purchased parcels on the assumption that the
said complex is a five storey building instead of a six storey building. I agree with counsel for the plaintiffs that
Amendment C is not envisaged or provided for in the SPA. There is no clause in the SPA that permits an expansion
of the complex by the developer by adding another floor. The description of the property in the Recitals of SPA was
that it was a five storey storey commercial complex . In my opinion, the 1st defendant as the developer cannot rely
on the reasonable amendment provision in the definition of building plan. Reasonable amendment in the said
clause implies that in the course of construction the developer may amend the building plan according to exigencies
that arise from time to time. However, in the instant case, the 1st defendant had proposed to build an additional
floor after the parcels in question had been sold to the plaintiffs who were led to believe that the Megalong Complex
was a five storey building. Furthermore, there is no evidence that the additional floor in Amendment C would be for
the purpose of common facilities. In fact, the evidence tendered by the 3rd defendant s witnesses is that the 1st
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defendant had proposed to build a futsal and food court which would be owned by them. In the absence of any
clause in the SPA that granted the 1st defendant a contractual right to add another floor for their benefit without the
consent of the plaintiffs, I find that Amendment C is invalid. I shall grant the declaration sought in Prayer 2(a) that
Amendment C is contrary to the SPA.

Commencement of service charges

[25] In Prayer 1(b), the plaintiffs prayed for refund of all management fees and service charges collected before 6th
October 2010. The 1st defendant started to collect service charges since 1st June 2010. The case of the plaintiffs is
that the 1st defendant or the 2nd defendant who was appointed as the manager of the complex was not entitled to
collect service charges prior to the issuance of the Occupation Certificate. Clause 5.2 which provides collection of
service charges, in part, reads as follows:

5.2 From the date of the production by the Developer to the Purchaser of a copy of the Occupation Certificate until the
Effective Date, the Purchaser shall advance such Service charges as stipulated at section 6 of the First schedule

[26] It is undisputed that the Occupation Certificate for the entire complex was only issued on 8th September 2010.
Counsel for 1st and 2nd defendants submitted that the temporary Occupation Certificate was granted in April of
2010. However, the temporary Occupation Certificate was only granted for the Giant Supermarket and the
basement car park. Therefore, by no stretch of imagination it can be construed to cover the various parcels
purchased by the plaintiffs. Counsel for 1st and 2nd defendants also submitted that inspection was done on 15th
June 2010 by the local authority. However, clause 5.2 requires purchasers to pay service charges from the date of
issuance of Occupation Certificate and not from the date of inspection. Finally, counsel for 1st and 2nd defendants
cited clause 2.1.1. of the Third Schedule (Mutual Convenants) which reads as follows:

As from the date the Purchaser takes possession or deemed to take vacant possession of the said Parcel (whether or not
he actually takes possession of or occupies the said Parcel), the Purchaser shall be liable for and promptly pay to the
Developer periodically and in advance, the Service Charges for the said Parcel as stipulated therein the Sale and Purchase
Agreement.

[27] Cindy Bazan (D.W. 2) who worked as the complex manager testified that the purchasers of Megalong knew by
April of 2010 that the complex was completed. However, she agreed that she did not issue a notice to take
possession. She also said that she does not know when the purchasers took possession of the parcels to open for
business or to do renovation works. She could not also identify the parcel owners who took possession with the
exception of Giant Supermarket, Cosway and Ban Loong Goldsmith. In the premises, the 1st defendant cannot
invoke clause 2.1.1 and submit that the plaintiffs herein had taken possession of their parcels before the issuance
of the Occupation Certificate and are therefore liable to pay service charges from 1st June 2010. The 1st defendant
also cannot rely on a deemed date because D.W. 2 said she did not issue a written notice to the purchasers. She
said as follows:

Q : Can you recall whether you had ever notified the purchasers of the parcels in Megalong to take vacant possession
of their respective parcels?
A : No, I didn?t. By the time I started at Megalong under Taylor Hobbs which was in 24 April 2010, the purchasers
already knew that they can take possession and some had started renovation works.
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[28] On the other hand, the plaintiffs have claimed that their parcels were not physically completed on 1st June
2014. Moreover, under clauses 11.1 and 11.2, possession can be deemed effective only 14 days after the notice to
take possession. The above clauses read as follows:

(1) Upon the issuance of a certificate by the Developer s Architects or Engineers certifying that the construction of the
said Parcel has been duly and practically completed and the Purchaser having paid all moneys payable under
Clause 4 and all other moneys due under this Agreement and the Purchaser having performed and observed all
the terms and convents on his part under this Agreement, the Developer shall let the Purchaser into possession of
the said Parcel.

