[2020] 1 LNS 931 Legal Network Series

DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM

DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA
[RAYUAN SIVIL NO: BA-12BNCVC-62-08/2019]

ANTARA

KIMSTYLEZ FACILITIES MANAGEMENT SDN BHD

(No. Syarikat: 969910-D) … PERAYU

DAN

BADAN PENGURUSAN BERSAMA KONDOMINIUM BBK

... RESPONDEN

DALAM MAHKAMAH SESYEN DI SHAH ALAM

DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA
GUAMAN NO: BA-B52NCVC-237-08/2018

ANTARA

KIMSTYLEZ FACILITIES MANAGEMENT SDN BHD

(No. Syarikat: 969910-D)
[dahulunya dikenali sebagai Indera Management services& Kuala
Lumpur) Sdn Bhd] … PLAINTIFF

DAN

BADAN PENGURUSAN BERSAMA KONDOMINIUM BBK

… DEFENDAN

1
[2020] 1 LNS 931 Legal Network Series

GROUNDS OF JUDGMENT

Introduction

The parties are referred to as they were at the Sessions Court.

This is an appeal by the Plaintiff against the decision of the learned

Sessions Court Judge. In the court below the learned Sessions Court
Judge dismissed the Plaintiff’s claim for RM437, 807.17 which is the
sum due and owing by the Defendant to the Plaintiff.

The Plaintiff is dissatisfied with the decision and hence this appeal to
the High Court.

Background of the Case

The Defendant is the Management Corporation for the Bandar Baru

Condominium in Kiang (BBK).

On 1.3.2013, the Defendant entered into a written agreement with a

company named Indera Management Services and appointed them as
its property managers to manage and maintain the day to day
operations of the property.

Among some of its duties was the following:

(i) To provide maintenance and administer the daily

management of the property on behalf of BBK; and

(ii) To collect maintenance charges from the residents of BBK

and to manage its accounts.

In consideration of the above arrangement Indera Management

Services charged the Defendant a monthly fee of RM9,900 per month.

2
[2020] 1 LNS 931 Legal Network Series

Via a letter dated 5.5.2015, Indera Management Services informed the

Defendant that it had assigned all its rights, interests, assets and
liabilities to the Plaintiff.

In this letter it was conveyed as follows:

“We wish to inform you that efficiently (sic) from May 2015 our
operations and managements of your complex would be taken
over by our new company, Kimstylez Facilities Management SB
(KFM).

The staff and the management would remain the same. All
debtors and creditors of lndera Management (KL Sdn Bhd would
be taken over by KFM”

The Defendant did not protest or dispute the change in management

nor did it reply to the said letter. The Plaintiff continued with giving
its services as per the terms of the agreement dated 1.3.2013. The
Plaintiff issued invoices for work done and served it on the Defendant
in the normal course of its business of running the management and
operation of the complex.

The Defendant defaulted in payments and arrears were incurred from

December 2014 until the Plaintiff terminated its services on
31.3.2018. The Plaintiff sent numerous reminders which the
Defendant ignored. The Plaintiff instructed its solicitors to issue a
Notice of Demand dated 27.3.2018 claiming for the arrears of
payments due. The Defendant replied via its solicitor’s letter dated
12.4.2018 denying the Plaintiff’s claim.

On 20.8.2018 the Plaintiff instituted an action against the Defendant

in the Sessions Court claiming the sum of RM437,807.17, being
arrears allegedly owed by the Defendant together with interest and
costs. The claim was demised on the assignment from lndera

3
[2020] 1 LNS 931 Legal Network Series

Management to the Plaintiff. The Defendant in its defence denied the

claim and stated that there was no privity of contract between the
Plaintiff and the Defendant.

They also claimed to not have any knowledge and were not informed
of the alleged assignment that took place. Hence the Defendant
contended that it was not liable for the claim made against them. On
9.8.2019, after a full trial, the Sessions Court Judge dismissed the
Plaintiff’s claim. Hence the present appeal.

The Decision of the Sessions Court

The Sessions Judge dismissed the Plaintiff’s claim on the basis that
there was no privity of contract between the Plaintiff and the
Defendant and that the Agreement dated 1.3.2013 made no provisions
for the assignment of any rights, liabilities, interest and assets to the
Plaintiff to take over and continue the contract between them and the
Defendant.

