Fabulous Range Sdn Bhd

[2021] 4 MLRA v. Helena K Gnanamuthu 447

FABULOUS RANGE SDN BHD

v.
HELENA K GNANAMUTHU

Court Of Appeal, Putrajaya

Kamardin Hashim, Lee Swee Seng, Lee Heng Cheong JJCA
[Civil Appeal No: B-02(NCVC)(W)-828-04-2017]
10 May 2021

Contract: Rescission — Sale and purchase agreement — Plaintiff sought rescission

of sale and purchase agreement and supplemental agreement — Total failure of
consideration – Misrepresentation — Breaches, whether fundamental — Damages —
Whether trial judge erred in fact and/or in law in allowing rescission of agreements and
awarding liquidated ascertained damages at same time

The respondent/plaintiff bought a three-storey bungalow residential building

(“Property”) from the appellant/defendant, at the price of RM2,500,000.00.
The parties then signed a sale and purchase agreement (“SPA”) dated 28 June
2010. As the Property was a show unit, the plaintiff also agreed to purchase
the Property together with all fixtures, fittings and interior design works in the
Property at the price of RM450,000.00 through a supplemental agreement
(“SA”). The Property was registered in the plaintiff ’s name and charged to
OCBC Bank (Malaysia). Subsequently, the plaintiff terminated the SPA and
the SA (“Agreements”) and initiated a suit against the defendant seeking, inter
alia, rescission of the Agreements. The plaintiff ’s pleaded causes of action
were, in essence, that there was misrepresentation by the defendant and that
the defendant had breached its representation; and/or that there was a breach
of contract by the defendant. The plaintiff continued to pay the purchase price
of the Property and fully settled the same in 2014. The plaintiff then instituted
legal action against the defendant, and the High Court granted judgment in
favour of the plaintiff. The High Court Judge (“judge”) made, among other
things, the following findings: (i) that the liquidated ascertained damages
(“LAD”) should be calculated until the date the plaintiff took the keys to the
Property; (ii) the judge found that there was misrepresentation as the defendant
had represented to the plaintiff, to deliver a ‘luxurious and high end’ property,
such as described in exh P34, which was the brochure of the Property; and (iii)
that the plaintiff was entitled to rescind the Agreements because the defendant
had failed to rectify the various defects in the Property and its fixtures. Hence,
the present appeal in which the defendant contended that the judge had, inter
alia, erred in his various findings on the following grounds: (a) the plaintiff had
affirmed the Agreements; (b) there was no misrepresentation; and (c) there was
no total failure of consideration.
Fabulous Range Sdn Bhd
448 v. Helena K Gnanamuthu [2021] 4 MLRA

Held (allowing the appeal in part; setting aside the decision of the High Court
except for its award of the LAD):
(1) The plaintiff, in seeking for rescission by way of termination of the
Agreements, must prove that there had been a total failure of consideration
whereby the defendant had committed a fundamental breach of the
Agreements which went to the root of the Agreements. In the instant
appeal, there was, on the facts, no total failure of consideration as the plaintiff
took vacant possession of the Property and exercised her rights under the
Agreements by taking the keys of the Property, inspecting the Property and
submitting her defect checklist to the defendant, claiming for LAD pursuant to
cl 22(2) of the SPA and continuing to pay the bank loan taken out to purchase
the Property notwithstanding having terminated the Agreements and having
the Property transferred to her name. In the light of the above, the plaintiff
had also affirmed the Agreements. The plaintiff thus could not rescind the
Agreements and seek restitution. (paras 23 & 25)
(2) Since the plaintiff ’s claim was for innocent misrepresentation, the
applicable remedy was that of rescission and the innocent party might not
recover damages. From the facts, the judge’s findings were inconsistent with
his finding of misrepresentation based on exh P34. The plaintiff did not rely
on exh P34 in coming to a decision to purchase the Property but rather as a
result of inspections made on several visits to the Property. Further, there was
no misrepresentation based on exh P34 because after the plaintiff saw exh P34
and subsequently went to view the Property, she was in fact impressed with the
Property. Since the plaintiff had seen and inspected the Property after having
looked at exh P34, there was no issue of the plaintiff relying solely on exh P34.
Hence, the judge erred in holding that there was misrepresentation.
(paras 36, 47, 48 & 49)
(3) It was undisputed that there were defects in the Property and that not all
the defects were rectified. However, notwithstanding the various defects in the
Property, they were rectifiable and the Property and the fittings which were the
subject matter of the Agreements, was still habitable. As such, the breaches
were not fundamental and were that of a warranty, and the refusal or omission
of the defendant to rectify the defects did not entitle the plaintiff to claim for
rescission and for the judge to grant an order of rescission. (paras 56 & 59)
(4) It was clear that the plaintiff ’s contention of breach of Agreements by the
defendant did not tantamount to any failure of consideration or breach of
condition which went to the root of the Agreements. The plaintiff ’s allegation
of breach was only an allegation of breach of warranty which entitled the
plaintiff only to damages. On the contrary, the plaintiff ’s termination of the
Agreements on the premise of breach of warranty was unlawful and such
unlawful termination was a breach of the Agreements. Thus, the judge had
erred in fact and/or in law when he allowed rescission of the Agreements
and awarded LAD at the same time. The judge’s decision was contrary to the
established principles of law. (paras 61, 63, 64 & 65)
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 449

Case(s) referred to:

Admiral Cove Development Sdn Bhd v. Balakrishnan Devaraj & Anor [2012] 1 MLRA
287 (folld)
Berjaya Times Square Sdn Bhd v. M-Concept Sdn Bhd [2009] 3 MLRA 1 (folld)
Bima Investment Pte Ltd v. Hong Fok Realty Pte Ltd [1990] 1 SLR 254 (refd)
Bounty Dynamics Sdn Bhd v. Chow Tat Ming & Ors [2016] 1 MLRA 54 (folld)
Ching Yik Development Sdn Bhd v. Setapak Heights Development Sdn Bhd [1996] 2
MLRA 69 (folld)
Chua Moh Huat Dennis v. Harvester Baptist Church Ltd [1991] 1 MLRA 633 (folld)
Dunbar Bank Plc v. Nadeem [1998] 3 All ER 876 (refd)
Egerton v. Jones [1939] 2 KB 702 (refd)
Evans v. Bartlam [1937] AC 473 (refd)
Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 2 MLRA 1 (refd)
Hadmor Productions Ltd v. Hamilton [1983] 1 AC 191 (refd)
Lee Ing Chin & Ors v. Gan Yook Chin & Anor [2003] 1 MLRA 95 (refd)
Low Keng Guan v. Sin Heap Lee-Marubeni Sdn Bhd [2005] 5 MLRH 124 (folld)
LSSC Development Sdn Bhd v. Thomas Iruthayam & Anor [2007] 1 MLRA 121 (refd)
Newbigging v. Adam (1886) 34 Ch D 582 (refd)
New Zealand Insurance Co Ltd v. Ong Choon Lin [1991] 1 MLRA 594 (refd)
Sim Thong Realty Sdn Bhd v. Teh Kim Dar [2003] 1 MLRA 272 (folld)
Tien Ik Sdn Bhd & Ors. v. Peter Kuok Khoon Hwong [1992] 1 MLRA 603 (refd)
TTDI Jaya Sdn Bhd v. Yew Hong Teng & Anor [2017] 1 MLRA 143 (folld)
Vijayalakshmi Devi Nadchatiram v. Dr Mahadevan Nadchatiram & Ors [1995] 1
MLRA 475 (refd)

Legislation referred to:

Contracts Act 1950, ss 40, 56(1)
Housing Development (Control and Licensing) Act 1966, Schedule G

Counsel:
For the appellant: M/s Chooi & Company + Cheang & Ariff
For the respondent: M/s KH Lim & Co

JUDGMENT

Lee Heng Cheong JCA:

Introduction

[1] The respondent/plaintiff bought a three-storey bungalow residential

building held under the title particulars H.S.(D) 137542 P.T. 51590 in Mukim
Cheras, District of Ulu Langat in the State of Selangor bearing postal address
Fabulous Range Sdn Bhd
450 v. Helena K Gnanamuthu [2021] 4 MLRA

No 18, Jalan Palma 1/1F, Taman Bukit Palma, Sg Long, 43000 Kajang,
Selangor (“the Property”) from the appellant/defendant, at the price of
RM2,500,000.00.

[2] The parties then signed a sale and purchase agreement dated 28 June
2010 (“SPA”) which is a statutory agreement in the form of Schedule G of the
Housing Development (Control and Licensing) Act 1966 (“HDA 1966”) and
Housing Development (Control and Licensing) Regulations 1989.

[3] As the Property was a show unit, the respondent/plaintiff also agreed to
purchase the Property together with all fixtures, fittings and interior design
works in the Property at the price of RM450,000.00 through a supplemental
agreement dated 28 June 2010 (“SA”).

[4] The Property was registered in the respondent/plaintiff ’s name and

charged to OCBC Bank (Malaysia) Bhd on 13 October 2010.

[5] On 2 September 2013, the respondent/plaintiff terminated the SPA

and the SA (collectively “the Agreements”) and initiated a suit against the
appellant/defendant on 30 December 2013, claiming for inter alia, rescission
of the Agreements.

[6] The respondent/plaintiff had continued to pay the purchase price of the
Property and had fully settled the same on 1 October 2014.

[7] The respondent/plaintiff then instituted legal action against the appellant/
defendant.

Decision Of The High Court

[8] After a full trial, the High Court granted judgment in favour of the
respondent/plaintiff on the following terms:

[a] A declaration that the Sale & Purchase Agreement dated 28

June 2010 and the Supplemental Agreement dated 28 June 2010 are
rescinded arising from the defendant’s breach of the Sale & Purchase
Agreement dated 28 June 2010 and the Supplemental Agreement
dated 28 June 2010 (“1st Order”);

[b] The appellant/defendant do pay the respondent/plaintiff, the sum

of RM2,950,000.00 together with interest at the rate of 5% per annum
from 27 December 2013 until full repayment (“2nd Order”);

[c] The appellant/defendant do pay the respondent/plaintiff, the sum

of RM62,232.90 together with interest at the rate of 5% per annum
from 27 December 2013 until full repayment (“3rd Order”);

[d] The appellant/defendant do pay the respondent/plaintiff, the

sum of RM202,200.44 as at 30 November 2013 together with interest
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 451

accruing thereon at the rate of 5% per annum from 27 December 2013

until full repayment (“4th Order”);

[e] The appellant/defendant do pay the respondent/plaintiff, the

respondent/plaintiff ’s loan interest repayment accruing from 1
December 2013 until full reimbursement by the appellant/defendant
to be assessed and determined by this Honourable Court (“5th
Order”);

[f] The appellant/defendant do pay the respondent/plaintiff, interests

accruing thereon all sums awarded by this Honourable Court at the
rate of 5% per annum from the date hereof 27 December 2013 until
full repayment (“6th Order”);

[g] A declaration that the respondent/plaintiff is entitled to a lien

on the Property held under the title particulars H.S.(D) 137542 P.T.
51590 in Mukim Cheras, District of Ulu Langat in the State of
Selangor bearing postal address No 18, Jalan Palma 1/1F, Taman
Bukit Palma, Sg Long, 43000 Kajang, Selangor (Property) until such
time the defendant has paid in full all monies, damages, interest and
cost awarded by this court to the plaintiff (the “Judgment Sum”), and
thereafter upon receipt of the full payment of the Judgment Sum, the
plaintiff shall execute the transfer form in favour of the defendant
with respect to the Property within 14 days (“7th Order”); and

[h] Cost of RM100,000.00.

