In this case, the respondent had agreed to transfer her land at Kulai to the second appellant as security for an advance of $220,000 to the respondent on her account. The money was to be used to pay off a charge on the land and also to pay the first appellant an amount payable by the brother-in-law of the respondent for whom the first appellant had stood surety in getting an advance from a bank. The first and second appellants were advocates and solicitors who acted for the respondent in preparing the necessary documents. The transfer and memorandum in favour of the second appellant were signed on 30 March 1974. The transfer was registered on 22 July 1975. On 31 July 1975, the second appellant executed a transfer of the land in favour of the third appellant purportedly in consideration of $220,000 but no consideration in fact passed. Subsequently, the land was again transferred to a land development company almost wholly-owned by the first appellant. The land was eventually sub-divided and sold to the public. The claim upon which the respondent had thus obtained judgment was based upon a number of grounds - fraud, breach of contract, undue influence and breach of trust. The learned trial judge found that fraud had been established against all three appellants and his finding was upheld by the Federal Court (see [1983] 2 MLJ 127 and 196). The learned trial judge and the Federal Court were at one in holding that the first and second appellants were guilty of fraud in that they falsely represented to the respondent that the transaction of 30 March 1974 was of the nature of a security such as would enable her to redeem the property by repaying the sum of $220,000 at any time, when it was in fact an outright sale coupled with an option to repurchase the property for that sum within a year, and further that they falsely represented that it was their intention to give effect to the transaction as a security one, when in fact they had no intention of allowing the respondent to redeem the property at any time. Both courts also found that the respondent had been induced by those misrepresentations to enter into the transaction. This was an appeal from the judgment of the Federal Court affirming Abdul Razak J's judgment, whereby the appellants were ordered to pay the respondent by way of damages the sum of $973,000 with interest at 6% per annum on the sum of $370,260 from July 1975 till July 1982 and interest at 8% per annum on the judgment sum from 21 November 1982 (see [1984] 1 MLJ 175).

Held: (1) the whole evidence of facts and circumstances was amply sufficient to justify the finding that both the first and second appellants were jointly involved in bringing about the transaction with the respondent and that they were similarly motivated; (2) there were no sufficient grounds, so far as the findings of fraud against the first and second appellants were concerned, for a departure from the practice whereby the Board refrains from disturbing concurrent findings of fact in the two courts below; (3) the third appellant's appeal should be allowed by consent upon agreed terms. He had no hand whatever in the events of 30 March 1974 which form the basis of the respondent's case of fraud against the other appellants; (4) the object of damages for the tort of deceit, as for other torts, is to put the injured party into as good a position financially as he would have been in if the tort had not committed; (5) the learned trial judge was right in principle to take into account in the assessment of damages the value which the land, if the respondent had not been deprived of it, would have borne at the date of judgment; (6) there can be no doubt that a judge is not entitled to use his own particular knowledge in arriving at an assessment of damages. In the general exercise of his judicial functions he is, however, entitled to rely on what is common and public knowledge. The scope of common and public knowledge may vary quite widely from one country to another. The fact of a fall over a period in the value of money or a rise in the value of land is a matter which is capable of being one of common and public knowledge. As to whether or not it is so in Malaysia is a question upon which their Lordships would hesitate to venture an opinion. The judiciary of Malaysia are the persons best qualified to answer the question. The learned trial judge has found the particular matter to be common and public knowledge there, and his finding has not been criticized by the Federal Court. Their Lordships were not prepared to interfere with that finding; (7) the first and second appellants' appeal against affirmation by the Federal Court of the order of Abdul Razak J of 17 July 1982 should be dismissed, and their appeal against the Federal Court's affirmation of the order of Abdul Razak J of 21 November 1982 should be allowed to the effect only of substituting in that order the sum of $797,000 for the sum of $973,000 and the date 20 September 1976 for the date July 1975. The respondent was not dispossessed of the land until 20 September 1976 and it is from that date, not July 1975, that the interest should run; (8) the first and second appellants should pay the respondent seven-eighths of her costs before the Board.

Datuk Jagindar Singh & Ors v Tara Rajaratnam [1986] 1 MLJ 105 Privy Council Appeal from Malaysia (Lord Keith of Kinkel, Lord Wilberforce, Lord Brandon of Oakbrook, Lord Mackay of Clashfern and Sir Denys Buckley).

The land out of which the present action arose was originally registered in the name of the deceased. The deceased had died intestate in 1946 and the beneficiaries of his estate were his wife and his four sons ('Mahmud, Isa, Mat Rejab and Mat Diah'). Pursuant to a distribution order made by the Land Administrator in 1982, the land was transferred to Isa, Mat Diah and the two children of Mahmud ('Ariffin and Sabariah'). The plaintiff, who is the daughter and the legal representative of the original plaintiff who had also passed away, alleged that all the aforementioned beneficiaries of the deceased's estate had, in 1970, entered into an agreement with the original plaintiff for the sale of the land to the latter. The plaintiff thus applied for a declaration that she is the proprietor of the land, and for an order for specific performance of the said agreement.

Held, dismissing the application: (1) the said agreement was not a valid contract for the sale of the land; (2) the agreement was made only between the original plaintiff and Mahmud who was only one of the five beneficiaries of the deceased's estate. There was nothing in the agreement which stated that all the five beneficiaries of the deceased's estate were parties to it. This was the case despite the fact that Mahmud had received the purchase price of the land in full, and the fact that the original plaintiff had taken possession of the land and had lodged a caveat in respect of it in 1981; (3) although the thumbprints of all the five beneficiaries of the deceased's estate appeared in the said agreement, it was not stated for what purpose or in what capacity the other four beneficiaries had affixed their thumbprints; (4) the testimony of the plaintiff's witness to the effect that the purchase price of the land was received by Isa was inadmissible because of ss 91 and 92 of the Evidence Act 1950. This was because the said testimony of the witness flatly contradicted the terms of the agreement between the original plaintiff and Mahmud.

Tijah bte Salleh v Md Diah bin Ali & Ors Civil Suit No 189 of 1984 High Court, Alor Setar (Mohd Hishamudin JC).

Yeo Gek Lang v Alice Wee 1978 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

See CONTRACT, Vol 3, para 1546.

Mary-Ann Arrichiello v Tanglin Studio Pte Ltd 1980 High Court, Singapore (Chua J).

See CONTRACT, Vol 3, para 2448.

The plaintiffs signed a contract with the defendants whereby the plaintiffs agreed to purchase and the defendants agreed to sell a Housing Development Board flat for a consideration of S$228,000. The plaintiffs paid the deposit of S$5,000. They also attended at the office of the HDB and paid S$17,905.15 towards the resale proceeds, the legal and incidental fees. Before the scheduled date for completion, it was announced that there would be a compulsory acquisition of that block of flats. The compensation package was very attractive. After the announcement, the defendants' solicitors wrote to the plaintiffs stating that the defendants did not wish to proceed with the sale and enclosed a cheque for S$27,800 being the refund of the deposit together with the agreed 10% liquidated damages stipulated under the agreement. The plaintiffs refused to accept the unilateral repudiation of the agreement and commenced these proceedings claiming, inter alia, specific performance of the agreement, alternatively damages and a declaration that they were entitled to compensation from the Collector of Land Revenue for the compulsory acquisition of the flat. The plaintiffs applied for summary judgment, which application was dismissed. The assistant registrar upheld the validity of cl 5 of the agreement providing for fixed liquidated damages. The plaintiffs appealed. The defendants also filed a cross-appeal asking for a reversal of the decision only in so far as there should have been a declaration made that the agreement was frustrated.

Held, dismissing the appeals: (1) the cause of non-completion may not have been envisaged by the clause but the consequence thereof had been clearly spelt out. Clause 5 contained no option for the plaintiffs to elect whether to accept the defendants' breach or to hold them to the bargain, the provision automatically discharged the party in breach, be it the defendants or the plaintiffs. The parties had adequately provided for the eventuality of a breach of the agreement, even where the equitable/beneficial interest in the flat would have passed to the purchasers, were it not for cl 5. As it is not the function of the courts to rewrite contracts made between willing parties, the decision made below was affirmed; (2) cl 5 of the agreement provided that in the event the plaintiffs breached the agreement, their deposit would be forfeited and, in addition, they had to pay the defendants compensation equivalent to 10% of the purchase price; if the defendants breached the agreement, they had to refund the deposit to the plaintiffs and similarly compensate the plaintiffs 10% of the purchase price. Thereafter, neither party would have any claim against the other. The wording of cl 5 was clear and unambiguous. The court disagreed with the submission of counsel for the plaintiffs that the clause did not contemplate compulsory acquisition. There was no necessity to provide for such an eventuality as the effect of breach or non-completion of the sale had been provided;it was submitted by counsel for the defendants that the agreement was frustrated. However, the acquisition exercise in this case would not frustrate the agreement as the position vis a vis the flat had not been altered fundamentally. It could not be said that after the sale and purchase had been completed, what would be conveyed to the plaintiffs would be an estate which was unusable and unsaleable let alone that the plaintiffs would receive compensation far below the market value of the flat.

Tay Ah Poon & Anor v Chionh Hai Guan & Anor Suit No 2020 of 1995 High Court, Singapore (Lai Siu Chiu J).

The plaintiffs' case is that the second plaintiff had lent money to the first defendant over a period of time whereby the total sum owing between 1977 and 1978 was RM30,000. In 1975 or 1976, the first defendant constructed a house on the portion of a whole land closer to Serian ('the Serian portion') and allowed the plaintiffs to live there. In 1978, an agreement was allegedly reached with the first defendant to sell the Serian portion to the plaintiffs for RM50,000, with the RM30,000 owed to be deemed as deposit and the balance to be paid within six months ('the agreement'). The plaintiffs claim that they wanted to pay the balance before the expiry of the six months but the first defendant did not come to collect it. Half of the whole land is now registered in the name of the second defendant and as such, the plaintiffs want the agreement to be specifically performed. The first plaintiff therefore sought for a declaration that he is entitled to retain possession of the Serian portion. Alternatively, he sought for an order that he need only pay the first defendant as full and final settlement for the Serian portion the sum of RM20,000 together with any interest outstanding under the charge with Hock Hua Bank as at 31 July 1990. The first defendant denied the existence of the loan from the second plaintiff. Further, while admitting the existence of a sale agreement of half of the whole land to the first plaintiff, it was denied that the subject of the sale was the Serian portion. The first defendant also contended that the sale agreement had lapsed due to total failure of consideration as the first plaintiff did not pay for the agreed price. The second defendant's defence is one of bona fide purchaser of value.