In the grounds of Judgment, the Sessions Judge explained his reasons

for dismissing the claim as follows:-

‘Berdasarkan nas undang-undang di atas, Mahkamah ini

berpendapat bahawa perjanjian bertarikh 1.3.2013 adalah
kontrak yang sah dan ia tidak wajar dicabar, dipinda atau
ditukar pihak-pihak oleh Plaintiff. Ini kerana terma-terma yang
terkandung di dalam perjanjian tersebut telah dipersetujui oleh
pihak-pihak yang berkontrak. Pihak-pihak yang berkontrak
seharusnya menghormati dan bertindak selaras dengan
perjanjian tersebut. Oleh yang demikian, Mahkamah ini menolak
dakwaan Plaintiff melalui surat bertarikh 5.5.2015 tersebut.

Memandangkan Mahkamah ini telah memutuskan bahawa

dakwaan Plaintif melalui surat bertarikh 5.5.2015 yang

4
[2020] 1 LNS 931 Legal Network Series

mendakwa bahawa Plaintiff adalah pihak yang mengambilal ih

segala liability, tanggungjawab dan hutang atau tanggungan
lndera Management adalah ditolak, maka sewajarnya
Mahkamah ini menolak tuntutan- tuntutan Plaintif atas alasan
bahawa Plaintif bukanlah pihak yang berkontrak dengan
Defendant di dalam perjanjian bertarikh 1.3.2013 tersebut. Atas
alasan ini, Mahkamah ini juga tidak akan mempertimbangkan
atau memutuskan isu-isu lain yang telah dibangkitkan oleh
pihak Plaintiff dan Defendan di dalam hujahanhujahan
mereka.”

The Issues on Appeal

The principal questions that lie at the heart of this appeal are:

(i) Whether there was a valid assignment of rights, interest,

assets and liabilities from Indera Management Sdn Bhd to
the Plaintiff;

(ii) Whether a contract existed between the Plaintiff and the

Defendant as a result of the assignment from Indera
Management Sdn Bhd to the Plaintiff; and

(iii) Whether the contract was illegal/invalid.

Issue (i) Whether there was a valid assignment of rights, interest,

assets and liabilities from Indera Management Sdn Bhd to the
Plaintiff.

The Plaintiff contended that the assignment that occurred between

Indera Management Sdn Bhd and itself was a valid assignment and
was thus binding on the Defendant. Counsel contended that it fulfilled
all the 3 conditions listed and set out in section 4 (3) of the Civil Law

5
[2020] 1 LNS 931 Legal Network Series

Act 1957. Counsel relied on the Federal Court Case of UMW

Industries (1985) SdnBhd v. Ah Fook [1996] 1 CLJ 379 where it was
held as follows:

“Section 4(3) of the Civil Law Act 1956 lays down three
conditions for effecting absolute legal assignment. It is clear
that the conditions are:-

1) That the assignment must be in writing under the

hand of the assignor;

2) That the assignment must be absolute and not by way

of the charge only

3) That the express notice in writing must have been

given to the person liable to the assignor under the
assigned chose in action.

As to the assignment in writing, no particular form is necessary

but it must be absolute, i.e. one that purports to pass the entire
interest of the assignor in the chose action.”

According to the Plaintiff, the letter of assignment dated 5.5.2015 had

been sent to the Defendant and the Defendant had acknowledged
receipt by putting down its official chop onto the letter. Hence the
Defendant was aware of the contents of the said letter. There was no
response to this letter and this according to the Plaintiff proved that
the Defendant had no objections to the assignment from Indera
Management to the Plaintiff and it could be inferred from their silence
that they endorsed and accepted the assignment to the Plaintiff.

The Plaintiff relied on a number of cases chiefly the case of Khaw

Poh Chuan v. Ng Gaik Peng & Yap Wan Chuan & Ors [1996] 2 CLJ
185 where it was held:

6
[2020] 1 LNS 931 Legal Network Series

“Since the assignment is absolute and in writing, and since

notice of assignment had been given to the debtor, there was due
compliance with s. 4 (3) of the Civil Law Act.”