[9] Being aggrieved by the decision of the High Court, the appellant/
defendant appealed.

[10] We heard the appeal and after due deliberation and having carefully
considered the submissions of both parties, we found that there are merits in
the appeal and unanimously allowed the appeal in part with costs. We propose
to give reasons for our decision with respect to the appeal.

[11] For ease of reference, the parties herein shall be referred to their
respective capacities before the High Court.

Applicable Laws And Principles

[12] It is trite law that the function of an appellate court is one of review only.
However, where the discretion has not been exercised judicially, that is to say,
when the judge has committed an error of law or misconceived the facts or has
not given sufficient weight to the relevant considerations or the decision would
result in injustice, the court can interfere (see Vijayalakshmi Devi Nadchatiram v.
Dr Mahadevan Nadchatiram & Ors [1995] 1 MLRA 475 (FC); Tien Ik Sdn Bhd &
Ors. v. Peter Kuok Khoon Hwong [1992] 1 MLRA 603 (SC); Hadmor Productions
Ltd v. Hamilton [1983] 1 AC 191; Evans v. Bartlam [1937] AC 473 (SC); New
Fabulous Range Sdn Bhd
452 v. Helena K Gnanamuthu [2021] 4 MLRA

Zealand Insurance Co. Ltd. v. Ong Choon Lin [1991] 1 MLRA 594 (SC) and Egerton
v. Jones [1939] 2 KB 702).

[13] We were mindful of the limited role of the appellate court in relation to
findings of facts made by the court of first instance. In the case of Lee Ing Chin
& Ors v. Gan Yook Chin & Anor [2003] 1 MLRA 95, the Court of Appeal held
as follows:

“... an appellate court will not, generally speaking, intervene unless the trial
court is shown to be plainly wrong in arriving at its decision. But appellate
interference will take place in cases where there has been no or insufficient
judicial appreciation of the evidence.”

[Emphasis Added]

[14] Reference is also made to the decision of the Federal Court in Gan Yook
Chin & Anor v. Lee Ing Chin & Ors [2004] 2 MLRA 1 where the Federal Court
held that the test of “insufficient judicial appreciation of evidence” adopted by
the Court of Appeal was in relation to the process of determining whether or
not the trial court had arrived at its decision or findings correctly on the basis
of the relevant law and the established evidence.

[15] Bearing in mind, the above principles distilled from the above authorities,
we will now consider the defendant’s appeal.

Findings Of High Court

[16] The Learned High Court Judge made inter alia the following findings in
his Grounds of Judgment:

[a] that the liquidated ascertained damages (“LAD”) should be

calculated until the date the plaintiff took the keys to the Property
(see paras 36 to 45 of the Grounds of Judgment).

[b] The Learned High Court Judge found that there was
misrepresentation as the defendant had represented to the plaintiff, to
deliver a ‘luxurious and high end’ property, such as described in exh
P34 which is brochure of the Property (see para 52 of the Grounds of
Judgment).

[c] that there was a breach of the Agreements in that the defendant
did not obtain written approval from the plaintiff before making
changes to the landscape (see para 59 of the Grounds of Judgment)
and that the fixtures and fittings purchased on an “as is where is”
basis must be in perfect condition, without defects and the items
delivered by the defendant are full of defects (see para 62 of the
Grounds of Judgment);
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 453

[d] that the defendant failed to show that the defects occurred when
the Property was in the custody and control of the plaintiff (see paras
63 to 65 of the Grounds of Judgment);

[e] that he prefers the evidence of the plaintiff ’s expert (PW-3) over
the defendant’s expert (DW-3) as DW-3 did not visit and inspect the
Property (see para 74 of the Grounds of Judgment); and

[f] that the plaintiff is entitled to rescind the Agreements because the
defendant has failed to rectify the various defects in the Property and
its fixtures (see paras 77 and 80 of the Grounds of Judgment).

The Appellant/Defendant’s Contentions

[17] Before us, the defendant contended that the Learned High Court Judge
has inter alia erred in his various findings on the following grounds:

[a] the plaintiff has affirmed the Agreements;

[b] there is no misrepresentation; and

[c] there is no total failure of consideration.

The Respondent/Plaintiff’s Contentions

[18] The plaintiff ’s pleaded causes of action in the SOC are in essence as
follows:

[a] that the plaintiff alleged that there was misrepresentation by

the defendant and that the defendant had breached the defendant’s
representation; and/or

[b] that there was a breach of contract by the defendant.

Our Decision

[19] From the pleadings and evidence of the plaintiff, we find that the plaintiff
is seeking for rescission and restitution only. This is confirmed by the plaintiff
during the course of trial, that what she sought from the defendant, is to “take
back the property and just refund me what I have paid for”. In essence, the
plaintiff is only seeking for restoration of her position as if the Agreements
were never entered into, that is, restitution. However, at the same time, the
plaintiff also pleaded in subparagraph 15 of the SOC that the defendant had
breached the Agreements.

[20] In a situation where there is rescission by way of termination arising out

of breach of contract, guidance can be found in Berjaya Times Square Sdn Bhd
v. M-Concept Sdn Bhd [2009] 3 MLRA 1, where Zulkefli Makinudin FCJ (as he
then was) held that:
Fabulous Range Sdn Bhd
454 v. Helena K Gnanamuthu [2021] 4 MLRA

“As regards the law on rescission of contract which is the main issue to be
decided in the present case, I am of the view on the factual matrix of the
case s 56(1) should be read together with s 40 of the Act in determining the
question as to whether the appellant as the party that was obliged to perform
its promise had refused to perform its promise in its entirety by not doing
any of the things it promised to do within the time specified by the contract.
A reference to ss 40 and 56(1) of the Act clearly showed that the right to
rescind a contract by way of termination only arises when there has been a
total failure of consideration.”

