CONTRACT: Breach - Performance of contract - Notice - Whether written notice fixing time for performance required to crystallize antecedent breach of party in default - Circumstances when such written notice required - Contracts Act 1950, s. 47
SIME HOK SDN BHD v. SOH POH SHENG
FEDERAL COURT, PUTRAJAYA
RAUS SHARIF PCA, AHMAD MAAROP FCJ, ZAINUN ALI FCJ, SULONG MATJERAIE FCJ, JEFFREY TAN FCJ
[CIVIL APPEAL NO: 02-14-2012]
17 JANUARY 2013
The appellant and the respondent entered into an oral agreement whereby the respondent, inter alia, would obtain the removal of caveats lodged over certain lots of land. On 12 April 1993, the respondent managed to persuade the proprietors of two lots of land to remove their caveats. However, the respondent failed to reach an agreement with the proprietors of the third lot of land who rejected all offers of settlement and refused to remove their caveats. On 1 May 1997, the appellant gave the respondent ten days’ written notice to cause the removal of the caveats. By a second letter dated 28 May 2002, the appellant gave the respondent a month to cause the removal of those caveats. The appellant later sued the respondent in the High Court, claiming a sum of RM900,000 and damages together with interest and costs. The High Court held that since the respondent had failed to remove all the caveats by the end of 1994, the appellant’s cause of action would have accrued on 31 December 1994, notwithstanding the absence then, of written notice to the respondent to cause the removal of the caveats. The filing of the plaintiff’s suit on 20 September 2002 was thus outside the six year limitation period which expired on 31 December 2000. The High Court held that the plaintiff’s claim was thus time barred. The Court of Appeal affirmed the decision of the High Court. The appellant obtained leave to appeal to the Federal Court. The issue for the Federal Court’s determination was whether a breach of a promise, without notice, could occur after the expiry of a reasonable time pursuant to s. 47 of the Contracts Act 1950 (‘the Act’) where the agreement is silent on the time for performance of the promise.
Held (dismissing the appeal with costs)
Per Jeffrey Tan FCJ delivering the judgment of the court:
(1) A notice fixing time for performance may be necessary depending on the peculiar facts of each case. A notice may be necessary to make time of the essence of the contract, under s. 56(1) of the Act; to preclude the intervention of equity or the effect of s. 56(2) of the Act. (para 26)
(2) Notice is not necessary to crystallize the antecedent breach of the party in default. Pursuant to s. 47 of the Act, a promise is discharged if the engagement is performed within a time which is reasonable under the existing circumstances. If the promise is not performed within a reasonable time, there is default (Hick v. Raymond and Reid; refd). (para 27)
(3) The absence of a notice fixing time for performance would not erase a breach already committed, for the notice comes after default. With default, a cause of action accrues and time starts to run. (para 29)
(4) The Federal Court would agree with the High Court’s finding as affirmed by the Court of Appeal that a reasonable time for performance in the instant case ended at the end of 1994. The action filed in 2002 was filed out of time. (para 37)
(5) Notice is not necessary if a party delays performance for so long and in such circumstances, as to amount to a repudiation of the contract. (para 38)
Bahasa Malaysia Translation Of Headnotes
Perayu dan responden telah memeterai perjanjian lisan di mana responden, antara lain, mesti memperolehi pembatalan kaveat yang telah dimasukkan ke atas beberapa lot tanah tertentu. Pada 12 April 1993, responden berjaya memujuk pemilik dua lot tanah untuk membatalkan kaveat mereka. Walau bagaimanapun, responden gagal menyampai persetujuan dengan pemilik-pemilik lot tanah ketiga yang telah menolak segala tawaran penyelesaian dan enggan membatalkan kaveat mereka. Pada 1 Mei 1997, perayu telah memberi responden notis bertulis sepuluh hari untuk menyebabkan pembatalan kaveat. Melalui surat kedua bertarikh 28 Mei 2002, perayu telah memberi responden sebulan untuk menyebabkan pembatalan kaveat-kaveat tersebut. Perayu kemudiannya menyaman responden di Mahkamah Tinggi, dengan menuntut amaun sebanyak RM900,000 dan ganti rugi serta faedah dan kos. Mahkamah Tinggi memutuskan bahawa kerana responden gagal membatalkan semua kaveat sebelum akhir tahun 1994, kausa tindakan perayu sepatutnya terakru pada 31 Disember 1994, walaupun ketiadaan notis bertulis kepada responden untuk kausa pembatalan kaveat-kaveat. Oleh itu, pemfailan tindakan plaintif pada 20 September 2002 adalah di luar had tempoh enam tahun yang telah tamat pada 31 Disember 2000. Mahkamah Tinggi memutuskan bahawa tuntutan plaintif adalah dihadkan oleh masa. Mahkamah Rayuan telah mengesahkan keputusan Mahkamah Tinggi. Perayu telah memperolehi kebenaran membuat rayuan kepada Mahkamah Persekutuan. Isu yang timbul bagi penentuan oleh Mahkamah Persekutuan adalah sama ada perlanggaran perjanjian, tanpa notis, boleh berlaku selepas tamat tempoh masa munasabah di bawah s. 47 Akta Kontrak 1950 (‘Akta’) di mana perjanjian senyap mengenai masa perlaksanaan perjanjian.
