The Co-Operative Central Bank Ltd v KGV & Associates Sdn Bhd [2008] 2 MLJ 233 CIVIL APPEAL

NO 0272007(W) FEDERAL COURT (PUTRAJAYA) DECIDED-DATE-1: 28 NOVEMBER 2007 ALAUDDIN, ARIFIN ZAKARIA AND HASHIM YUSOFF FCJJ CATCHWORDS: Tort - Negligence - Duty of care - Negligent misstatement from a professional advisor to a third party - Valuation report - Whether categorisation or open-ended approach to be adopted - Principles applicable HEADNOTES: The appellant sued the respondent, a property valuer for negligently preparing a valuation report for a property. The respondent valued the property at RM408,000 (forced sale at RM325,000). When there was a default on the loan, the appellant commissioned a valuation for the purpose of foreclosure proceedings (the second valuation). The second valuation disclosed that the property was in fact vacant land, with a forced sale value of only RM51,000. The fact of the case was that one Lim Tian Huat (Lim) intended to take a loan from the appellant to set up a marble factory. Lim however had no prior business record which made it difficult for him to secure a loan. Lim approached his friend Kong Siew Ken (Kong) for assistance in securing the loan. Kong applied for a loan from the appellant in his own name and offered Lims landed property as security. Kong instructed Tan Liew Lin (Tan), a friend of both Kong and Lim to approach the respondent for a valuation of the property. The actual valuation was conducted by Long Tian Chek (Long) who was assisted by Teo, both employee of the respondent. Teo was shown the property by Tan and Lim, which appeared to be three units of shop-lots which were 70% completed. At that time the property could not be identified by their titles. Relying on Tan and Lims identification of the property, Long issued a valuation report which was dated 21 January 1985. The learned high court judge found the respondent liable to the appellant for negligence. The Court of Appeal decided that there was no duty of care owed by the respondent to the appellant and allowed the appeal. The Federal Court on 5 February 2007 granted the appellant leave to appeal on the following questions of law: (a) Whether the open-ended approach recognised and adopted by the Federal Court in Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2 MLJ 389 regarding a claim for pure economic loss due to negligence should be equally applicable to determine the existence of duty of care in a claim for pure economic loss arising from negligent misstatement from a [*234] professional advisor to a third party? (b) If the answer to (a) is in the negative, whether the assumption of responsibility test and/or the three-fold test discussed in the case of Her Majestys Commissisoners of Customs and Excise v Barclays Bank Plc [2006] 4 All ER 256 (Barclays case) which were adopted by the Court of Appeal in this matter, were the correct tests and applicable law in Malaysia to determine the existence of duty of care from a professional advisor to a third party arising from negligent misstatement? Held, dismissing appellants appeal with costs: (1) The court found that the Court of Appeal had adopted the tests laid out by the Federal Court in Ampang Jayas case. The Federal Court in

Ampang Jaya acknowledged that the general duty of care in all negligence claims, including claims for pure economic loss was the three-fold test laid out in Caparo Industries PLC v Dickman [1990] 2 AC 605. Following Caparo, a dual approach had developed. The categorisation and the open-ended approach. In the first instance, the issue of liability was dealt with according to established or recognised categories of duties of care. In novel cases, i.e. where the issue had not been decided previously, the courts could go further to determine if the facts admit to a duty of care. The learned Chief Judge in that case also held that they were not mutually exclusive approaches and it was possible for overlap between the two. While the learned Chief Judge expressed an inclination towards the open-ended approach, he specifically endorsed the conservative or cautious approach to a forward movement adopted by the Singapore Court of Appeal in Man B & W Diesel SE Asia Ptd & Anor v PT Bumi International Tankers & another appeal [2004] 2 SLR 300 (see para 24). (2) Similarly, the decision of the House of Lords in Barclays case created no new law. It merely consolidated the learning in this vexed area and sets it out comprehensively. The five general observations in the speech of Bingham LJ were not intended to create new law. The first two observations dealt with the assumption of responsibility test what it meant and how it was to be applied. The third observation was in relation to the three-fold Caparo test and how it related to a novel situation. The cautionary words in Caparo and the trend towards categorization were repeated. The fourth observation was that the incremental approach was helpful when used in combination with established principle. The fifth observation was the same call made in Ampang Jayas case that the detailed circumstances of the particular case and the particular relationship between the parties generally led to the correct finding on the existence or not of a duty (see paras 2628). [*235] (3) The fifth observation, in the courts opinion, held the key to this area of law. The ultimate question was whether the detailed facts and circumstances of the case support the finding of a duty of care. Here, there was no evidence to suggest that the respondent knew or ought to have known that the valuation was to be used or relied on by the appellant as the report was addressed to Tan and not to the appellant. Tan was not the owner of the property. The owner was Lim. The borrower was Kong who wanted the loan and had asked Tan to obtain the report from the respondent. Lim and Tan took the respondents valuer to the site and identified the property to him. This was important as it was clear that Tan and Lim had identified a property which did not belong to them. They identified three units of substantially completed shophouses, when in fact (as it subsequently transpired) the land was vacant and there was no construction on it. This was significant because if there was any duty owed to Tan, Lim or Kong, it was discharged by valuing the property identified by them. Clearly there was no breach to Tan, Lim or Kong (see paras 2932). (4) The letters of offer by the appellant did not require a valuation report to be produced. In fact they require the appellant to satisfy itself of the progress of the construction. The appellant did in fact

carry out its own inspection at the site and confirmed that the buildings were 100% completed before disbursing the loan (see para 32(g) & (h)). Perayu mendakwa responden, sebuah syarikat penilai hartanah, untuk kecuaian menyediakan laporan penilaian atas satu hartanah. Responden menilai hartanah tersebut pada harga RM408,000 (jualan paksaan pada harga RM325,000). Apabila terdapat keingkaran membayar pinjaman, perayu mendapatkan satu nilaian untuk tujuan prosiding halang tebus gadaian (penilaian kedua). Penilaian kedua menyatakan hartanah tersebut sebenarnya satu tanah lapang, dengan jualan paksaan bernilai hanya RM51,000. Fakta kes ialah seorang Lim Tian Huat (Lim) ingin mendapatkan pinjaman daripada perayu untuk menubuhkan satu kilang marmar. Akan tetapi Lim tidak mempunyai sebarang rekod perniagaan yang menyebabkannya payah untuk mendapatkan satu pinjaman. Lim mencari kawannya, Kong Siew Ken (Kong) untuk bantuan dalam mendapatkan pinjaman. Kong memohon satu pinjaman daripada perayu atas namanya sendiri dan memberikan hartanah Lim sebagai jaminan. Kong mengarah Tan Liew Lin (Tan) seorang kawan kedua-dua Kong dan Lim untuk mendapatkan responden untuk penilaian hartanah tersebut. Penilaian sebenarnya dilakukan oleh Long Tian Chek (Long) dibantu oleh seorang Teo, keduaduanya pekerja responden. Teo ditunjukkan hartanah tersebut oleh Tan dan Lim, yang menunjukkan tiga tingkat unit-unit kedai dimana [*236] 70% telah disiapkan. Pada masa tersebut, hartanah tersebut tidak dapat dikenalpasti melalui hakmilik. Berdasarkan pengenalpastian hartanah tersebut oleh Tan dan Lim, Long telah mengeluarkan laporan penilaian bertarikh 21 Januari 1985. Hakim mahkamah tinggi mendapati responden bertanggungjawab kepada perayu untuk kecuaian. Mahkamah rayuan mendapati bahawa tiada kewajipan berjaga-jaga oleh responden kepada perayu dan membenarkan rayuan tersebut. Mahkamah persekutuan telah pada 5 Februari 2007 membenarkan perayu kebenaran merayu atas soalan-soalan undang-undang: (a) Sama ada open-ended approach yang dikenali dan dipakai oleh mahkamah persekutuan di dalam kes Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2 MLJ 389 berhubungan dengan tuntutan untuk kerugian ekonomi tulen harus sama dipakai untuk menentukan kewujudan satu kewajipan berjaga-jaga dalam satu tuntutan untuk kerugian ekonomi tulen yang berbangkit daripada salah nyata cuai daripada seorang penasihat profesional kepada pihak ketiga? (b) Sekiranya, jawapan kepada (a) adalah tidak, sama ada ujian assumption of responsibility dan/atau three-fold test yang dibincangkan di dalam kes Her Majestys Commissisoners of Customs and Excise v Barclays Bank PLC [2006] 4 ALL ER 256 (kes Barclays) yang dipakai oleh Mahkamah Rayuan dalam perkara ini, adalah ujian yang betul dan terpakai kepada undang-undang di Malaysia untuk menentukan kewujudan kewajipan berjaga-jaga daripada seorang penasihat profesional kepada pihak ketiga yang berbangkit daripada salah nyata cuai? Diputuskan, rayuan perayu ditolak dengan kos: (1) Mahkamah berpendapat Mahkamah Rayuan telah memakai ujian yang dibentangkan oleh Mahkamah Persekutuan di kes Ampang Jaya. Mahkamah Persekutuan di Ampang Jaya mengakui bahawa kewajipan berjaga-jaga am dalam semua tuntutan kecuaian, termasuk tuntutan-tuntutan kerugian ekonomi tulen adalah ujian tiga tahap seperti yang dibentangkan di Caparo Industries PLC v Dickman [1990] 2 AC 605. Berikutan Caparo, dua jenis pendekatan telah digunakan. Pendekatan categorisation dan open-ended. Dalam jenis pertama, isu liabiliti digunakan mengikut kategori kewajipan berjaga-jaga yang kukuh dan dikenali. Dalam kes-kes baru iaitu dimana isu belum pernah diputuskan