Held, dismissing the plaintiffs' prayers: (1) the exhibits tendered do not all state that the Serian portion was the subject matter of the agreement. The existing caveat and the accompanying statutory declaration do not make any reference as to which portion of the whole land has been caveated. In the circumstances, and having considered the evidence and the demeanour of the parties, and their witnesses, on a balance of probabilities, the first plaintiff had failed to prove that it was the Serian portion that was the subject matter of the government; (2) having observed the first defendant in the witness box and considered the evidence, the court was satisfied that on a balance of probabilities, the selling price agreed under the agreement was RM50,000 with RM30,000 having been acknowledged receipt by the first defendant; (3) having evaluated the evidence adduced together with the demeanour of the parties and their witnesses, on a balance of probabilities the plaintiffs' version regarding the attempts to pay the RM20,000 was more believable; (4) the first defendant should not be allowed to say that the agreement had lapsed or that he had rescinded it as early as in 1986. If he were minded to enforce the time stipulation in the first place, he would have done so when he did not receive the RM20,000 payment within six months. Further, he would not have gone along with the negotiation as late as in 1990. There was therefore no total failure of consideration and no delay resulting in the lapsing or rescission of the agreement; (5) the plaintiffs had not made out any case against the second defendant; (6) although the plaintiffs' prayers are refused, the court may make an order as it deems fit in the circumstances. The plaintiffs' statement of claim specifically claimed the Serian portion but they should not be denied of justice. There is nothing in the plaintiffs' pleading which shows that specific performance is the only appropriate remedy. Justice requires, in the court's judgment, that damages be assessed and be awarded to the first plaintiff.

Kho Yian Kim & Ors v Then Fah Chin & Anor [1993] 1 CLJ 497 High Court, Kuching (Richard Malanjum JC).

This was an action for specific performance of an agreement for sale of land between the plaintiff and the defendant. The plaintiff sued as administratrix of her father's estate, her mother's estate as well as in her own right. The plaintiff had been in possession of the land for many years following possession previously by her late father-in-law and her late husband. The title deed had been in her possession since 1943. The land had been subject to two agreements for sale. The first agreement was made in 1943 between the plaintiff's late husband and the mother of the defendant who was the administratrix of her mother's estate, and the second made in 1948 was a written agreement between the plaintiff and the mother of the defendant. The plaintiff's claim against the defendant as administratrix of her mother's estate was for specific performance of the second agreement in 1948, and her claim against the defendant in her personal capacity was a declaration that the defendant was a trustee of the land for the plaintiff. The court had to decide whether pursuant to s 45 of the Administration of Estates Enactment No 1 (Kedah) it could grant permission so that a registrable transfer by sale be made in favour of the plaintiff.

Held: (1) taking into consideration the facts and surrounding circumstances and having regard to the long period of uninterrupted possession by the plaintiff, her possession of the document of title and paying of quit rents, the court ought and should grant permission for the transfer of the grant of title to be registered in the name of the plaintiff; (2) the plaintiff's delay in bringing action for specific performance could not be held against her as she was in a sense the equitable owner; (3) the defendant became a trustee of the plaintiff upon the death of the previous trustee, who was the mother of the defendant as the defendant was the administratrix of her mother's estate.

Itam bte Saad v Chik bte Abdullah [1974] 2 MLJ 53 High Court, Alor Star (Syed Agil Barakbah J).

Where an agreement to transfer land contains a monetary penalty to be paid in default the transferor is not automatically given the choice of transferring the land or paying the penalty. The court must look at the intention of the parties.

Chong v Yew Chui Tieh [1952] SCR 39 Supreme Court, Sarawak, North Borneo and Brunei

The plaintiffs in this case applied for and obtained an order for specific performance of an agreement alleged to have been entered into by the plaintiffs and the defendant whereby the plaintiffs agreed to purchase and the defendant agreed to sell the property known as No 3, Fernhill Road, Singapore, for the sum of $140,000. Chua J construed three letters which passed between the parties and dated 6 June 1979, 27 June 1979 and 9 July 1979 and held that 'a contract may be made by letters and that the mere reference in them to a future formal contract will not prevent their constituting a binding bargain'. Hence, the learned judge concluded that the said three letters constituted a binding contract. The defendant appealed.

Held, allowing the appeal: the letter of 9 July 1979 from the appellant's solicitors showed that the appellant had contemplated and intended that the bargain would be struck in the usual manner by the parties signing and exchanging an agreed agreement for sale and purchase prepared by solicitors.

Quek Choon Huat v RM Seow & Anor 1980 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Raja JJ).

This is an application by the plaintiff for specific performance of the agreement dated 21 September 1978 pursuant to O 81 of the Rules of the High Court 1980. The defendant agreed to sell and the plaintiff agreed to purchase lot no 573, mukim of Bukit Katil, Malacca (hereinafter referred to as the 'said lot') together with a single-storey terrace low cost house (hereinafter referred to as the 'said building') to be erected by the defendant. By cl 20 of the said agreement, the defendant agreed to execute a valid and registrable transfer of the said lot and the said building to the plaintiff upon the issue of the document of title in respect of the said lot and upon the plaintiff having completed the payments of the purchase price. The plaintiff had completed the payments of the purchase price. The title of the said lot was issued by the Land Office to the defendant on 14 May 1979 but was charged to Bank Bumiputra. On the failure of the defendant to execute a valid and registrable title of the said lot and the said building, the plaintiff filed a writ of summons on 13 November 1986. Nothing was done to the said summons until 2 November 1989 when the plaintiff filed the present application by way of summons-in-chambers. By that date the defendant was already in a bad shape. By an order of the court dated 16 November 1988 the defendant was placed under receivership.

Held, allowing the plaintiff's application: the appointment of a receiver does not of itself afford the vendor company a defence to a claim by the purchaser for specific performance of the contract to sell land, which gives the purchaser an equitable interest in the land. This interest is not destroyed by the fact that the vendor company is placed in receivership by a debenture holder prior to completion of the contract. The vendor company remains liable to complete the contract.

Lee Chee Chen v Ayer Keroh Heights Sdn Bhd [1991] 1 MLJ 63 High Court, Malacca (Mokhtar Sidin JC).

Seven suits were filed originally in this case but at the opening of the hearing, all parties agreed to have one case as a test case with the other six to be bound by that decision. The plaintiff was a foreign-based company who had entered into a sales and purchase agreement with the defendant whereby the plaintiff agreed to purchase and the defendant to sell to the plaintiff one unit of a condominium. It was an implied condition precedent to the sales and purchase agreement that approvals from the Jawatankuasa Pelaburan Asing and the Melaka State Authority pursuant to s 433B of the National Land Code 1965 for the acquisition of the property were to be obtained as the plaintiff was foreign-based. As the Jawatankuasa Pelaburan Asing had rejected the plaintiff's application for approval, the plaintiff alleged that the sales and purchase agreement had been rendered null and void and the plaintiff thus entitled to the refund of all moneys paid to the defendant towards the purchase price of the property. The defendant applied to the court for security for costs.

Held, dismissing the defendant's application: (1) it was no longer an inflexible rule that a plaintiff resident abroad should provide security for costs but for practical reasons courts generally still considered it appropriate to require that security; (2) though the plaintiff had no immovable property or assets deposited in banks or in any financial institution here, the defendants were in possession of RM125,550 of the plaintiffs' progressive payments; (2) the defendants only wanted the sum of RM27,900 to be forfeited as compensation in the even of being unsuccessful in obtaining the specific performance. This meant that after deducting that sum, there still was left a balance of RM107,650, more than ample to cover any potential costs.

Ananda Trading (Singapore) Pte Ltd v Palmerston Holdings Sdn Bhd Guaman Sibil No 22-57-1996—High Court, Malacca (Suriyadi bin Halim Omar J).

The plaintiff's claim was for the specific performance of a contract for the sale of a shop unit known as B1-124 Lucky Plaza, Orchard Road ('the property'). The two defendants were brothers who held the property as tenants-in-common in equal shares. As originally framed, the claim was against both defendants in respect of the whole of the property, and alternatively against the first defendant only for specific performance in respect of his half undivided share of the property, and damages for breach of warranty of authority or misrepresentation. There originally was and remained a claim for damages in lieu of specific performance. As the plaintiff was unable to serve the writ on the second defendant, who had apparently migrated to Australia, he proceeded on the alternative claim against the first defendant alone for specific performance (or damages in lieu) in respect of the first defendant's half undivided share in the property, and for damages for breach of warranty of authority or misrepresentation. At a meeting between the plaintiff and the first defendant on 2 May 1987, where the sale of the property was discussed, the first defendant allegedly made representations that he was authorized to sell the property on behalf of his brother and co-owner. At the end of the meeting, a document, PB-1, was drawn up and signed by the parties, and a cheque for S$5,000 was handed by the plaintiff to the first defendant. The plaintiff contended that the document constituted a valid option to purchase the property, exercisable by him within 14 days by the payment of the balance of the 10% of the purchase price of S$470,000. The first defendant, on the other hand, contended that the sale was subject to the confirmation of his mother and to the agreement of his brother, the second defendant, and that it was also subject to the execution of a contract to be drawn up by solicitors. He also said that PB-1 was merely an acknowledgement of the receipt by him of the S$5,000 cheque. He also raised a defence based on the Statute of Frauds.

Held, allowing the plaintiff's claim: (1) it was found as a fact that the parties reached a clear and firm agreement that the option was to be exercised within 14 days by the plaintiff paying the balance of 10% of the purchase price, failing which the option would lapse. Unfortunately, PB-1 did not reflect accurately what the parties undoubtedly agreed on this point; (2) the English Statute of Frauds 1677 is a part of our local law; (3) it is well established that to satisfy this statutory requirement the contract in question itself need not be in writing, but all its material terms must be evidenced in writing. This is commonly referred to as requiring the specification of the four P's - the parties, the property, the price, and any other agreed provisions; (4) the written memorandum need not take any special form, as long as it is signed by the defendant. It also appears that the memorandum need not explicitly state the required material terms, the four P's, as long as these terms are ascertainable or identifiable from the particular circumstances of the case; (5) the material terms of the contract in question were the parties, the price, the property, the grant of the option to purchase the property, the payment of S$5,000 as an option fee as consideration for the grant of the option, the payment of 10% of the purchase price less the option fee as the manner of exercise of the option, the time of 14 days in which the option was to be exercised, and the sale of the property with vacant possession. It was clear that all the terms except the one concerning the exercise of the option were stated in the plainest possible manner; (6) in these circumstances, it seemed that the only way in which the statutory requirement for evidence in writing of all material terms may be satisfied, was by way of the exercise of the court's equitable jurisdiction to rectify a document which did not accurately reflect the true bargain struck by the parties; (7) the equitable remedy of rectification presupposes that the instrument on which a party relies does not reflect or does not reflect correctly the parties' true agreement. This was just the sort of situation where authorities decided under the statute have uniformly held that the oral agreement is for that reason not enforceable. However, following United States v Motor Trucks [1924] AC 196, it was held that rectification was available as a remedy in the instant case and this even though the point had not been pleaded by the plaintiff; (8) with regard to the claim for specific performance, in cases of breaches of contracts for the sale of land, damages are not usually regarded as an adequate remedy, and specific performance is normally ordered. However, the instant case is unusual in that it was only open to the court to make a disposition of the first defendant's half-share in the property as the plaintiff had proceeded against him alone; (9) however, following Horrocks v Rigby (1878) 9 Ch D 180 and Abdul Karim Basman v Weekes [1950] 2 All ER 146 an order for specific performance of the contract to the extent that the first defendant be ordered to convey his half-share in the property to the plaintiff, with a corresponding abatement of half of the agreed purchase price is made; (10) as for damages, the plaintiff as the injured party was to be put as far as possible in the position in which he would have been had the warranty of authority been true. If the first defendant had truly been authorized to act on his brother's behalf in the matter, he would have bound his brother to the contract to grant the option to sell the property to the plaintiff. The plaintiff had suffered the loss, as a result of the first defendant's breach, of the ability to specifically enforce the conveyance of the second defen-dant's half-share in the property. The measure of damages was the present value of the second defendant's half-share in the property less the price the plaintiff would have had to pay for that half-share according to the contract.

