CASE Negligent Valuation KGV

7/31/2019 CASE Negligent Valuation KGV

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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 beadopted - 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 atRM325,000). When there was a default on the loan, the appellant commissioned a valuationfor 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 onlyRM51,000. 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 hisown 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 theproperty. The actual valuation was conducted by Long Tian Chek (Long) who was assistedby 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 theproperty could not be identified by their titles. Relying on Tan and Lims identification of theproperty, Long issued a valuation report which was dated 21 January 1985. The learnedhigh 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 andallowed the appeal. The Federal Court on 5 February 2007 granted the appellant leave toappeal 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 negligenceshould be equally applicable to determine the existence of duty of care in a claim for pureeconomic 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 ofresponsibility test and/or the three-fold test discussed in the case ofHer Majestys

Commissisoners of Customs and Excise v Barclays Bank Plc[2006] 4 All ER 256 (Barclayscase) 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 professionaladvisor 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 inAmpang Jayas case. The Federal Court in


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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.Thecategorisation 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. Thelearned 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 PTBumi 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 inthe speech of Bingham LJ were not intended to create new law. The firsttwo observations dealt with the assumption of responsibility test

what it meant and how it was to be applied. The third observation wasin 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 thatthe incremental approach was helpful when used in combination withestablished principle. The fifth observation was the same call made in

Ampang Jayas case that the detailed circumstances of theparticular case and the particular relationship between the partiesgenerally 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 tohave 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 borrowerwas Kong who wanted the loan and had asked Tan to obtain the reportfrom the respondent. Lim and Tan took the respondents valuer to the

site and identified the property to him. This was important as it wasclear that Tan and Lim had identified a property which did not belong

to them. They identified three units of substantially completedshophouses, when in fact (as it subsequently transpired) the land was

vacant and there was no construction on it. This was significantbecause 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


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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 tersebutpada harga RM408,000 (jualan paksaan pada harga RM325,000). Apabila terdapat

keingkaran membayar pinjaman, perayu mendapatkan satu nilaian untuk tujuan prosidinghalang tebus gadaian (penilaian kedua). Penilaian kedua menyatakan hartanah tersebut

sebenarnya satu tanah lapang, dengan jualan paksaan bernilai hanya RM51,000. Fakta kesialah 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. Kongmemohon satu pinjaman daripada perayu atas namanya sendiri dan memberikan hartanahLim 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, kedua-

duanya pekerja responden. Teo ditunjukkan hartanah tersebut oleh Tan dan Lim, yangmenunjukkan tiga tingkat unit-unit kedai dimana [*236] 70% telah disiapkan. Pada masatersebut, hartanah tersebut tidak dapat dikenalpasti melalui hakmilik. Berdasarkan

pengenalpastian hartanah tersebut oleh Tan dan Lim, Long telah mengeluarkan laporanpenilaian 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 rayuantersebut. Mahkamah persekutuan telah pada 5 Februari 2007 membenarkan perayukebenaran merayu atas soalan-soalan undang-undang: (a) Sama ada open-ended

approach yang dikenali dan dipakai oleh mahkamah persekutuan di dalam kes MajlisPerbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2 MLJ 389 berhubungandengan tuntutan untuk kerugian ekonomi tulen harus sama dipakai untuk menentukan

kewujudan satu kewajipan berjaga-jaga dalam satu tuntutan untuk kerugian ekonomi tulenyang berbangkit daripada salah nyata cuai daripada seorang penasihat profesional kepadapihak ketiga? (b) Sekiranya, jawapan kepada (a) adalah tidak, sama ada ujian assumptionof 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 (kesBarclays) yang dipakai oleh Mahkamah Rayuan dalam perkara ini, adalah ujian yang betuldan 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 kesAmpang Jaya. MahkamahPersekutuan di Ampang Jaya mengakui bahawa kewajipan berjaga-jaga am