sebelumnya, mahkamah-mahkamah dapat mengembangkan untuk memutuskan sekiranya fakta-fakta menunjukkan satu kewajipan berjaga-jaga. Hakim besar yang bijaksana dalam kes tersebut juga telah memutuskan bahawa kedua-dua jenis tersebut bukannya pendekatan yang bersesama eksklusif dan ia mungkin bersangkut paut di antara satu sama lain. Sementara Hakim besar yang bijaksana lebih memihak kepada pendekatan open-ended, beliau secara khususnya mengendorskan satu pendekatan konservatif [*237] atau berhati-hati terhadap perjalanan ke depan yang dipakai oleh Mahkamah Rayuan Singapura di kes Man B & W Diesel SE Asia Ptd & Anor v PT Bumi International Tankers & another appeal [2004] 2 SLR 300 (lihat perenggan 24). (2) Begitu juga, keputusan House of Lords di kes Barclays yang tidak mewujudkan undang-undang baru. Ia hanya menyatukan pembelajaran dalam bidang yang susah ini dan membentangkannya secara keseluruhan. Lima pandangan-pandangan am dalam ungkapan Bingham LJ bukannya bermaksud untuk mewujudkan undang-undang baru. Pandangan pertama dan kedua berhubungan dengan ujian assumption of responsibility apakah maksudnya dan bagaimana ia harus dipakai. Pandangan ketiga adalah berhubungan dengan ujian tiga jenis Caparo dan bagaimana ia berkait dengan keadaan baru. Perkataan berjaga-jaga di Caparo dan pendekatan terhadap kategori diulangi. Pandangan keempat adalah bahawa pendekatan meluaskannya adalah baik sekiranya digunakan bersama-sama prinsip mantap. Pandangan kelima adalah sama seperti di kes Ampang Jaya bahawa butir-butir keadaan sesuatu kes dan perhubungan yang khusus di antara pihak-pihak secara amnya membawa kepada carian yang betul atas kewujudan atau tidak suatu kewajipan (lihat perenggan 2628). (3) Pandangan kelima, pada pendapat mahkamah, adalah kunci kepada bidang undang-undang di sini. Soalan sebenarnya ialah sama ada butir-butir fakta dan keadaan-keadaan kes menyokong satu carian kewajipan berjaga-jaga. Di sini, tiada bukti yang mencadangkan bahawa responden tahu atau sepatutnya tahu bahawa penilaian akan digunakan atau digantung oleh perayu oleh kerana laporan tersebut disediakan untuk Tan dan bukan perayu. Tan bukanlah pemilik hartanah tersebut. Pemiliknya ialah Lim. Peminjam adalah Kong yang inginkan pinjaman tersebut dan telah menyuruh Tan untuk memperolehi laporan tersebut daripada responden. Lim dan Tan membawa penilai responden ke tempat tersebut dan mengenalpasti hartanah kepadanya. Ini adalah penting oleh kerana ia adalah jelas bahawa Tan dan Lim telah mengenalpasti satu hartanah yang bukan kepunyaan mereka. Mereka telah mengenalpasti tiga unit-unit kedai yang hampir siap apabila sebenarnya (diketahui kemudiannya) tanah tersebut adalah lapang tanpa sebarang pembinaan. Ini adalah penting oleh kerana sekiranya terdapat kewajipan terhadap Tan, Lim atau Kong, ia telah dilepaskan dengan menilai hartanah yang dikenalpasti mereka. Dengan jelas tiada kemungkiran kepada Tan, Lim ataupun Kong (lihat perenggan 2932). (4) Surat-surat tawaran oleh perayu tidak memerlukan satu laporan penilaian dibentangkan. Sebenarnya mereka memerlukan perayu berpuas hati dengan perjalanan kerja-kerja pembinaan. [*238] Perayu sebenarnya telah menjalankan penyiasatan di tempat tersebut dan mengesahkan bahawa bangunan-bangunan tersebut adalah 100% dibina sebelum memberikan pinjaman tersebut (lihat perenggan 32(g) & (h)). Notes

For cases on duty of care, see 12 Mallals Digest (4th Ed, 2005 Reissue) paras 9631011.

Cases referred to Caparo Industries PLC v Dickman [1990] 2 AC 605 Her Majestys Commissisoners of Customs and Excise v Barclays Bank Plc [2006] 4 All ER 256 Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2 MLJ 389 Man B & W Diesel SE Asia Ptd & Anor v PT Bumi International Tankers & another appeal [2004] 2 SLR 300 RSP Architects Planners & Engineers v Management Corporation Strata Title No 1075 [1999] 2 SLR 449 RSP Architects Planners & Engineers v Ocean Front Pte Ltd [1996] 1 SLR 113 Smith v Eric Bush [1990] 1 AC 831 S Murthi (S Murthi & Associates) for the appellant. David Morais (Su-Ann Lim with him) (M David Morais) for the respondents. Alauddin FCJ (now CJ (Malaya) delivering judgment of the court)::

[1] The records before us disclose the following facts. One Lim Tian Huat (Lim) intended to take a loan from the appellant to set up a marble factory. Lim however had no prior business record which made it difficult for him to secure a loan. Lim approached his friend Kong Siew Ken (Kong) for assistance in securing the loan. Kong applied for a loan from the appellant in his own name and offered Lims landed property as security. The property is described as HS(D) 9411, 9412 & 9414, PTD No 4052, 4053 and 4055 in Mukim Paloh, District of Kluang, Johor (the Property). [2] Tan Liew Lin (Tan) was a friend of both Kong and Lim. Kong instructed Tan to approach the respondent for a valuation of the Property. [3] The respondent company is a property valuer. Its managing director, Ng Heng Cheong (Ng) is a registered valuer. At the material time, the other [*239] registered valuer in the respondents employ was one Long Tian Chek (Long). The respondent also employed an assistant at that time identified only as Teo. [4] Tans initial contact was with Ng. The actual valuation was conducted by Long who was assisted by Teo. Teo was shown the Property by Tan and Lim, which appeared to be three units of shop-lots which were 70% completed. At that time the Property could not be identified by their titles. Relying on Tan and Lims identification of the Property, Long issued a valuation report which was dated 21 January 1985 (the Valuation Report). [5] The appellant extended an offer for the loan to Kong on 17 October 1985. This offer was never accepted by Kong and was cancelled by the appellant. The appellant then issued a fresh offer to Kong on 2 April 1986. This was the offer which was accepted and led to the loan from the appellant to Kong. [6] The appellants own evidence is that it was unreasonable for the appellant to rely on the Valuation Report in issuing the second offer. Further, and this is also material to the

