[2022] 1 LNS 317 Legal Network Series

DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM

DALAM NEGERI SELANGOR DARUL EHSAN
[GUAMAN SIVIL NO: BA-22NCVC-55-02/2021]

ANTARA

DR LOOI MUN CHOON

(No. K/P: 870203-14-5357)
Bertindak di atas kapasiti sendiri
dan juga mewakili kumpulan pemilik-pemilik
Unit pangsapuri Paragon 3) … PLAINTIFF

DAN

1. PARAGON PROMENADE SDN BHD

(No. Syarikat: 561009-T)

2. PARAGRENE LAND SDN BHD

(No. Syarikat: 400051-H) … DEFENDAN-
DEFENDAN

GROUNDS OF JUDGMENT

Introduction

[1] The 1 st Defendant in this suit applies [enclosure 24] to strike

out the Plaintiff’s pleadings and consequently the action against
it, invoking Order 18 rule 19 of the Rules of Court 2012. The
application is premised on all the paragraphs in O. 18 r. 19.

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Background facts

[2] The Plaintiff’s claim is a representative action brought on behalf

of himself and 45 other purchasers of condominium units in a
development named as Paragon 3. The names of the purchasers
(“home buyers”) he represents are set out in Appendix A to the
Statement of Claim. The Plaintiff’s pleaded case against both
the Defendants is summarised as follows.

[3] Both the Defendants are locally incorporated companies. They

are developers. They share the same business address at No.
9.07, Level 9, Amcorp Tower B, Amcorp Trade Centre, 18,
Persiaran Barat, 46050, Petaling Jaya, Selangor Darul Ehsan.

[4] The 1 st Defendant, which had undergone several name change,

its prior name being YONGKASA MARKETING SDN BHD and
PARAGON MASTERY SDN BHD, issued an advertisement in
the local newspapers in relation to a luxury development known
as Paragon 3. The development was to comprise of three towers,
complete with common facilities for the use of residents of the
said development. The 1 st Defendant represented the Paragon 3
project to be theirs. A show room was also constructed for
viewing by interested buyers.

[5] The Plaintiff was given brochures representing the features and
facilities of the development which will be constructed as part
of Paragon 3. Upon such representation, the Plaintiff decided to
enter into sale and purchase agreements (“SPA”) with the 1 st
Defendant to purchase condominium units in the Paragon 3
development (“the said property”).

[6] Upon completion and handing over of the said property, the
Plaintiff discovered to his disappointment, there were numerous

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defects, poor workmanship and non-compliance to the

description and specification stipulated in Schedule 4 of the
SPA. The common facilities which were represented to be part
of the development was not completed and not available.

[7] To date, various facilities have yet to be constructed comprising

inter alia:-

(i) Alfresco concept pool side cafetaria;

(ii) Thematic 4-storey high water fall;

(iii) Multi-purpose hall;

(iv) Launderette;

(v) Kindergarten;

(vi) Café;

(vii) Reading room; and

(viii) Games room

[8] The Plaintiff rely on Clause 13 of the SPA which states,

Material and workmanship to conform to description

“The said Parcel together with all the common property

shall be construed in accordance with the description set
out in the Fourth Schedule and in accordance with the
plans approved by the Appropriate Authority which
description and plans have been accepted and approved by

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the Purchaser, as the Purchaser hereby acknowledges. No

changes thereto or deviations therefrom shall be made
without the consent in writing of the Purchaser except such
as may be required by the Appropriate Authority. The
Purchaser shall not be liable for the cost of such changes
or deviations in the event that the changes or deviations
involve the substitution of use of cheaper materials or the
omission of works originally agreed to be carried out by
the Vendor, the Purchaser shall be entitled to a
corresponding reduction in the purchase price herein or to
damages, as the case may be.”

[9] The Plaintiff thereupon allege that there was a fundamental

departure from the representation given earlier which had
induced him to enter into the agreement with the 1 st Defendant
and to subsequently execute the SPA. The Defendants were also
alleged to have breached their obligations under the SPA by
failing to deliver the said property which failed to conform with
the description in the Fourth Schedule of the SPA.

[10] The claim of misrepresentation and breach of terms of the SPA

against both the Defendants were premised on inter alia, the
following matters:-

(i) the car parks were to be constructed on four

floors but there were only three floors of car
parks;

(ii) the guardhome which was constructed was not

the two- storey guardhome as represented in the
brochure;

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(iii) the grand fountain was unlike what was

represented in the brochure;

(iv) there were numerous defects in the construction

rendering it unsafe for occupation
notwithstanding the fact that the Certificate of
Completion and Compliance had been issued.

[11] These unsatisfactory features of the development had affected

the Plaintiff’s enjoyment of their condominium unit. The
Plaintiff thereupon seeks relief in the nature of declaration and
damages.