Ku Yu Sang v Tay Joo Sing & Anor [1993] 3 SLR 938 High Court, Singapore (Warren LH Khoo J).

[Annotation: Affirmed in part on appeal. See [1994] 3 SLR 719.]

Ong, the second and third defendants and one Inn Swee were partners in a hotel business. All four paid for the hotel property, but only the first three were registered as owners (tenants-in-common). After Inn Swee died, his widow Madame Ho stepped in his shoes as partner. Thereafter, the other partners executed a declaration of trust whereby they declared that the property was held in trust for Madame Ho and themselves. The first defendant was incorporated to take over the business of the partnership, with the four landowners as directors with one share each. At the first directors' meeting on 30 July 1981, each was allocated a monthly salary. The directors also resolved to purchase the property from the four landowners at the valuation price. The purchase price would be shares in the company. Upon the sale, the allotment of shares would be in the proportions of the interests in the partnership. On 31 July 1981, the directors passed a resolution to appoint a banker. In September, the banker approved an overdraft facility for the company on condition that the property be transferred to the company and mortgaged to the bank. At a directors' meeting in December 1981, the directors resolved, in Madame Ho's absence, to purchase the property and obtain the bank overdraft. However, in deference to Madame Ho's objections, the purchase was abandoned. Eventually, Madame Ho was removed as director and her salary stopped. Ong died in November 1982. Probate was granted to the first and second plaintiffs, his sons, in 1983, but was not extracted until 1991 because there was no money to pay estate duty. The third plaintiff, also one of Ong's sons, took his place as director and chairman. In 1983, the third plaintiff and the second and third defendants bought out Madame Ho's share in the partnership, her one share in the company and her beneficial interest in the property. In 1983 also, the directors were paid their salaries by way of payment to their relatives who were recorded as employees. This ploy was to save the higher rate of income tax if the directors received the salaries solely. In 1990, the old system was reverted to. In 1985, the third plaintiff resigned as director. The first plaintiff took over and represented the deceased's estate for the purpose of the business. The parties fell out and the first plaintiff could not get re-elected to the board because the second and third defendants did not support him. The company then discontinued the first plaintiff's remuneration. The plaintiffs sued for rental on behalf of Ong's estate because the consideration for use of the property was by the directors' salaries. The defendants contended that there had been no agreement to pay rental. The company was occupying the land as a licensee pending completion of the purchase. They counterclaimed for specific performance of the purchase agreement.

Held: (1) there was no agreement between the company and the four landowners to pay rent. Since the purported rent was in the form of salaries, this was admission that there was no fixed rent, but it fluctuated with the income of the hotel. The salaries per se prove an agreement to pay rent, eg Madame Ho's salary ceased with her directorship. Even the plaintiffs treated their salaries as personal income by paying tax and contributing to the Central Provident Fund thereon; (2) the plaintiffs had intended to transfer the hotel property and business from the four landowners to the company, for which reason the company was incorporated; (3) s 4 of the Statutes of Frauds 1677 validates an oral sale agreement for land so long as a written memorandum or note signed by the party to be charged with the agreement evidenced it. There were two memoranda of sale here. Firstly, there were the minutes of the 30 July board meeting which authorized the purchase and contained the three elements of parties, property and price. The party to be charged, the deceased (and now his estate), had signed the minutes. Secondly, the December 1989 resolution also contained all three elements. The deceased signed both minutes as director of the company and not in his personal capacity; (4) there was no lease agreement, but there was a sale and purchase agreement for which there was part performance because the company went into possession of the property in 1981. It expended money to maintain and improve the property, and paid the property tax; (5) the defendants were not guilty of laches, which would prevent specific performance of the agreement. Since the first and third plaintiffs as directors did not enforce the agreement, they could not later complain, in their capacity as representatives of the deceased's estate, of the company's inactivity. The plaintiffs had contributed to the delay by not arranging earlier extraction of the grant of probate to the plaintiffs. The defendant company did not lose its rights to perfect its legal title because of the delay; (6) on the undertaking of the second and third defendants that they would, as vendors, complete the sale of their shares in the property to the first defendant, the plaintiffs would sell the property on the terms of the minutes of the 30 July 1981 meeting. They would sell their interests and those of the estate, to the first defendant company. The specific performance of the agreement would be within three months of the order.

Wong Kim Soon & Ors v Ghim Peng Hotel Pte Ltd & Ors Suit No 2517 of 1991 High Court, Singapore (Judith Prakash J).

Yeo Long Seng v Lucky Park (Pte) Ltd 1968 High Court, Singapore (Winslow J).

See CONTRACT, Vol 3, para 2047.

The premises No 95, Jalan Senang, Singapore, was built by the developers Kim Toh Realty Ltd. The plaintiff was a sub-purchaser of the said premises. Some time in 1973 the defendant (a sub-sub-purchaser) offered to purchase the said premises at the price of $164,000 subject to contract. The defendant paid the 10% deposit to her own solicitors. Subsequently the defendant's solicitors corresponded with the plaintiff's solicitors as to the terms of the contract. The defendant's solicitors forwarded the engrossment of the transfer and restriction to the plaintiff's solicitors for execution by the developers and the plaintiff. The defendant's solicitor also told the plaintiff's solicitor on the telephone that she 'did not think there was the necessity of a formal contract'. The defendant subsequently refused to complete the purchase. The defendant contended that as there was no formal contract in existence between the plaintiff and the defendant the plaintiff could not succeed.

Held: (1) the correspondence that passed between the parties, execution of the transfer and restriction by all the parties (except the defendant) and the evidence on oath of the solicitor for the defendant to the effect that there was no necessity of a formal contract established beyond doubt the existence of a contract at that stage sufficient to satisfy s 4 of the Statute of Frauds 1677; (2) the defendant by failing to complete the contract was in breach thereof and the plaintiff was therefore entitled to judgment for $22,000, ie the difference between the contract price and the price at which the property was eventually sold.

Alice Wee v Yeo Gek Lang 1978 High Court, Singapore (D'Cotta J).

Tai Tong Realty Co (Pte) Ltd v Galstaun & Anor 1972 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Tan Ah Tah JJ).

See CONTRACT, Vol 3, para 1937.

Ong Chong Soo v Tan Eng Tai & Anor 1982 High Court, Singapore (Sinnathuray J).

See CONTRACT, Vol 3, para 2508.

On 2 April 1993 the first appellant and the respondent signed an agreement for sale. The first appellant also signed a receipt for S$50,000 paid by the respondent. Both documents were prepared on the letterhead notepaper of Chap Mai Jewellery Manufacturer (S) Pte Ltd of which the first appellant was the managing director, and were signed in his office. The next day, 3 April 1993, the respondent's solicitor wrote to the first appellant's solicitors a letter, inter alia, confirming the contract and requesting for the sale and purchase agreement. They received this reply dated 12 April 1993 from the first appellant's solicitors enclosing the sale and purchase agreement for their execution and return. The agreement for sale and purchase contained many terms not stated in the agreement for sale dated 2 April 1993. It was expressed to be made between the first appellant and the second defendant as vendors and the respondent as purchaser. It was unsigned. The respondent signed it without any amendments and issued a cheque for the balance of the 10% deposit referred to in it. The agreement for sale and purchase and the cheque were forwarded with her solicitors' letter of 14 April 1993 duly executed. In spite of reminders by letters dated 27 April 1993 (which referred to another letter dated 22 April 1993), 29 April 1993 and 30 April 1993 and a notice dated 5 May 1993 there was not a word from the first appellant's solicitors. On 7 May 1993 the writ in this action was issued and in the statement of claim the respondent (plaintiff in the action) alleged a contract by the agreement for sale dated 2 April 1993, payment of the deposit of S$50,000, the breach of the contract and the respondent's readiness and willingness to complete it. Counsel for the first appellant submitted that there was no concluded agreement. He said that the parties were in continuing discussions and negotiations. His case was that the parties had not agreed on (1) the completion date, (2) the date for giving vacant possession, (3) the period the first appellant and the second defendant were allowed to stay on after completion, and (4) the terms for such occupation.

Held, dismissing the appeal: from the agreement for sale it was clear that the essential terms had been agreed. The parties were the first appellant as vendor and the respondent as purchaser; the parcels comprised the property at 2 Swiss Club Road and the price was S$4.05m. The completion date if agreed upon was a material term but if it was not agreed upon the contract was nevertheless valid and enforceable. The same could be said about the terms concerning vacant possession and occupation by the first appellant after completion. It would be different if it was alleged that some term had been agreed which was not mentioned in or referred to in the agreement for sale, but that was not the first appellant's case.

Ang Suan Hong v Sim Thye Siang & Anor Suit No 985 of 1993 (Registrar's Appeal No 118 of 1993) High Court, Singapore (Lim Teong Qwee JC).