The Plaintiff also relied on the Court of Appeal case of Prangin Mall
Sdn Bhd v. Tag Joo Min &Anor [20012] 1 LNS 1285 where it was
decided:

“Any “handing over” or transfer of contractual rights can only

take effect if there is an assignment of such rights either
contractually or by law.”

The Defendant in response disputed the Plaintiff’s submissions and

contended that the Sessions Judge was right to dismiss the Plaintiff’s
claim. The Defendant argued that the Plaintiff is a separate and
different entity from Indera Management Sdn Bhd. The Defendant
contended that they had entered into a contract with Indera
Management Sdn Bhd not the Plaintiff hence they were not liable for
the claim brought by the Plaintiff.

The Defendant referred the court to Sections 91 and 92 of the

Evidence Act 1950 to support their contention which was that the
contents of a document must be proved by the document itself and no
oral agreement or statement shall be admitted for the purpose of
contradicting, varying, adding to or subtracting its terms. Counsel for
the Defendant relied on the case of Datuk Tan Leng Teck v. Sarjana
Sdn Bhd & Ors [1997] 4 MLJ 329 to support their contention.
Therefore the inclusion of the letter dated 5.5.2015 to amend or vary
the terms agreed between Indera Management Sdn Bhd and the
Defendant was prohibited by section 91 of the Evidence Act.

It was further submitted that the contract that bound the Defendant
was the Agreement dated 1.3.2013 entered into between the Defendant
and Indera Management Sdn Bhd. They argued that the letter dated

7
[2020] 1 LNS 931 Legal Network Series

5.5.2015 purportedly assigning the contract to the Plaintiff was

invalid and of no effect against them mainly because the Defendant
never agreed to its contents nor were they a signatory of the ‘contract’
between the Plaintiff and the Defendant. More significantly the
Defendant claimed they did not receive the letter dated 5.5.2015.

It was the contention of the Defendant that the assignment would only
be valid if it had been consented to in writing by the two contracting
parties.

It is important to note that the basis of the Plaintiff’s claim against

the Defendant is that Indera Management Sdn Bhd had assigned all its
rights under the contract dated 1.3.2013 to the Plaintiff. It is therefore
incumbent upon this court to closely scrutinize the letter dated
5.5.2015 which purportedly allowed for the assignment to take place.
In this letter dated 5.5.2015, it is noted that there is no specific phrase
using the word ‘assign’. Instead the phrase used is that the
“operations and management of the complex would be taken over by
our new company.... all debtors and creditors o f Indera Management
would be taken over by KFM”‘.

On this issue I am mindful that no particular form is necessary as long

as the assignment is absolute. Hence I agree with the contention of
counsel for the Plaintiff that a close reading of its contents reveal it to
be for all intent and purpose effectively an absolute assignment of the
rights, assets, liabilities and interests transferred from Indera
Management Sdn Bhd over to the Plaintiff. It is clearly stated in the
letter that the Plaintiff is taking over the operations and management
of the complex as well as all its debtors and creditors. Only the staff
and management would remain the same.

It is the view of this court that the intention in the letter dated
5.5.2015 is clear and unambiguous. Its intention is to inform the other
party that the contract had been assigned and that it was absolute.

8
[2020] 1 LNS 931 Legal Network Series

There is no uncertainty in the contents of the letter. It means what it

says i.e. that the Plaintiff would now be taking over the management
and operation of the apartment complex. In this regard it is the
opinion of this court that an assignment had taken place and that it is
valid and enforceable.

Having gone through the notes of evidence in the court below and
having scrutinized the exhibits especially Exh P2 which is the letter
dated 5.5.2015, there was evidence adduced on a balance of
probabilities that the Defendant had received the letter and were
aware and had knowledge that the management and operation of the
complex had changed hands from Indera Management to the Plaintiff.

It would be highly improbable for the Defendant to maintain that it

did not know who was running the management corporation. It is
untenable for the Defendant to rest their argument on that basis to
avoid liability. Furthermore it must be emphasized there was evidence
of a chop receipt stamped on the letter dated 5.5.2015 and the
Defendant agreed that it was their chop. With that it brought the
inference that they had received the letter and hence the contents of
the letter was also known by them.