appeal, the Valuation Report in any event contained an effective disclaimer of liability. [7] The respondent valued the forced sale value of the Property at RM325,000. When Kong defaulted on the loan, the appellant commissioned a valuation from CH Williams, Talhar & Wong Sdn. Bhd. for the purpose of foreclosure proceedings (the second Valuation). This second Valuation disclosed that the Property was in fact vacant land, with a forced sale value of only RM51,000. [8] The appellant sued the respondent. The claim is founded on negligence. The appellant alleged that the respondent had negligently prepared the Valuation Report for the Property which was relied on by the appellant in granting the loan to Kong. [9] The amount loaned to Kong to finance the purchase of the Property was RM100,000. Part of the consideration for the loan was a charge over the Property in favour of the appellant. The appellant alleged that it could not recover the loan amount and outstanding interest from Kong. [10] In the Valuation Report, the Property was valued by the respondent at RM408,000 (forced sale at RM325,000) on the basis that on it were 3 units of double-storey shophouses which were 70% completed. [*240] [11] Although the appellant did not complete foreclosure of the Property at the time of trial, it contended, based upon the second Valuation dated 2 August 1990, that a foreclosure would only recoup RM51,000 as the Property was a vacant plot of land. [12] On this basis, the appellant contended that the respondent was liable to the appellant for negligence. [13] The learned High Court Judge found the respondent liable to the appellant for negligence. On the evidence submitted at the trial the amount outstanding from Kong to the appellant as at 20 September 1999 was RM445,585.10. This is the quantum of damages awarded to the appellant by the High Court as special damages. [14] Dissatisfied with the above decision, the respondent appealed to the Court of Appeal. The Court of Appeal decided that there was no duty of care owed by the respondent to the appellant. Thus the Court of Appeal allowed the respondents appeal. Hence the present appeal before us. [15] The Federal Court on 5 February 2007 granted the appellant leave to appeal on the following questions of law: (a) Whether the open-ended approach recognised and adopted by the Federal Court in Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2 MLJ 389 regarding a claim for pure economic loss due to negligence should be equally applicable to determine the existence of duty of care in a claim for pure economic loss arising from negligent mis-statement from a professional advisor to a third party? If the answer to (a) is in the negative, whether the assumption of responsibility test and/or the three-fold test discussed in the case

(b)

of Her Majestys Commissisoners of Customs and Excise v Barclays Bank Plc [2006] 4 ALL ER 256 which were adopted by the Court of Appeal in this matter, are the correct tests and applicable law in Malaysia to determine the existence of duty of care from a professional advisor to a third party arising from negligent mis-statement? [16] Before us, learned counsel for the appellant contended that the correct test for a claim for pure economic loss arising from negligent misstatement as in this appeal would be the test as decided in Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2 MLJ 389 (Ampang Jayas case). There the Federal Court preferred the open-ended approach against the categorisation approach which was an approach similar to that adopted by the Court of Appeal in this appeal. [*241] [17] The Federal Court also accepted the approach adopted by the Singapore Court of Appeal in the case of RSP Architects Planners & Engineers v Management Corporation Strata Title No 1075 [1999] 2 SLR 449. The Federal Court further reiterated that in determining whether the scope of duty of care in the circumstance of the case is such as to embrace damages of the kind suffered by the plaintiff, additional factors such as public policy and local circumstance must be considered. [18] Under the open-ended approach, where the facts of a particular case do not come within a recognised category of liability, a court could go further to look at the facts closely to determine if the duty of care should nevertheless be owed by the defendant to the plaintiff. [19] Learned counsel further contended that although the Federal Court in the Ampang Jayas case was dealing with a claim for negligence, a similar approach should be adopted for claim for negligent mis-statement. The test adopted by the Court of Appeal here is clearly contrary to the approach taken by the Federal Court in Ampang Jayas case. [20] In opposing the appeal, learned counsel for the respondent argued that the test adopted by the Court of Appeal in determining whether a duty of care exists between the respondent (valuer) and the appellant (bank) was correct and in keeping with the principles and tests set out by the Federal Court in Ampang Jayas case. [21] On the particular facts and circumstances of this case, the Court of Appeal found that the respondent does not owe a duty of care to the appellant. [22] In attempting to answer the questions posed it is pertinent for us to refer to the approach adopted by the Court of Appeal in the instant appeal. [23] After quoting extensive passages from the speeches of the Law Lords in Her Majestys Commissisoners of Customs and Excise v Barclays Bank Plc [2006] 4 ALL ER 256 (Barclays Bank case) the Court of Appeal made the following observations (at paras 1013 Vol 1 AR pp 5154): (a) The ultimate question in determining the existence of a duty of care in cases of pure economic loss is essentially fact sensitive. This means that a careful examination of the facts and circumstances of each case is required before deciding whether to impose a duty of care on the defendant, (para 10). This is what the court of Appeal said

[*242] Whilst there are several useful tests, indicia or guidelines to ascertain whether a duty of care exists in given circumstances, the ultimate question whether a duty of care should be placed in a particular case is essentially fact sensitive (see, Arab-Malaysian Finance Bhd v Steven Phoa [2003] 1 MLJ 567 where this Court made the same finding). (b) A useful guide in reaching that determination is to ask whether there was an assumption of responsibility. This is an objective test to decide whether the defendant assumed responsibility to the plaintiff about the accuracy of his statement (para 11). Another test is to see if the case under consideration is close to a decided case in which a duty was found to exist. The closer the facts are to such a case, the more likely is there to be a finding of a duty. The further the facts are from a similar decided case, the less likely the Court will find a duty of care (Para 11). By agreement of counsel on both sides Smith v Eric Bush [1990] 1 AC 831 was the authority closest to the present facts. This was also a case of negligent mis-statement by a surveyor engaged by a building society to inspect and value a home. The plaintiff relied on the report in deciding to purchase the house. Because of the surveyors negligence, the plaintiff suffered financial loss. Critical in the finding of a duty of care was the fact that the surveyor knew that the plaintiff would rely on its report without obtaining independent advice and that in the circumstances of the transaction it was good public policy to establish a duty of care (para 12). The facts of the present appeal while similarly dealing with the reliance of a third party on a professional report negligently prepared was sufficiently distant from Smith v Eric Bush to conclude that there was no duty of care (para 13). The Court of Appeal opined thus Now look at our facts and compare them with those of Smith v Eric Bush. Here, the report was not commissioned by the plaintiff. It was commissioned by Tan. But, he was not the true buyer. Kong was the true buyer. And there is not a scintilla of evidence to show that the defendant knew the report it gave Tan would be used by Kong. Next, the plaintiff having seen the report did not want it because it was not addressed to Kong. Again, there is not a jot of evidence to show that the defendant permitted Kong to use the report after the plaintiff had rejected it. The facts of the present instance are therefore very far from Smith v Eric Bush. It is therefore fair to conclude that there had been no assumption of responsibility by the defendant. It is also fair to conclude that the proximity and policy conditions of the threefold test have not been satisfied. [*243]

(c)

(d)

(e)

[24] From the above observations by the Court of Appeal, we must say, with the greatest of respect to the appellant that the Court of Appeal had adopted the tests laid out by the Federal Court in Ampang Jayas case. We say so for the following reasons: (a) In his judgment (at para 13 p 20 of the report) in the Ampang Jaya s case, Steve Shim CJ (Sabah & Sarawak) (as he then was) had this to say: Having had the benefit of reading the various authorities on this subject, I am more inclined to accept the positions taken by the courts in Australia and Singapore. In adopting the sentiments and observations expressed by the Singapore Court of Appeal in PT Bumi International Tankers, I would also endorse the view that caution should be exercised in extending the principle in Donoghue v Stevensen to new situations. Much would depend on the facts and circumstances of each case in determining the existence or otherwise of a duty of care (b) the learned Chief Judge also acknowledged that the general duty of care in all negligence claims, including claims for pure economic loss is the three-fold test laid out in Caparo Industries PLC v Dickman [1990] 2 AC 605, (see pp 17H 18G). That following Caparo, a dual approach has developed. The categorisation and the open-ended approach. In the first instance, the issue of liability is dealt with according to established or recognised categories of duties of care. In novel cases, i.e. where the issue has not been decided previously, the courts can go further to determine if the facts admit to a duty of care. It should be borne in mind that the learned Chief Judge in dealing with the dual approach held at pp 19 and 20, that they were not mutually exclusive approaches and it is possible for overlap between the two. The same sentiment was expressed in the judgment of Abdul Hamid Mohamad FCJ (as he then was) at p 42 para 65. Further, while he expressed his inclination towards the open-ended approach, the learned Chief Judge specifically endorsed the conservative or cautious approach to a forward movement adopted by the Singapore Court of Appeal in Man B & W Diesel SE Asia Ptd & Anor v PT Bumi International Tankers & another appeal [2004] 2 SLR 300 (PT Bumi). It is important to note that PT Bumi went to great lengths to distinguish and highlight the particular facts in the case of RSP Architects Planners & Engineers v Ocean Front Pte Ltd [1996] 1 SLR 113 (Ocean Front) which recognised negligence for pure [*244] economic loss and to advise extreme caution in extending the Donoghue principle or the decision in Ocean Front.