In January 1981, the respondent (Milton Tan) approached the first appellant (Dr Huang) for a loan of S$20,000. Dr Huang referred Milton Tan to his wife (Mdm Chow), the third appellant, as she was the one who 'held the money.' Mdm Chow agreed to lend Milton Tan the money provided there was security. Milton Tan had a piece of land which he offered as security. He handed over to Mdm Chow the title deeds of the land. On viewing the land, Mdm Chow told him she would provide him the money only if he agreed to sell the land to her. Milton Tan reluctantly agreed. He drafted a document (the 26 January agreement) agreeing to sell the land for S$200,000 with vacant possession, naming Dr Huang and Mdm Chow as the purchasers of the land. Mdm Chow then handed Milton Tan a cheque for S$20,000. The following day, at Mdm Chow's request, Milton Tan deleted the names of Dr Huang and Mdm Chow and substituted the name of their son, the second appellant (Ran Chi), as the sole purchaser in the document (the amended 26 January agreement). On 2 February 1981, Dr Huang and Milton Tan signed a typewritten document (the option) in the presence of Dr Huang's lawyer, Mr Advani, at Mr Advani's office, concerning the sale and purchase of the land. The option provided that the land would be sold 'for the price of S$200,000 with vacant possession subject to contract.' The option further provided that in the event that a contract was not signed within two weeks of the date of the option, Milton Tan was to return the sum of S$50,000 paid to him with interest. Until then, the purchaser of the land was to hold the title deeds of the land as an equitable mortgagee. On the same day, Mdm Chow paid Milton Tan a further sum of S$30,000. The sale of the land did not proceed despite exchanges of correspondence between lawyers representing the parties. Eventually, Milton Tan claimed for an account of what is due from him to Dr Huang or alternatively, to Dr Huang and Mdm Chow under and by virtue of an equitable mortgage evidenced by the option. He sought a return to him of the title deeds of the land on redemption of the equitable mortgage. Dr Huang's defence was that he had nothing to do with the transactions and that he signed the option only because Milton Tan misrepresented that it was an acknowledgment that the title deeds of the land had been handed over to Ran Chi. Mdm Chow and Ran Chi denied that the transactions involved Dr Huang and claimed that 'the amended 26 January agreement' remained binding on Milton Tan and unfulfilled. Ran Chi counterclaimed specific performance of 'the amended 26 January agreement' and damages for delay in completing the sale under 'the amended 26 January agreement'. The trial judge found that Mdm Chow was purchasing the land for Ran Chi and that Dr Huang was not the innocent bystander who did not know anything about the transactions which he made himself out to be. On the contrary, he was very much involved in the transactions. Both Dr Huang and Mdm Chow were present together before Mr Advani when Mr Advani explained to them the option and in particular the meaning of the phrase 'subject to contract'. When Dr Huang signed the option, he did so in Mdm Chow's presence and with her concurrence. By mutual agreement, the option cancelled and replaced 'the amended 26 January agreement'. On the facts, no formal contract had been entered into as required by the option. Since there was no binding contract of sale and purchase of the land, the trial judge ordered that the sum of S$50,000 be repaid by Milton Tan with interest. On the payment of the amount due, the title deeds of the land was to be released to Milton Tan. The trial judge also dismissed the counterclaims with costs. On appeal, counsel for the appellants attacked the trial judge's primary findings of fact. The main argument was that even accepting the trial judge's primary facts as being correct, the finding that 'the amended 26 January agreement' had been cancelled and replaced by the option could not be supported. The option which was a contract between Dr Huang and Milton Tan could not in law rescind 'the amended 26 January agreement' which was a contract between Milton Tan and Ran Chi. Neither Dr Huang nor Mdm Chow had the authority to bind Ran Chi who was sui juris. The only subsisting agreement in relation to the land was 'the amended 26 January agreement'.

Held, dismissing the appeal: (1) on the facts and evidence, Mdm Chow and not Ran Chi was the real purchaser of the land notwithstanding that 'the amended 26 January agreement' named Ran Chi as the purchaser. When the option was signed by Dr Huang, he did so in Mdm Chow's presence and with her concurrence. Mdm Chow had understood the effect of the option, especially the meaning of the phrase 'subject to contract'. The option was clearly intended by her to replace 'the amended 26 January agreement'. The trial judge's findings of primary facts on the above matters were not to be disturbed; (2) an agreement for the sale and purchase of land which is made 'subject to contract' is a conditional agreement. It is not binding until the contract contemplated therein is signed by the parties and exchanged. The sale and purchase of the land was made 'subject to contract' in the option. No contract as required by the expression 'subject to contract' in the option was signed. Milton Tan and his lawyers were not at fault for this. Accordingly, the orders of the trial judge were upheld.

Huang Han Chao & Ors v Tan Hong Moh Milton [1995] 1 SLR 459 Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Chao Hick Tin J).

The plaintiff claimed specific performance of a contract for the sale of land belonging to the defendant. On 10 March 1989, the plaintiff had negotiated with the defendant's representative as a result of which a letter addressed to the plaintiff was drafted and signed by the latter ('the letter'). Condition 3 of the letter dealt with the progressive payments of the purchase price, 15% of which was to be paid by 18 March, and ended with a proviso that 'the Sale and Purchase Agreement shall incorporate all the terms and conditions herein and other usual terms and conditions', and was to be signed on or before 18 March 1989 or otherwise a refund of the option money was to be made to the plaintiff. On 18 March 1989, the plaintiff forwarded to the defendant 15% of the purchase money and a draft sale and purchase agreement signed by him. The draft agreement contained two terms not found in the letter, one dealing with a solicitor's undertaking and the other with the appointment of a surveyor. On the same day, the defendant's solicitors wrote saying they would take instructions on the two terms. Subsequently, on 23 March 1989, they wrote informing the plaintiff that the defendant did not agree to the proposed agreement and refunded the plaintiff's money. Lastly, on 3 January 1991, the plaintiff obtained a court order for the redemption of certain charges on the land by the plaintiff and the plaintiff did in fact make such payment to the chargee bank. The present action was thus instituted by the plaintiff. At first instance, the trial court held the letter was an enforceable agreement on the basis that all the terms in the draft agreement (other than those stated in the letter) were usual terms and conditions.

Held, allowing the appeal: (1) and so is evidence of correspondence after the said document, for in finding whether there was any contract at all, the court must look at the correspondence as a whole; (2) the court was of the view that the presence of the proviso in condition 3 of the letter would have the same effect as if the formula of 'subject to contract' had been in it, since what would be 'usual terms and conditions' remained largely a matter of speculation, and the words would create uncertainty unless a contract containing these agreed 'usual terms and conditions' had been signed by the parties; (3) it is settled that the formula of 'subject to contract' gives rise to a strong presumption of the necessity of a further formal contract and it requires cogent evidence to rebut this strong presumption; (4) in the instant case, taking all the circumstances into consideration the evidence was strongly indicative of an on-going negotiation between the parties, rather than exuding an air of finality in particular, the payment by the plaintiff to the chargee bank was not paid at the request or connivance of the defendant, but after the plaintiff had obtained a court order to do so; (5) by way of preliminary, evidence of the surrounding circumstances, background and negotiation between parties in a case like the instant one is admissible to show that there was no concluded and binding agreement;alternatively, the finding that there was no concluded contract can be supported on the ground of uncertainty, ie that the words in the proviso 'usual terms and conditions' were two ambiguous for the court to act upon.

Kam Mah Theatre Sdn Bhd v Tan Lay Soon [1994] 1 MLJ 108 Supreme Court, Malaysia (Abdul Hamid Omar LP, Peh Swee Chin and Eusoff Chin SCJJ).

Lim Hoong Thoo v Grik Development Sdn Bhd [1995] 4 MLJ 783 High Court, Kuala Kangsar (Abdul Malik Ishak J).

See CONTRACT, Vol 3, para 3116.

See land law, para III [95].

Yap Hong Too & Anor v Wong Ah Mei & Anor [1997] 1 MLJ 545 Federal Court, Kuala Lumpur (Chong Siew Fai CJ (Sabah & Sarawak).

By an agreement in writing dated 11 July 1984, the appellants agreed to sell and the respondents agreed to purchase property in Leng Kee Road ('the property'). Clause 8B of the agreement provided, inter alia, that the sale shall be subject to satisfactory replies to legal requisitions and if the replies were not satisfactory, the purchaser shall be entitled to, by notice in writing to the vendor within seven days of receipt of such replies, to rescind the agreement. Legal requisitions were sent out and a Road Interpretation Plan was applied for by the appellants on 11 July 1984. The plan was in fact received by the appellants on 2 August 1984. On 16 August 1984, the respondents wrote to the appellants that the property was affected by road proposals. On 17 August 1984, the respondents informed the appellants that since the area affected exceeded the 5% provided for in the agreement, the respondents were not prepared to purchase the property unless a fresh agreement at a different price was renegotiated. Notice of rescission was served on 17 August 1984. For the next month there was a flurry of letters exchanged between the parties. As the dispute could not be resolved, the appellants on 13 September 1984 accepted the respondents' repudiation, and forfeited the deposit. On 22 September 1984 the respondents filed an originating summons for, inter alia, a declaration that they have lawfully rescinded the aforesaid sale. Before the Court of Appeal, the appellants conceded that the replies were unsatisfactory and addressed the court on only two points, namely, whether cl 8B required rescission within seven days of receipt of the unsatisfactory replies, and, if so, whether that requirement was waived. The respondents submitted that time was not of the essence in cl 8B because the period of completion was 90 days from 11 July 1984. The respondents also submitted that the forfeiture of the deposit by the appellants on 13 September 1984 was an indication that the appellants were of the opinion that they were not bound or no longer bound by the contract.

Held, dismissing the appeal: (1) the court adopts para 481 from Halsbury's Laws of England (4th Ed) Vol 9 as the correct summary of the law; (2) a stipulation of a time for the doing of an act is different from the substantive obligation to do the act; (3) time is not of the essence unless any of the exceptions referred to in Halsbury applies. In the present case, only the second exception, that is whether the subject matter or surrounding circumstances show that time is of the essence, need to be considered; (4) no time frame was provided for the receipt of replies in cl 8B. The most substantive issue in cl 8B is the satisfactory nature of the replies. The absence of a time frame for resolution of such a substantive issue in cl 8B is a sufficiently strong indication that the parties did not intend the period of seven days in which to rescind to be of the essence; (5) observations drawn from other clauses in the agreement further indicate that time is not of the essence in cl 8B; (6) since time was not of the essence, there is no need for the court to consider the question of waiver.

Tian Teck Construction Pte Ltd v Exclusiv Auto Pte Ltd [1992] 2 SLR 390 Court of Appeal, Singapore (Yong Pung How CJ, LP Thean J and Chan Sek Keong JJ).

The defendant signed a sale and purchase agreement with the plaintiff to buy a townhouse. The townhouse was developed as part of an integrated housing estate. Upon completion of the project, the defendant paid an advance towards the monthly contribution of RM60 demanded for the maintenance upkeep and repair of communal facilities. Subsequently, he refused to pay the amount. The plaintiff sued the defendant. The defendant contended that the service fee of RM60 per month was arbitrary, that details had not been provided as to how this figure had been arrived at and that at the time of he signed the sale and purchase agreement, the plaintiff knew that the Majlis Perbandaraan Petaling Jaya (MPPJ) would never take over the maintenance of the infrastructure and services referred to in cll 14 and 22 and therefore had misrepresented a fundamental term of the contract that there was a reasonable opportunity that the MPPJ would take over at some future date. He also contended that because the MPPJ had levied an assessment on the titles of this property for which he did not get any tangible return he should not be penalised by having to pay the developer as well.

Held, dismissing the claim: (1) the wording of cl 14 of the sale and purchase agreement was clear. The purchaser's liability under this clause was to contribute a fair and justifiable proportion of the cost and expense of the maintenance upkeep and repair of the infrastructure of the housing estate. As the clause said, the apportionment was to be made by a licensed surveyor appointed by the vendor. However, the court had not been supplied with any evidence to show what the total cost was, let alone any apportionment by a licensed surveyor; (2) there was no clear evidence that the plaintiff had actual knowledge at the time the sale and purchase agreement was signed that the MPPJ would never take over the maintenance of the infrastructure and services; (3) the imposition of assessment by the MPPJ did not by itself exonerate the residents from paying an appropriate service charge because the terms of the sale and purchase agreement made it clear that they had to pay this until the MPPJ took over. The reasons why the MPPJ did not take over was a separate issue; (4) the plaintiff had totally failed to prove its case that it was entitled to charge a flat rate of RM60 per month and it had not provided any evidence from which the court could determine what other sum, if any, the court should order the defendant to pay.