Grounds for striking out the Plaintiff’s claim

[12] The 1 st Defendant advanced 4 grounds in its affidavit in support

of the application to strike out the Plaintiff’s claim. The first is
the Plaintiff’s lack of locus standi to institute the present
proceedings. Except for the home buyers listed as no. 18, 25 and
26 in Appendix A, the other home buyers failed to exhibit the
requisite notices pursuant to section 22C of the Housing
Development Act 1966. Section 22C makes it mandatory for the
financiers of the homebuyers to be notified in writing of the
commencement of a suit against the housing developer.

[13] The second ground is that the right party to institute the action
in relation to common property ought to be by the joint
management body (“JMB”). As the claim here is in relation to
common property, the claim brought by the Plaintiff is
tantamount to an abuse of the process of the court.

[14] In addition to the above two grounds, the 1 st Defendant also

contends that the claim of the Plaintiff is premature as it had

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deposited a sum of RM325,660.39 with the Commissioner of

Buildings, which sum is to be utilised for rectification works in
respect of the common property. Finally, the 1 st Defendant
submits that a representative action is not the suitable mode for
a claim based on misrepresentation as the evidence of such
claim would have to be adduced individually by the home
buyers.

Analysis and findings of this court

[15] The law on striking out of pleadings is trite. This power is

exercised to avoid the unnecessary time and expense of a trial.
However, the courts have recognized that as this is a summary
power, it is only to be exercised in plain and obvious cases and
where the claim is obviously unsustainable. This principle has
been restated in many cases. (See: Bandar Builders Sdn Bhd &
Ors v. United Malayan Banking Corporation Bhd [1993] 3 MLJ
36; Seruan Gemilang Makmur Sdn Bhd v. Kerajaan Negeri
Pahang Darul Makmur & Anor [2016] 1 CLJ 1).

[16] The meaning of obviously unsustainable was explained by the

Court of Appeal in Sivarasa Rasiah & Ors v. Che Hamzah Che
Ismail & Ors [2012] 1 MLJ 473 as follows,

[16] The test for striking out as laid down by the Supreme
Court in Bandar Builder’s case is that the claim on the
face of it must be ‘obviously unsustainable’. The stress is
not only on the word ‘unsustainable’ but also on the word
‘obviously’ ie, the degree of unsustainability must appear
on the face of the claim without having to go into lengthy
and mature consideration in detail. If one has to go into a
lengthy and mature consideration in detail of the issues of

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law and/or fact, then the matter is not appropriate to be

struck out summarily. It must be determined at trial.

[17] To succeed in its application, the 1 st Defendant must

demonstrate that the Plaintiff’s claim must be one, on the face of
its pleadings, hopeless and doomed to fail. The court need not
delve into the merits of the claim at this stage when considering
an application to strike out. If a lengthy and mature
consideration of the issues of fact and law is required, then the
claim ought not to be struck out, but determined at a trial
instead.

[18] I shall now deal with the grounds advanced by the 1 st Defendant.

Locus standi

[19] The contention of the 1 st Defendant as to lack of locus standi is

premised on non-compliance of section 22C of the Housing
Development (Control & Licensing) Act 1966 which provides as
follows,

22C. Right to initiate and maintain actions

Notwithstanding anything contained in any written law or

any rule of law, agreement, assignment or charge lawfully
entered into between a homebuyer as defined in section
16A and his financier, a homebuyer shall be entitled on his
own volition and in his own name to initiate, commence,
institute and maintain in any court or tribunal any action,
suit or proceeding against a housing developer or any other
person in respect of any matter arising out of the sale and
purchase agreement entered into between the homebuyer
and the housing developer provided the homebuyer’s

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financier under a deed of absolute assignment is notified in

writing either before or within fourteen days after the
action, suit or proceeding against the housing developer
has been filed before any court or tribunal.

[20] The lack of locus standi rests on the fact that no notice to
Plaintiff’s financiers was tendered in evidence. Except for home
buyer no. 18, 25 and 26 as listed in Appendix A of the Statement
of Claim, the rest of the home buyers took financing.

[21] The contention of the 1 st Defendant to my mind, is

misconceived. Section 22C cannot clothe the home buyers with
locus and neither the non-compliance of it should be used to
defeat an action brought by the home buyers. It has been
gainsaid that the Housing Development (Control & Licensing)
Act 1966 is a social legislation designed to protect home buyers
and the interests of the purchasers shall be the paramount
consideration against the developer. (See: Ang Ming Lee & Ors
v. Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan
Tempatan & Anor and other appeals [2020] 1 MLJ 281 Federal
Court).