Diputuskan (menolak rayuan dengan kos)
Oleh Jeffrey Tan HMP menyampaikan penghakiman mahkamah:
(1) Notis menentukan masa untuk perlaksanaan mungkin diperlukan bergantung pada fakta-fakta tersendiri setiap kes. Notis mungkin diperlukan untuk membuat masa intipati kontrak, di bawah s. 56(1) Akta; untuk menghalang campur tangan ekuiti atau kesan s. 56(2) Akta.
(2) Notis tidak diperlukan untuk menghablurkan perlanggaran sebelumnya pihak yang ingkar. Di bawah s. 47 Akta, perjanjian dilepaskan jika ia dilaksanakan dalam tempoh masa yang munasabah di bawah keadaan-keadaan yang sedia ada. Jika perjanjian tidak dilaksanakan dalam tempoh masa yang munasabah, terdapat pengingkaran (Hick v. Raymond and Reid; dirujuk).
(3) Ketiadaan notis menentukan masa bagi perlaksanaan tidak akan memadam pelanggaran yang sudah dilakukan, kerana notis datangnya selepas pengingkaran. Dengan pengingkaran, kausa tindakan terakru dan masa mula berjalan.
(4) Mahkamah Persekutuan bersetuju dengan dapatan Mahkamah Tinggi seperti yang disahkan oleh Mahkamah Rayuan bahawa masa yang munasabah bagi perlaksanaan di dalam kes ini berakhir pada akhir tahun 1994. Tindakan yang difailkan pada 2002 telah difailkan di luar tempoh had masa.
(5) Notis tidak diperlukan jika satu pihak melewatkan perlaksanaan untuk sekian lama dan dalam keadaan sedemikian, untuk berjumlah kepada pembatalan kontrak.
Case(s) referred to:
Astea (UK) Ltd v. Time Group Ltd [2003] EWHC 725 (refd)
Behzadi v. Shaftesbury Hotels Ltd [1992] Ch 1 (refd)
Carr v. JA Berriman Pty Ltd [1953] 89 CLR 327 (refd)
Dalkia Utilities Services plc v. Celtech International Ltd [2006] All ER (D) 203 (refd)
Damansara Realty Bhd v. Bungsar Hill Holdings Sdn Bhd & Anor [2011] 9 CLJ 257 FC (refd)
Ellis v. Thompson, 3 M & W 445 (refd)
Farrant v. Olver [1922] WN 47 (refd)
Forslind v. Bechely-Crundall [1922] SC (HL) 173 (refd)
Ganam Rajamany v. Somoo Sinniah [1984] 2 CLJ 268; [1984] 1 CLJ (Rep) 123 FC (refd)
Hick v. Raymond and Reid [1893] AC 22 (refd)
Hind Construction Contractors v. State of Maharashtra AIR 1979 SC 720 (refd)
Hock Huat Iron Foundry v. Naga Tembaga Sdn Bhd [1999] 1 CLJ 89 CA
Laurinda Pty Ltd v. Capalaba Park Shopping Centre Pty Ltd [1989] 166 CLR 623 (refd)
National Car Parks Ltd v. Baird (Valuation Officer) and Another [2004] EWCA Civ 967 (refd)
Osborne v. Australian Mutual Growth Fund [1972] 1 NSWLR 100 (refd)
Penang Development Corporation v. Khaw Chin Boo & Anor [1993] 3 CLJ 167 HC (refd)
Raineri v. Miles [1981] AC 1050 (refd)
Re Stone and Saville’s Contract [1963] 1 All ER 353; [1963] 1 WLR 163 (refd)
Shevill v. Builders Licensing Board [1982] 149 CLR 620; 42 ALR 305 (refd)
Tan Hock Chan v. Kho Teck Seng [1979] 1 LNS 110 FC (refd)
United Scientific Holdings Ltd v. Burnley Borough Council [1978] AC 904 (refd)
Legislation referred to:
Contracts Act 1950, ss. 47, 56(1), (2)
Contracts Act 1872 [Ind], s. 46
Other source(s) referred to:
A Mohaimin Ayus, Law of Contract in Malaysia, p 20
Cheshire & Fifoot’s Law of Contract, 6th Australian edn, p 742
Keating on Construction Contracts, 9th edn, p 275
Leake on Contracts, p 836
MLJ, Law of Contract and Specific Relief, 2nd edn, vol 1, p 1007
Pollock & Mulla, Indian Contract and Specific Relief Acts, 10th edn, p 426
Pollock & Mulla, Indian Contract and Specific Relief Acts, 13th edn, p 1036
For the appellant - Foo Joon Liang (Sebastian Cha & Ang Kok Chun with him); M/s Sebastian Cha & Co
For the respondent - Wong Kim Fatt (Wong Boon Lee & Wong Boon Chong with him); M/s Gulam & Wong
Reported by Andrew Christopher Simon