Emko Properties Sdn Bhd v Lee Choon Khong Saman Pemula No 24-540-1990—High Court, Shah Alam (M Shankar J).

In this case, the plaintiffs sought a declaration that the defendants are their trustees in respect of a piece of land ('the land'), Lot 1995 held under Selangor Certificate of Title No 13415, in the Mukim of Petaling, District of Kuala Lumpur. The plaintiffs alleged that the land was purchased by them under an agreement dated 16 May 1959, and should be sub-divided accordingly. They asked the court to order the defendants to execute and register a transfer of the land in favour of the plaintiffs. Alternatively, they sought a vesting order. All the original 69 plaintiffs lived on the land and paid ground rent for their respective plots to the registered proprietor, one Mrs Brown, who decided to sell the land to these tenants. The price agreed between the tenants and her for the remaining portion of the land consisting of an area of 29 acres and 15 poles ('the remaining portion') was $58,000. On 18 April 1958, a sale agreement was executed between Mrs Brown and Tai Wah and four others on behalf of all the purchasers. She later transferred the remaining portion to Tai Wah and three others, who later transferred the remaining portion to the defendants in 1960, for the consideration of $58,000 which would be satisfied by the allotment to these four persons and all their nominees of 58,000 fully paid-up shares in the capital of the defendant company to which each of the four named persons was to receive 14,500 fully paid-up shares. The four persons requested the defendant company in writing to allot to the persons named in the said notices the shares of the company.

Held, dismissing the plaintiffs' claim with costs: the plaintiffs have failed to prove that the defendant company is their trustee. Clearly, the defendant company purchased the land from the four persons as purchasers and not as trustees.

Chan Foo Meng & Ors v Hup Seng Co Ltd [1987] 2 MLJ 456 High Court, Kuala Lumpur (Mohamed Dzaiddin JC).

The first respondent (the developers) developed a building known as Ming Arcade. By an agreement dated 24 February 1979 ('the agreement') the second respondent, L, agreed to buy from the developers a shop unit in Ming Arcade. Clause 10 of the agreement stated that in the event that the unit is deleted from the approved plan, the vendor may offer at his option to the purchaser a substitute unit or refund the progress payments made by the purchaser. In May 1980 the appellant offered to buy the unit from L. The parties entered into a sale and purchase agreement ('the sub-sale agreement') dated 23 June 1980 followed by a deed of assignment dated 29 July 1980. Pursuant to cl 5 of the sub-sale agreement, L procured the developers' consent to the sub-sale and also a fresh agreement between the developers and the appellant in the exact same terms as the agreement. On 27 September the developers gave notice to the appellant pursuant to cl 10 of the agreement dated 8 July 1980 that the unit had been deleted from the approved plan. Subsequent inquiries of the Building and Development Control Division ('the BDCD') by the appellant revealed that the unit was never approved by the BDCD as it neither appeared in the original approved plan nor in the subsequent amendment plans. The appellant commenced proceedings against the developers and L. Judgment was awarded in favour of the appellant against the developers but the claim against L was dismissed. The appellant appealed against the dismissal.

Held, dismissing the appeal: (1) what L sold to the appellant was not the unit itself but whatever right title or interest L may have in the unit which unit may or may not be built; (2) L neither covenanted nor warranted that the covenanted unit would be built. L knew and accepted the risk that the unit may not be built because of cl 10 of the agreement, which risk he passed on to the appellant by the assignment; (3) the test in each case is to ascertain what the contract really is. The appellant took his chance that the unit may not be built for which he had his remedy against the developers under the fresh agreement. He had no recourse against L who provided consideration to the appellant for the profit of S$21,000 by discharging various obligations such as obtaining the developers' consent to the sub-sale and procuring for the appellant a fresh agreement from the developers, which he did.

Mutu Jeras v Liew Siow Eng District Court Appeal No 11 of 1991 High Court, Singapore (Lai Siu Chiu JC).

P took an option from D which was duly exercised by them for the purchase of the property known as 17, Stokesay Drive, Singapore ('the property'). Completion of the purchase was fixed for 1 December 1986. Clause 6 of the option contained, inter alia, the clause that the sale was subject to P receiving satisfactory replies to all legal requisitions sent to the various government departments and that in the event that any of the replies were unsatisfactory, P may annul the sale. The road interpretation plan issued by the PWD in response to P's application revealed that the property would be affected at some time in the indeterminate future by a road-widening scheme. Dispute arose over the question whether a reduction in the area of the property of approximately 10.3% and the narrowing of the frontage along Stokesay Drive was unsatisfactory or not. P took out this originating summons, praying for the annulment of the agreement or alternatively an abatement of the purchase price. Notwithstanding this application, P proceeded to complete the purchase on 11 December 1986 before the application was heard. They claimed they were completing the purchase under duress and their purpose in completing was to prevent and mitigate losses and was not intended to affirm the contract. P were granted leave to amend their application on 31 March 1988 in which they sought rescission of the contract based on the Misrepresentation Act 1967. The basis of the misrepresentation alleged by P was that the area conveyed to them must be regarded as 3,746sq ft and not the area stated in the transfer, namely, 4,117sq ft as this is what they would be left with when the road-widening scheme was implemented.

Held: (1) not every case of road widening which affects a property is to be considered unsatisfactory. It is a question of fact which the court must reasonably determine; (2) on the facts, the effect of the road-widening scheme even though it was likely to be implemented at an indeterminate time in the future was nevertheless unsatisfactory; (3) the effect of cl 6 is that P must either take the stand that the reply is unsatisfactory or they must complete the purchase. By choosing to complete, P have waived whatever right they had under cl 6 to annul the sale on the ground of unsatisfactoriness; (4) there is no duress. All that D did was to put P to their election, ie whether to annul the sale or to complete; (5) there is no misrepresentation. What is material is the actual area conveyed and it is totally unrealistic to treat the area conveyed as if the road-widening scheme had already been implemented, as no one can tell the extent of the area that would be taken until the road-widening scheme is actually implemented and completed.

Yeo Wee Tee & Anor v Cheong Seng Peow Peter Originating Summons No 1234 of 1986 High Court, Singapore (Karthigesu J).

The plaintiffs' claim against the first defendants was for wrongful breach of a contract for the sale of land, which was alleged to have been entered into upon the exercise by the plaintiffs of an option in writing given to them by the first defendants. There was an alternative claim for wrongful revocation of option. The second to fifth defendants were the partners of the firm of solicitors acting for the first defendant in the said transaction ('the defendant solicitors'). It was alleged that the defendant solicitors had agreed to vary the terms of the exercise of the option by allowing the plaintiffs to pay the balance of the 10% deposit outstanding to them as stakeholders rather than to the first defendants (as provided for in cl 3(1)(a) of the sale and purchase agreement). Evidence for the purported variation allegedly existed in the form of three letters between the defendant solicitors and the plaintiffs' solicitors, the first of which, from the defendant solicitors and dated 13 September 1989, requested the plaintiffs to execute the sale and purchase agreement and return it with a cheque for the balance of the 10% deposit by 15 September 1989. The second letter, from the plaintiffs and dated 15 September 1989, referred to an alleged telephone conversation between the defendant solicitors and the plaintiffs' solicitors whereby the former had apparently confirmed that they would hold the balance of the 10% deposit as stakeholders pending the finalization of the conveyance. Accordingly, the sale and purchase agreement was returned duly executed and with an accompanying cheque drawn in the defendant solicitors' favour. No amendment was made by the plaintiffs to the cl 3(1)(a) of the copies of the sale and purchase agreement executed by them to reflect the variation to which they had purportedly agreed. On 6 October 1989, the defendant solicitors returned the cheque to the plaintiffs with an accompanying letter (the third letter) informing them that their clients, the first defendants did not agree to their holding the money as stakeholders. The plaintiffs' claim against the defendant solicitors was for breach of implied warranty of authority and alleged a loss caused by the first defendants' refusal to proceed with its sale. The defendant solicitors denied agreeing to vary the option and applied to strike out the plaintiffs' claim against them as disclosing no cause of action.

Held, allowing the application: (1) by s 93 of the Evidence Act, no evidence shall be given in proof of the terms of the option except the written option itself. By s 94, no evidence of any subsequent oral agreement shall be admitted between the plaintiffs and the first defendants to vary the terms of the option. The subsequent agreement had to be proved by the three letters. The existence of such an agreement was, however, inconsistent with the agreement of sale signed by the plaintiffs. The three letters did not, when read together, constitute or evidence an agreement to vary the terms of the option or a memorandum of the option varied as alleged or of an agreement for sale of land on varied terms sufficient to satisfy the Statute of Frauds; (2) all that could be proved as between the plaintiffs and the first defendants was an option to be exercised by signing the agreement for sale (which provided for the payment of the deposit to the first defendants), which the plaintiffs did, and by paying the deposit to the first defendants, which the plaintiffs had not done. They would not have succeeded against the first defendants for 'refusing to proceed with its sale' whether or not the first defendants had given the defendant solicitors authority to enter into the agreement to vary the terms of the option. The court could not agree that the case as pleaded included a loss allegedly suffered from allowing the option to lapse or by exercising it in the wrong way. Hence, on the case as pleaded, the plaintiffs would have suffered no loss by the defendant solicitors' alleged breach of warranty; (3) (obiter) in an action for the breach of warranty of authority, the principle in Collen v Wright (that 'a person who induces another to contract with him as the agent of a third party by an unqualified assertion of his being authorized to act as such agent, is answerable to the person who so contracts for any damages which he may sustain by reason of the assertion of authority being untrue') is not qualified by any requirement that the 'transaction' must lead to a contract that is enforceable against the supposed principal (but for the absence of authority) before the plaintiff can bring an action against the professed agent.

Chin Shoo Cheen Steven & Anor v Ocean Investments Pte Ltd & Ors Suit No 1137 of 1990 (Registrar's Appeal No 195 of 1993) High Court, Singapore (Lim Teong Qwee JC).

In this case the registered proprietors of the land had agreed to sell the land to the respondents. The respondents in turn agreed to sell the land to the appellants. The sale was subject to the approval of the State Authority. This approval was given and the respondent therefore requested the appellant to pay the balance of the purchase price in accordance with the agreement. The appellants failed to pay the balance. The appellants alleged that the parties had agreed to vary the terms of the agreement as regards the sale of the land to the sale of the entire issued shares of the respondents' company to the appellants. All the shareholders of the respondents except the three major shareholders had signed the transfer. The respondents applied for an order under O 81 of the Rules of the High Court 1980 for rescission of the agreement of sale. After hearing the parties the learned judge of the High Court made an order in terms. The appellants appealed and applied for the application for amendment of the defence and counterclaim to be heard before the appeal.