[22] The thrust of the section is to allow a home buyer to initiate

proceedings against a housing developer in his own name. The
notice is required to be served as the law recognises that home
buyers may need financing to purchase the property and the
financiers would have to be informed as the latter may have
rights which would be in their interest to protect. The absence of
a notice cannot have the effect of rendering the claim
unsustainable as that would defeat the very purpose of the
provision.

Action ought to be brought by the JMB

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[23] The 1 st Defendant contends that as the subject matter of the suit
concerns common property, the action ought to be commenced
by the JMB. In support of its contention, section 143 of the
Strata Management Act 2013 is referred to.

[24] The provision referred to has no application to the factual matrix

of this case. Section 143(2) reads,

143. Representation in proceedings

(1) ……

(2) Where all or some of the parcel owners or proprietors

of the parcels in a development area-

(a) are jointly entitled to take proceedings for or

with respect to the common property in that
development area against any person or are
liable to have such proceedings taken against
them jointly; or

(b) are jointly entitled to take proceedings for or

with respect to any limited common property in
that development area against any person or are
liable to have such proceedings taken against
them jointly,

the proceedings may be taken-

(A) in the case of paragraph (2)(a), by or

against the joint management body or
management corporation; or

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(B) in the case of paragraph (2)(b), the

subsidiary management corporation
constituted for that limited common
property,

as if the joint management body, management

corporation or subsidiary management
corporation, as the case may be, were the parcel
owners or the proprietors of the parcels
concerned.

[25] This provision has to do with the issue of representation in suits

pertaining to common property involving parcel owners and the
joint management body or management corporation relating to
matters falling within the scope of the Act.

[26] This is not the case here. The Plaintiffs’ case is founded on
misrepresentation and breach of contract and damages are
sought as a consequence. These are private law causes of action
which the home buyers can institute against the developer. It is
not for a management corporation or the JMB to institute against
the developer in respect of these causes of action.

[27] Reference is made to the case of Dua Residency Management

Corporation v. Edisi Utama Sdn Bhd & Anor [2021] MLJU 140
where the management corporation brought an action inter alia
against the developers for breach of contract and/or negligence
predicated on inadequate maintenance which resulted in latent
defects discovered in several parts of Dua Residency
Condominium. Justice Lim Chong Fong (HC) held,

[93] The First Defendant denies that it is liable to the

Plaintiff for breach of contract because this Suit is not a

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case of individual purchasers rule against the developer

but a case of the management corporation rule against the
developer. There is plainly no contract whatsoever
between the Plaintiff and the First Defendant. That
notwithstanding, the First Defendant strenuously
contended that the Plaintiff cannot take any benefit of the
SPA.

[94] In the Singapore Court of Appeal case of RSP

Architects Planners & Engineers v. Ocean Front Pte Ltd
and another appeal [1995] 3 SLR(R) 653, LP Thean JA
held as follows:

“The management corporation had no cause of

action in contract. It would be staring the language
of the sale and purchase agreements to say that it
was the intention of the developer and the purchasers
that the provisions in their sale and purchase
agreements, which related to the construction of the
condominium, would run with the land. Such
agreements were intended to govern the relations
only between the developer and its purchasers and
clearly the developer did not intend to extend the
benefit of these provisions to others down the line. ”

[95] I share Justice Thean’s views. Thus and unless the

SPA are assigned or novated over by the purchasers of the
Condominium to the Plaintiff, I find and hold that there is
no legal standing for the Plaintiff to initiate and sustain the
cause of action of breach of contract against the First
Defendant. In other words, it is only the purchasers of the
Condominium who can sue the First Defendant based on
the SPA. It is therefore unnecessary to consider further

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whether the First Defendant is in breach of contract by

reason of my findings in paragraphs [74], [83] and [88]
above.

Plaintiff’s action is premature

[28] The 1 st Defendant claims that it has deposited a sum of

RM325,660.39 with the Commissioner of Buildings to rectify
defects on the common property, pursuant to the provisions of
section 92(1) and (3) of the Strata Management Act 2013.

[29] The relevant provision states,

92. Developer to pay deposit to rectify defects on

common property

(1) A developer of a building shall deposit in cash or

bank guarantee with the Commissioner such sum as
may be determined by the Commissioner for the
purpose of carrying out any work to rectify any
defects in the common property of the development
area after the completion of the common property.

(2) The deposit referred to in subsection (1) shall be paid

to the Commissioner upon the handing over of vacant
possession.

(3) The Commissioner may use the deposit for the

purpose of carrying out any work which is necessary
to rectify any defects in the common property of the
development area.

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(4) Where the Commissioner has determined that the

deposit is insufficient for rectifying the defects to the
common property, the Commissioner may direct the
developer to deposit within fourteen days such
further sums as the Commissioner may determine.

(5) Any unexpended deposit shall be refunded to the

developer on the expiry of the defect liability period
for the development area.