(c)

(d)

(e)

(f)

[25] From the above analysis, it can be seen that the principles laid out in the Ampang Jayas case were applied by the Court of Appeal. If they were not expressly adopted, this

was because the judgment was not published at the time the appeal was argued in the Court of Appeal. Suffice to say, the Court of Appeal did nothing more than apply those established tests. [26] Similarly, the decision of the House of Lords in Barclays Bank case creates no new law. In our respectful view, it merely consolidates the learning in this vexed area and sets it out comprehensively. At p 260 para 4 of the speech of Bingham LJ we find the very tests laid out by this Honourable Court in Ampang Jayas case. [27] The so-called open-ended approach is also recognised in Barclays Bank case. This is the same cautious approach to extending new areas of liability by careful increments adopted by PT Bumi, which was endorsed by this honourable court. [28] Referring to the five general observations in the speech of Bingham LJ they are just that observations arising from a review of the established cases (pp 261263). They were not intended to create new law. The first two observations deal with the assumption of responsibility test what it means and how it is to be applied. The third observation is in relation to the threefold Caparo test and how this relates to a novel situation. Here the observation is imprecise labelling can make it difficult to find if a duty of care exists in a novel situation. The cautionary words in Caparo and the trend towards categorization are repeated. The fourth observation is that the incremental approach is helpful when used in combination with established principle. The fifth observation is the same call made in Ampang Jayas case that the detailed circumstances of the particular case and the particular relationship between the parties generally leads to the correct finding on the existence or not of a duty. [29] The fifth observation, in our opinion, holds the key to this area of law. The ultimate question is whether the detailed facts and circumstances of the case support the finding of a duty of care. The same observation is found in Ampang Jayas case and it is also found in the decision of the Court of Appeal. Merely setting out the observations as has been done in the Barclays Bank case has created no new law. It simply clarifies what the courts have been consistently saying. [*245] [30] Regardless of whether we apply the categorization test or simply general principle of stare decisis, the decision of the House of Lords in Smith v Eric Bush is on either view highly persuasive. It deals with facts which are very similar and with principles which are directly applicable to the facts of this appeal. In fact, in the decision, obiter comments were made regarding the duty of a valuer to a third party who relies on the report. [31] The facts are succinctly set out at p 843 of the report and the relevant findings on the duty of care appear at pp 844847. The House of Lords found that the duty of care existed between the valuer and the plaintiff purchaser because the valuer had assumed responsibility knowing that the valuation fee had been paid by the plaintiff and knowing that the valuation would probably be relied on by the plaintiff to decide on whether or not to buy the house. As can be seen in that case there was actual knowledge of the plaintiff and of his reliance on the report. [32] Now, reverting to the facts of the instant appeal, there is no evidence to suggest that the respondent knew or ought to have known that the valuation was to be used or relied on by the appellant. The following are our reasons:

(a) (b)

The report was addressed to Tan and not to the appellant (Vol 2 AR p 328). Tan was not the owner of the property. The owner was Lim. The borrower was Kong who wanted the loan and had asked Tan to obtain the report from the respondent (Vol 2 AR pp 181182). Already, we can see that there are three levels of individuals between the respondent and the appellant ie Tan who is asked to procure the valuation, Lim, the landowner who provides his title as security and Kong the beneficiary of the loan. Lim and Tan took the respondents valuer to the site and identified the property to him. This is important as it is clear that Tan and Lim had identified a property which did not belong to them. They identified three units of substantially completed shophouses, when in fact (as it subsequently transpired) the land was vacant and there was no construction on it (Vol 2 AR pp 182183). This is significant because if there was any duty owed to Tan, Lim or Kong, it was discharged by valuing the property identified by them. Clearly there is no breach to Tan, Lim or Kong. From the evidence it appears that the report was rejected by the appellant as it was not addressed to Kong, the borrower. Tan was asked to have it corrected. He says that he met with one Teoh from the respondent company who assured him that this would be alright [*246] but this evidence is self-serving and unsupported by documentary evidence or by the appellant. The fact is that the report was always addressed to Tan alone and there were no amendments made (Vol 2 AR pp 183184). The evidence of the appellants expert that in their practice the report is confidential to the addressee is also relevant (Vol 2 AR p 176). Further, one of the appellants officers confirmed that there was no communication between the appellant and the respondent until 10 August 1990 (Vol 2 AR p 162). As a matter of fact, this officer could not even confirm that the valuation report was in the loan application file or how it came to the appellants hands. Another officer of the appellant contradicted this and testified that there was communication but clearly his evidence was hearsay and inadmissible (Vol 2 AR p 197). Thus it is unclear whether there was any reliance on the report. The letters of offer by the appellant do not require a valuation report to be produced. In fact they require the appellant to satisfy itself of the progress of the construction (Vol 2 AR pp 322325). The appellant did in fact carry out its own inspection at the site and confirmed that the buildings were 100% completed before disbursing the loan (Vol 2 AR pp 147 and 367). The original letter of offer was issued on 17 October 1985. This was cancelled. A fresh offer was issued on 2 April 1986 which was accepted.

(c)

(d)

(e)

(f)

(g)

(h)

(i)

At this point of time the report was 1 year and 3 months old (issued on 21 January 1985). A valuer called as an expert by the appellant testified that it was unreasonable for the appellant to have relied on a report which was more than 1 year old (Vol 2 AR pp 322, 325, 152, 176) . (j) The report carried a clear disclaimer under the heading Limiting Conditions, (Vol 2 AR p 340). The appellants expert witness also testified that the industry practice requires strict adherence to these conditions (Vol 2 AR p 176).

[33] For the reasons already advanced above, we respectfully say that the appellant did not in fact rely on the valuation report in granting the loan to Kong. [34] In our respectful view, the situation is akin to the professional referred to by Griffiths LJ in Smith v Eric Bush who ought not on policy grounds to be held to owe a duty to persons unknown. At p 865 of the report His Lordship observed: [*247] It would impose an intolerable burden upon those who give advice in a professional or commercial contract if they were to owe a duty not only to whom they give the advice but to any other person who might choose to act upon it. [35] In the final analysis, we readily appreciate that the Court of Appeal acted precisely on the same tests adopted by this honourable court in Ampang Jayas case. The Court of Appeal basically holds the view that each case must be decided on its particular facts to establish if a duty of care exists. [36] On that finding we answer both the questions posed to us in the affirmative and order that this appeal be dismissed with costs. The deposit is to go to the respondent to account of taxed costs. [37] My learned brothers Arifin Zakaria and Hashim Yusoff FCJJ have read this judgment in draft and have expressed their agreement with it. ORDER: Appellants appeal dismissed with costs. LOAD-DATE: 05/21/2008
This is the first te selectedText,doc 1 dGLbVtz-zSkAz 4a1d572935b9e7 Z-WA-A-AAU-AA opened 2 MLJ 233 1 295 6df46e70-c469-1 tccspec 12 _src%a4153134. _tscspec FULL %a3forever%a6_

Debir Desa Development Sdn Bhd v Pesuruhjaya Bangunan, Kuala Lumpur & Ors [2009] 9 MLJ 814 JUDICIAL REVIEW APPLICATION NO R225200 OF 2008

HIGH COURT (KUALA LUMPUR) DECIDED-DATE-1: 10 AUGUST 2009 ABDUL KADIR MUSA J CATCHWORDS: Statutory Interpretation - Aids to construction - Hansard - Recourse to by court when interpreting statute Statutory Interpretation - Construction of statutes - Purposive approach - Intention of Parliament - Whether first respondents act of incorporating joint management body of condominium contravened s 4(1)(a) of the Building and Common Property (Maintenance and Management) Act 2007 HEADNOTES: Debir Desa Development Sdn Bhd, the applicant, was a licensed housing developer. Amongst its developments was the Medan Putra Condominium (the condominium) in Mukim Batu, Wilayah Persekutuan which was completed on 4 May 2001. The first respondent was the Commissioner of Buildings for Kuala Lumpur appointed under s 3 of the Building and Common Property (Maintenance and Management) Act 2007 (the 2007 Act) which came into force on 12 April 2007. The second respondent was the joint management body (JMB) of the condominium which was duly incorporated on 23 June 2006, pursuant to s 4 of the 2007 Act. The third and fourth respondents were amongst those purchasers who had obtained vacant possession of two units in the condominium. On 7 May 2007, when the applicant opened the book of the strata register (SRB) in respect of the condominium this led to the eventual incorporation of the Medan Putra Condominium Management Corporation (the MC) on 4 June 2008, under s 39 of the Strata Titles Act 1985. This section provides that the management corporation consisting of all the parcel proprietors shall come into existence in respect of a subdivided building upon the opening of the SRB and that it shall be a body corporate having perpetual succession and a common seal. A dispute arose between the parties as to the manner in which the JMB and the MC were incorporated. According to the applicant, the MC had been incorporated after the commencement of the 2007 Act ie on 12 April 2007 and as such the first respondents act of incorporating the JMB contravened s 4(1)(a) of the 2007 Act. As such the applicant submitted that all acts or deeds carried out by or on behalf of the JMB would be ultra vires, illegal or [*815] invalid. The applicant therefore filed its application for judicial review whereby it sought a ruling that the JMB was unlawfully or invalidly incorporated since it was set up after the MC had already been duly incorporated. The respondents opposed this application and urged the court to consider the purpose or the intention of the Legislature in enacting s 4(1)(a) of the 2007 Act. To ascertain the purpose or object of s 4(1)(a) the respondents relied on the relevant Hansard. Held, dismissing the applicants application with costs: (1) Taking Hansard as an aid to statutory interpretation will be in line with the legislative intention of s 17A of the Interpretation Acts 1948 and 1967. At the same time Hansard must be applied for the purpose of assisting to interpret s 4(1)(a) of the 2007 Act and not as a determinative of the issues of the instant application (see para 31). (2) The subject matter of s 4 of the 2007 Act is styled as the Establishment of a Joint Management Body (JMB), while s 4(1) then

