Court’s Jurisdiction to Disregard Error in Contract
25 March 2019
In HTJ Development Sdn Bhd v DMZ Synergy Sdn Bhd & Anor  2 AMR 259, the High Court upheld the claim by the plaintiff against the defendants for the recovery of an introduction fee paid by the plaintiff to the first defendant pursuant to a referral letter in respect of an investment that was subsequently aborted.
In coming to its decision, the Court held that it had the jurisdiction to disregard an error in the name of the plaintiff in the referral letter.
The plaintiff issued a referral letter to the first defendant wherein it agreed to pay RM5.151 million to the latter for introducing the vendors of shares in a company to the plaintiff. The fees under the referral letter were to be paid in two instalments. The first instalment of RM3.0 million was to be paid upon the signing of an equity investment agreement between the plaintiff and the vendors of the company, and the balance of RM2.151 million was to be paid within 14 days of notification by the plaintiff to its solicitors that the acquisition can be completed.
The referral letter required the first defendant to refund the referral fee to the plaintiff in the event that the acquisition cannot be completed for any reason. The first defendant’s obligation was guaranteed by second defendant under a guarantee.
The letter head of the referral letter was not in the plaintiff’s name but that of one ‘HJT Development Sdn Bhd’. The first instalment of RM3.0 million under the referral letter was paid by the plaintiff’s holding company on its behalf.
As the investment could not be completed, the plaintiff commenced proceedings against the first defendant under the referral letter and the second defendant under the guarantee to recover the sum of RM3.0 million paid to the firs defendant under the referral letter.
The defendants opposed the plaintiff’s claim on various grounds, one of which was that if the plaintiff’s name had been printed in error on the referral letter, the plaintiff must first rectify the error pursuant to section 30 (rectification of instrument due to fraud or mutual mistake) of the Specific Relief Act 1950. The defendants’ argument was rejected by the Court.
The Court held that it is trite law that where there are typographical errors in a contractual document, rectification is not necessary if it is an obvious mistake or misnomer, particularly when there is no confusion and no prejudice. The Court cited the Malaysian Supreme Court decision of Ng Siew Wah & Ors v MAA Holdings Sdn Bhd & Anor  2 MLJ 332, in support of this proposition.
Notwithstanding the error in the plaintiff’s name on the letter head of the referral letter, the judge was of the view that there was no confusion over the plaintiff’s identity. Firstly, the plaintiff’s name was correctly stated in the description of the ‘purchaser’ in the caption of the referral letter. Secondly, the referral letter referred to the purchaser’s acquisition of shares under the investment agreement and thirdly, the referral letter also referred to the issue of the guarantee by the second defendant and the guarantee that was issued correctly identified the plaintiff as the beneficiary of the guarantee.
The Court further noted that the letters issued by the plaintiff’s solicitors identified the plaintiff as their client and the defendants’ response through their solicitors did not dispute the identity of the plaintiff as the party to the referral letter and the guarantee.
The Court opined that it is clear and obvious that the heading of the referral letter was a “typographical blunder” without any legal or factual adverse consequences, and at worse, a mere misnomer. The Court found that the error in the heading was nothing more than a typographical error which did not prejudice or confuse any party. Accordingly, the judge concluded that the court had the requisite jurisdiction to ignore the mistake (misnomer) and to construe that the referral letter was issued by the plaintiff.
This decision affirms the Court’s jurisdiction to dispense with the requirement to rectify an error in a contract if the error is an obvious mistake or misnomer which causes no confusion or prejudice to any party.
The plaintiff was represented in this case by our Ms Sharon Chong and Ms Janice Ooi Huey Peng.