The said letter was specifically addressed to the Defendant. To

support this view I now refer to Page 193 of the Record of Appeal,
Jilid 1 where the evidence of the Defendant’s witness shows that he
was informed of the change of management.

The Notes taken in evidence are reproduced as follows:

“PC: My question to you is Mr. Wong, paragraph 1 of the letter

says that Kimstylez the Plaintiff in this matter will take over the
operation and management of the BBK

SD 1: Yeah

9
[2020] 1 LNS 931 Legal Network Series

PC: Paragraph 1 says that. And it also says that you know all
the debtors and creditors of lndera would be taken over by the
Plaintiff.

SD 1: Yes

PC: Right that will also include the management of BBK, it will
also include the outstanding from BBK to lndera?

SD 1: Yes

PC: Will be taken over by the Plaintiff?

SD 1: Yes. Letter to us. That is a inform. To inform that they

intending to do this.

[…….]

PC: So you are part of JMB when this letter was received, you
agree. You will also agree with me there is a cop BBK
Condominium Joint Management cop received, the cop was, the
Defendant has received this letter there is a cop here, cop
placed on it.

SD 1: Yeah l see 2 cop

[…….]

PC: Mr. Wong, you agree with me that the Defendant has not
reply to this letter?

SD 1: Ya”.

From the evidence adduced above the Defendant’s witness frankly

agreed that the letter was received by the Defendant and he agreed
that the Defendant’s cop was stamped on the letter. He also agreed
that the Defendant did not reply to the letter.

10
[2020] 1 LNS 931 Legal Network Series

In the circumstances of this case I am of the view that the Defendant

is deemed to have no objection to the assignment because they did not
reply to the letter. If they had any objections they would have replied
to the letter stating their objections to the Plaintiff taking over from
the previous property managers. By their conduct they gave the
Plaintiff the expectation that they had no objections to the
assignment. The Defendant did absolutely nothing after the receipt of
the letter.

The Defendant cannot avoid liability by arguing that they did not
receive the letter or that they had never entered into any agreement
with the Plaintiff. Support for this view can be found in the case of
MBF Factors Sdn Bhd v. Tay Hing Ju [2002] 2 CLJ 664 the court held
that:

“Once a notice of assignment....has reached (the debtors).... the

entitlement of the assignee to the debts in question would be
incontestable against the assignee by anybody else including a
subsequent so-called bona fide buyer for value without notice. ”

There is no need for the consent from the Defendant to be given

where an assignment takes place. In the case of CIMB Bank Bhd v.
Sebang Gemilang Sdn Bhd & Anor [2018] 5 CLJ 129 the Federal
Court held that consent was not necessary for an assignment to be
valid. What is of importance is that notice must be given. The relevant
passages in the case is reproduced as follows:

“[81] The pertinent question to ask is at what point in time the

assignment can be held to be binding on the appellant? It must
be from the time it had notice of it. The appellant cannot be held
liable if it had no notice at all of the said assignment. For the
assignee’s title to be effective against the debtor, notice must
therefore be given, though, no consent or acquiescence on the
part of the debtor is necessary: see Halsbury’s Laws of England,

11
[2020] 1 LNS 931 Legal Network Series

28th edn. Para 41. If notice is not given, the assignee must give
credit for any payment made to the assignor by the debtor see
Public Finance Bhd’s case.”

Bearing in mind the assignment in this case fulfilled all the conditions
pursuant to section 4 (3) of the Civil Law Act, it is thus my finding
that there was a valid assignment of rights interest and assets of the
contract from Indera Management to the Plaintiff and I also find that
the Plaintiff had the locus standi to file this claim against the
Defendant for the amount outstanding.

It is my finding based on the evidence adduced that the Sessions

Judge was wrong to reject the Plaintiff’s argument that there was a
valid assignment of the contract and that the Defendant is bound by
that assignment.