deals with when that body is required to be established. According to s 4(1) the JMB should be established when the building intended for subdivision into parcels has been complete. In the present case the subdivision into parcels and delivery of vacant possession had been completed and hence the applicability of s 4(1) of the 2007 Act (see paras 32 & 34). (3) Section 4(1)(a) of the 2007 Act can be broken into two parts. Part I starts from Before the commencement of this Act till the management corporation has not come into existence and Part II starts from a JMB till the commencement of this Act. Before s 4(1)(a) of the 2007 becomes operative the three factual fabrics in Part I must be fully satisfied. It must be shown that the relevant building was completed; that vacant possession of the building had been delivered to the respective lawful owners; and no management corporation was in existence at that time. However, after the word existence in Part I is a comma followed by Part II. The presence of this comma links both Part I and Part II together to complete a sentence. As such Part I and Part II of s 4(1)(a) have to be read conjunctively and by this section the developer is required to mandatorily and statutorily establish a JMB within the time frame and manner specified by Part II. On the undisputed fact of the present application, there was no doubt that all the three essential ingredients in Part I coexisted before 12 April 2007 and as such the acts of the first respondent were in compliance and in accordance with the relevant provisions of the 2007 Act (see paras 3338). [*816] Pemohon, Debir Desa Development Sdn Bhd, merupakan pemaju perumahan berlesen. Di antara pembangunannya ialah Kondominium Medan Putra (kondominium) di Mukim Batu, Wilayah Persekutuan yang disiapkan pada 4 Mei 2001. Responden pertama merupakan Pesuruhjaya Bangunan untuk Kuala Lumpur yang dilantik di bawah s 3 Akta Bangunan dan Harta Bersama (Penyenggaraan dan Pengurusan) 2007 (Akta 2007) yang berkuat kuasa pada 12 April 2007. Responden kedua merupakan badan pengurusan bersama (BPB) kondominium yang ditubuhkan pada 23 Jun 2006, menurut s 4 Akta 2007. Responden ketiga dan keempat merupakan pembeli yang memperolehi dua unit milikan kosong di kondominium tersebut. Pada 7 Mei 2007, apabila pemohon membuka buku daftar strata (BDS) berkenaan kondominium, ini membawa kepada penubuhan Syarikat Pengurusan Kondominium Medan Putra (SP) pada 4 Jun 2008, di bawah s 39 Akta Hakmilik Strata 1985. Seksyen ini memperuntukkan bahawa syarikat pengurusan terdiri daripada semua tuan punya petak akan wujud berkenaan dengan bangunan dipecah bahagi apabila pembukaan BDS dan bahawa syarikat tersebut akan menjadi badan korporat yang berpewarisan kekal dan mempunyai satu meterai yang sama. Satu pertikaian timbul antara pihak-pihak mengenai cara BPB dan SP ditubuhkan. Menurut pemohon, SP telah ditubuhkan selepas penguatkuasaan Akta 2007 iaitu pada 12 April 2007 dan oleh itu tindakan responden pertama yang menubuhkan BPB melanggar s 4(1)(a) Akta 2007. Oleh itu pemohon menghujah bahawa semua tindakan atau surat ikatan yang dijalankan oleh atau bagi pihak BPB adalah ultra vires, menyalahi undang-undang atau tidak sah. Oleh itu pemohon memfailkan permohonannya untuk semakan kehakiman yang mana ia memohon untuk perintah bahawa BPB yang ditubuhkan menyalahi undang-undang atau tidak sah memandangkan ia ditubuhkan selepas SP ditubuhkan. Responden menentang permohonan

ini dan mendesak mahkamah untuk mempertimbangkan tujuan atau niat Badan Perundangan dalam menggubal s 4(1)(a) Akta 2007. Untuk memastikan tujuan atau objektif s 4(1)(a) responden bergantung kepada penyata rasmi Parlimen yang relevan. Diputuskan, menolak permohonan pemohon dengan kos: (1) Menggunapakai penyata rasmi Parlimen sebagai bantuan kepada tafsiran statutori adalah selari dengan tujuan perundangan dalam s 17A Akta Tafsiran 1948 dan 1967. Pada masa yang sama penyata rasmi Parlimen perlu diguna pakai bagi tujuan membantu dalam mentafsirkan s 4(1)(a) Akta 2007 dan bukannya sebagai penentuan isu-isu dalam permohonan ini (lihat perenggan 31). [*817] (2) Hal perkara s 4 Akta 2007 digubal sebagai the Establishment of a Joint Management Body (JMB), manakala s 4(1) mengenai bila badan tersebut perlu ditubuhkan. Menurut s 4(1) BPB perlu ditubuhkan apabila building intended for subdivision into parcels has been complete. Dalam kes ini pecah bahagian kepada petak-petak dan serahan milikian kosong telahpun selesai dan oleh itu s 4(1) Akta 2007 boleh diguna pakai (lihat perenggan 32 & 34). (3) Seksyen 4(1)(a) Akta 2007 boleh dipecahkan kepada dua bahagian. Bahagian I bermula daripada Before the commencement of this Act sehingga the management corporation has not come into existence dan Bahagian II bermula daripada a JMB sehingga the commencement of this Act. Sebelum s 4(1)(a) Akta 2007 berkuat kuasa terdapat tiga rangka fakta dalam Bahagian I yang perlu dipenuhi. Ia mestilah menunjukkan bahawa bangunan yang relevan telahpun disiapkan; bahawa milikan kosong bangunan tersebut telahpun diberikan kepada pemilik-pemilik yang berhak; dan tiada syarikat pengurusan yang wujud pada masa itu. Walau bagaimanapun, selepas perkataan existence dalam Bahagian I ialah tanda koma diikuti dengan Bahagian II. Kehadiran koma ini menghubungkan Bahagian I dan Bahagian II untuk menyempurnakan satu perkataan. Oleh itu Bahagian I dan Bahagian II s 4(1)(a) perlu dibaca bersama dan mengikut seksyen ini pemaju secara mandatori dan statutori perlu menubuhkan BPB dalam masa yang ditetapkan dan dengan cara sepertimana yang dinyatakan oleh Bahagian II. Atas fakta yang tidak dipertikaikan dalam permohonan ini, tidak dapat disangsikan bahawa ketiga-tiga unsur dalam Bahagian I telah wujud sebelum 12 April 2007 dan oleh itu tindakan responden pertama mengikut dan menurut peruntukan relevan dalam Akta 2007 (lihat perenggan 3338). Notes For cases on Hansard, see 11 Mallals Digest (4th Ed, 2005 Reissue) paras 19391741. For cases on purposive approach, see 11 Mallals Digest (4th Ed, 2005 Reissue) paras 1952 2009.

