HS HOE SENG TRADING SDN BHD v ERA UNIVERSE DEVELOPMENT SDN BHD

Case Significance

A worked example of Order 14 summary judgment for a purchaser against a developer that failed to deliver vacant possession, rejecting COVID-19 exclusion, non-payment and corporate-restructuring defences as unsupported and holding that a change of management does not absolve the same legal entity of contractual liability.

This High Court decision at Johor Bahru concerns an application for summary judgment under Order 14 of the Rules of Court 2012 in a purchaser's claim against a developer. The plaintiff had entered into a sale and purchase agreement in May 2016 to buy a parcel of property in a development project, agreeing to pay the purchase price progressively according to a prescribed schedule. It contended that the developer had failed to complete construction and deliver vacant possession within the stipulated 36 months, entitling it to terminate the agreement, and it sought a declaration that the agreement had been lawfully terminated together with a refund of the purchase price of RM141,800 and legal fees and stamp duty of RM35,657.30, as well as damages, interest and costs. The developer resisted, contending among other things that the agreement was conditional and subject to an overriding agreement, that time should be excluded under the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020, that the plaintiff had failed to make progressive payments, and that a corporate restructuring and new management were relevant. The Court rejected each defence. The COVID-19 exclusion of time was immaterial because there was no evidence that work resumed or that the project was ever completed. The complaint about progressive payments was unsupported, since the agreement required such payments to be made upon written claim by the developer and no such claims had been exhibited. And the reference to corporate restructuring and new management was irrelevant, the developer remaining the same legal entity, changes in management not absolving it of contractual liability, consistent with Salomon v A Salomon & Co Ltd. Finding that the developer had raised no bona fide triable issue and that its defences were speculative and unsupported by documentary proof, the Court held the plaintiff entitled to summary judgment.