PROVIDED THAT such possession shall not give the Purchaser the right to occupy the said Parcel and the
Purchaser shall not occupy the said Parcel until such time as the Occupation Certificate for the Complex is
issued.

(2) Upon the expiry of fourteen (14) days from the date of a notice from the Developer requesting the Purchaser to
take possession of the said Parcel, whether or not the Purchaser has actually entered into possession or
occupation of the said Parcel, the Purchaser shall be deemed to have taken delivery of vacant possession.

[29] In this case, the notice to take possession is dated 22nd September 2010. Hence, by virtue of all the above
clauses, the 1st defendant or 2nd defendant is not entitled to collect service charges on 1st June 2010. Counsel for
1st and 2nd defendants cited Clause 5.1 and submitted that outgoings can be collected before the issuance of
Occupation Certificate. Clause 5.1 reads as follows:

From the date of the issue of the Certificate of Fitness for Occupation whether Partial Certificate of Fitness for Occupation
or Temporary Certificate of Fitness for Occupation in respect of the said Parcel (hereinafter all referred to as Occupation
Certificate ) or until the Effective date whichever shall be the latter, the Purchaser shall duly and punctually pay to the
Developer on a pro rate basis of all the outgoings payable in respect of the said Lands and/or the Complex including but not
limited to quit rents, rates, taxes, assessments, other charges imposed or to be imposed by the appropriate authority(ies)
insurance premiums and other line outgoings.

[30] Clause 5.1 only refers to outgoings in respect of quit rents, rates etc. The 2nd defendant has however
imposed service charges as stated in Clause 5.2 without distinguishing the outgoings as stated in Clause 5.1.
Therefore, Clause 5.1 cannot justify the premature collection of service charges from 1st June 2010. The 1st and
2nd defendants have not disputed the quantum of service charges that were prematurely collected as stated on
page 167 of the plaintiffs Supplementary Bundle of documents. In the premises, I find that the 1st and/or 2nd
defendant is liable to refund the service charges collected before 6th October 2010 in the sum of RM38,103.00 to
the plaintiffs as listed on pages 167 169 of the Supplemental Bundle of documents of the plaintiffs.

Late Delivery
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[31] Only twelve of the 100 plaintiffs are claiming ascertained liquidated damages (LAD) for late delivery. Their
names and the quantum of damages are listed on pages 88 and pages 89 of the plaintiffs Core Bundle. It is an
agreed fact that the Occupation Certificate for the entire complex was only issued on 8th September 2010. There is
no clause in the SPAs that states that the period of late delivery must be calculated based on the date of issuance
of the Occupation Certificate. Instead, the SPAs refer to the date of practical completion. Clause 6.7 and 6.8 which
govern late delivery charges reads as follows:

Subject to Clause 12.7 hereof and to such extension as may be certified necessary by the Developer s Architect or
Engineers AND PROVIDED ALWAYS that the Purchaser shall have paid to the Developer all instalments and moneys due
and payable under this Agreement, the Developer undertakes that the said Parcel shall be practically completed at a date
which shall not be later than THIRTY SIX (36) calendar months from the date of the first progressive claim made by the
Developer to the Purchaser (the last day of the said thirty six (36) calendar months shall hereinafter be referred to as
Completion Date )

Subject always to Clause 12.7 and of Sub-Clause 6.7 hereof and in the event that the said Parcel is not practically
completed on the Completion Date, the Developer shall pay to the Purchaser an agreed liquidated damages calculated
from day to day at the rate of eight percent (8%) per annum on the purchase price payments already paid by the Purchaser
to the Developer commencing from the Completion Date to the actual date of the delivery of vacant possession of the said
Parcel.