Cases referred to All Malayan Estates Staff Union v Rajasegaran & Ors [2006] 6 MLJ 97; [2006] 4 CLJ 195, FC Chin Choy & Ors v Collector of Stamp Duties [1979] 1 MLJ 69, FC Dato Mohamed Hashim Shamsuddin v Attorney General, Hong Kong [1986] 2 MLJ 112, SC Gilmores Application, Re [1957] 1 All ER 796, CA

Lai Cheng Cheong v Sowaratnam [1983] 2 MLJ 113, FC Lim Phin Khian v Kho Su Ming [1996] 1 MLJ 1, FC [*818] Majlis Perbandaran Pulau Pinang v Syarikat Bekerjasama-sama Serbaguna Sungai Gelugor dengan Tanggungan [1999] 3 MLJ 1, FC Malaysian Bar v Dato Kanagalingam a/l Velupillai [2004] 4 MLJ 153; [2004] 4 CLJ 194, FC Pengurusan Danaharta Nasional Bhd v Tang Kwor Ham & Ors and another appeal [2007] 5 MLJ 125, FC Pepper (Inspector of Taxes) v Hart and related appeals [1993] 1 All ER 42; [1992] 3 WLR 1032, HL Prithipal Singh v Datuk Bandar, Kuala Lumpur (Golden Arches Restaurant Sdn Bhd, intervener) [1993] 3 MLJ 336, SC Syed Mubarak bin Syed Ahmad v Majlis Peguam Negara [2000] 4 MLJ 167, CA Tan Boon Liat @ Allen & Anor Et Al, Re; Tan Boon Liat v Menteri Hal Ehwal Dalam Negeri & Ors; Chuah Han Mow v Menteri Hal Ehwal Dalam Negeri & Ors; Subramaniam v Menteri Hal Ehwal Dalam Negeri & Ors [1977] 2 MLJ 108, FC United Malayan Banking Corporation Bhd v Syarikat Perumahan Luas Sdn Bhd (No 2) [1988] 3 MLJ 352, HC Legislation referred to Building and Common Property (Maintenance and Management) Act 2007 ss 3, 4, 4(1)(a), (b), (2), 5, 15, 41 Interpretation Acts 1948 and 1967 s 17A Rules of the High Court 1980 O 52, O 53, O 92 Strata Titles Act 1985 s 39 Saranjit Singh (Tharminder Singh with him) (Izral Partnership) for the applicant. Siti Norseha (Abdul Hakim Abdul Rahman & Co) for the first respondent. Benjamin John Dawson (Ang Soon Roy with him) (Benjamin Dawson) for the second respondent. Harwinder Kaur (Katherine K Durai with her) (AJ Ariffin, Yeo & Harpal) for the third respondent. Siti Nornadira (Official Assignee) for the fourth respondent. Abdul Kadir Musa J:

[1] Debir Desa Development Sdn Bhd, the applicant (applicant) filed in a leave application for an order of certiorari vide encl 1 on 7 July 2008, and was fixed for mention on 17 July 2008. On the 11 July 2008, the applicant filed in another application, vide encl 5 for an order of injunction against the second to fifth respondents (prayers 1(a)(c) of encl 5) and for a stay against the first respondent (prayer (2), encl 5). Enclosure 5 was also fixed on 17 July 2008 together with encl 1. Both encls 1 and 5, were dealt with by the learned deputy registrar on 17 July 2008; mainly to determine whether or not there [*819] was any objection by the honourable attorney general. Since there was no positive answer forthcoming from Mr Saranjit Singh (Mr Tharminder Singh with him) learned counsel for the applicant, rightly enough the learned deputy registrar fixed both the said enclosures for mention before me on 18 July 2008. [2] On 18 July 2008, the court was informed by the aforesaid learned counsel that there was no objection from the attorney generals chambers. Based on that, I accordingly

allowed the applicants prayer (2) of encl 1 with no order as to costs (and agreed by the applicants learned counsel). I also allowed interim stay and injunction (on an ex parte basis) in respect of the said encl 5 application, but with no order as to costs. Lastly, I ordered that the applicant were to file in their application proper within two weeks from 18 July 2008, and fixed 5 August 2008 for further mention to ensure full compliance with the above orders. It was made very clear that, failure to so comply with the above, I will strike off both the applicants applications with liberty to file afresh, if need be. [3] In compliance with the above order, the applicant filed in their judicial review application under O 53 of the Rules of the High Court 1980 (the 1980 Rules) vide encl 14 on 24 July 2008. That being so, it was thus accordingly fixed for mention to also on 5 August 2008 as encl 5. [4] On the 5 August 2008 Mr Benjamin John Dawson (Mr Ang Soon Roy with him), learned counsel for the second to fourth respondents, objected to the applicants encl 5 application and was thus fixed to 6 August 2008 as the hearing date of encl 5. On the basis of first come first served, encl 14 was fixed for hearing to 6 March 2013 since all earlier dates were taken by cases registered very much earlier than encl 14 application. It is to be noted that on 5 August 2008 when both encls 5 and 14 were mentioned, there was neither any representative of the first respondent nor from the attorney generals chambers. [5] Before the said 5 August 2008 mention date, the second and third respondents, on 1 August 2008 filed their application under O 92 of the 1980 Rules to set aside the ex parte injunction of encl 5 application vide encl 17. The applicant, on the other hand, on 5 August 2008 at about 3.30pm filed another leave application for committal proceedings against the second to fifth respondents under O 52 of the 1980 Rules as per their encl 20. Both encls 17 and 20 were fixed for mention on 6 August 2008 together with the aforesaid encl 14. The 6 August 2008 hearing of encl 5 had to be adjourned to the 12 August 2008 at the request of the parties. On that date (6 August 2008), encls 14, 17 and 20 were then fixed for mention to also on 12 August 2008. [*820] [6] (a) (b) (c) On 12 August 2008 the court fixed encls 5, 14, 17 and 20 as follows: to 13 and 14 November 2008 as hearing for encl 5; to the same dates for mention of encls 17 and 20; and to 6 March 2013 as the hearing date for encl 14.

[7] It was also ordered that the status quo as before encl 1 was filed until 14 November 2008. [8] On 13 November 2008, all the parties agreed and requested the court to bring forward the hearing of encls 14 to 19 and 20 November 2008 (pm) (the dates originally fixed by court for continued hearing of encl 5). If their said request was allowed by the court, they further requested that the 14 and 18 November 2008 hearing dates, also for encl 5 hearing, be vacated. I obliged their said requests by bringing forward the 6 March 2013 hearing date for encls 14 to 19 and 20 November 2008 (pm only; the counsels free and available dates), vacated the aforesaid 14 and 18 November 2008 hearing dates and encls 5, 17 and 20 were accordingly fixed for mention on 19 November 2008.

[9] On 19 November 2008, Mr Saranjit Singh informed the court that they were not proceeding against the fifth respondent. That being so, the action against the said fifth respondent was accordingly struck off and proceeded with the applicants learned counsels submission in respect of encl 14 application against, the rest of the respondents. On that day, the third respondent, Yap Kai, was represented by learned counsel Miss Harwinder Kaur. [10] At the start of Mr Saranjit Singhs submission, he tendered (and no objection by all learned counsel for the respective respondents) an Undisputed Timeline of Events marked by me as X and proceeded to highlight the salient facts which were in tendon with X and not disputed by all learned counsel for the respective respondents. Those facts, inter alia, are that: (a) (b) (c) (d) the applicant is a licensed housing developer who had developed Medan Putra Condominium (the condo) in Mukim Batu, Wilayah Persekutuan; the condo was completed and vacant possession delivered to the all right and lawful purchasers (the purchasers) on or about 4 May 2001; the third and fourth respondents are amongst those purchasers who are unit owners of B-10-2 and C-1-8 respectively; the first respondent is the Commissioner of Buildings for Kuala [*821] Lumpur appointed under s 3 of the Building and Common Property (Maintenance and Management) Act 2007 (the 2007 Act) which came into force on 12 April 2007; the second respondent is the joint management body (JMB) for Medan Putra Condominium established pursuant to s 4 of the 2007 Act which was duly incorporated on 23 June 2008 consequential to its first meeting and appointment of its council members held on 28 May 2008; and pursuant to and in connection with, direct or indirectly, the issuance of strata titles (with some disputes arising between the applicant, the surveyor and the registrar of titles which was subsequently resolved on 27 June 2006 vide Kuala Lumpur High Court Civil Suit No S521199 of 2004) the applicant opened the relevant strata register book on 7 May 2008 which eventual incorporated the Medan Putra Condominium Management Corporation (the management corporation M/C) on 4 June 2008 under s 39 of the Strata Titles Act 1985 (the 1985 Act).