dalam semua tuntutan kecuaian, termasuk tuntutan-tuntutan kerugianekonomi 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 liabilitidigunakan mengikut kategori kewajipan berjaga-jaga yang kukuh dan

dikenali. Dalam kes-kes baru iaitu dimana isu belum pernah diputuskan


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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 bahawakedua-dua jenis tersebut bukannya pendekatan yang bersesama eksklusifdan 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 SEAsia 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 bermaksuduntuk mewujudkan undang-undang baru. Pandangan pertama dan keduaberhubungan 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 danpendekatan terhadap kategori diulangi. Pandangan keempat adalah bahawapendekatan meluaskannya adalah baik sekiranya digunakan bersama-sama

prinsip mantap. Pandangan kelima adalah sama seperti di kesAmpangJaya 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 kewajipanberjaga-jaga. Di sini, tiada bukti yang mencadangkan bahawa respondentahu atau sepatutnya tahu bahawa penilaian akan digunakan atau

digantung oleh perayu oleh kerana laporan tersebut disediakan untuk Tandan bukan perayu. Tan bukanlah pemilik hartanah tersebut. Pemiliknyaialah Lim. Peminjam adalah Kong yang inginkan pinjaman tersebut dantelah menyuruh Tan untuk memperolehi laporan tersebut daripada

responden. Lim dan Tan membawa penilai responden ke tempat tersebut danmengenalpasti hartanah kepadanya. Ini adalah penting oleh kerana iaadalah 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) tanahtersebut adalah lapang tanpa sebarang pembinaan. Ini adalah pentingoleh 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 denganperjalanan kerja-kerja pembinaan. [*238] Perayu sebenarnya telah

menjalankan penyiasatan di tempat tersebut dan mengesahkan bahawa

bangunan-bangunan tersebut adalah 100% dibina sebelum memberikanpinjaman tersebut (lihat perenggan 32(g) & (h)).

Notes


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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 ER256

Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2 MLJ 389Man B & W Diesel SE Asia Ptd & Anor v PT Bumi International Tankers & another appeal

[2004] 2 SLR 300RSP 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 priorbusiness record which made it difficult for him to secure a loan. Lim approached his friendKong 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 isdescribed 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 toapproach the respondent for a valuation of the Property.

[3] The respondent company is a property valuer. Its managing director, Ng HengCheong (Ng) is a registered valuer. At the material time, the other [*239] registeredvaluer 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 whowas 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 beidentified 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 offerwas 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


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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. WhenKong 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 appellantalleged 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 outstandinginterest 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 theappellant as at 20 September 1999 was RM445,585.10. This is the quantum of damagesawarded 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 theappellant. 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 thefollowing 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 theexistence of duty of care in a claim for pure economic loss arising

from negligent mis-statement from a 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


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ofHer 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 todetermine the existence of duty of care from a professional advisor toa third party arising from negligent mis-statement?

[16] Before us, learned counsel for the appellant contended that the correct test for aclaim 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 thatadopted by the Court of Appeal in this appeal.

[*241]

[17] The Federal Court also accepted the approach adopted by the Singapore Court ofAppeal in the case ofRSP 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 publicpolicy and local circumstance must be considered.

[18] Under the open-ended approach, where the facts of a particular case do not comewithin 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 theAmpang

Jayas case was dealing with a claim for negligence, a similar approach should be adoptedfor claim for negligent mis-statement. The test adopted by the Court of Appeal here isclearly contrary to the approach taken by the Federal Court inAmpang Jayas case.

[20] In opposing the appeal, learned counsel for the respondent argued that the testadopted by the Court of Appeal in determining whether a duty of care exists between therespondent (valuer) and the appellant (bank) was correct and in keeping with the principles

and tests set out by the Federal Court inAmpang 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 theapproach 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 Bankcase) 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 meansthat a careful examination of the facts and circumstances of each caseis required before deciding whether to impose a duty of care on the

defendant, (para 10). This is what the court of Appeal said


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[*242]

Whilst there are several useful tests, indicia or guidelines toascertain 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 therewas 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).