[32] The date of practical completion is 36 months from the date of the 1st drawdown. In this case, the date of
practical completion is 3rd May 2010 which is 36 months after the date of the 1st draw down. As stated earlier, the
parcels in question were delivered much later. The 1st defendant s case is that practical completion was achieved
as early as January of 2010. However, it is undisputed that no Certificate of Practical Completion was issued by the
Project Consultant. Instead, only in a letter dated 24th May 2010, Inovatif Jurutera Perunding Sdn Bhd, who is the
project consultant stated that practical completion of the complex was achieved in January of 2010. The civil
engineer (Hiew King Man, D.W. 3) from Inovatif Jurutera Perunding Sdn Bhd gave evidence to that effect on behalf
of the 1st defendant. Counsel for the counsel for 1st and 2nd defendants submitted that there was no rebuttal
expert evidence from the plaintiffs to challenge the said letter and the evidence of the engineer. In my opinion, it is
not incumbent on the plaintiffs to tender expert evidence to prove that the 1st defendant had failed to achieve
practical completion of the complex within the stipulated period. As the 1st defendant is the developer of the
complex, it would be within their knowledge whether practical completion had been achieved by the completion date
of 3rd May 2010. It would be impossible for the plaintiffs to commission an inquiry during the progress of
construction to determine the stage of completion. Therefore, the date of practical completion is a fact within the
knowledge of the developer or their consultant alone. By virtue of Section 106 of the Evidence Act 1950, the burden
to prove the date of practical completion is on the 1st defendant. Section 106 (shorn of illustrations) reads as
follows:

106. Burden of proving fact especially within knowledge

When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.

[33] In the instant case, there is no evidence that the 1st defendant or their consultants had issued any notice in
January of 2010 to the plaintiffs to notify them that practical completion of the complex had been achieved. Even at
the date of completion, ie 3rd May 2010 which is 36 months after the 1st progress payment, the 1st defendant had
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not issued any Certificate of Practical Completion. Only, on 24th May 2010, the consultant issued a letter stated that
practical completion had been achieved in January of 2010. In his witness statement consisting of a single
paragraph, D.W. 3, the civil engineer made a bare assertion that practical completion was achieved in January of
2010. During cross-examination, he said the letter was issued because of the oral request of the developer. He said
as follows:

Q: So you mean that there was a request from the Penampang Council. Is that in writing or oral? 3

A: I could not recall but I think it is oral through the developer.

[34] He also said that he concluded that practical completion had been achieved based on the advice from the
architect and the mechanical and engineering consultant. He gave no further evidence to support the case of the
1st defendant that practical completion was achieved in January of 2010. D.W. 3 also did not give any reasonable
explanation why the letter was issued only in May of 2010. The temporary Occupation Certificates issued by the 3rd
defendant cannot be relied upon by 1st defendant to support their argument that practical completion for the
complex had been achieved by January of 2010. This is because the temporary Occupation Certificates did not
cover the parcels owned by the plaintiffs. Furthermore in this case, the Final Occupation Certificate was only issued
in September of 2010. As the 1st defendant had not notified the said 12 plaintiffs during the 36 month period from
the time of the first progress payment whether practical completion had been achieved, the belated letter issued by
D.W. 3 at the behest of the 1st defendant clearly appears to be an afterthought. For all the above reasons, I find
that the 12 plaintiffs have succeeded in proving that they are entitled to ascertained liquidated damages for late
delivery in accordance with clause 6.7 and 6.8 of the SPA. The said 12 plaintiffs are therefore entitled to damages
from the date of completion to the date of actual delivery. In this case, the date of delivery for all the 12 plaintiffs
save for one is 22nd September 2010 as it was on the said date that they were notified of completion. The 1st
defendant has not disputed the calculation of damages as stated in the table on pages 88 and 89 of the Core
Bundle of the plaintiff. In the premises, I shall grant damages in the sum of RM82,840.91 for the said 12 plaintiffs as
stated in the said table.

Whether service charge can be increased?

[35] The 2nd defendant standarized the service charges stated in the SPAs to RM1.00 per sq ft with effect from 1st
June, 2010 and further increased it to RM1.25 with effect from August 2011. The plaintiffs herein are challenging
the increased service charges and are applying for a refund of the same in prayer 1(g) of the prayers in the
amended Statement of Claim. It reads as follows:

(g) refund all service charges collected after 1/06/2010 for the increase to RM1.00 per sq ft and after August 2011 for
the increase RM1.25 per sq ft in excess of the stated rate in the sales and purchase agreement to the Plaintiff s
within seven (7) days of order of Court.