(e)

(f)

[11] Even though events per se leading to the incorporation of the aforesaid JMB and M/C were not in dispute, how they were incorporated received adverse opposition by learned counsel for the applicant in relation to the incorporation of JMB by the relevant respondents, and vice versa by the latter in respect of M/C by the applicant. Those objections of theirs are clearly reflected as the main thrusts of their respective submissions. [12] From the above fact, it was vigorously and in no uncertain term submitted by Mr Saranjit that, by virtue of the opening of the aforesaid strata register book (SRB) on 7 May 2008 as stated earlier has undisputably given birth to the M/C on 4 June 2008; the date well after the coming into force of the 2007 Act which was on 12 April 2007. Section 39 of the 1985 Act provides, inter alia, as follows:

(1)

Upon the opening of a book of the strata register [SRB] in respect of a subdivided building or land there shall, by the operation of this section, come into existence a management corporation consisting of all the parcel proprietors , the proprietor of the provisional block or blocks. The management corporation established by subsection (1) shall be known by the name appearing in the book of the [SRB] and shall be a body corporate having perpetual succession and a common seal.

(2)

[*822] [13] Premised on the above, it was his contention that by such incorporation of the said M/C, s 4(1)(a) of the 2007 Act cannot be invoked by any of the respondents to the detriment of the applicant. Section 4(1)(a) of the 2007 Act reads as follows: (1) Where a building or land intended for subdivision into parcels has been completed (a) Before the commencement of this Act and vacant possession of the parcels has been delivered by the developer to purchasers but the management corporation has not come into existence, a Joint Management Body shall be established consisting of the developer and the purchasers upon the convening of the first meeting not later than twelve months from the commencement of this Act,

which he contended speaks of the M/C which has not come into existence before the commencement of the 2007 Act (that is, 12 April 2007). As such, the very act of incorporating the aforesaid JMB (that is, the second respondent), contravenes the said s 4(1)(a) aforesaid. Since it is a body corporate having perpetual succession and a common seal by virtue of s 4(2) of the 2007 Act, its such incorporation and all its further acts or deeds carried out by or on behalf of the said JMB would, according to him, be ultra vires, illegal or invalid. That being so, he further contended that, the fact that there is an alternative remedy of its right of appeal under s 41 of the 2007 Act does not bar the applicant from seeking for judicial review of an administrative decision based on the alleged aforesaid contention of illegality or involves a question of law. For that, he relied on the cases of: (1) (2) (3) United Malayan Banking Corporation Bhd v Syarikat Perumahan Luas Sdn Bhd (No 2) [1988] 3 MLJ 352 at p 355; Majlis Perbandaran Pulau Pinang v Syarikat Bekerjasama-sama Serbaguna Sungai Gelugor dengan Tanggungan [1999] 3 MLJ 1 at pp 3741; and Lai Cheng Cheong v Sowaratnam [1983] 2 MLJ 113 at p 115.

[14] He further argued that, save the above, the said s 41 of the 2007 Act speaks of the merit of a decision or factual matter but not of the decision which is as described above or made without jurisdiction. To support the said contention, he quoted and relied on the cases

of: (1) (2) Re Gilmores Application [1957] 1 All ER 796 at p 801; and Re Tan Boon Liat @ Allen & Anor Et Al; Tan Boon Liat v Menteri Hal Ehwal Dalam Negeri & Ors; Chuah Han Mow v Menteri Hal Ehwal [*823] Dalam Negeri & Ors; Subramaniam v Menteri Hal Ehwal Dalam Negeri & Ors [1977] 2 MLJ 108 at pp 109, 114 and 116.

[15] Those contended acts of ultra vires and/or illegality and/or without jurisdiction are direct consequences of unlawfully incorporating the said JMB after the M/C has been duly incorporated under s 39 of the 1985 Act, and was so incorporated after the commencement of the 2007 Act (on 12 April 2007). By then all the purchasers received vacant possession and delivery of their respective units. [16] Platformed on those facts and the clarity of the said s 4(1)(a) of the 2007 Act and since the said M/C was incorporated after 12 April 2007 as pointed out above, the said s 4(1)(a) does not impose the applicant to establish JMB, once M/C was duely incorporated. Urging the court to accept such contention on the authorities of: (a) (b) (c) the aforesaid case Syarikat Perumahan Luas Sdn Bhd (No 2) [1988] 3 MLJ 352 at p 355; Malaysian Bar v Dato Kanagalingam Velupillai [2004] 4 MLJ 153; [2004] 4 CLJ 194 at p 200; and All Malayan Estates Staff Union v Rajasegaran & Ors [2006] 6 MLJ 97; [2006] 4 CLJ 195 at p 210,

by rejecting any attempt by the respective respondents counsel to interpret otherwise. However all respondents counsel recognised that the incorporation of the M/C was in consonant with the requirement(s) of the said s 39 of the 1985 Act. [17] (a) At this juncture, it is pertinent for me to stress firstly that:

the incorporation of the second respondent, the JMB, was and is the creature of cumulative and/or collective acts of the first, third and fourth respondents; learned counsel for the respective respondents agreed (with no objection by the applicants counsel) that Mr Benjamin will submit his case for the second, third and fourth respondents first; and learned counsel for the first respondent, thereafter, wherever relevant, will fully adopt Mr Benjamins said submission, and will only make her additional submission if necessary but not otherwise.

(b)

(c)

[18] Secondly, it is my utmost humble considered conclusion that, it will not cause any gross injustice to any of the parties if I do not analytically deal with the right of appeal under s 41 of the 2007 Act since both parties agreed unequivocally that the success or failure of the applicants application of this [*824] case pivots as to what and how should s 4(1)(a) of the 2007 Act be legally construed. As such the aforesaid cases of:

(a) (b) (c) (d) (e)

Luas Sdn Bhd (No 2) [1988] 3 MLJ 352; Syarikat Berkerjasama-sama [1999] 3 MLJ 1; Lai Cheng Cheong [1983] 2 MLJ 113; Re Gilmores Application [1957] 1 All ER 796; and Re Tan Boon Liat [1977] 2 MLJ 108

will not be that relevant to the applicant in the circumstances of this application. It will be more meaningful for and to both parties after the said s 4(1)(a) of the 2007 Act has been properly interpreted. [19] If the court rules in favour of the applicant, it will therefore be obvious that the said JMB was invalidly incorporated. If that being the situation, whether by design or otherwise, it would be entirely up to the applicant to take the advantage of the lacuna in law until such a situation being remedied by Legislature. As for any or all the respondents, they are at full liberty to appeal against such decision of this court with the view of having it reversed by the higher court. Likewise, if this court decides in favour of the respondents, the applicants are free to appeal against such decision to the higher court for the reversal of this courts decision which, if successful, would then be in line with the aforesaid submission of the applicants counsel. [20] As the applicant deemed fit not to appeal to the relevant state authority under s 41 of the 2007 Act, it will be a most futile exercise for me to labour the courts time to discuss the issue of such appeal since by now the matter will be purely academic. The applicant, by their own choice, has taken away their such right after 14 days from the time the first respondent ordered them to take appropriates steps for the establishment of the JMB required by them under s 4(1)(a) of the 2007 Act. Thus it is next incumbent upon me to interpret the said s 4(1)(a) of the 2007 Act accordingly. [21] Mr Benjamin, in opposing this application, meticulously canvassed that this court cannot ignore the purpose or the intention of the Legislature enacting the said s 4(1)(a) of the 2007 Act. In support to that he relied, inter alia, to s 17A of the Interpretation Acts 1948 and 1967 (the Interpretation Acts) which statutorily requires the court to give regard to the purpose of the 2007 Act. The section provides as follows: In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to the construction that would not promote that purpose or object. [*825] (Emphasis added.) [22] To ascertain that purpose or object of the said s 4(1)(a), he introduced and relied on the relevant Hansard in respect of the 2007 Act and, inter alia, to cases of: (1) Pengurusan Danaharta Nasional Bhd v Tang Kwor Ham & Ors and another appeal [2007] 5 MLJ 125;

(2) (3)

Syed Mubarak bin Syed Ahmad v Majlis Peguam Negara [2000] 4 MLJ 167 at pp 175 and 176; and Lim Phin Khian v Kho Su Ming [1996] 1 MLJ 1.