(c) Another test is to see if the case under consideration is close to adecided 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).

(d) 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 acase 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 surveyorsnegligence, the plaintiff suffered financial loss. Critical in thefinding of a duty of care was the fact that the surveyor knew that the

plaintiff would rely on its report without obtaining independent adviceand that in the circumstances of the transaction it was good publicpolicy to establish a duty of care (para 12).

(e) The facts of the present appeal while similarly dealing with thereliance of a third party on a professional report negligently preparedwas 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 ofSmith v

Eric Bush. Here, the report was not commissioned by the

plaintiff. It was commissioned by Tan. But, he was not the truebuyer. Kong was the true buyer. And there is not a scintilla ofevidence to show that the defendant knew the report it gave Tan

would be used by Kong. Next, the plaintiff having seen the reportdid not want it because it was not addressed to Kong. Again,

there is not a jot of evidence to show that the defendantpermitted Kong to use the report after the plaintiff had rejected

it. The facts of the present instance are therefore very far fromSmith 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 policyconditions of the threefold test have not been satisfied.

[*243]


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[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 theFederal Court inAmpang Jayas case. We say so for the following reasons:

(a) In his judgment (at para 13 p 20 of the report) in theAmpang Jaya

s case, Steve Shim CJ (Sabah & Sarawak) (as he then was) had thisto say:

Having had the benefit of reading the various authorities on this

subject, I am more inclined to accept the positions taken by thecourts 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 inDonoghue v Stevensen to new situations. Much would depend onthe 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 carein all negligence claims, including claims for pure economic loss isthe three-fold test laid out in Caparo Industries PLC v Dickman

[1990] 2 AC 605, (see pp 17H 18G).

(c) 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 orrecognised categories of duties of care. In novel cases, i.e. where the

issue has not been decided previously, the courts can go further todetermine if the facts admit to a duty of care.

(d) It should be borne in mind that the learned Chief Judge in dealing withthe dual approach held at pp 19 and 20, that they were not mutuallyexclusive 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.

(e) 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 theSingapore 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).

(f) It is important to note that PT Bumiwent to great lengths todistinguish and highlight the particular facts in the case ofRSP

Architects Planners & Engineers v Ocean Front Pte Ltd[1996] 1SLR 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.

[25] From the above analysis, it can be seen that the principles laid out in theAmpang

Jayas case were applied by the Court of Appeal. If they were not expressly adopted, this


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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 Bankcase 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 testslaid out by this Honourable Court inAmpang Jayas case.

[27] The so-called open-ended approach is also recognised in Barclays Bankcase. This is

the same cautious approach to extending new areas of liability by careful incrementsadopted 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 werenot intended to create new law. The first two observations deal with the assumption ofresponsibility 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 arerepeated. The fourth observation is that the incremental approach is helpful when used incombination with established principle. The fifth observation is the same call made in

Ampang Jayas case that the detailed circumstances of the particular case and theparticular 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 ultimatequestion is whether the detailed facts and circumstances of the case support the finding of a

duty of care. The same observation is found inAmpang Jayas case and it is also found inthe decision of the Court of Appeal. Merely setting out the observations as has been done inthe Barclays Bankcase 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 ofstare decisis, the decision of the House of Lords in Smith v Eric Bush is on either view highlypersuasive. 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 careexisted 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 thatthe 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 hisreliance on the report.

[32] Now, reverting to the facts of the instant appeal, there is no evidence to suggest thatthe respondent knew or ought to have known that the valuation was to be used or relied onby the appellant. The following are our reasons:


11/26

(a) The report was addressed to Tan and not to the appellant (Vol 2 AR p

328).

(b) Tan was not the owner of the property. The owner was Lim. The borrowerwas 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 theappellant ie Tan who is asked to procure the valuation, Lim, the

landowner who provides his title as security and Kong the beneficiaryof the loan.