[36] The 1st and 2nd defendant have not disputed the fact that the service charges were increased. Their counsel
submitted that the plaintiffs did not complain earlier when the rate was increased to RM1.00 per sq ft. He referred to
the evidence of D.W. 5 (Thien Chee Ming) who said none of the residents complained about the increase or
requested a Costs Certificate . He argued that by the terms of the SPA, the 1st defendant had discretion to vary the
rate from time to time to suit the increase in the costs of running the complex. He said that a Costs Certificate is not
a pre-condition to vary the service charge rates but is only required for verification purposes. Clause 5.2, in part,
reads as follows:
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The Developer shall be entitled to vary the monthly services charges in writing in the event the Developer s cost for
providing the relevant services shall be varied and the Purchase shall pay the amended service charges from the date
specified in the notice. A certificate of the Developer s accountant or officer as to the total costs of such services to the
Developer and as to the apportionment thereof between the respective purchasers of the parcels in the Complex shall be
conclusive, final and binding on the parties hereto.

[37] Clause 2.1.2 of the Third Schedule (Mutual Convenants) reads as follows:

The rate and period of payment of the service charges may be varied from time to time at the absolute discretion of the
developer or Management Corporation.

[38] When the second increment was implemented, the 2nd defendant who ran the management office notified the
parcel owners that the increase was due to the higher SESB (electricity) rates and running costs. In my opinion, the
1st defendant or their appointed manager, the 2nd defendant was contractually entitled to increase the costs. The
above mentioned clauses envisage that the running costs would not remain static and that the developer or a future
Management Corporation had a right to increase service charges. As for the non-issuance of the Costs Certificate
, I agree with counsel for 1st and 2nd defendants that clause 5.2 does not require it as a pre-condition before the
service charges can be increased. It only states the Costs Certificate is conclusive, binding and final . In the
premises, the costs certificate becomes relevant in the event of a dispute between the parties in respect of the
quantum of charges. D.W. 5 who ran the management office testified that after the dispute between the parties
arose, the plaintiffs requested for an account and the 1st defendant issued the Costs Certificate to justify the
increase in the service charges. Therefore, the argument that the higher charges paid by the plaintiffs are null and
void and should be refunded to them is without merit. In respect of the higher charges, the accountant (Liew Sui
Yin) who reviewed the financial statements pertaining to the maintenance of the complex stated that the costs of
running the complex was actually RM1.75 per sq ft. He said that if the electricity charges of the anchor tenant and
the mini anchor tenants were included, the costs would be RM1.34 sq ft. His evidence was not seriously challenged
during cross-examination. I see no reason not to accept his evidence. In the premises, it cannot be said that the
standardized service charge of RM1.25 per sq ft is so excessive or disproportionately high that it should arouse
suspicion of profiteering on the part of 1st or 2nd defendants. For all the above reasons, I see no ground to hold
that the increase in the services charges were null and void and order a refund.