Held: (1) in this case the appellants could not possibly go to the High Court which had given judgment summarily for the respondents. Where the High Court is in no position to grant the application for amendment, it would be wrong for the appellate court to do so just when it was about to hear the appeal. Having regard to the conclusion reached by the court in setting aside the summary judgment rescinding the contract and in view of r 58 of the Rules of the Supreme Court 1980 it is unnecessary for the court to deal with the application in this appeal; (2) in this case the defence is alleging not only variation but also estoppel which was not dealt with by the learned judge. In view of this it could not be said that the liability for breach of contract had clearly been established. The appeal must therefore be allowed and the appellants be given unconditional leave to defend.

Alloy Automotive Sdn Bhd v Perusahaan Ironfield Sdn Bhd [1986] 1 MLJ 382 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

Jusuf Kaliman & Anor v Outram Realty (Pte) Ltd 1984 High Court, Singapore (Wee Chong Jin CJ).

See CONTRACT, Vol 3, para 2001.

The respondents had agreed to buy from the appellants a piece of land in Pontian free from encumbrances. It was agreed that the respondents would pay $26,000 at the time of entering into the agreement and thereafter pay instalments of $40,000 by 30 April 1982, $74,000 by 28 May 1982, and the balance of $120,000 on 28 May 1982, or when the respondents' bank loan is approved. At the time of the agreement, the land had been charged but no reference to the charge was made in the agreement. There was no dispute regarding the payment of the $40,000 but there was a dispute regarding the next instalment of $74,000. The appellants purported to terminate the agreement on the ground of non-payment of the $74,000 instalment. The respondents alleged that the money had been paid before the due time to the solicitor for both parties. This was admitted by the solicitor but he said he did not pay the money to the appellants but instead paid it to the credit of the loan account with the bank in order to reduce the amount owing on the charge. The respondents applied for specific performance of the agreement and this was granted by the trial judge. The appellants appealed.

Held, dismissing the appeal: it is clear in this case that the respondents paid the instalment of $74,000 before the date on which it was due and that the solicitor received it on behalf of the appellants. The respondents were therefore entitled to specific performance of the agreement.

Tan Hong Pui & Anor v Tan Guet Yiang & Anor [1988] 3 MLJ 208 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

In this action, the plaintiff alleged that by an oral agreement made in late January or early February 1985 between himself and the defendant, he agreed to lend to the defendant and to one Heng Teo Meng ('HTM') the sum of S$130,000 free of interest in consideration of the defendant agreeing to pay the said sum on demand and also to sell jointly with HTM their house known as No 8 Lorong H, Telok Kurau, Singapore ('the property') to the plaintiff at the price of S$520,000. The property, prior to 9 July 1982, had been mortgaged to a bank to secure an overdraft granted by the bank to HTM. The plaintiff further alleged that on 1 March 1985, he handed the said S$130,000 in cash to the defendant and HTM and had also exercised an option to purchase the property, granted to him at a consideration of S$5,000, by signing the acceptance portion of the same and issuing to Teo Choo Hong & Co ('TCH & Co'), the solicitors for the defendant and HTM, a cheque for S$47,000 being the balance of the 10% deposit. In his claim for the return of the S$130,000, the S$5,000 and damages, the plaintiff contended that the defendant and HTM failed, neglected and/or refused to return the said S$130,000 despite his repeated demands, and to take such necessary action to avert the foreclosure of the property by the bank, which auctioned off the property on 7 March 1985, rendering the sale and purchase agreement of the property impossible of performance by the plaintiff. The defendant denied taking the said loan and contended that the said S$130,000 was owed by HTM instead. Further, as for the said S$5,000, the defendant denied that the said option to purchase had been exercised by the plaintiff within the stipulated time as the plaintiff's said cheque for S$47,000 had been made and received, but which was not received, tge said cheque having been dishonoured. Alternatively, even of the said option to purchase had been exercised within the stated time, there was no concluded and binding contract as the exercise of the said option to purchase was subject to the payment of the said S$47,000 having been made and received, but which was not received, the said cheque having been dishonoured. In reply, inter alia, the plaintiff denied that the defendant had a right to forfeit the said S$5,000. The issues before the court were: (1) whether there was the oral agreement to the effect as alleged by the plaintiff; (2) whether the said S$130,000 was handed by the plaintiff to the defendant and HTM on 1 March 1985; (3) whether the plaintiff was entitled to a refund of the said S$5,000 paid by him for the said option to purchase the property which involved two questions: (i) whether there was a binding contract of sale made between the plaintiff, and the defendant and HTM, when the plaintiff exercised the option to purchase on 1 March 1985 by completing and signing the acceptance form and delivering the said cheque for S$47,000; (ii) whether the dishonouring of the plaintiff's said cheque prevented any contract of sale from coming into existence. If so, whether the defendant and HTM were entitled to elect to treat the contract of sale as at an end when the said cheque was dishonoured.

Held, allowing the claim: (1) the defendant had pleaded in his defence that the sum of S$130,000 was owed to the plaintiff by HTM and not by himself. Since the document DB2 stating HTM's acknowledgment of the said S$130,000 from the plaintiff was the evidence by which the defendant relied upon as proof of the fact that the loan was owed by HTM, it was admissible in evidence. Also, after considering the terms of DB2 and the definition of 'promissory note' in s 2 of the Stamp Duties Act (Cap 312), DB2 was not a promissory note and therefore admissible in evidence; (2) on the evidence before the court and after having considered the written submissions of counsel for the parties and on a balance of probabilities, the plaintiff's version of the events which took place at the office of TCH & Co was accepted. Firstly, the court found that the S$130,000 was handed over by the plaintiff to the defendant on 1 March 1985 outside the office of TCH & Co after the plaintiff had exercised the said option to purchase. Secondly, the plaintiff had agreed to purchase the property from the defendant and HTM for the sum of S$650,000 and had accepted the condition imposed by the defendant and HTM that he was to give the defendant the sum of S$130,000 in cash on the day the contract for the sale and purchase was signed and that he was to pay a deposit equivalent to 10% of the sum of S$520,000 that was recorded as the purchase price in the option, notwithstanding that the parties had agreed that the property be sold at S$650,000 to the plaintiff. Thirdly, the defendant and HTM knew that bankruptcy proceedings were pending against HTM. Fourthly, DB2 was prepared for the purpose of giving the plaintiff some form of assurance that the full purchase price would be refunded if the transaction fell through otherwise he might not have agreed to pay part of the purchase price of the property to the defendant in cash; (3) there was a binding contract of sale as there was nothing in the terms of the option which expressly or impliedly stated that the contract of sale would not come into existence at all unless the said cheque of S$47,000 was honoured upon its presentation for payment. The plaintiff had complied with the relevant term in the option in respect of exercising the option by having signed the acceptance form and delivering the said form together with the cheque for S$47,000 to the solicitors for the defendant and HTM; (4) having regard to the authorities referred to and the practice in England where the parties exchange contracts for the sale of land whereas in Singapore the parties use options for the sale of land, the provision in the option for payment of the deposit was not a condition precedent to the formation of a contract. It was a fundamental term of a contract that was concluded when the plaintiff exercised the said option to purchase the property under the terms stated therein, a breach of which entitled the vendor, if he so elects, to treat the contract as at an end and to sue for damages including the amount of the unpaid deposit; (5) although the contract of sale did not have a term which states that the property was sold subject to the bank's approval and that the contract would be null and void if the approval is not given, the defendant and HTM were not entitled to elect the contract as at an end on 7 March 1985.

Ng Soo Khim v Heng Teo Bong [1993] 1 SLR 407 High Court, Singapore (Goh Phai Cheng JC).

The appellants in this case were the registered proprietors of a piece of land in Seremban and they had agreed to sell it to the respondent. Subsequently, the appellants terminated the contract as the respondent had not paid the balance of the purchase price. The appellants then applied for the removal of the caveat which had been entered against the land by the respondent. The respondent in his affidavit alleged that there had been an agreement for extension of time for completion but this was denied by the appellants. The learned trial judge accepted the sworn denial of the appellants in their affidavit that they had agreed to any extension of time and he rejected the allegations of the respondent as insufficient to disclose that there was any serious question to be tried as to whether any agreement for the sale of the land by the appellant to the respondent was still subsisting at the date of the hearing of the application. The learned trial judge therefore granted the application of the appellants and ordered the removal of the caveat. On appeal to the Federal Court, the appeal was allowed (see [1977] 1 MLJ 7). The Federal Court held that whether or not the agreement had been lawfully terminated could only be decided in the action which the respondent could and had in fact brought in relation to the agreement for sale and, therefore, the respondent had a caveatable interest in the land. The appellants appealed to the Privy Council.

Held, allowing the appeal: (1) in this case, the onus was on the respondent, as caveator, to satisfy the court that on the evidence presented to it his claim to an interest in the property did raise a serious question to be tried and having done so, he must go on to show that on the balance of convenience, it would be better to maintain the status quo until the trial of the action by preventing the caveatee from disposing of his land to some third party; (2) in this case, the trial judge had rejected the allegations in the respondent's affidavit as insufficient to disclose that there was any serious question to be tried as to whether any agreement for sale of the land by the appellants to the respondent was still subsisting at the time of the application. The learned judge accepted the sworn denial of the appellants in their affidavit that they had ever agreed to any extension of time beyond the agreed date for completion; (3) it was for the learned judge to determine whether the statements in the affidavits that were relied upon as raising a conflict of evidence upon a relevant fact have sufficient plausibility to merit further investigation as to their truth. An appellate court ought not to interfere with the judge's exercise of his discretion under s 327 of the National Land Code 1965 (Act 56/1965) unless the way in which he exercised it is shown to have been manifestly wrong; (4) in this case, the learned trial judge's evaluation of the affidavit evidence was justified and there was no ground for an appellate court to interfere with the way in which his discretion was exercised. Per Lord Diplock: 'Unless there were some speedy procedure open to the registered proprietor to get the caveat set aside in cases where the caveator's claim is baseless or frivolous or vexatious, the Torrens system of land registration and conveyancing, so far from giving certainty to title to land in Malaya, would leave the registered proprietor in a more precarious position as respects his powers of disposition of his land than an unregistered proprietor under English law.'

Eng Mee Yong & Ors v Letchumanan [1979] 2 MLJ 212 Privy Council Appeal from Malaysia (Lord Diplock, Lord Morris of Borth-y-Gest, Lord Hailsham of St Marylebone, Lord Edmund Davies and Lord Fraser of Tullybelton).