[Emphasis Added]

[21] As to what amounted to a total failure of consideration, the case of

LSSC Development Sdn Bhd v. Thomas Iruthayam & Anor [2007] 1 MLRA 121 is
pertinent. This is what the court held:
“It follows that this is not a case where there was a fundamental breach
by the defendant which resulted in the plaintiffs being deprived of - to
borrow the words of Lord Diplock in Photo Productions -substantially the
whole benefit which it was the intention of the parties that they should
obtain from the contract. The defendant’s breach did not go to the root
of the contract. The contract was therefore not ‘voidable’ under s 56(1).
Hence, the plaintiffs were not entitled to terminate it. Their termination
was therefore unlawful.”

[Emphasis Added]

[22] In LSSC Development Sdn Bhd v. Thomas Iruthayam and Anor (supra), the
court further held that rescission by way of termination arising from a breach
of contract is a common law right, which is set out in s 40 read together with
s 56(1) of our Contracts Act 1950. This is what the court held:
“The question, then, in each case must be this: Did the defendant fail to
perform every part of his promise? If the answer is ‘No’, then s 56(1) has no
application. In my judgment, given the facts of the present instance, ss 40 and
56(1) should be read together. When that is done, the question that arises for
determination is whether the instant defendant refused to perform its promise
in its entirety by not doing any of the things it promised to do within the time
specified by the contract.”

[23] The plaintiff, in seeking for rescission by way of termination of the

Agreements as prayed for in the SOC, must prove that there has been a total
failure of consideration whereby the defendant committed a fundamental
breach of the Agreements which goes to the root of the Agreements.

[24] In the absence of any total failure of consideration, the plaintiff could not
not avail herself of the right to rescind. This is what the court in Berjaya Times
Square Sdn Bhd v. M-Concept Sdn Bhd (supra):
“Absent a total failure of consideration, the common law right to rescind
does not exist. Goff & Jones “The Law of Restitution” (6th edn) which is the
leading text on the subject has this to say at p 502, para 20-007:
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 455

A breach of contract may be so fundamental that it deprives the 'party who

has further undertakings still to perform of substantially the whole benefit
which it was the intention of the parties as expressed in the contract that
he should obtain as the consideration for performing those undertakings.
(Hong Kong Fir Shipping Co Ltd v. Kawasaki Kaisen Kaisha Ltd [1962] 2 QB
26]. The innocent party has then an election. He may affirm the contract
or he may bring it to an end. In the latter event, if he has paid money
to the defendant under the contract, he can, as an alternative to claiming
damages, sue for recovery of the money provided that the consideration for
the payment has wholly failed; if the consideration has partially failed, his
only action is for damages.

In other words, where there has been a total failure of consideration, the
innocent party has the alternative remedy of suing to recover monies paid
under the contract to the guilty party. But he can under no circumstances
have his money returned and claim damages. And if the consideration has
only partially failed, he may only claim damages.”

[Emphasis Added]

[25] In the instant appeal, we find that there is no total failure of

consideration as the plaintiff took vacant possession of the Property and
exercised her rights under the Agreements, by taking the keys of the Property
on 12 September 2012, inspecting the Property on 12 September 2012 and
submitting her defect checklist to the defendant and again submitted her
defect checklists on 26 September 2012 and 3 October 2012 respectively (see
Senarai Semak Kerosakan (Defect Checklist) at pp 218 to 222 of CCB Vol
2 and Senarai Kerosakan (List of Defects) at pp 368 to 372 of CCB Vol 3),
claiming for LAD pursuant to cl 22(2) of the SPA and continuing to pay
the bank loan taken out to purchase the Property notwithstanding having
terminated the Agreements and having the Property transferred to her name.
In the light of the above, we also find that the plaintiff has also affirmed
the Agreements. Thus the plaintiff cannot rescind the Agreements and seek
restitution.

[26] Guidance can be found in TTDI Jaya Sdn Bhd v. Yew Hong Teng & Anor
[2017] 1 MLRA 143 which facts are similar to the instant appeal before us
where the Court of Appeal found that the claim by the plaintiff in the said
case for a rescission is an afterthought. This is what the Court of Appeal in
TTDI’s case supra said:

“[53] The High Court had also failed to consider the conduct of the plaintiffs
in submitting their complaints form dated 10 November 2004 which was
done about two months after the defendant’s letter dated 29 September 2004
had been issued notifying them that the property was completed and ready
to be delivered to the plaintiffs. There was clear evidence that the plaintiffs
had accepted vacant possession of the property as provided in the SPA and
had even identified some 160 defects to be rectified by the defendant. If
it was true, as claimed by the plaintiffs that there was total failure of
consideration, a reasonable purchaser would have rejected the property
Fabulous Range Sdn Bhd
456 v. Helena K Gnanamuthu [2021] 4 MLRA

at the outset and exerted his rights for a rescission of the SPA and not
wait for several years to elapse before deciding to rescind the SPA and/or
proceeded to fill up the complaints form to complain about the defects to be
rectified by the defendant.”