Uniform service charges

[39] In prayer 2(c), the plaintiffs have applied for a declaration that the 1st and 2nd defendants must enforce the
same service charge uniformly on all parcel owners. It is not disputed by the 1st and 2nd defendants that the
parcels occupied by the Giant Supermarket, the anchor tenant and the mini anchor tenants were subject to service
charges of RM0.20 per sq ft and RM0.75 per sq ft. I see no merit in this prayer for the following reasons. Clause 5.2
which is the relevant clause governing payment of service charges in the SPA does not require the developer or
Management Corporation to collect uniform service charges from all the parcel owners. As the SPA is necessarily
between an individual purchaser and the developer, clause 5.2 only refers to the obligation of the said purchaser to
pay the service charge and also the amended service charge if notified of the variation. Only clause 5.1 refers to
payment on a pro rata basis . However, it is in respect of outgoings for quit rent, rates, taxes, assessments etc. It is
not in respect of service charges. Counsel for plaintiffs submitted that under section 19 (8) of the LSTE a resolution
of the subsidiary owners is required if the lower rate of contribution is provided for unsold parcels. This argument
was advanced because the 18 parcels originally allocated to the 3rd defendant reverted back to the 1st defendant
after the 3rd defendant took over the parking lot in exchange. Counsel for plaintiffs also cited section 14A (1) of the
LSTE which provides that during the initial period the Management Corporation cannot amend the by-laws to
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impose an obligation on one or more but not all the parcel owners. However, in my opinion, these provisions cannot
operate as the Management Corporation had not come into existence as yet. I am not persuaded by argument of
the counsel for the plaintiffs that merely because reference is made in the definition of service charges to the
Management Corporation and the LSTE, the parties have imported the provisions of the LSTE into the SPAs.
Similarly, the reference to written laws in clause 5.11 of the SPA is merely intended as a general injunction directed
at the purchasers to comply with the law. The clause cannot be stretched to mean that the parties have imported
the provision of the LSTE into the SPAs. The defendants witnesses gave credible evidence that the anchor tenants
and mini anchor tenants were not charged the same rate of service charges for the following reasons. The largest
component of the overall expense of running the complex was electricity charges. The anchor tenant (Giant
Supermarket) and the mini anchor tenants operated their own air conditioning units. Therefore, a discount of the
service charge was given to the said tenants. Furthermore, an anchor tenant such as Giant Supermarket had to be
given incentive to run their business in the Megalong complex in order to attract crowds which would benefit all
other businesses. The director of the 1st defendant also denied that the lower rates would benefit the 1st defendant
as the 47 parcels occupied by the Giant Supermarket was not owned by them but by another company call Quality
Edition Sdn Bhd. This evidence was not rebutted. For all the above reason, I see no reason to hold that the 1st
defendant was in breach of the SPA by exercising their discretion in imposing varying service charges on the
parcels owners and anchor tenants. It is a matter of business judgment since it is not prohibited by the SPA and
there is no evidence of abuse of management authority. Prayer 2(c) should therefore be dismissed.

Power to appoint manager

[40] In prayer 3(a) of the amended Statement of Claim, the plaintiffs prayed for a declaration that the appointment
of the 2nd defendant is null and void. The ancillary prayers sought are for refund of monies paid under the invoices
issued by the 2nd defendant since 1st June 2010. It is common ground that the 2nd defendant was appointed as
manager when the complex was first opened. There is no dispute that the 2nd defendant is an associate company
of the 1st defendant as it has common shareholders and common directors. However, the plaintiffs case is that the
appointment of the 2nd defendant is invalid for the following reason. Counsel for the plaintiffs submitted that the 2nd
defendant is not an authorized property management company under section 19 of the Valuers and Appraisers
Estate Agents Act 1981 because it does not have a registered valuer or appraiser. Counsel for the defendant did
not dispute this fact. Counsel for the plaintiffs also submitted that the consent of the plaintiffs was not obtained prior
to the appointment. I shall first deal with the second ground. Clause 12.10 of the SPA reads as follows:

The Developer reserves the right to appoint or engage any person firm or body corporate as the Developer s agent or
manager and such agent or manager shall be vested with the power to control, manage and run the administration of the
Complex and shall have the right to enforce against the Purchaser the agreements and covenants of the Purchaser
contained herein and to exercise all other rights of the Developer contained in this Agreement.

[41] The above mentioned clause does not require the consent of the parcel owners as a pre-condition to the
appointment of the 2nd defendant. In the premises, the 1st defendant is contractually entitled to appoint a third
party as manager of the complex. There is no prohibition in the LSTE for a third party to be appointed as a
manager. In respect of the breach of section 19 of the Valuers and Appraisers Estate Agents Act 1981, a penal
sanction is provided in section 30. It is therefore entirely up to the relevant enforcement authority to take action in
respect of the breach of section 19. In any event, the 1st defendant had terminated the appointment of the 2nd
defendant as manager of the complex by 1st June 2012. Therefore, any declaration to the effect that the
appointment is null and void is academic. As for the refund of service charges, it is not warranted as the 1st
defendant was contractually entitled to appoint a third party as manager and the parcels owners are obliged to pay
service charges for the maintenance of the complex. Counsel for the plaintiffs argument that the 1st defendant had
reappointed the 2nd defendant as manager is unsupported by evidence. The 1st defendant s witnesses explained
credibly that the staff of the 2nd defendant had been re-engaged to assist the 1st defendant in managing the
complex. In the premises, I see no ground to grant any of the remedies applied for under prayer 3(a) and (b).
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Delay in applying for subdivision