(c) 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 itsubsequently transpired) the land was vacant and there was noconstruction 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.

(d) From the evidence it appears that the report was rejected by the

appellant as it was not addressed to Kong, the borrower. Tan was askedto 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 bydocumentary evidence or by the appellant. The fact is that the reportwas always addressed to Tan alone and there were no amendments made

(Vol 2 AR pp 183184). The evidence of the appellants expert that intheir practice the report is confidential to the addressee is alsorelevant (Vol 2 AR p 176).

(e) Further, one of the appellants officers confirmed that there was nocommunication between the appellant and the respondent until 10 August1990 (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 orhow it came to the appellants hands.

(f) Another officer of the appellant contradicted this and testified that

there was communication but clearly his evidence was hearsay andinadmissible (Vol 2 AR p 197).Thus it is unclear whether there was anyreliance on the report.

(g) 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 ofthe progress of the construction (Vol 2 AR pp 322325).

(h) 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).

(i) 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.
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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 ona 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 LimitingConditions, (Vol 2 AR p 340).The appellants expert witness also

testified that the industry practice requires strict adherence to theseconditions (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 GriffithsLJ in Smith v Eric Bush who ought not on policy grounds to be held to owe a duty to personsunknown. At p 865 of the report His Lordship observed:

[*247]

It would impose an intolerable burden upon those who give advice in aprofessional 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 chooseto act upon it.

[35] In the final analysis, we readily appreciate that the Court of Appeal acted preciselyon the same tests adopted by this honourable court inAmpang Jayas case. The Court ofAppeal 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 toaccount 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 f irst te 1 tccspec _tscspec

selectedText,doc Z-WA-A-AAU-A opened 295 12 FULL

1 2 MLJ 233 6df46e70-c469-1 _src%a4153134. %a3forever%a6

dGLbVtz-zSkAz 4a1d572935b9e Debir Desa Development Sdn Bhd v Pesuruhjaya Bangunan, Kuala Lumpur & Ors

[2009] 9 MLJ 814

JUDICIAL REVIEW APPLICATION NO R225200 OF 2008
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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 wheninterpreting 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 firstrespondent was the Commissioner of Buildings for Kuala Lumpur appointed under s 3 of theBuilding 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 managementbody (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 theapplicant opened the book of the strata register (SRB) in respect of the condominium thisled 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 providesthat the management corporation consisting of all the parcel proprietors shall come intoexistence 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 arosebetween 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 the2007 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 ordeeds 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 toconsider the purpose or the intention of the Legislature in enacting s 4(1)(a) of the 2007Act. 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 Hansardas an aid to statutory interpretation will be inline with the legislative intention of s 17A of the Interpretation Acts

1948 and 1967. At the same time Hansardmust be applied for the

purpose of assisting to interpret s 4(1)(a) of the 2007 Act and not asa 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


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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 thesubdivision into parcels and delivery of vacant possession had beencompleted 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 Istarts from Before the commencement of this Act till the

management corporation has not come into existence and Part II startsfrom 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 mustbe 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 Iis a comma followed by Part II. The presence of this comma links bothPart 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 theundisputed fact of the present application, there was no doubt that allthe three essential ingredients in Part I coexisted before 12 April

2007 and as such the acts of the first respondent were in complianceand 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 merupakanPesuruhjaya Bangunan untuk Kuala Lumpur yang dilantik di bawah s 3 Akta Bangunan danHarta 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. Respondenketiga 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 PengurusanKondominium Medan Putra (SP) pada 4 Jun 2008, di bawah s 39 Akta Hakmilik Strata1985. Seksyen ini memperuntukkan bahawa syarikat pengurusan terdiri daripada semua

tuan punya petak akan wujud berkenaan dengan bangunan dipecah bahagi apabilapembukaan BDS dan bahawa syarikat tersebut akan menjadi badan korporat yang