Issue 2: Whether there was a valid contract between the Plaintiff

and the Defendant in accordance with the assignment

The Plaintiff in this case submitted that there was a valid contract
between the parties keeping in mind the fact that they had fulfilled
their part of the contract and had managed and operated the complex
without receiving any complaints from the Defendant. Furthermore
the conduct of the Defendant in remaining silent and allowing the
Plaintiff to continue with the contract brought on the inference that
the Defendant had no objections to the assignment.

On the facts the Plaintiff had served the Statements of Accounts and
invoices of the amount due for the services rendered and the
Defendant had acknowledged receipt signifying their implicit
admission that there was a valid contract existing between them and
the Plaintiff. The invoices that were prepared and served on the
Defendant were not disputed to by the Defendant.

12
[2020] 1 LNS 931 Legal Network Series

Having received and having never raised any objections or denied the
invoices issued, it is far too late for the Defendant to challenge the
matter after the Plaintiff had sent the notice of demand which
culminated in the filing of this suit. The Defendant did not terminate
the agreement after being informed that the Plaintiff had taken over
the contract from Indera Management Sdn Bhd. Since they did not,
they are now estopped from denying the validity of the contract.
Having failed to raise any objection at the first opportunity presented
to them means that the Defendant is bound by the terms of the
contract.

In this matter, the Plaintiff was justified to be under the impression

that the Defendant accepted the assignment of the contract from
Indera Management Sdn Bhd to them. The Defendant had never
verbally nor put into writing any objections to their taking over from
the previous property managers. Monthly statements of accounts had
been continuously delivered to the Defendant without any issues
raised. The same issue was never raised nor discussed in any of the
meetings or in any of the AGM held.

I am reminded of the words of Edgar Joseph Jr J in Tan Cheng Hock

v. Chan Thean Soo [1986] 1 LNS 42 where he plucked the remarks of
Lord Esher M.R in Weidemann v. Walpole [1891] 2 Q.B 534, 537
where he held:

“Here, we have only to see whether the mere fact of not

answering the letters, with nothing else for us to consider is any
evidence in corroboration of the promise. Earlier, in his
judgment, he said, Now there are cases — business and
mercantile cases in which the Courts have taken notice that, in
the ordinary course of business, if one man of business states in
a letter to another that he has agreed to do certain things, the

13
[2020] 1 LNS 931 Legal Network Series

person who receives that letter must answer it if he means to

dispute the fact that he did so agree.”

In my view there was no reason not to hold that the statement of

invoices rendered are sufficient proof of the amount due and owing by
the Defendant. The Defendant did not dispute that the Plaintiff had
rendered the services and had carried out the administration and
management of the complex. It is inequitable to say the least for the
Defendant who have enjoyed the benefit of the services rendered by
the Plaintiff for 4 years to now turn around and say there is no privity
of contract between them.

Having considered the entirety of the evidence, and in particular the

conduct of the Defendants, it is my view that the letter of assignment
dated 5.5.2015 which is in effect an extension of the contract dated
1.3.2013 as well as the invoices served on the Defendant all amounted
to a valid and enforceable contract between the Plaintiff and the
Defendant.

Issue 3: Whether the contract/Agreement was illegal

The Defendant argued that they were not liable for the amount
claimed because the Plaintiff was not registered with the Board of
Valuers, Appraisers and Estate Agents. They referred to section 22J of
the Valuers, Appraisers, Estate Agents and Property Managers Act
1981 which provides that a person must be registered as a property
manager and be issued with authority to practice or carry on the
business as a property manager. The Plaintiff was not registered as a
property manager. It was therefore the Defendant’s contention that the
contract was illegal and the Defendant was not liable to pay the
amount claimed by the Plaintiff.