(6) Any developer who fails to comply with subsection

(1) commits an offence and shall, on conviction, be
liable to a fine not exceeding five thousand ringgit
and to a further fine not exceeding fifty ringgit for
every day or part thereof during which the offence
continues after conviction.

[30] The 1 st Defendant’s reliance on this provision to assert that the

Plaintiffs’ claim is premature, is wholly misconceived. The
provision referred to is to provide for the developer’s statutory
obligation to pay a deposit for rectification works to the
common property. The fact that such an obligation has been
performed cannot be a basis to contend that the Plaintiff’s claim
in contract, is premature. The Plaintiff’s claim is not premised
on the 1 st Defendant’s breach of statutory obligation.

Unsuitability of representative action

[31] The 1 st Defendant contends that a suit premised on

misrepresentation has to be individually proven by each of the
home buyers through evidence led by them. The representative
action therefore, has been wrongly instituted.

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[32] Representative actions are allowed to be brought pursuant to

Order 15 rule 12(1) of the Rules of Court 2012 which provides
as follows,

Representative proceedings (O. 15, r. 12)

12. (1) Where numerous persons have the same interest

in any proceedings, not being such proceedings as are
mentioned in rule 13, the proceedings may be begun and,
unless the Court otherwise orders, continued by or against
any one or more of them as representing all or as
representing all except one or more of them.

[33] The Plaintiff and the 45 other home buyers clearly have a
common grievance founded on a common cause of action in
contract and misrepresentation. Similar clauses are relied on for
the alleged breach of the SPA. They also seek for a common
relief of damages.

[34] In the Court of Appeal case of Maju Puncakbumi Sdn Bhd v.

Ch’ng Han Keong (membawa guaman untuk Unit No. C-21-08
untuk “The Arc @ Cyberjaya” dan juga untuk unit mereka
masing-masing untuk “The Arc @ Cyberjaya” sepertimana yang
disenaraikan di dalam lampiran yang dikepilkan Bersama writ
ini) [2019] 8 AMR 625, the Court cited several instances of
representative actions and held them to have been correctly
brought as follows,

[38] There are similar authorities where a representative

action by purchasers has been held to be suitable where the
claims are in respect of common interests. In Cheong Kok
Khuen v. Kolektra Recreation Sdn Bhd [2010] AMEJ 621;
[2010] MLJU 1236, the representative action was filed by

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the plaintiff and 135 purchasers against the developer for a

breach of a term in the deed of mutual covenants entered
into between the developer and the 136 purchasers. In the
case of Voon Keng & Ors v. Sykt Mazwina Development
Sdn Bhd [1990] 3 CLJ (Rep) 329, the plaintiff had filed a
representative action on behalf of the purchasers including
himself against the developer to claim for agreed
liquidated damages in respect of sale and purchase
agreements with different dates and where the claims are
for different amounts due. The High Court held as follows:

In the circumstances of the present case, the

plaintiffs were members of the same class, had a
common grievance and that the relief sought was in
its nature beneficial to all whom the plaintiffs
represented and thus the representative action could
continue although the amounts due to each of them
may well be different in view of the different dates
of the sales and purchase agreements.

[35] I therefore find that the premise for a representative action

pursuant to Order 15 rule 12 (1) to have been satisfied, and
correctly brought by the Plaintiff.

Conclusion

[36] For the foregoing reasons, I find no merits in the grounds

advanced in support of the striking out application.
Consequently, the application in enclosure 24 is dismissed and
the 1 st Defendant is ordered to pay costs of RM3,000 to the
Plaintiff.

Dated: 8 JANUARY 2022

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(ALICE LOKE YEE CHING)

Judicial Commissioner
High Court of Malaya
at Shah Alam

COUNSEL:

For the plaintiff - Puvarasan Balaiyah & Muthiah Karupaya; M/s

Muthiah & Arsh

For the 1 st defendant - MK Rajasegaran; M/s Pretam Singh, Nor & Co

Case(s) referred to:

Bandar Builders Sdn Bhd & Ors v. United Malayan Banking

Corporation Bhd [1993] 3 MLJ 36

Seruan Gemilang Makmur Sdn Bhd v. Kerajaan Negeri Pahang Darul

Makmur & Anor [2016] 1 CLJ 1

Ang Ming Lee & Ors v. Menteri Kesejahteraan Bandar, Perumahan

dan Kerajaan Tempatan & Anor and other appeals [2020] 1 MLJ 281

Dua Residency Management Corporation v. Edisi Utama Sdn Bhd &

Anor [2021] MLJU 140

Legislation referred to:

Housing Development (Control & Licensing) Act 1966, s. 22C

Strata Management Act 2013 ss. 92(1), (3), 143(2)

Rules of Court 2012, O. 15 r. 12(1), O. 18 r. 19

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