berpewarisan kekal dan mempunyai satu meterai yang sama. Satu pertikaian timbul antarapihak-pihak mengenai cara BPB dan SP ditubuhkan. Menurut pemohon, SP telah ditubuhkan

selepas penguatkuasaan Akta 2007 iaitu pada 12 April 2007 dan oleh itu tindakanresponden 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 itupemohon memfailkan permohonannya untuk semakan kehakiman yang mana ia memohonuntuk perintah bahawa BPB yang ditubuhkan menyalahi undang-undang atau tidak sah

memandangkan ia ditubuhkan selepas SP ditubuhkan. Responden menentang permohonan


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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 tafsiranstatutori adalah selari dengan tujuan perundangan dalam s 17A Akta

Tafsiran 1948 dan 1967. Pada masa yang sama penyata rasmi Parlimenperlu 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 tersebutperlu 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 danBahagian II bermula daripadaa 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 mestilahmenunjukkan bahawa bangunan yang relevan telahpun disiapkan; bahawamilikan kosong bangunan tersebut telahpun diberikan kepada

pemilik-pemilik yang berhak; dan tiada syarikat pengurusan yang wujudpada masa itu. Walau bagaimanapun, selepas perkataan existence dalamBahagian I ialah tanda koma diikuti dengan Bahagian II. Kehadiran koma

ini menghubungkan Bahagian I dan Bahagian II untuk menyempurnakan satuperkataan. Oleh itu Bahagian I dan Bahagian II s 4(1)(a) perlu dibacabersama dan mengikut seksyen ini pemaju secara mandatori dan statutoriperlu menubuhkan BPB dalam masa yang ditetapkan dan dengan cara

sepertimana yang dinyatakan oleh Bahagian II. Atas fakta yang tidakdipertikaikan dalam permohonan ini, tidak dapat disangsikan bahawaketiga-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, FCChin Choy & Ors v Collector of Stamp Duties [1979] 1 MLJ 69, FCDato Mohamed Hashim Shamsuddin v Attorney General, Hong Kong [1986] 2 MLJ 112, SC

Gilmores Application, Re [1957] 1 All ER 796, CA


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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] 5MLJ 125, FC

Pepper (Inspector of Taxes) v Hart and related appeals [1993] 1 All ER 42; [1992] 3 WLR1032, 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 HalEhwal Dalam Negeri & Ors [1977] 2 MLJ 108, FCUnited Malayan Banking Corporation Bhd v Syarikat Perumahan Luas Sdn Bhd (No 2)

[1988] 3 MLJ 352, HC

Legislation referred toBuilding 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 17ARules 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 secondrespondent.

Harwinder Kaur (Katherine K Durai with her) (AJ Ariffin, Yeo & Harpal) for the thirdrespondent.Siti Nornadira (Official Assignee) for the fourth respondent.

Abdul Kadir Musa J:

[1] Debir Desa Development Sdn Bhd, the applicant (applicant) filed in a leaveapplication for an order of certiorari vide encl 1 on 7 July 2008, and was fixed for mentionon 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 encl5) 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 thelearned 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 nopositive 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


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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, Iordered that the applicant were to file in their application proper within two weeks from 18July 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 reviewapplication under O 53 of the Rules of the High Court 1980 (the1980 Rules) vide encl 14

on 24 July 2008. That being so, it was thus accordingly fixed for mention to also on 5August 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 applicationand was thus fixed to 6 August 2008 as the hearing date of encl 5. On the basis of firstcome 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 parteinjunction 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 17and 20 were fixed for mention on 6 August 2008 together with the aforesaid encl 14. The 6August 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 mentionto also on 12 August 2008.

[*820]

[6] On 12 August 2008 the court fixed encls 5, 14, 17 and 20 as follows:

(a) to 13 and 14 November 2008 as hearing for encl 5;

(b) to the same dates for mention of encls 17 and 20; and

(c) 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 forwardthe 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, theyfurther 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 wereaccordingly fixed for mention on 19 November 2008.


