Rumah Kami Sdn Bhd v Mekio Holdings Sdn Bhd, 10-06-2008

• Judge: Y.A Dato’ Zulkifli Bin Bakar
• Judgment Date: 10 June 2008
• Court: High Court (Malaysia)
• Record Number: 22-15-2006(MR)

MALAYSIA

IN THE HIGH COURT IN SABAH AND SARAWAK AT MIRI

SUIT NO. 22-15-2006(MR)

BETWEEN

RUMAH KAMI SDN BHD (97484-V) … PLAINTIFF

Lot 810-811, Bintang Jaya Commercial Centre

Jalan Bintang, Miri Sarawak

AND

MEKIO HOLDINGS SDN. BHD (548642-D)

No. 170-4-20, Gurney Plaza

Persiaran Gurney

10250 Penang … DEFENDANT

BEFORE THE HONOURABLE JUDGE

YANG ARIF DATO’ ZULKIFLI BIN BAKAR

IN CHAMBERS

GROUNDS OF JUDGMENT

(for enclosures 16)

Backgrounds

Enclosure 16 is the Plaintiff’s application for summary judgment against the Defendant under Order 14 of Rules of High Court 1980. The Plaintiff claims against the Defendant for loss and damages caused by the Defendant’s breach of the terms of tenancy agreement, as agreed in the letter dated 26/5/2005 for the rental of 19,321.40 square feet on Lot 3.04-3.07 of the third floor and fourth floor of Bintang Plaza Shopping Complex Miri. The Plaintiff prayed as follows;-

i. Judgment be entered against the Defendant for the security deposit of three (3) months rental totaling RM48,690.00.

ii. Loss of rental totaling RM154,185.00 from 15.9.2005 to 30.6.2005 for 19, 321.40 square feet of the demised premises and

iii. Interim Judgment with damages to be assessed for loss of rental from July, 2006 for 17,463.60 square feet of the demised premises plus interest and costs.

The Plaintiff claimed he owns various shoplots at the shopping complex known as Bintang Plaza Shopping Complex, Miri. The Plaintiff’s ownership of the shoplots is evidenced from the Sale and Purchase Agreement dated 19.8.1999 and the Supplementary Agreement dated 19.8.1999. At the Defendant’s request, a letter of offer was drawn up by the Plaintiff wherein the Plaintiff offered to rent the demised premises to the Defendant subject to the terms and conditions stated therein Mr. Teoh Si Kiang, the managing director of the Defendant has accepted the letter of offer on behalf of the Defendant. The accepted letter of offer provided for a three (3) years tenancy with a monthly rental of RM0.84 per square foot, commencing from 15.9.2005. The security deposit was to be three months rental payable immediately. At such, monthly rental at RM0.84 per square foot is RM16,230.00 per month and for three months the deposit amounting to RM48, 690.00.

About three weeks after accepting the letter of offer, the Defendant, wrote to the Plaintiff the letter dated 14.6.2005 alleging that it wanted to defer the tenancy for the reason that it has been identified that there is no heavy loading lift and escalator to reach the intended floor.

The Submissions:

Plaintiff’s counsel submitted as follows;

1. The Defendant has accepted the letter of offer via Mr. Teoh Si Kiang, who claimed that he is the managing director of the Defendant’s company. Mr Teoh has sign the letter of offer and made his handwriting under the words. “I agree to the above terms and conditions.”

2. The letter of offer when accepted formed a provisional and binding agreement until a fully legalized Tenancy Agreement is drawn up by the solicitor. The letter of offer also annexed the floor plans of the demised premises.

3. The Plaintiff’s obligation is to construct the demised premises without mechanical and electrical fitting and the Defendant acknowledged that it has inspected the demised premises on “as is where is” condition.

4. The Defendant never replied to the Plaintiff’s letter of 15.6.2005. Nor did the Defendant reply to any of the Plaintiff’s subsequent letters of 30.6.2005, 18.7.2005 and 11.11.2005 reminding the Defendant to take up vacant possession of the premises and to pay the rental and security deposit.

5. The Defendant is estopped from raising issue of non est factum. There is nothing whatsoever affirmed in the Defendant’s Affidavit in Opposition on non est factum.

The Defendant’s counsel on the other hand submitted as follows;-

1. The Defendant only need to show a triable issue.

2. The Defendant has never paid any deposit or any money and in particular the earnest money for the premises.

3. The Defendant has never occupied the premises or taken any action to assume tenancy.

4. The Defendant has written a letter dated 14/6/2005 to defer the Letter of Offer and gave reasons that it is unsuitable for the purposes of the Defendant because the non availability of a heavy loading area.

5. The premises in question is actually the lower roof of a building.

The Issues

After considering the evidence and submissions before me, I found the following issues arises;-

1. Whether the Letter of Offer dated 26/5/2005 is a binding agreement although tenancy agreement is yet to be signed?

2. Whether there is contemporaneous oral or collateral contract between both parties? Whether the parties are indeed in the midst of negotiation and yet to be bound by any contract?

3. Whether the agreement secured by fraudulent misrepresentation? Whether the doctrine of non est factum is applicable in this case?

4. Whether the lower roof is meant only for health and recreational purposes. Whether the Plaintiff has failed to apply to competent authorities to do business at the lower roof area? Therefore if the answer is in affirmative, has the Defendant succeeded in proving exturpi causa non oritur actio?

Findings of this Court

1. Whether the Letter of Offer dated 26/5/2005 is a binding agreement although tenancy agreement is yet to be signed?

It is a fact that the Plaintiff’s letter of offer dated 26/5/2005 has been accepted by the Defendant, in particular by Mr. Teoh Si Kiang, the managing director of the Defendant’s company. He has duly accepted and signed the letter of offer at page 4 under the heading “I agree to the above terms and conditions”. He also has put down his initials on every page of the said letter. The said letter of offer has been exhibited as exhibit “E” in the Plaintiff’s Affidavit in Support of Goh Kok Kian also known as Jackson Goh. I agree with the Plaintiff’s submission that the said letter of offer should form a provisional and binding agreement, thus rendered as a binding contract.

Pursuant to Section 2 (h) of Contract Act 1950, a contract is an agreement enforceable by law. Basic fundamental to constitute a contract was stated under Section 10 (1) of the Act which stated that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void (Seloga Jaya Sdn Bhd v UEM Genisys Sdn Bhd [2010] 5 CLJ 745, is referred).

In this case, a lawful offer has been made by the Plaintiff, put in the writing in the form of exhibit ‘E’ i.e. the letter of offer. The acceptance has been made by the Defendant by signing the said letter of offer.

2 Whether there is contemporaneous oral or collateral...