3 [3034] CONTRACT Sale and purchase of land – Whether time of essence – Failure to complete – Oral promise by defendants for obtaining loan or joint venture – Denial by defendants – Whether instant termination of agreement reasonable and valid – Tan Chong and Sons Motor Co (Sdn) Bhd v Alan McKnight [1983] 1 MLJ 220 (folld) Synn Lee & Co Ltd v Bank of China [1962] MLJ 395 (folld) Munusamy v PP [1987] 1 MLJ 492 (folld) WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 All ER 127; [1972] 2 QB 189; [1972] 2 WLR 800 (folld) Kilmer v British Columbia Orchard Lands Ltd [1913] AC 319 (refd) Webb v Hughes (1870) LR 10 Eq 281 (refd) Stickney v Keeble & Anor [1915] AC 386 (refd) Tilley v Thomas (1867) LR 3 Ch App 61 (refd) Wong Kup Sing v Jeram Rubber Estates Ltd [1969] 1 MLJ 245 (folld) Seth Maganmal & Anor v Darbarilal Chowdhry AIR 1928 PC 39 (refd) Guthrie Sdn Bhd v Trans-Malaysian Leasing Corp Bhd [1991] 1 MLJ 33 (refd)

The plaintiffs, a company with a paid-up capital of $5m, under a written agreement of sale and purchase dated 20 August 1984 ('the said agreement') purchased a piece of land measuring 1,000.5 acres in the District of Johore Bahru ('the said land') for $47,939,958 from its registered proprietors the second defendant, Rumah Nanas Rubber Estate Sdn Bhd. The first defendant was the chairman of the board of directors of the second defendant. The plaintiffs were required on execution of the said agreement to pay 10% of the purchase price by way of forfeitable deposit amounting to $4,793,995.80. The balance of the purchase price was to be paid within six months from the date of execution, with provisions for extension of time for completion. The second defendant granted several extensions for completion to the plaintiffs as requested. On 12 December 1988, after some three and a half years, the solicitors for the second defendant wrote to the plaintiffs informing them that the second defendant was terminating forthwith the said agreement on the ground that the plaintiffs were unable to complete the purchase of the said land. On 18 December 1988, the plaintiffs entered a caveat against the said land, and subsequently filed the present action. The plaintiffs' managing director ('PW1') testified that through the help of a mutual friend he spoke on the telephone with the first defendant who promised that he and the second defendant would obtain a loan to enable the plaintiffs to pay the balance of the purchase price, failing which the second defendant would enter into a joint venture with the plaintiffs to develop the said land. As told by the first defendant, PW1 saw the first defendant's solicitor Mr AL Looi (since deceased) in Johore Bahru regarding the sale of the said land. The solicitor told the plaintiffs that it was not necessary to include in the agreement the oral undertaking by the defendants to obtain the loan as the first defendant was a big tycoon and the plaintiffs should trust him. Acting on such assurance and in reliance on the oral undertaking of the first defendant, the plaintiffs entered into the said agreement. The plaintiffs contend that the instant termination of the said agreement was invalid as time was no longer of the essence of the contract. They contend that they had been negotiating with Sohaimi, the resident director of the second defendant for joint venture, and Sohaimi had assured that the defendants would not terminate the said agreement and forfeit the deposit. The plaintiffs further contend that they had arrived at a compromised arrangement on joint venture with Sohaimi who was representing both the defendants. The plaintiffs claim specific performance of the said agreement, damages and costs. At trial, the first defendant denied having given the oral undertaking for the loan or joint venture. The executive director of the second defendant admitted that Sohaimi was authorized to negotiate with PW1. The defendants contend that the oral undertaking was inadmissible and irrelevant and that adverse inference should be drawn against the plaintiffs for failing to call the mutual friend who introduced the first defendant and the director of the plaintiffs as witnesses. The defendants further contend that the said agreement had been validly terminated.

Held, allowing the plaintiffs' claims: (1) on the evidence both oral and on the contemporaneous documentary evidence, the court found that the plaintiffs had proven on a balance of probabilities that the defendants had promised to secure a loan for the plaintiffs and that in the event that such a loan could not be secured, the second defendant would join the plaintiffs in a joint venture scheme to develop the said land. The court found the first defendant to be an evasive and unreliable witness; (2) as time was no longer of the essence of the contract, the notice of termination dated 12 December 1988 was not a reasonable notice. The said agreement was never legally terminated and accordingly the plaintiffs were not in breach of the agreement; (3) the defendants by their indulgence in granting the plaintiffs a series of extensions for completion had lulled them into a false sense of security and had given them reason to believe that they would be given a reasonable time within which to complete the contract. It would be inequitable, in view of the dealings which had taken place between the parties, to allow the defendants to enforce their strict legal rights against the plaintiffs after they have led the plaintiffs to believe that they had no intention to enforce such rights; (4) on the evidence viewed in totality the court was satisfied that the plaintiffs had made out a case to merit an order for specific performance. A court of equity enforces specific performance of a contract affecting land because it acts upon the equities caused by the acts of the parties in the execution of the contract and not upon the contract itself; (5) the plaintiffs were entitled to an order for specific performance of the said agreement with damages to be assessed and paid by the second defendant to the plaintiffs for wrongful termination of the said agreement and by both defendants for breaches of their undertakings with costs; (6) the primary purpose of proving the pre-contract statements in this case was not to contradict, vary, add to or subtract from the terms of the agreement but to prove the existence of a separate contractual provision. Such oral terms were therefore admissible in evidence; (7) there was clearly no question of an attempt by the plaintiffs either to withhold or suppress evidence. There was therefore no justification whatsoever for drawing an adverse inference against the plaintiffs under s 114(g) of the Evidence Act 1950 for failure to call the two witnesses mentioned; (8) an adverse inference ought to be drawn against the defendants in that had their resident director Sohaimi been called to give evidence, his evidence would have been unfavourable to them. The court found Sohaimi to be the only person who could give a firsthand account of the negotiations between the plaintiffs and the defendants and the only one who could deny on oath the allegations made by the plaintiffs.

Plenitude Holdings Sdn Bhd v Tan Sri Khoo Teck Puat & Anor [1992] 2 MLJ 68 High Court, Johore Bahru (PS Gill J).

[Annotation: Affirmed on appeal. See [1993] 1 MLJ 113.]

The Physician's Clinic Sdn Bhd Melaka agreed to sell the goodwill and practice of the late Dr LJ Rao at a clinic called Clinic No 6 of Straits Hospital Melaka, the medicine, equipment and fittings, and Dr LJ Rao's shares in Wisma Medical Centre (Melaka) Sdn Bhd, the operator of the Straits Hospital, to the plaintiff. The defendant, who was the administrator of Dr LJ Rao's estate, signed another agreement with the plaintiff stating that she was to transfer the prescribed share transfer forms to the plaintiff after she had obtained the approval of the High Court. The administrator never obtained any court approval after many years and the plaintiff applied to the court for orders, inter alia, that the the defendant tranfer the shares in Wisma Medical Centre to the plaintiff. The defendant argued that certain assets, namely the goodwill of the late Dr LJ Rao at the clinic and a heart machine, were not part of the consideration sum and that goodwill could not be resolved unless the assistance of an independent valuer was sought as agreed in an oral agreement prior to the contract.

Held, allowing the application: (1) the oral agreement, the evidence at the negotiation stage and all communications subsequent to the contract were extrinsic evidence which were inadmissible at law; (2) it could not be denied that the contract required the approval of the court but only insofar as the issue of the shares as expressed by the contract; (3) it was the duty of the administrator to obtain the best possible value of the shares of the deceased especially when the rights of minors were at stake. Based on the affidavits and the exhibits, there was nothing to indicate that the sum paid for the shares were unfair and unreasonable. There was no reason to reject the value as agreed by both parties, especially in the light of the acceptance of their value by the Collector of Estate Duty Tanah Melayu for purposes of estate duty and the court when granting the letter of administration; (4) the main ingredient of s 60(2) of the Probate and Administration Act 1959, ie the term `immovable property' did not apply to the clinic as it did not possess the ingredients of immovability be it in the nature of any rights or interests. Had the sale included the clinic, the land and the building, the story would have been different and the permission of the court would have been required. The clinic, which was the subject matter of the sale, was one of the assets of the Physician Clinic Sdn Bhd, a transaction which was no different from that of a legal firm being sold off without the building and land; (5) the factor of goodwill was part of the contract and did not require the court's approval. Since goodwill was not subject to the court's approval as gauged from the contract, the report of an independent valuer was therefore unnecessary; (6) the sub-clauses of the contract adequately covered the complete set-up required of a clinic which encompassed goodwill and practice of the late Dr LJ Rao, the medicine, equipment and fittings in it.

Dr Ang Eng Lip v June Daniel Amaranickrama, Administrator of Dr LJ Rao, deceased Originating Summons No 24-131 of 1995—High Court, Malacca (Suriyadi bin Halim Omar J).

In this case, a tutor in the Universiti Kebangsaan Malaysia had been given study leave on being awarded a scholarship to do a PhD. He was unable to complete his course and, after extensions of his study leave, returned to serve the university. He subsequently disappeared and he was dismissed for misconduct. An agreement had been entered into between the tutor and his two guarantors (the respondents) and the university whereby the university agreed to defray the cost of the PhD course and the tutor agreed to pursue the course diligently and on completion of the said course to return to Malaysia and serve the university for a number of years. The respondents agreed to guarantee the performance of the agreement by the tutor. As the tutor had been dismissed for misconduct, the university sued the tutor and the guarantors for the refund of the sum spent by the university. The learned President of the Sessions Court gave judgment for the university-appellant but suggested that the guarantors-respondents should not be made liable for salaries and EPF. On appeal to the High Court, the claim of the university-appellant was dismissed. The appellant appealed to the Supreme Court.

Held, dismissing the appeal: (1) in this case the tutor had abandoned his course of study with the consent of the university and the subsequent service was not under the agreement; (2) as he had not obtained his PhD but was recalled to continue his service to the university and he behaved in the way he did and was dismissed following the disciplinary proceedings, the sureties cannot be faulted.

Universiti Kebangsaan Malaysia v Zainal Abidin bin Ahmad & Anor [1988] 2 MLJ 303 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

In 1964 the University of Malaya ('the university') appointed Lee Ming Chong ('Lee') to a scholarship offered by the Canadian government under the Colombo Plan, to pursue a course of study in Canada for the degree of Master of Business Administration and Accounting. A scholarship agreement was entered into on 26 July 1964 between Lee and the university. There were also two sureties for Lee. The agreement provided, inter alia, that if required by the university, Lee upon his return would serve the university for a period of not less than five years from the date of his first appointment and a breach of this term without the consent of the university would render Lee and his sureties liable to pay the university on demand a sum of $5,000. On his return, Lee was appointed assistant lecturer in the Faculty of Economics and Administration on 6 June 1966; this service contract was to expire on 1 January 1969. In a letter by the university dated 9 July 1968, Lee was promoted to lecturer and confirmed in his appointment as lecturer in the Department of Economics and Administration with effect from 1 February 1969. Lee declined the offer and gave notice of his intention to terminate his service with the university at the end of his initial contract period on 1 January 1969 in a letter to the university dated 18 October 1968. The university then demanded that the sum of $5,000 be paid in accordance with the scholarship agreement as Lee had only been in its service for 2[1/2] years and that he was leaving the university without its consent. The university brought an action in the sessions court against Lee claiming the sum of $5,000 for his breach of undertaking in the scholarship agreement to serve the university for a period of not less than five years. In his statement of defence, Lee contended, inter alia, that: (1) the university entered into the scholarship agreement as agent on behalf of the Canadian government and therefore the university itself could not enforce it; (2) the scholarship agreement was void as it was made without consideration; and (3) he had completely fulfilled or performed the scholarship agreement, having entered into the service agreement. Its claim was dismissed and the university appealed.