[54] There were overwhelming evidence before the learned judge that
the plaintiffs' action to claim for a rescission of the SPA was merely an
afterthought, unsupported by contemporaneous documents and/or evidence.
The following conduct would strengthen our findings that this was merely an
afterthought and was introduced by the plaintiffs at this late stage to justify
their claim for a rescission of the SPA:

a) The plaintiffs had submitted the complaint forms vide Complaints

Form No 01463 in response to the notice issued by the defendant that the
property was ready for delivery of vacant possession;

b) The plaintiffs continued to repay the housing loan to their financier,

Maybank until the Loan had been fully paid and discharged form had
been signed;

c) The plaintiffs had paid all outgoings such as quit rent of the said
property as required under the SPA; and

d) The plaintiffs consented for their names to be registered in the issue

document of title to signify that they are the registered owners of the
property. They continue to be registered owners of the property up to
now and three years preceding the commencement of this action.”

[Emphasis Added]

[27] The Court of Appeal in TTDI’s case supra subsequently further held that
under such circumstances, there was no total failure of consideration:

“[58] The facts as shown in para 37 were significant to demonstrate to the

court that the plaintiffs had exercised their rights pursuant to the SPA to
affirm the terms and conditions of the SPA. The plaintiff could not at this
stage claim that there was total failure of consideration especially when
they had sat on their rights to pursue a claim for rescission. The plaintiff had
further exercised their rights under cl 25(1) to request the defendant to rectify
the 160 defects complained in the Complaint Forms No 01463.

...

64. Guided by the above high authorities, we were of the view that the
remedy of a rescission ought not to be allowed by the High Court as we were
satisfied that there was no total failure of consideration. The defendant
in the instant case did not refuse or had failed to perform the promise in
its entirety. There was overwhelming evidence that the property had been
completed and a certificate of practical completion dated 5 July 2004 and
the certificate of fitness dated 29 September 2004 had been issued by the
relevant authority. The property had been registered in the names of the
plaintiffs about three years before the filing of the current action.
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 457

65. In view of the fact that the plaintiffs had not formally rejected the
said property and rescinded the SPA at the first opportunity available to
them but had instead elected to affirm the SPA by submitting the defects
list and threatening to rectify the defects on their own (see p 871 of lkatan
Teras Bersama (Bahagian C) Jilid 2), we were of the view that the order of
rescission made by the learned judge was improper and ought to be set aside
by this court.”

[Emphasis Added]

[28] Since the plaintiff has affirmed the Agreement, the Learned High Court
Judge ought not, to have granted an order of rescission.

[29] Support can be found In TTDI’s case (supra) where the court also held that:
“[64]... The plaintiffs had not taken any steps to stop the release of the
financing from their financier, Maybank and/or the transfer of the property
in their names on 12 September 2006, when they knew about the condition of
the property very early ie, on 10 November 2004.

[65] In view of the fact that the plaintiffs had not formally rejected the said
property and rescinded the SPA at the first opportunity available to them
but had instead elected to affirm the SPA by submitting the defects list
and threatening to rectify the defects on their own (see p 871 of lkatan
Teras Bersama (Bahagian CJ Jilid 2), we were of the view that the order
of rescission made by the learned judge was improper and ought to be set
aside by this court.”

[Emphasis Added]

[30] We thus find that in granting an order of rescission and LAD

simultaneously to plaintiff, the Learned High Court Judge erred in law and
in fact, in granting inconsistent remedies and in disregard of the Court of
Appeal’s decision in Berjaya Times Square Sdn Bhd v. M-Concept Sdn Bhd supra
where the Court of Appeal held inter alia:
“In other words, where there has been a total failure of consideration, the
innocent party has the alternative remedy of suing to recover monies paid
under the contract to the guilty party. But he can under no circumstances
have his money returned and claim damages. And if the consideration has
only partially failed, he may only claim damages.”

[Emphasis Added]

[31] In the event, the alleged breach of contract is not fundamental, it is only
a breach of warranty; this is what the court in Ching Yik Development Sdn Bhd v.
Setapak Heights Development Sdn Bhd [1996] 2 MLRA 69 held:
“Where the term that has been flouted is fundamental to the contract, the
innocent party is entitled to treat himself as being discharged from further
obligations under it. But where the obligation that has been breached is only
subsidiary or minor in nature, the innocent party may not treat himself as
Fabulous Range Sdn Bhd
458 v. Helena K Gnanamuthu [2021] 4 MLRA

being free of his obligations under the contract, although he may sue and
recover damages for the non-performance of the subsidiary term.”

[Emphasis Added]

[32] We also noted that the Learned High Court Judge did in fact find the
defects in the Property and that such defects did not render the Property
inhabitable. This is what he said:
“[83] Tidak dinafikan bukan semua kerosakan/kecacatan yang disenaraikan
oleh Plaintif dalam Defect List dan aduan susulan beliau adalah serius.
Saya bersetuju dengan peguam terpelajar Defendan bahawa terdapat
‘kerosakan/kecacatan’ yang bukanlah diakibatkan oleh kerja pembinaan
yang tidak sempurna tetapi tidak dijaga dan tidak diselenggara selama
lebih dua tahun. Sebagai contoh kesan lumut (moss) dan rumput liar. Saya
bersetuju ‘kecacatan’ tersebut suatu yang tidak membuat rumah tersebut
tidak boleh dihuni (inhabitable). ‘Kecacatan’ tersebut boleh diperbetulkan
dengan mudah. Pada hemat saya kerosakan/kecacatan kecil sebegitu semata-
mata tidak mencukupi untuk Plaintif menamatkan Perjanjian- perjanjian
dengan Defendan.”

[Emphasis Added]

[33] We are of the considered opinion that from the Learned High Court
Judge’s above finding namely that the defects were not as a result of building
defect and that the Property was not inhabitable, there is no total failure of
consideration on the part of the defendant. Thus, we find that the Learned
High Court Judge has erred in fact and/or in law when he granted the
plaintiff ’s claim for rescission when there is no total failure of consideration
and whilst at the same time he found that the defects in the Property did not
render the Property, inhabitable.