[42] In the instant case, the registered landowner is the 3rd defendant. However, it is common ground that the 3rd
defendant had assigned all their rights to the land in question to the 1st defendant under their joint venture
agreement. In the premises, landowner in section 4A should be taken to refer to the 1st defendant. Section 4A
(4)(b) of the LSTE imposes a duty on the landowner to apply for subdivision of title before the issuance of the
Occupation Certificate. Section 4A (3) imposed a duty on the landowner to obtain subdivision approval after the
issuance of the Occupation Certificate. Section 4A (7) provides that a one-time extension of six months of the
period referred to in sub-section (4) may granted by the Director. In the instant case, up to the time of trial, the 1st
defendant had not applied for subdivision in accordance with section 4A of the LSTE. There was evidence that the
1st defendant had applied for amalgamation of the lands only about one year after the issuance of the Occupation
Certificate. The director of the 1st defendant did not proffer any valid reason for the undue delay. Counsel for
plaintiffs urged the court to impose a fine of RM1,000 per day for the delay. In my opinion, such an order would be
beyond the powers of the civil court. Sub-section (8) of the section 4A provides a penal sanction for non-
compliance. In the premises, it would be entirely up to the relevant enforcement authority to prosecute the 1st
defendant. However, in my opinion, the civil court is not without power to afford relief to the plaintiffs by ordering the
1st defendant to apply for subdivision as there is a breach of a statutory duty on their part. Such a remedy was
prescribed in the case of Syed Azman bin Syed Mohamed v Lian Seng (KL) Construction Co Sdn Bhd [1992] 2 MLJ
842. In the said case, the defendants failed to deliver strata titles in accordance with the provisions of the Strata
Titles Act 1985. The court took into account that penal sanctions had been provided for breach of the law but
nonetheless made an order to compel the defendants to apply for subdivision within one month. Lim Beng Choon J
said as follows:

In support of propositions (5) and (6), one should take note of the penalty clause where it is provided that a proprietor
convicted of an offence under s 8(5) is penalized with a lump sum fine not exceeding $5,000 and with a further fine not
exceeding $1,000 for each day the offence continues to be committed. Bearing in mind that as long as the proprietor fails to
comply with s 8(1), he would be considered as having committed an offence under the said sub-s (5) for the whole period in
which he fails to comply with s 8(1) and he could be penalized with a fine of $1,000 per day. That being the case, the
proprietor would be placed in a ridiculous position if one were to construe s 8(4) to mean that the Director of Lands and
Mines has no power to deal with an application for sub-division after the six-month period stipulated in s 8(2)(b) has
terminated. I cannot, therefore, accept the contention of the defendants when they say that they cannot be compelled to
specifically perform their obligations to apply for sub-division of the building and to obtain a strata title for the third floor.

For the above reasons, the application of the plaintiff by way of summons-in-chambers dated 15 December 1989 is
allowed. The defendants are ordered to apply for the sub-division of the said building to the appropriate authority within one
month from the date of this order. Upon the grant of the strata title for the third floor purchased by the plaintiff, the same
shall be delivered to the plaintiff forthwith.

[43] In this case, there is evidence that the application for amalgamation of the lands has already been submitted.
However, no reason has been furnished by the 1st defendant why the process has not been completed. In the
premises, I cannot accept the suggestion that any order to apply for subdivision should be made subject to the
approval of the amalgamation application. If such a contingent order is granted, it is possible that the process of
subdivision could be indefinitely delayed on the excuse that the lands had not been amalgamated. In the premises,
I shall order the 1st defendant to submit the subdivision application under section 4A of the LSTE within six months
of the judgment this court.

Post trial production of documents

[44] Under prayer 1(c),(d) and (f), the plaintiffs are applying for copies of various documents including bank
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accounts and statements relating to the management of the complex. In my opinion, this prayer is irrelevant and
without basis. The plaintiffs have not prayed for the remedy of taking of accounts. Therefore, it is completely
unnecessary to obtain, in a manner of speaking, an order for post trial discovery of documents. If the documents
were relevant during the trial, the plaintiffs should have obtained them through general discovery or special
discovery before commencement of trial.

