Ng Chee Kui & Anor v Fast Aid Medical (M) Sdn Bhd & Ors and Another Appeal

NG CHEE KUI & ANOR v FAST AID MEDICAL (M) SDN BHD & ORS AND ANOTHER APPEAL [2020] 8 MLJ 576

High Court (Shah Alam )

Sale and Purchase Agreement of Land

Facts

1.     In this case, there were two civil suits being heard together namely-

a)            22NCVC-741–12 of 2017 (“Suit 741”); and

b)            22NCVC-138–03 of 2018 (“Suit 138”).

2.     Moo Ooi Peng (“Moo”) is the registered proprietor of a piece of agricultural land (“the Land”). Moo and her son are co borrowers of a loan facility offered by Bank Pertanian Malaysia Bhd (“Agro Bank”) for the purpose of financing the purchase of the Land.

3.     Moo and her late husband, Abdul Aziz bin Mohd Daud (“Abdul Aziz”) were directors in a travel tour company known as Cherry Bird Travel & Tours Sdn Bhd (“Cherry Bird”).

4.     Cherry Bird obtained a loan from Standard Chartered Bank which was backed by Abdul Aziz, Moo, and her husband. The loan facility owed by Cherry Bird was then settled by Abdul Aziz in November 2014 after the bank filed a legal action against Cherry Bird and the guarantors.

5.     Later, Abdul Aziz had resigned from Cherry Bird was a director with Fast Aid Medical (M) Sdn Bhd (“Fast Aid”) at the material time.

6.     The following documents were signed by Moo and Woo on March 30, 2015, at the office of Messrs. Jasbeer, Nur, and Lee-

(a)          a friendly loan agreement for RM150,000 (the loan agreement) between Fast Aid and Moo, the borrower; and

(b)          a sale and purchase agreement between Moo and Fast Aid, the seller and the buyer of the land for RM1 million.  Fast Aid and Ng Chee Kui and Ng Chee Cheong (collectively known as “the Ngs”) then signed into a sale and purchase agreement on 1 February 2017 to sell the land for RM1,803,960.

7.     The contract stated that because of its arrangement with Moo, Fast Aid was the beneficial owner of the land. According to the contract, The Ngs paid Fast Aid RM180,396 and placed the remaining RM1,623,564 with their solicitors as a stakeholder.

8.     Jasber, Nur, and Lee requested a redemption statement for the redemption of the Agro Bank loan facility related to the land, and Agro Bank informed Moo of this request in February 2017.  Moo and Woo requested Agro Bank to withhold the redemption statement after informing the bank that they had in no way agreed to sell the land to Fast Aid or any other entity.

9.     Consequently, Fast Aid was unable to proceed to complete the sale and purchase agreement with the Ngs.  The Ngs then filed suit in December 2017 in order to have the sale and purchase agreement between them and Fast Aid specifically performed, adding Moo and Woo as co-defendants.

10.  To invalidate the loan agreement and sale and purchase agreement with Fast Aid, Moo and Woo filed suit 138 in March 2018.

Issue 1.    Whether there was consideration?

2.    Whether there was any assignment of debt owing?

3.    Whether the Plaintiff is entitled to seek for specific performance?

4.    Whether the Plaintiff is entitled to liquidated damages?

Ratios 1.   Total failure of consideration

(a) Moo/Woo contended that because they did not receive any money from Fast Aid, the loan and sale and purchase agreements are void for lack of consideration.

(b) During the cross-examination, Nanda, a witness from Fast Aid admitted that it was Abdul Aziz who gave the loan to Woo and Fast Aid did not pay any monies to her.

(c)  Section 91-92 of the Evidence Act 1950 (Act 56) do not preclude Moo/Woo from providing oral evidence that they did not in fact receive RM150,000.00 from Fast Aid.

(d) Section 26 of the Contracts Act 1950 (Act 136) states that-

“An agreement made without consideration is void, unless-

(a) it is in writing and registered;

It is expressed in writing and registered under the law (if any) for the time being in force for the registration of such documents, and is made on account of natural love and affection between parties standing in a near relation to each other;

(b)   or is a promise to compensate for something done;

it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or

(c)or is a promise to pay a debt barred by limitation;

is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits”.

(e)  Therefore the Court found that the sale and purchase agreement and loan agreement between Moo/Woo and Fast Aid are void and unenforceable for lack of consideration.

2.          Claim regarding the assignment of debt owing

(a) In this case, Moo/Woo denied that there was an assignment, whilst Abdul Aziz and Nanda testified otherwise.

(b) If there had been an assignment agreement or deed upon the execution, it would have transferred Abdul Aziz’s right to recover Moo’s debt to Fast Aid and Fast Aid would have taken over to pursue his claim.

(c)  The Court found that the assertion made by Fast Aid regarding the assignment was unsubstantiated and the evidence is contrary.

3.             The Ngs claim for specific performance

(a) Since the sale and purchase agreement between Moo and Fast Aid is void and unenforceable, Fast Aid had no legal interest in the land and could not therefore contract to sell it to the Ngs.

(b) Therefore, the Ngs cannot seek for specific performance of the sale and purchase agreement with Fast Aid and are limited to requesting a return of all payments made.

4.             The liquidated damages claimed by the Ngs

(a) An amount of RM 180,396.00 for liquidated damages was claimed by the Ngs as provided in clause 2.13 of the sale and purchase agreement.

(b) However, Fast Aid denied the claim and asserted that no liquidated damages were due because of its non performance of its obligation under the agreement was beyond its control.  It was argued that due to clauses 2.14 and 2.15.1 (the force majure clause), of the sale and purchase agreement, it is exempted to pay liquidated damages.

(c)  According to clause 2.14-

“In the event that the transfer of the said Land in favour of Purchaser (s) is rejected  … for any non-rectifiable reason not due to any default, wilful neglect, omission or blameworthy or either party … in such case the Vendor shall refund free of interest to the purchaser all such as have been paid by purchaser towards the purchase price under the provisions of this Agreement”.

(d) The Court disagreed with the submission made by First Aid as clause 2.14 can only be invoked in a circumstance where Fast Aid’s application to transfer the land to the Ngs is rejected by the Land Office.

(e)  Therefore, the Court allowed the claim for liquidated damages made by the Ngs since Fast Aid failed to discharge its burden of proving that the amount claimed was excessive.

Decision

1.    The Court allowed the claim made by Moo/Woo with costs of RM20,000.00 and allow the Ngs claim for refund of all monies with costs of RM10,000.00.

Key Take Away

1.      Consideration is a promise or performance in which one party have to perform in exchange for their promise.

2.      A good consideration includes-

(a) Consideration must be sufficient but need not be adequate

(b) Consideration need not move from promise

(c)  Past consideration

(d) Made on account of love and natural affection

3.      Specific performance is an equitable remedy available for breach of contract.  It is a decree by the Court to compel the party to perform its contractual obligations.

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