14
[2020] 1 LNS 931 Legal Network Series

In reply the Plaintiff relied on a number of case authorities which

considered this issue and held that courts are now less ready to find a
contract illegal or unenforceable simply by reason of a statutory
provision. One of the cases relied on was Office Park Development
Sdn Bhd v. Surinder Singh Sewa Singh & Anor [2013] 1 LNS 1443
where the court held as follows:

“The Defendants submit that non-compliance with each of these

provisions stated above renders the “Deed” illegal and void. It
is my view that the Court have moved away from taking a
blanket position of holding the contract illegal by severing the
penal ability of the Defendant (if any) from the contractual
obligations of the parties, which remains intact. I refer to the
decision of the Supreme Court in Co-operative Central Bank Ltd
(in Receivership) v. Feyen Development Sdn Bhd reported in
[1995] 4 CLJ 300 where it was held:

“(i) the general rule is that where a contract is prohibited

by statute expressly or by implication, and the statute
stipulates for penalties for those entering into it, the
contract shall be void and unenforceable, unless saved by
the statute itself for there are contrary intentions which
can reasonably be read from the statute. However, the
general rule is subject to exceptions, and it is a question
of construction of the particular statute. There appears to
be a trend for courts to be less ready to find a contract
illegal or unenforceable simply by reason of a statutory
provision.”

This approach was also adopted by the Supreme Court in Coramas

Sdn Bhd v. Rakyat First Merchant Bankers Bhd [1994] 1 MLJ 369. In
my view even if the Defendant is correct in respect of the alleged
breaches, it would expose the Plaintiff and/or its Directors to penal

15
[2020] 1 LNS 931 Legal Network Series

sanctions whilst the “deed” remains valid” where a statute imposes a

penalty upon the making or performance of a contract, it is a question
of construction whether the statute intends ‘to prohibit the contract in
this sense, that is, to render, it void and unenforceable or whether it
intends only that the penalty for which it provides shall be inflicted if
the contract is made or performed.

We note that Greig and Davis on the Law of Contract, at pg 1117,

say that they see a trend in decisions whereby courts are now less
ready to find a contract illegal or unenforceable simply by reason
of a statutory provision.

However, in the present case, Parliament has provided a penalty

which is a measure of the deterrent which it intends to operate in
respect of non-compliance with s. 8. In this case it is not for the
court to hold that further consequences should flow, consequences
which in financial terms could well far exceed the prescribed
penalty and could even conceivably lead the plaintiff to insolvency
with resultant loss to innocent lenders or investors.

I accept the reasoning of counsel for the Plaintiff on this score. The
contention that the court should not be quick to find a contract is
illegal or unenforceable simply by reason of a statutory provision has
merits and I am of the view that the principles enunciated in the case
above apply to the case presently before this court. It is noted that the
Valuers, Appraisers, Estate Agents and Property Managers Act 1981
contains a penalty clause for any person who without lawful authority
acts as a valuer, appraiser or estate agent.

The contract between the parties should not be vitiated on that ground
especially after the Plaintiff had performed their part of the contract
for a period of 4 years without any objection or complain by the
Defendant. It would be inequitable for the Defendant to avoid paying

16
[2020] 1 LNS 931 Legal Network Series

the Plaintiff what was due to them by raising this objection during the
trial.

A pertinent mitigating factor to take into consideration is that the

subject matter of the contract was not illegal. Therefore I accept the
submission of counsel for the Plaintiff that while the absence of a
licence exposes the Plaintiff to penal sanctions the contract between
the parties remain valid and enforceable.

It is also the view of this court that the Defendant has enjoyed the
benefit of the services given by the Plaintiff without making due
payment for the same. It would be unconscionable and unjust to allow
the Defendant to escape liability when by conduct they had accepted
the services rendered by the Plaintiff for so long.

Based on the reasons given above I find that the Sessions Court Judge
had erred in concluding that the contract was void and unenforceable.
On the contrary I find that the Plaintiff had proved their case as
pleaded. Therefore I reverse the decision of the court below and allow
this appeal with costs.

Dated: 5 MAY 2020

(JULIE LACK)
Judicial Commissioner
High Court of Malaya
Shah Alam, Selangor Darul Ehsan

COUNSEL

For the appellant - Satishwaranji; M/s Hussein Akhtar Satishwaranji &

Co

17
[2020] 1 LNS 931 Legal Network Series

For the respondent - Rasvinder Kaur Sodhi; M/s Rasvin Sodhi & Co

Legislation referred to:

Civil Law Act 1957, s. 4 (3)

Civil Law Act 1956, ss. 4(3), 8

Evidence Act 1950, ss. 91, 92

Valuers, Appraisers, Estate Agents and Property Managers Act 1981, s.

22J

18