RM250 penalty for not opening business

[45] Under prayer 2(b), the plaintiffs have prayed for a declaration that the 1st and 2nd defendants are not entitled
to charge a penalty of RM250 day for failure of the parcel owner to keep the parcel open for business. Under prayer
1(a), the plaintiffs have prayed for refund of the penalty that has been collected. Conversely, in prayer (7) of the
counterclaim, the 1st defendant is praying for declaration that they have contractual right to the said penalty
charges. Clause 2.47 of the Third Schedule (Mutual Convenants) reads as follows:

a) To open the said Parcel for business between the hours of 9.00 am 10.00 am from Monday to Sunday including
Public Holidays and not to open the said parcel for business outside the opening hours provided that the
Developer/Management Corporation reserves the right to change the opening hours from time to time.
b) For the smooth operation of the said Parcel, the Purchaser shall commence the permitted business in the said
Parcel Forty Five (45) days from the date of delivery of vacant possession failing which the Purchaser shall pay to
the Developer or Management Corporation as the case may be, on demand, liquidated damages at the rate of
RM250.00 per day ( Liquidated Damages ) in respect of each day that the Purchaser has not commenced the
permitted business.

[46] The penalty provision (b) appears only in the SPAs executed by 12 of the 78 plaintiffs. Counsel for the
plaintiffs submitted that the penalty only serves to enrich the 1st defendant who owns many unsold parcels in the
complex. However, one of the plaintiffs (P.W. 2) told the court that after the action was commenced, the 2nd
defendant had written to his solicitors to state that penalty had been waived. D.W. 4 (director of the 1st defendant)
told the court that the penalty was not collected and that it had been waived. Although, the plaintiffs have prayed for
refund of the penalty, none of the plaintiffs tendered any evidence of payment of the same in the first place. In fact,
during argument, it was agreed that the penalty was never collected. In my opinion, the prayer for a refund or a
declaration that the clause is null and void is academic because the liability to pay the penalty would only arise if
there was a demand under clause 2.47(b). The said clause clearly says that liability to pay will arise on demand .
Although the 1st defendant has prepared a list of the plaintiffs who did not open their business and have breached
clause 2.47(b), no demand for payment of penalty was issued to the said plaintiffs. In the premises, the prayers
related to the penalty clause are academic. I shall therefore dismiss the said prayers.

Claim against the 3rd defendant

[47] In paragraph 4 of the prayers, the plaintiffs have applied for an order against the 3rd defendant to:

(a) indemnify the plaintiffs for all breaches and excess of authority by the 1st defendant and 2nd defendant
under the Sale and Purchase agreement, section 2, section 14A(2) and section 16A of the LSTE.
(b) indemnify the plaintiffs for the RM250 penalty under/or the service charges received by the 1st and/or 2nd
defendant.
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[48] The plaintiffs pleaded that the 3rd defendant committed an offence as landowner for not submitting the
subdivision plan under section 4A (8) of the LSTE and also did not comply with section 14A. As I said earlier, the
3rd defendant cannot be faulted for not submitting the subdivision plan under section 4A (8) of the LSTE as they
had assigned all their rights to the land to the 1st defendant who is the developer under the joint venture
agreement. In respect of compliance with other provisions, the 3rd defendant is not liable for the same reason. The
plaintiffs also pleaded that the 3rd defendant had placed themselves in a conflict of interest position as the
approving authority that had approved Amendment B and Amendment C. In my view, this is an oblique challenge
against the decision of a public authority that had exercised its discretion within the scope of its powers. It is trite
law that such a challenge can only be mounted via a judicial review application and not through a civil suit. In the
premises, the plaintiffs have no valid cause of action against the 3rd defendant and the said prayers ought to be
dismissed.

Counterclaim of the 1st and 2nd defendant

[49] Almost all the declarations sought by the 1st defendant are the converse of the declarations sought by the
plaintiff. Since I had made a ruling on the plaintiffs prayers, I find it unnecessary to rule on the 1st defendant s
prayers with the exception of the following. In prayer (8), the 1st defendant had sought a declaration that they are
entitled to set off any monetary judgment against them in favour of the plaintiffs from the current outstanding
amount and payable by the plaintiffs to the 1st defendant. In my view, a general declaration would not be practical
as the plaintiffs are not collective purchasers but individual purchasers and different amounts are involved in their
respective accounts. In the premises, it is obvious that the issue of set off should be dealt with in the ordinary
course of execution proceedings and it is unnecessary to make numerous declaratory orders in respect of all the
plaintiffs.

