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31 May 2023

PROPERTY LAW
Late Payment Interest – Delay – Financier’s Loan – Tribunal Tuntutan Pembeli Rumah

Teoh Kok Seng v Heesland Sdn Bhd & Anor
Civil Appeal No. P-01(A)-44-01/2022 | Court of Appeal
- see the grounds of judgment here

Facts Teoh Kok Seong (the ‘Appellant’) had purchased a double-storey house from the Heesland Sdn Bhd (the ‘1st Respondent’). The firm of solicitors who were appointed and retained by the 1st Respondent to undertake the sale and purchase and loan application for the purchase is one Messrs Ong and Partners (“Lawyers for the 1st Respondent”). The Appellant had expeditiously signed the Sale and Purchase Agreement on 14.4.2017 (the ‘SPA’) which was only later dated and stamped on 2.5.2017. By this juncture, the procession of the loan documentation and disbursement of the loan sum is by and large out of the Appellant’s hands and control. The Appellant obtained a loan facility from RHB Bank (the ‘Financier’) to partly finance the purchase. The Financier subsequently issued a Letter of Notification and only after this Letter of Notification that the Lawyers for the 1st Respondent began to prepare the Loan Documents. Simultaneously the 1st Respondent issued its Progress Billing for the disbursement to the Financier, which allegedly falls due on 26.5.2017. The Progress Billing was issued to the Financier and was indicated to have been copied to the Appellant. However, no proof of actual issuance or receipt of the same progress billing to the Appellant were ever furnished by the 1st Respondent. Lawyers for the 1st Respondent had only 18 working days to ensure that the Financier disburses the loan sum within the 1st Respondent’s own set timeline. Unfortunately, Lawyers for the 1st Respondent had only submitted the loan documentation for execution to the Financier on 12.5.2017. Thus, there was already a gap of 10 days and remained 8 working days’ left for the Financier to process the loan documentation and disburse the loan within time. To no fault of the Appellant, the Financier had refused execution of the Loan Documentations for the reason that the Lawyers for the 1st Respondent had given an ‘expired’ land search which had gone beyond one month in time. The Loan Documentations were returned unexecuted to the Lawyers for the 1st Respondent. It was patently obvious that disbursement of the loan certainly could not have been made within the time set by the 1st Respondent. Notwithstanding, the 1st Respondent insisted to claim for late payment interest (‘LPI’) against the Appellant for the delays that were occasioned by the Lawyers for the 1st Respondent. Consequently, the Appellant took the matter before the Tribunal Tuntutan Pembeli Rumah (the ‘2nd Respondent’) whereby the 2nd Respondent without any written grounds have agreed with the 1st Respondent’s imposition of LPI against the Appellant. In protest against the impugned Award, the Appellant filed a Judicial Review Application in the Penang High Court which was ultimately dismissed. Hence this appeal.

Issues 1. Whether the learned High Court Judge was wrong in failing to find that the 2nd Respondent’s impugned Award was irrational for blaming the Delay against the Appellant?
2. Whether the learned Judge’s analysis and reliance upon ‘without prejudice’ correspondences were unlawful / illegal?
3. Whether the learned Judge was wrong in failing to find that the 2nd Respondent’s impugned Award was procedurally improper in view of the pre-maturity of the LPI Claim?

Held In allowing the appeal, Learned Judge Azimah Binti Omar held that the Learned Judge and the 2nd Respondent had fallen into irrationality in not embarking on any meaningful deliberation and analysis of the process and procedures of the Loan Documentation which had led to the delay occasioned by the Lawyers for the 1st Respondent. There was not an iota of mention of the Lawyers for the 1st Respondent furnishing an ‘expired’ Land Search which did not meet the Financier’s requirement (which caused the disbursement of the loan impossible to be made within time). There was also not any mention of the 1st Respondent’s own delay in paying the stamp duty after LHDN’s issuance of its Notice of Assessment. Never at any point in time was the delay attributable to the Appellant. As far as the Appellant is concerned, it is irrational for the 1st Respondent to impose LPI against the Appellant for the delay that the 1st Respondent itself and the Lawyers for the 1st Respondent have caused. Further, the Court of Appeal held that the learned Judge’s finding and consideration of the negotiated Settlement clearly contravened the trite law against raising and referring to documents regarding ‘without prejudice’ negotiations for settlement. The learned Judge had failed to appropriately appreciate and uphold the law on the inadmissibility of ‘without prejudice’ document. In conclusion, the learned Judge’s decision and the 2nd Respondent’s impugned Award had fallen into an appealable error considering that the entire critical discourse of the procedural propriety of the LPI demand was absent in the learned Judge’s Grounds of Judgment and the 2nd Respondent’s impugned Award. Hence the appeal was allowed and the learned Judge’s decision, findings, and orders were set aside.

Zul Rafique & Partners
{31 May 2023}

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