[23] On those authorities, he strongly persuaded and urged this court that, the applicants counsels submission in that respect, cannot be accepted to be a right interpretation of the legislative intention of s 4(1)(a) of the 2007 Act. [24] The relevant, available Hansard of 12 December 2006 Halaman 118 at p 120, as an aid to statutory interpretation (and hence the relevance of the aforesaid Chors case [1994] 3 MLJ 345 at para (I) cited and relied upon by the applicants counsel) referred to by Mr Benjamin, inter alia, provides as follows: (the 2007 Act) memperkenalkan satu elemen baru iaitu Badan Pengurusan Bersama , Joint Management Body atau JMB yang ditubuhkan dalam tempoh interim untuk mengambil alih tugas dan tanggungjawab pemaju dalam menyelenggara dan mengurus harta bersama sesuatu bangunan itu sehinggalah hak milik strata diprolehi. (Emphasis added.) [25] The JMB referred to above is interim in nature and will subsequently be dissolved after three months from the date of the first meeting of the relevant MC by virtue of Fasal 15, Bahagian III (at p 122 of the said DR 12 December 2006). [26] By Fasal 4, Bahagian 111 of the said Hansard mandatorily requires JMB to be incorporated by providing as follows: Fasal 4 mengadakan peruntukan bagi penubuhan JMB yang wajib ditubuhkan setelah bangunan yang bertujuan dipecah bahagi telah siap dibina dan VP [ie vacant possession] telah diserahkan. (Emphasis added.) [*826] [27] Whilst waiting for such incorporation of the required JMB, all aspects of management remain in the hand of the developer (Fasal 5, Bhg III). All the aforesaid Fasal-Fasal were later enacted to be ss 15, 4 and 5 of the 2007 Act respectively. The Bills actual objects were made as preamble to the 2007 Act. [28] From the above, it is my considered conclusion that those Fasal-Fasal clearly provides beneficial aid to statutory interpretation of s 4(1)(a) of the 2007 Act. Making such reference is not absolutely prohibited by the aforesaid Chors case as contended by the applicants counsel. Such reference to the relevant Hansard as an aid to statutory interpretation is also recognised in the case of Pepper (Inspector of Taxes) v Hart and related appeals [1993] 1 All ER 42; [1992] 3 WLR 1032. [29] In that context, it was held by Federal Court in the aforesaid Chors case, at pp 345 and 346, inter alia, as follows:

(4)

ln construing a statute, a reference to Hansard, as an aid to statutory interpretation, should be permitted where the enactment which if literally construed might lead to an absurdity , (Emphasis added.)

[30] It is my considered conclusion that, on the undisputed facts of this application, Mr Sarjits contention if accepted will, in all probabilities, lead to such absurdity spoken of in the said Chors case. [31] By taking it as an aid to statutory interpretation will therefore be in line with the legislative intention of s 17A of the Interpretation Acts quoted earlier. Having so concluded, it must however be applied for purposes of assisting to interpret s 4(1)(a) of the 2007 Act, and not as a determinative of the issue[s] of the instant application before me. As such, I accept Mr Benjamins submission in that aspect and reject Mr Sarjits contention which, by inference, submitted that, the former was suggest[ing] fanciful interpretation by reading words into the [said] s [4(1)(a) of the 2007 Act] more so in the absence of any ambiguity. Thus my close analysis of both the cases of Chin Choy & Ors v Collector of Stamp Duties [1979] 1 MLJ 69 at p 70H, and the Malaysian Bar v Dato Kanagalingam Veluppilai [2004] 4 MLJ 153; [2004] 4 CLJ 194 could not and do not render any assistance to the applicants application. The aforesaid s 17A clearly speaks of purposive approach and so was and is s 4(1)(a) of the 2007 Act. I find support in cases of: (a) Syed Mubarak bin Syed Ahmad v Majlis Peguam Negara [2000] 4 MLJ 167; and

[*827] (b) Pengurusan Danaharta Nasional Bhd v Tang Kwor Ham & Ors and another appeal [2007] 5 MLJ 125.

which were also cited and relied upon by Mr Benjamin. If the respective courts of those two cases were to decide the present application before me and applying their respective dicta, they would have decided, in all probabilities, in the like-manner as they have done so in those two aforesaid cases. [32] Extension to the above, and to fully appreciate the practical application of the aforesaid s 4(1)(a), a closer analysis of s 4 of the 2007 Act as a whole is unavoidable. The subject matter of the said s 4 is styled as the establishment of a joint management body [ie JMB]. As to when that [e]stablishment is required to be established is provided by sub-s (1) of the said s 4. It is so statutorily required where a building or land intended for subdivision into parcels has been completed . If it is not completed, then the said s 4 is not applicable. In the present application, the material property, the relevant subdivision into parcels has [undisputably] been completed; hence the applicability of the said s 4(1). [33] (a) (b) The said s 4(1) deals with two situations, namely: before the commencement of the 2007 Act (s 4(1)(a)); and on or after the commencement of the 2007 Act (s 4(1)(b)).

[34] The commencement date of the 2007 Act is 12 April 2007. In the said s 4(1)(a) the respective owners of the completed subdivided parcels have been delivered with vacant possession (V/P) by the developer before 12 April 2007, and such is the situation in the

present application; thus the applicability of the said s 4(1)(a). If delivery of V/P was made on or after 12 April 2007, then the aforesaid s 4(1)(b) applies, which on the facts, it is not applicable to the present application. Flowing from such an analysis, the said s 4(1)(a) needs to be examined further. The said s 4(1)(a) can be broken into two parts. They are: (1) that part which starts from Before the commencement of this Act till the management corporation has not come into existence, (Part I ); and that part which starts from a Joint Management Body till the commencement of this Act (Part II).

(2)

[35] Part I sets out the required factual fabrics within the purview of the aforesaid s 4(1)(a) consideration. They are: (1) that the relevant building has been completed;

[*828] (2) (3) that V/P of the said building has been delivered to the respective lawful owners; and that no MC was, by then in existence.

[36] Those three factual fabrics must be fully satisfied before 12 April 2007 for the said s 4(1)(a) to be operative. Absence on any one of those three factual fabrics, the said s 4(1)(a) is not applicable. However, Part I by itself is not a full sentence as illustrated below. [37] At the expense of repetition, the aforesaid Part I read together with the common factors to both paras (a) and/or (b) of s 4(1) of the 2007 Act will demonstratively show as: (1) Where a building has been completed (a) before the commencement of this Act and vacant possession of the parcels has been delivered by the developer to purchasers but the [M/C] has not come into existence,

is clearly not a complete sentence even if the comma after the word existence is substituted with a full stop. It is for that reason that the said Part II of the aforesaid s 4(1)(a) positioned itself after the aforesaid comma. The main thrust of the said Part II is that, it mandatorily and statutorily requires the developer to establish a JMB within the time frame and manner specified by the said Part II. Thus the presence of the aforesaid comma as such, links both Part I and Part II together to complete a sentence as intended by and in the manner as per the said s 4(1)(a). The absence of and after the aforesaid comma, compelled me to conclude that Part II is to be read conjunctively with Part I. If comma is followed by the word and, based on the cases of: (a) (b) Dato Mohamed Hashim Shamsuddin v Attorney General, Hong Kong [1986] 2 MLJ 112 at p 122 per Abdoolcader SCJ; and Prithipal Singh v Datuk Bandar, Kuala Lumpur (Golden Arches

Restaurant Sdn Bhd, intervener) [1993] 3 MLJ 336 at p 341 per Eusoff Chin SCJ (as he then was). [38] Part I should then be read disjunctively with Part II; which is not the case with the said s 4(1)(a). [39] It is also my conclusion that, the word and before the words vacant possession is to be read conjunctively with the delivery of vacant possession referred to above earlier, and so is with the word but appearing before the word purchasers. The said word but is the mandatory qualification for Part [*829] II to be statutorily operational as explained earlier. To that extent, it can be construed as being conjunctive with the words of: (a) (b) before the commencement of this Act; and vacant possession of the parcels has been delivered by the developer to purchasers.

[40] It would not be speculative on my parts to rewrite the relevant portion of the said s 4(1)(a) based on the above dissection of the same as follows: (1) Where a building for subdivision into parcels has been completed [,] (a) before the commencement of this Act [,] vacant possession has been delivered to [the] purchasers [and] the [MC] has not came into existence, a [JMB] shall be established ,

(The words in square brackets are substituted, and with emphasis added). [41] It can be seen from the above that both the - and and are substituted with , whilst the word but is substituted with the word and which has a similar effect of the aforesaid Part I being properly and grammatically connected with Part II of the said s 4(1)(a). However all those three factual fabrics must be present and satisfied Before the commencement of the [2007] Act. [42] On the undisputed facts of this application, there is no doubt in my mind whatsoever, that all those three essential ingredients coexisted before 12 April 2007. That being so, what were done by the first respondent as submitted by her learned counsel would therefore, on those facts, be in compliance and in accordance with the relevant provisions of the 2007 Act. [43] On the premises above, I herewith dismiss the applicants encl 14 application with costs. Consequentially I also strike off encls 5, 17 and 18 with liberty to apply; and respective parties to bear their respective costs of their respective enclosures. ORDER: Application dismissed with costs. LOAD-DATE: 11/20/2009
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