[50] In prayer (11), the 1st defendant prayed for an order that some of the plaintiffs pay outstanding deposits with
interests. In the list reproduced in the written submission of counsel for 1st and 2nd defendants from pages 162 to
166 Bundle of documents volume 13, counsel for 1st and 2nd defendants has pointed out that ten plaintiffs (42nd,
45th, 69th, 71st and 72nd, 83rd, 86th and 99th plaintiffs) who between them own eight parcels have not fully paid
the RM4,000 deposit. The outstanding amounts vary from RM1000 to RM3,500.00. Clause 5(3) (5) obliges
purchasers to pay the security and performance deposit pending the formation of the Management Corporation.
The plaintiffs in question have not rebutted the documentary evidence that they are still in default of payment of the
balance of the said deposit. In the premises, I shall granted order in terms of prayer (11) of the counterclaim of the
1st defendant. In prayer (12), the 1st defendant applied for an order that the plaintiffs pay the outstanding insurance
premium. Again, this prayer does not affect all the plaintiffs. Clause 5.16 of the SPA obliges all purchasers to pay
proportionately the insurance premium for the complex. The list of plaintiffs who owe outstanding premiums
payments are listed on pages 223 to 228 of the defendant bundle of documents volume 2 and reproduced at pages
56 to 59 of the first written submission of the 1st and 2nd defendants. The outstanding amounts vary from RM139 to
RM541. There was no credible denial that the said plaintiffs did not owe the said amounts although it was pleaded
in paragraph 26 of the Defence and Counterclaim that the some of the plaintiffs owed various outstanding amounts
as evidenced in the bundle of documents that were admitted into evidence. In the premises, I shall grant an order in
terms of prayer (12).

Conclusion

[51] Having regard to the prayers in the Statement of Claim and the counterclaim of the 1st defendant and my
findings on the principal issues, I make the following orders. The 1st defendant and/or 2nd defendant do jointly and
severally do:
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(a) refund interest free all of the management fees and service fees collected before 6th October 2010 from
the plaintiffs in the sum of RM38,103.00 as stated on page 167 of the plaintiff s supplementary bundle of
document.

(b) damages for late delivery in the sum of RM82,840.91 to the said 12 plaintiffs as stated on pages 88 and 89
of the plaintiff s Core Bundle.
(c) I shall also grant the following declaration against the 1st and/or 2nd defendant:

(i) that Amendment C dated Jan 2009 which has lapsed is in contravention of the said Sale and Purchase
Agreements.
(ii) that the 1st defendant is in breach of their duty under section 4A of the Land (Subsidiary Title)
Enactment 1972 for not submitting the subdivision and other plans to the Registrar of Lands and
Survey for issuance strata titles before the issuance of the Occupation Certificate and until current
date.

(d) I order that the 1st defendant do submit the subdivision and other plans for the purpose of issuance of
strata title under the Land (Subsidiary Title) Enactment 1972 to the Registrar of Lands and Survey within
six months of this order.
(e) In respect of the counterclaim of the 1st and 2nd defendants, I shall make the following orders:

(i) That the 42nd, 45th, 69th, 71st and 72nd, 83rd, 86th and 99th plaintiffs pay the 1st defendant the
outstanding sums stated as in the list reproduced in the written submission of counsel for 1st and 2nd
defendants (which is extracted from pages 162 to 166 Bundle of documents volume 13) together with
interest at the rate of 8% per annum from the due date until the date of payment.
(ii) The plaintiffs listed on pages 56 to 59 of the written submission of the counsel for 1st and 2nd
defendants (which is extracted from pages 223 to 228 of the defendant bundle of documents volume 2)
do pay the outstanding insurance premium as stated therein together with interest at the rate of 8% per
annum from the due date until the date of payment.

(f) The claim of the plaintiffs against the 3rd defendant is hereby dismissed.
(g) The 1st and 2nd defendants are to pay costs of RM 30,000.00 to all the Plaintiffs. No order as to costs
between the Plaintiffs and the 3rd defendant.

End of Document