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[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 counselssubmission in respect of encl 14 application against, the rest of the respondents. On thatday, 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 markedby 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) the applicant is a licensed housing developer who had developed Medan

Putra Condominium (the condo) in Mukim Batu, Wilayah Persekutuan;

(b) the condo was completed and vacant possession delivered to the all

right and lawful purchasers (the purchasers) on or about 4 May 2001;

(c) the third and fourth respondents are amongst those purchasers who areunit owners of B-10-2 and C-1-8 respectively;

(d) 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;

(e) the second respondent is the joint management body (JMB) for Medan

Putra Condominium established pursuant to s 4 of the 2007 Act whichwas duly incorporated on 23 June 2008 consequential to its firstmeeting and appointment of its council members held on 28 May 2008; and

(f) pursuant to and in connection with, direct or indirectly, the issuanceofstrata titles (with some disputes arising between the applicant, thesurveyor and the registrar of titles which was subsequently resolved on

27 June 2006 vide Kuala Lumpur High Court Civil Suit No S521199 of2004) the applicant opened the relevant strata register book on 7 May2008 which eventual incorporated the Medan Putra Condominium

Management Corporation (the management corporation M/C) on 4 June

2008 under s 39 of the Strata TitlesAct 1985 (the 1985 Act).

[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 bylearned counsel for the applicant in relation to the incorporation ofJMB by the relevant

respondents, and vice versa by the latter in respect of M/C by the applicant. Thoseobjections 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 datewell after the coming into force of the 2007 Act which was on 12 April 2007. Section 39 ofthe 1985 Act provides, inter alia, as follows:


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(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 managementcorporation consisting of all the parcel proprietors , theproprietor of the provisional block or blocks.

(2) The management corporation established by subsection (1) shall beknown by the name appearing in the book of the [SRB] and

shall be a body corporate having perpetual succession and acommon seal.

[*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 thedetriment of the applicant.

Section 4(1)(a) of the 2007 Act reads as follows:

(1) Where a building or land intended for subdivision into parcelshas been completed

(a) Before the commencement of this Act and vacant possessionof 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 establishedconsisting of the developer and the purchasers upon theconvening 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 ofincorporating the aforesaid JMB (that is, the second respondent), contravenes the said s4(1)(a) aforesaid. Since it is a body corporate having perpetual succession and acommon 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 ultravires, illegal or invalid. That being so, he further contended that, the fact that there is analternative 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 thecases of:

(1) United Malayan Banking Corporation Bhd v Syarikat Perumahan Luas SdnBhd (No 2) [1988] 3 MLJ 352 at p 355;

(2) Majlis Perbandaran Pulau Pinang v Syarikat Bekerjasama-sama Serbaguna

Sungai Gelugor dengan Tanggungan [1999] 3 MLJ 1 at pp 3741; and

(3) 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 themerit 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


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of:

(1) Re Gilmores Application [1957] 1 All ER 796 at p 801; and

(2) Re Tan Boon Liat @ Allen & Anor Et Al; Tan Boon Liat v MenteriHal Ehwal Dalam Negeri & Ors; Chuah Han Mow v Menteri Hal Ehwal

[*823] Dalam Negeri & Ors; Subramaniam v Menteri Hal EhwalDalam 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 dulyincorporated 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 andsince 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) the aforesaid case Syarikat Perumahan Luas Sdn Bhd (No 2) [1988]3 MLJ 352 at p 355;

(b) Malaysian Bar v Dato Kanagalingam Velupillai[2004] 4 MLJ 153;

[2004] 4 CLJ 194 at p 200; and

(c) All Malayan Estates Staff Union v Rajasegaran & Ors [2006] 6MLJ 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] At this juncture, it is pertinent for me to stress firstly that:

(a) the incorporation of the second respondent, the JMB, was and is thecreature of cumulative and/or collective acts of the first, third andfourth respondents;

(b) learned counsel for the respective respondents agreed (with noobjection by the applicants counsel) that Mr Benjamin will submit hiscase for the second, third and fourth respondents first; and

(c) learned counsel for the first respondent, thereafter, wherever

relevant, will fully adopt Mr Benjamins said submission, and will onlymake her additional submission if necessary but not otherwise.

