Introduction
Over the past couple of years or so, there has been an uptick of claims for liquidated damages for late delivery of vacant possession in Malaysia[1]. In such claims, it is not uncommon to find more than one purchaser to a particular project filing claims for liquidated damages for late delivery of vacant possession against the developer. As a matter of convenience, it is also common for these claims to be heard together or consolidated as they often involve similar facts and legal issues.
The issue of jurisdiction arises when such individual claims may not exceed the threshold of RM 1,000,000.00 and therefore falls within the jurisdiction of the Sessions Court, but when collated, the total sum being claimed may then bring the matter within the jurisdiction of the High Court.
The case of Koh Kien Hooi v Kepong Industrial Park Sdn Bhd [2022] 12 MLJ 440 addresses the issue of whether it is appropriate, in such a circumstance, for the purchasers to collate their claims and whether doing so amounts to an abuse of process of the Court.
The Purchasers’ Claims In Koh Kien Hooi
There were 16 plaintiffs in this case, each having entered into separate sale and purchase agreements with the defendant, being the developer of a project, pursuant to the Housing Development (Control and Licensing) Act 1966.
The plaintiffs alleged that the developer had failed to deliver vacant possession according to the stipulated time frame in the sale and purchase agreements and as such, mounted claims for liquidated damages for late delivery of vacant possession and common property against the defendant developer.
The individual claims of each plaintiff were premised on different dates of delivery of vacant possession and separate claims for liquidated damages against the developer, with each individual claim being less than the sum of RM 1,000,000.00. The plaintiffs’ claims were consolidated in a single suit and filed in the High Court.
Same But Different: The Decision Of The High Court
The matter was then called up for case management during which the learned Judge questioned whether this matter ought to be more appropriately heard before the Sessions Court. Counsel for the defendant applied orally for the High Court to exercise its power to transfer the proceedings to the Sessions Court pursuant to Order 57 rule 1 of the Rules of Court 2012, and the learned High Court Judge allowed the said application with no order as to costs. The learned Judge’s grounds of decision are summarized below.
Joinder or consolidation does not detract from the plaintiffs having separate causes of action
Counsel for the plaintiffs argued that the plaintiffs were entitled to have the matter heard in the High Court as the matters had been consolidated into a single suit pursuant to the Rules of Court 2012, on the basis that the same common question of law or fact appears in each separate claim and that the rights to relief arises out of the same series of transaction (i.e. similar sale and purchase agreements). This then entitled the plaintiffs to collate the total sums claimed by the plaintiffs, which exceeded the sum of RM 1,000,000.00 thus falling within the jurisdiction of the High Court.
However, the learned Judge was of the view that whilst the plaintiffs were entitled to consolidate their claims in a single suit, each plaintiff’s claim constitutes a separate cause of action against the defendant, each with its separate subject matter and remedy claimable against the defendant. Although each claim was similar in nature and law, these claims were based on separate agreements. As such, this did not equate to the ‘amount in dispute or the value of the subject matter’[2] exceeding RM 1,000,000.00. As such, the joinder of the claims did not create an overall larger claim which fell outside the jurisdiction of the Sessions Court.
The Court also considered the fact that even if the plaintiffs were to succeed in their claims, each claim would have to be assessed separately. This would mean having to consider the dates on which the deposit was paid, the dates of delivery of vacant possession of the various units and an order for a specific sum to be paid by the defendant to each plaintiff.
For these reasons, the learned Judge opined that the matter ought to be heard before the Sessions Court.
Abuse of process of the Court and unfairness to the defendant
The learned Judge was of the view that initiating the proceedings directly in the High Court was an abuse of process and unfair to the defendant for two main reasons: (i) doing so would be contrary to the intention of the Legislature; and (ii) the higher costs involved.
The intention of the Legislature in increasing the jurisdiction of the Sessions Court from RM 250,000.00 to RM 1,000,000.00[3] ought to be complied with for otherwise, claimants may disregard the appropriate layering of the civil justice system lower court and attempt to bypass the jurisdiction of the Sessions Court by filing claims in the High Court directly. In this regard, the learned Judge also considered that a claim initiated in the High Court may end in appeal at the Federal Court, whereas a claim initiated in the lower courts may end in appeal at the Court of Appeal.
The learned Judge was further of the view that had these proceedings been instituted in the Sessions Court, the filing fees and potential costs faced by the defendant would be lower compared to the High Court. As such, the defendant ought not to be subjected to higher fees and costs and this is a right which ought not to be taken away from the defendant.
Commentary
Prior to the decision in Koh Kien Hooi, there had been similar situations in which several purchasers had mounted claims against the developer, with each individual claim amounting to less than RM 1 million. On one hand, the High Court had allowed the claims to be collated and the matter to be heard in the High Court[4] and on the other, the High Court initially intended to strike out the claims but had instead transferred the matter to the Sessions Court to be heard[5]. The decision in Koh Kien Hooi is aligned with the latter.
The purchasers have, however, appealed against the High Court’s decision in Koh Kien Hooi. It is unclear if the appeal(s) have been disposed of at this stage.
It would appear that the applicability of the decision in Koh Kien Hooi is by no means limited to claims involving liquidated damages for late delivery of vacant possession, but would apply generally to civil proceedings with claims involving similar law and facts.
This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.
About the Author
Siew Suet Mey
Partner
Construction & Energy Unit
Harold & Lam Partnership
[1] This is following the Federal Court decisions of Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and Other Appeals [2020] 1 MLJ 281 and PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah and Ng Chee Kuan and other appeals [2021] 2 MLJ 60.
[2] See Section 65(1)(b) of the Subordinate Courts Act 1948.
[3] See Subordinate Courts (Amendment) Act 2010.
[4] Dominic Simon Brown & Ors v Crest Worldwide Resources Sdn Bhd [2019] MLJU 300. Note, however, that the issue of jurisdiction was not specifically addressed in this decision.
[5] Beh Chew Tai dan lain-lain v DC & A Developments Sdn Bhd [2020] MLJU 2141. It is understood that there was an appeal against the decision in Beh Chew Tai, however, there does not appear to be written grounds of the appellate court’s decision.