Misrepresentation

[34] From our reading of the plaintiff ’s pleading in respect of

misrepresentation in her SOC, we noted that the plaintiff did not plead
whether such misrepresentation was fraudulent or negligent. In the light of
such a situation, the plaintiff ’s claim for misrepresentation shall be treated as
one of innocent misrepresentation.

[35] Support can be found in Sim Thong Realty Sdn Bhd v. Teh Kim Dar [2003] 1
MLRA 272, where the Court of Appeal held inter alia as follows:
“It is clear that the defendant’s pleaded case alleges neither fraud nor
negligence. All the defendant has pleaded is the misrepresentation about
the access to the land. Absent a specific and particularised plea of fraud
or negligence, the defendant must be taken as asserting a case of innocent
misrepresentation in the sense already discussed.”

[36] Since the plaintiff ’s claim is for innocent misrepresentation, the

applicable remedy is that of rescission and the innocent party may not
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 459

recover damages. This was stated by Gopal Sri Ram JCA (as he then was)
in Sim Thong Realty Sdn Bhd supra where he followed the rule as approved
by Merritt LJ in Dunbar Bank pie v. Nadeem [1998] 3 All ER 876, at p 886 in
Newbigging v. Adam (1886) 34 Ch D 582:

“The applicant for an order for a transaction to be set aside on the ground of
undue influence or for any other invalidating tendency, as they were described
by Lord Browne-Wilkinson in Barclays Bank pie v. O'Brien [1993] 4 All ER
417 at 424, must as a condition for relief give back all he obtained from the
transaction (see Erlanger v. New Sombrero Phosphate Co (1878) 3 App Gas 1218).
The matter was put clearly by Bowen LJ in Newbigging v. Adam (1886) 34 Ch
D 582 at 592 where he said:

‘... when you come to consider what is the exact relief to which a person is
entitled in a case of misrepresentation it seems to me to be this, and nothing
more, that he is entitled to have the contract rescinded, and is entitled
accordingly to all the incidents and consequences of such rescission. It is
said that the injured party is entitled to be replaced in status quo. It seems
to me that when you are dealing with innocent misrepresentation you must
understand that proposition that he is to be replaced in status quo with this
limitation - that he is not to be replaced in exactly the same position in all
respects, otherwise he would be entitled to recover damages, but is to be
replaced in his position so far as regards the rights and obligations which
have been created by the contract into which he has been induced to enter.
That seems to me to be the true doctrine, and I think it is put in the neatest
way in Redgrave v. Hurd ((1881) 20 Ch D 1).’

In the later passage to which I referred, Bowen LJ added (at p 595):

'There ought, as it appears to me, to be a giving back and a taking back on

both sides, including the giving back and taking back of the obligations which
the contract has created, as well as the giving back and the taking back of the
advantages.”

[Emphasis Added]

[37] In Berjaya Times Square Sdn Bhd v. M-Concept Sdn Bhd supra, the Court of
Appeal dealt with the effect of the remedy of rescission:

“[15] Some writers continue to use the word rescind in this sense. Professor
G.H Treitel is one. See, Trietel’s “Law of Contract”, (11th edn). But this
rescission is very different from the specific relief of rescission invented by
the Court of Chancery. The right to terminate puts an end to the contract
only as to the future. All past rights and duties under the contract remain
unaffected. But that is not the case where the equitable remedy of rescission
is obtained by a decree from the court or by self- help. An example that
illustrates rescission as a self-help remedy is Car and Universal Finance
v. Caldwell [1965] 1 QB 525. The remedy of rescission has the effect of
restoring the parties to the same position as though the contract was
never made. In other words, there is restitution in integrum. Where it is
impossible to restore the status quo ante, the court may grant equitable
Fabulous Range Sdn Bhd
460 v. Helena K Gnanamuthu [2021] 4 MLRA

compensation as happened in Longstaff v. Birt/es [2001] EWCA (Civ) 1219,

a case of breach of fiduciary duty.

[Emphasis Added]

[38] We also noted that the plaintiff did not elect whether to pursue her
claim, on the ground of misrepresentation or breach of contract and instead
proceeded to claim both remedies which we find, is inconsistent with one
another and both cannot be allowed to subsist or co-exist together.

[39] In Bounty Dynamics Sdn Bhd v. Chow Tat Ming & Ors [2016] 1 MLRA 54, the
Court of Appeal held that:

“[50] We found that, in connection with the order on damages to be assessed

granted by the learned JC, there were elements of duplicity. A plaintiff must in
law decide whether he is pursuing a claim on misrepresentation or breach of
contract. He is not entitled to be awarded damages both for misrepresentation
and breach of contract. Once a representation becomes a clause in the
contract such as argued here by the respondents, there could not therefore be
an order for damages to be assessed for both misrepresentation and breach of
contract.”

[40] Further support can be found in Low Keng Guan v. Sin Heap Lee-Marubeni
Sdn Bhd [2005] 5 MLRH 124 where the court similarly held as follows:

“A term of the contract and representation are two different things. They
are poles apart. Both cannot co-exist. At the trial, the plaintiff did not
elect as to which was the cause of action: whether it was a breach of the
term or misrepresentation. The cumulative plea of a breach of a term and
misrepresentation is mutually inconsistent and both must, in law, fail for
want of certainty. Once a representation becomes a term of a contract, the
representation ceases and has become part of the contract. But where the
representation was not included as a term of the contract, that representation
would continue its independent existence. And where the representation is
included as a term of the contract then that representation is 'merged' into
the contract and incorporated into the contract. When that happens the
remedy will lie for breach of contract. A classic example would be the case
of Pennslyvania Shipping Co v. Compagnie Nationale De Navigation [1936] 2 KBD
1167 and there Branson J laid down the law in these fine words (seep 1171 of
the report):

It is there pointed out that at common law if an innocent misrepresentation

did not afterwards become part of the contract its untruth was immaterial.
In such a case equity might intervene to avoid or rescind the contract.
But where the representation has been embodied in the contract there
the courts of common law could deal with it according to whether it
was a condition entitling the injured party to repudiate the contract or
a warranty giving rise only to an action ex contractu for damages. The
representation thus becomes merged in the higher contractual right, and
there was no need to resort to equity for rescission...”
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 461

[41] Thus, it is clear that the remedy of rescission as a result of

misrepresentation and breach of contract could only be awarded if
the plaintiff can prove innocent misrepresentation or a total failure of
consideration.