[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 orfailure of the applicants application of this [*824] case pivots as to what and how shoulds 4(1)(a) of the 2007 Act be legally construed. As such the aforesaid cases of:


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(a) Luas Sdn Bhd (No 2) [1988] 3 MLJ 352;

(b) Syarikat Berkerjasama-sama [1999] 3 MLJ 1;

(c) Lai Cheng Cheong [1983] 2 MLJ 113;

(d) Re Gilmores Application [1957] 1 All ER 796; and

(e) Re Tan Boon Liat[1977] 2 MLJ 108

will not be that relevant to the applicant in the circumstances of this application. It will bemore 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 saidJMB 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 applicantsare free to appeal against such decision to the higher court for the reversal of this courtsdecision 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 discussthe issue of such appeal since by now the matter will be purely academic. The applicant, bytheir 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 JMBrequired by them under s 4(1)(a) of the 2007 Act. Thus it is next incumbent upon me tointerpret the said s 4(1)(a) of the 2007 Act accordingly.

[21] Mr Benjamin, in opposing this application, meticulously canvassed that this courtcannot ignore the purpose or the intention of the Legislature enacting the said s 4(1)(a) ofthe 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 regardto 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 (whetherthatpurpose or object is expressly stated in the Act or not) shall bepreferredto 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 Hansardin 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;


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(2) Syed Mubarak bin Syed Ahmad v Majlis Peguam Negara [2000] 4 MLJ

167 at pp 175 and 176; and

(3) Lim Phin Khian v Kho Su Ming [1996] 1 MLJ 1.

[23] On those authorities, he strongly persuaded and urged this court that, the applicantscounsels 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 Hansardof 12 December 2006 Halaman 118 at p 120, as anaid 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 BadanPengurusan 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 Hansardmandatorily requires JMB to be

incorporated by providing as follows:

Fasal 4 mengadakan peruntukan bagipenubuhan JMB yang wajib

ditubuhkan setelah bangunan yang bertujuan dipecah bahagi telahsiap 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 werelater enacted to be ss 15, 4 and 5 of the 2007 Act respectively. The Bills actual objectswere 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 suchreference is not absolutely prohibited by the aforesaid Chors case as contended by the

applicants counsel. Such reference to the relevant Hansardas an aid to statutoryinterpretation is also recognised in the case ofPepper (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 345and 346, inter alia, as follows:


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(4) ln construing a statute, a reference to Hansard, as an

aid to statutory interpretation, should be permitted where the

enactment which ifliterally construed might lead to anabsurdity , (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 inthe 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 interpretationby reading words into the [said] s [4(1)(a) of the 2007 Act] more so in the absence of anyambiguity. Thus my close analysis of both the cases ofChin 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 approachand 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 MLJ167; 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 inthose two aforesaid cases.

[32] Extension to the above, and to fully appreciate the practical application of theaforesaid s 4(1)(a), a closer analysis of s 4 of the 2007 Act as a whole is unavoidable. Thesubject 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 forsubdivision into parcels has been completed . If it is not completed, then the said s 4 isnot 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] The said s 4(1) deals with two situations, namely:

(a) before the commencement of the 2007 Act (s 4(1)(a)); and

(b) 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) therespective 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


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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

(2) that part which starts from a Joint Management Body till the

commencement of this Act (Part II).

[35] Part I sets out the required factual fabrics within the purview of the aforesaid s4(1)(a) consideration. They are:

(1) that the relevant building has been completed;

[*828]

(2) that V/P of the said building has been delivered to the respective

lawful owners; and

(3) that no MC was, by then in existence.

[36] Those three factual fabrics must be fully satisfied before 12 April 2007 for the said s4(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 commenceme

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