Can a buyer of a property rescind the sales and purchase agreement based on an alleged misrepresentation of having an unimpeded view?
Sureendhran Subramaniam & Anor v Lush Development Sdn Bhd & Anor | June 21, 2022 | High Court [2022] MLJU 1453
The Plaintiffs claimed against the 1st Defendant (developer) for an order to rescind the sale and purchase agreement for a property and for the 1st Defendant to refund the 2nd Defendant (bank) of monies released to the 1st Defendant.
The Plaintiffs claimed that the 1st Defendant had misrepresented to the Plaintiffs that the property will have an unimpeded view, a factor which the Plaintiffs claim was fundamental in their decision to purchase the property and which they claim had induced them to enter into the SPA with the 1st Defendant.
Subsequently there was construction of MRT Line 2 in the vicinity of the property which the Plaintiffs claimed had impeded the view from his property.
The High Court dismissed the Plaintiffs claim based on 3 grounds:
[1] There was no misrepresentation by the 1st Defendant because the representation in the brochure has not resulted in something different than what it actually was. The Plaintiffs were unable to show the court how his property’s view was impeded. Further, Clause 7.1 of the SPA states that the Plaintiff’s’ purchase of the property was not based on any representation by the 1st Defendant.
[2] The facts showed that by entering into the Deferred Payment Scheme with 1st Defendant, the Plaintiffs had agreed that the 3 post-dated cheques that he has delivered to the 1st Defendant will be treated as differential sum which will enable the 2nd Defendant to disburse the loan to the 1st Defendant. The 1st Defendant did not misrepresent the 2nd Defendant when it confirmed that the Plaintiffs had paid the differential sum to the 1st Defendant.
[3] The Plaintiffs had failed to specifically plead fraud or negligence in regards to their claim for misrepresentation. In the absence of fraud or negligence, the court will treat it as innocent misrepresentation which will not be sufficient for the Plaintiffs to rescind the SPA. A party cannot rescind a contract based on innocent misrepresentation unless it renders the subject of the sale different from what was contracted for.
Our partner, Ankit R Sanghvi represented the developer (1st Defendant) and successfully defended the Plaintiff’s claim to rescind the SPA. The High Court also ruled in favour of the 1st Defendant’s counterclaim against the Plaintiff.
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This Case Update is intended to be informative & is not intended to be nor should be relied upon as a substitute for legal or any other professional advice.