[42] From the above authorities, we find that it is settled that in the event
the plaintiff is successful in proving innocent misrepresentation, the plaintiff
would only be entitled to rescission ab initio and no damages. Thus, we find that
the Learned High Judge’s grant of an order of rescission as in the 1st Order
and at the same time, also with an award of damages as in the 3rd Order, to be
wrong and contrary to decided cases.
[43] Further, in TTDI Jaya Sdn Bhd v. Yew Hong Teng & Anor (supra), the court
clearly held that:
“Looking at the learned judge’s order in totality, it would appear that the
order for 10% damages for late delivery of the property along with the
order for a rescission of the SPA made by the High Court was erroneous
and not in line with the accepted principle.”

[Emphasis Added]

[44] Another issue which arose from the Learned High Court Judge’s granting
of the 1st Order relates to the rescission of the Agreements which is contrary
to decided cases and principles namely that there can be no rescission arising
out of innocent misrepresentation after full conveyance of a property. Support
can be found in Admiral Cove Development Sdn Bhd v. Balakrishnan Devaraj & Anor
[2012] 1 MLRA 287 where the Federal Court held inter alia as follows:
“We are of the similar view. We would agree that delay in pursuing an
action for rescission of a contract could be fatal. More importantly, the
above judgment of Jenkins LJ pointed out that so far as dealings on land
are concerned, there is a considerable body of authority to the effect that
rescission on the ground of innocent misrepresentation will not be allowed
after conveyance.”

[Emphasis Added]

[45] In respect of the other evidence adduced and the Grounds of Judgment,
we find that there was a lack of judicial appreciation of the available evidence
and application of the relevant laws by the Learned High Court Judge who
found at para 52 of his Grounds of Judgment that the plaintiff only purchased
the Property after having seen the Property. This is what he said:
“... Plaintif telah tertawan untuk membeli rumah tersebut setelah melihat
gambar-gambar tersebut serta melihat rumah itu sendiri.”
Fabulous Range Sdn Bhd
462 v. Helena K Gnanamuthu [2021] 4 MLRA

[46] In the plaintiff ’s testimony, she also stated the same. This is what she
said:

[47] From the above, we find that the Learned High Court Judge’s findings
hence are inconsistent with his finding of misrepresentation based on exh
P34 which is the brochure of the Property. We find that the plaintiff did not
rely on exh P34, in coming to a decision to purchase the Property but rather
as a result of inspections made on several visits to the Property.

[48] We further find that there is no misrepresentation based on exh P34

because after the plaintiff saw exh P34 and subsequently went to view the
Property, she was in fact impressed with the Property. This is consistent with
the Learned High Court Judge’s finding. Since the plaintiff had seen and
inspected the Property after having looked at exh P34, there is no issue of the
plaintiff, relying solely on exh P34.

[49] In the light of the above, we are of the opinion that the Learned High
Court Judge erred in holding that there was misrepresentation and in
allowing the plaintiff ’s claim for rescission. Further, since there is no innocent
misrepresentation, the remedy of rescission is not available to the plaintiff.

[50] One of the plaintiff ’s contention is that the defendant is in “breach of

the Agreements” namely the SPA and SA. Based on the plaintiff ’s pleadings
in subparagraphs 15.2 and 15.3 of the SOC, the plaintiff pleaded that the
defendant had breached the Agreements, by not delivering the Property in
accordance to the Agreements and that the defendant did not remedy the
defects in the Property.

[51] At paras 59 and 60 of the Grounds of Judgment of the Learned High

Court Judge, he agreed with the plaintiff ’s contention and held that the
defendant has breached cl 13 of the SPA when the defendant made changes
to the landscape of the Property.
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 463

[52] This is what cl 13 of the SPA states:

“Material and workmanship to conform to description

13. The said Building shall be constructed in a good and workmanlike

manner in accordance to the description set out in the Fourth Schedule
hereto and in accordance with the plans approved by the Appropriate
Authority in the Second Schedule) which descriptions and plans have
been accepted and approved by the Purchaser, as the Purchaser hereby
acknowledges. No changes thereto or deviations there from 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 and in the event that the changes
or deviations involve the substitution or use of cheaper materials or the
commission 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.”

[53] A perusal of cl 13 of SPA would reveal that the landscaping of the

Property was never provided for or described in the Second and Fourth
Schedules of the SPA. Thus, there cannot be a breach of the SPA in such
situation. In the premises, we find that the Learned High Court Judge’s
above finding is erroneous as cl 13 of the SPA referred to the material and
workmanship to conform to description and not landscaping.

[54] Further, at para 62 of the Grounds of Judgment of the Learned High

Court Judge, he held that the fixtures and fittings under the SA must be in
“keadaan sempurna” when the plaintiff purchased them from the defendant,
on an “As is where is” basis. This again is erroneous.

[55] Support can be found in Chua Moh Huat Dennis v. Harvester Baptist Church
Ltd [1991] 1 MLRA 633, where the Court of Appeal stated as follows:

“In our view, that construction is also wrong. Clause 6 served the same
function as an "as is where is" clause in an agreement for the sale of goods, the
purpose of which is to exclude any of the warranties as to merchantability,
etc. Implied under legislation relating to the sale of goods. Accordingly, cl 6
expressly excluded any warranty or condition as to the state and condition
of property, and also, in consequence, its fitness for habitation.”

[Emphasis added]

[56] It is undisputed that there are defects in the Property and we find that
not all the defects were rectified. We further find that there is an issue of
whether the plaintiff ’s contention that the breach of the Agreements is a
breach of condition of the Agreements or that of warranty.

[57] We noted that the Learned High Court Judge found as follows:

“Saya bersetuju ‘kecacatan’ tersebut suatu yang tidak membuat rumah tersebut
tidak boleh dihuni (inhabitable). ‘Kecacatan’ tersebut boleh diperbetulkan
Fabulous Range Sdn Bhd
464 v. Helena K Gnanamuthu [2021] 4 MLRA

dengan mudah. Pada hemat saya kerosakan/kecacatan kecil sebegitu semata-

mata tidak menamatkan perjanjian-perjanjian dengan defendan.”

[58] The Learned High Court Judge further found that the plaintiff was
entitled to rescission because the defendant purportedly refused to continue
rectification at para 84 of his Grounds of Judgment:

“[84] Namun dalam kes kita ini, oleh kerana terdapat begitu banyak
kecacatan/kerosakan yang mana defendan memutuskan untuk tidak
meneruskan pembaikan. Dalam keadaan itu, pada hemat saya tindakan
Plaintif menamatkan Perjanjian-Perjanjian adalah sah dan seterusnya
tindakan beliau menuntut supaya Defendan mengambil balik rumah dan
barang/kelengkapan dan membayar balik segala perbelanjaan berkaitan
pembelian rumah tersebut, suatu tindakan yang patut dan munasabah.”

[59] From the above findings of the Learned High Court Judge, we are of
the opinion that notwithstanding the various defects in the Property, they are
rectifiable and the Property and the fittings which are the subject matter of
the Agreements, is still habitable. As such, the breaches are not fundamental
and are that of a warranty and the refusal or omission of the defendant to
rectify the defects, do not entitle the plaintiff to claim for rescission and for the
Learned High Court Judge, to grant an order of rescission.
[60] When a party terminates an agreement, relying on a breach of a non-
fundamental term, such termination is unlawful. In Ching Yik Development Sdn
Bhd v. Setapak Heights Development Sdn Bhd [1996] 2 MLRA 69, the court held
as follows:
“Now, in every contract, be it for the sale of land or any other commodity,
there are, generally speaking, some terms that are of fundamental
importance and others of less or minor importance. The law creates the
distinction for the purpose of determining the kind of remedy that is to
be made available to an innocent party, ie the party who is not guilty of
a breach. Where the term that has been flouted is fundamental to the
contract, the innocent party is entitled to treat himself as being discharged
from further obligations under it. But where the obligation that has been
breached is only subsidiary or minor in nature, the innocent party may not
treat himself as being free of his obligations under the contract, although
he may sue and recover damages for the non-performance of the subsidiary
term. The rules that operate in this area of the law of obligations produce
further consequence. A party who terminates a contract or treats it as
having come to an end in reliance upon the breach of a non-fundamental
term is himself guilty of a breach of contract.”

[Emphasis Added]

[61] It is clear that the plaintiff ’s contention of breach of Agreements by the

defendant, did not tantamount to any failure of consideration or breach of
condition which goes to the root of the Agreements. The plaintiff ’s allegation
of breach is only an allegation of breach of warranty which entitled the
plaintiff, only to damages.
Fabulous Range Sdn Bhd
[2021] 4 MLRA v. Helena K Gnanamuthu 465

[62] In Bima Investment Pte Ltd v. Hong Fok Realty Pte Ltd [1990] 1 SLR 254, the
court held inter alia that:
“I now turn to the right of the plaintiffs as the purchasers to repudiate the
agreement and to enforce rescission by the judgment of this court, as they
assert. Where the property which the defendants as vendors have agreed to
convey is not substantially the same as the property contracted to be sold, the
plaintiffs as purchasers are entitled to repudiate. They may not repudiate for
trifling defects which may properly be matters for compensation.”

[Emphasis Added]

[63] On the contrary, the plaintiff ’s termination of the Agreements on the

premise of breach of warranty is unlawful and such unlawful termination is
a breach of the said Agreements (see Ching Yik Development Sdn Bhd v. Setapak
Heights Development Sdn Bhd supra).
[64] Thus, we find that the Learned High Court Judge has erred in fact
and/or in law when he allowed rescission of the Agreements and awarded
damages at the same time.

Conclusion

[65] Based on all the reasons, that we have explained, we are of the considered
opinion that the decision of the Learned High Court Judge is contrary to the
established principles of law. In the premises, we find merit in the appeal. We
allow the appeal in part. We set aside the decision of the High Court except for
its award of the LAD for the sum of RM62,232.90 with the interest granted by
the Learned High Court Judge since the respondent/plaintiff elected to claim
for the LAD and submitted a list of defects for appellant/defendant to rectify
the defects. Thus respondent/plaintiff ’s claim should be limited to damages
arising from the failure of the appellant/defendant to make good of the defects
and to comply with the specific condition as stipulated in the Sale & Purchase
and the Supplemental Agreement.

[66] In the interest of justice, the matter is sent back to the High Court for the
assessment of damages based on our above directions. Parties are at liberty
to call further witnesses if necessary but only for the purpose of assisting the
court in assessing the damages.

[67] As for costs, we allow the plaintiff, the sum of RM60,000.00 in the High
Court and costs of RM10,000.00 to the defendant for this appeal, both subject
to allocator fees.