Held, allowing the appeal: (1) it is more appropriate that the university should be the principal party in such agreement. Nowhere is it stated that the university was acting as agent of the Canadian government; (2) it is clear that there was consideration on the part of the university. The fact that the university appointed him to the scholarship was the consideration on its part for his promise to serve it for five years after completing the course. Even if there was no consideration on the part of the university, s 4 of the Contracts (Amendment) Act 1976 (Act A329) provides that notwithstanding anything to the contrary contained in the Contracts Act no scholarship agreement shall be invalidated on the ground that it lacks consideration; (3) service is not the same thing as post or appointment. Lee gave notice to purportedly terminate his service with the university. This he cannot legally do because there is no provision in the scholarship agreement or in the service agreement for terminating his service.

University of Malaya v Lee Ming Chong [1986] 2 MLJ 148 High Court, Kuala Lumpur (Wan Hamzah SCJ).

The plaintiff claimed damages for breach of a scholarship agreement entered into between the plaintiff and a student, with the defendants as sureties. The defendants denied that the student had committed a breach of the agreement and also alleged that the provision in the agreement for the refund of all moneys which had been paid by the plaintiff in respect of the student's course of training is a penalty and therefore not refundable.

Held: (1) on the facts the student had left the service of the plaintiff without their approval and consent and had therefore committed a breach of the agreement; (2) the damages stipulated for in this agreement were not extravagant or unconscionable and therefore were not a penalty.

Government of Malaysia v Thelma Fernandez & Anor [1967] 1 MLJ 194 High Court, Kuala Lumpur (Raja Azlan Shah J).

The government sued the first defendant as the promisor and the second and third defendants as sureties for breach of agreement in writing entered into by them with the plaintiff for providing a course of training at a Malayan Teacher's Training Institution. The claim was for $11,500 alleged to be actually spent by the government for educating the first defendant. At the time of the contract being entered into, the first defendant was an infant and the defence was essentially that the contract entered into by the first defendant was void and that consequently the second and third defendants were not liable. Alternatively it was pleaded that as the first defendant had served the government for three years and ten months out of the contractual period of five years, the claim for $11,500 was excessive and not reasonable compensation. The statement of claim was amended at the hearing to include an alternative claim for the repayment of the sum claimed as having been expended on the infant for necessaries.

Held: (1) the contract entered into by the first defendant was void as he was an infant at the relevant time; (2) as the second and third defendants were sureties, their liability was co-extensive with that of the principal debtor, and as the principal debtor was not liable, the sureties also were not liable; (3) the word 'necessaries' must be construed broadly and in the circumstances of this case, the provision of professional or vocational training for the first defendant in a Teacher's Training Institution to enable him to qualify for and accept appointment as a teacher was a provision for necessaries; (4) the first defendant was therefore liable for the repayment of the sum expended for his education and training as being expended on necessaries; (5) the provisions for repayment for breach in the contract was a penalty clause and therefore not enforceable; (6) the amount of damages payable in this case must be based on the repayment of the proportion of the actual sum expended based on the completed months of service and in the circumstances judgment would be given for the plaintiff against the defendants for $2,683.

Government of Malaysia v Gurcharan Singh & Ors [1971] 1 MLJ 211 High Court, Ipoh (Chang Min Tat J).

The respondent was a bank carrying on business in Singapore. The appellant had agreed to charge his land in Malaysia to the bank as a guarantee for overdraft facilities given to the bank's customers. No payment having been made, the respondent applied for an order for sale of the land by public auction. The appellant argued that the respondent had flouted the Banking Act 1973 (Act 102) and that by requiring and accepting charges of Malaysian land to secure loans and by seeking to enforce the security the respondent was carrying on banking business in Malaysia without a licence. The learned trial judge made an order for the sale of the land. The appellant appealed.

Held: (1) the transaction of acquiring and accepting charges of land in Malaysia could not be said to come within the ambit of banking business within ss 2 and 3 of the Banking Act 1973; (2) charges of land did not come within the meaning of 'securities' in s 2 of the Exchange Control Act 1953 (Act 17); (3) the learned trial judge was right in ordering the sale of the land by public auction.

Koh Kim Chai v Asia Commercial Banking Corp Ltd [1981] 1 MLJ 196 Federal Court, Johore Bahru (Lee Hun Hoe CJ (Borneo).

The plaintiff was granted an ex parte order on 1 July 1985 for various injunctions, including a mandatory injunction against the defendants involving 1,263,500 shares in Kamunting Tin Dredging (M) Bhd owned by her and her representees. These shares were deposited by them with blank transfer forms duly executed with the first defendant by way of security in respect of loans granted to third parties who defaulted in payment. As a result, the first defendant proceeded to register the shares in favour of its nominee, Perwira Habib Nominees Sdn Bhd. The first defendant and the fifth defendant now apply to set aside the ex parte order restraining the defendant from dealing with the shares adverse to their interest. The main issue for decision was whether the taking away of the plaintiff's shares was lawful.

Held: (1) the first defendant bank was in the circumstances of this case legally entitled to register the shares of the plaintiff and her representees into the name of its nominee company; (2) even if there were triable issues in this case, the plaintiff was not on the balance of convenience in the light of the evidence available to the court on 5 July 1985 entitled to the various injunctions, including the mandatory injunction ordering the first defendant to execute fresh proxy forms in respect of the said 1,263,500 shares which were originally in her name and those whom she represented; (3) the order granted to the plaintiff on 1 July 1985 must therefore be set aside; (4) applications for stay of execution and a fresh injunction were refused.

Seow Mui Kim v Perwira Habib Bank & Ors [1987] 1 MLJ 46 High Court, Kuala Lumpur (Gunn Chit Tuan J).

The plaintiff ('the bank') had granted an overdraft facility to Subramaniam ('the borrower'), who was the husband of Roshammah ('the deceased') on the security of a lien holder's caveat executed by the deceased as registered owner of certain land ('the land'). The borrower was subsequently adjudicated a bankrupt. Following the deceased's death, the borrower was appointed as representative of the deceased's estate upon the bank's application. The bank obtained judgment for RM50,324.31 against the deceased's estate and applied under s 281(2) of the National Land Code 1965 for an order for sale. The borrower was named as defendant in his capacity as the personal representative of the estate. Two days before the auction, the deceased's children ('the interveners') applied for a stay pending their application to be substituted or added as defendants on the grounds, inter alia, that: (1) they were part owners of the land; (2) the judgment was defective because it described the borrower as 'personal representative' and not 'representative'; (3) the bank could not obtain an order for sale as the land had passed to the borrower, as husband of the intestate deceased, and vested in the Official Assignee; (4) the bank could not claim more than the sum owed on the date of the borrower's bankruptcy under s 43 of the Bankruptcy Act 1967; and (5) by selling the security in the form of shares deposited by the borrower only in 1991, the bank had caused the borrower unnecessary loss.

Held, dismissing the interveners' application: (1) there was no evidence to support the interveners' allegation that they were part owners of the land. The deceased was registered as the owner of the land and the bank were bona fide purchasers of their interest for value and without notice; (2) executors and administrators are collectively described as personal representatives of deceaseds' estates and O 8 r 14 of the Subordinate Courts Rules 1980 indicates that proceedings may be initiated against a person appointed to represent the estate. Although the borrower was a bankrupt, s 31(a) of the Bankruptcy Act 1967 empowers a court to allow a bankrupt to manage the business of his spouse; (3) the deceased had encumbered the land in her lifetime and the property could only pass subject to the encumbrance. The land did not vest in the Official Assignee as it did not concern the personal bankruptcy of the borrower. Furthermore, the judgment was clearly to be enforced against the deceased's estate; (4) the bank's claim was not against the bankrupt borrower and as s 43 of the Bankruptcy Act 1967 refers to debts proved upon the bankrupt's estate, it is inapplicable. Furthermore, s 8 of the Bankruptcy Act 1967 did not preclude the bank from recovering against the deceased's estate as the bank was a secured creditor and the judgment debt of the deceased's estate was not provable in the borrower's bankruptcy; (5) it is well established that a banker has a right to sue a guarantor without resorting to the security deposited by the borrower and the bank can elect when it wishes to dispose of its security; (6) the order for sale is a final order unless appealed against. Once it is made, drawn up and perfected, the court is functus officio and has no power to set it aside. Under O 15 r 6(2)(b) of the Rules of the High Court 1980, intervention must be applied for before the final order is made and a person is a proper party only if his presence before the court is imperative for the adjudication; (7) as this purported intervention was an unwarranted intrusion which the intruders could not have believed was an arguable case, the interveners were to be jointly and severally liable for the costs of the bank to be taxed on a solicitor and client basis.

United Asian Bank Bhd v Personal Representative of Roshammah (decd) & Ors [1994] 3 MLJ 327 High Court, Shah Alam (Mahadev Shankar J).

The appellant's letter of appointment as a teacher at a salary of $310 per month, dated 15 October 1960, was for four years commencing on 1 January 1961 and expiring on 31 December 1964. The appellant received a letter dated 8 October 1962 from the acting supervisor and chairman of the education sub-committee stating that his post as teacher at the Sandakan Chinese Secondary School would not be continued from 8 January 1963, and that in pursuance of the terms of his contract with the education sub-committee, he was given three months' notice to leave the service. In an action in the High Court in Borneo, the appellant claimed that he had been wrongfully dismissed and sought damages. Harley J held that the appellant had been wrongfully dismissed and awarded damages at a sum equal to $330 a month from the date of his ceasing employment up to the date of judgment and a further $330 a month from that date until his re-employment or 31 December 1964, whichever should be the earlier. The Federal Court reversed that judgment and he appealed to the Judicial Committee of the Privy Council. The official translation of cl 4 of the contract was in the following terms: 'The teachers and staff of the school must not during the validity of the agreement of appointment rescind the agreement of appointment except for very important matters. If, in case of special circumstances, release of or withdrawal from the appointment is necessary either party shall give three months' notice in advance'. No reasons for the appellant's dismissal were given in the letter of 8 October 1962, but one Tan Tze Shun, one of the respondents (the respondents' only witness), had said in evidence 'we could not keep the plaintiff at $330 anyway because we had too large a ratio of junior teachers'. No further elucidation of this point was made in evidence or in argument. In the Federal Court, this ground of dismissal was amplified in the judgment of Wylie CJ by reference to Education (Central Education Fund) (Amendment) Rules 1963 under which it became necessary to reduce the number of teachers so as not to jeopardize the grant-in-aid under the rules.

Held: the respondents having failed to justify the appellant's dismissal in terms of cl 4 of the contract, the appeal should be allowed. Observations on question whether the Board would entertain points not taken in court below.

Tio Chee Chuan v Khoo Siak Chiew & Ors [1967] 2 MLJ 20 Privy Council Appeal from Malaysia (Lord Guest, Lord Wilberforce and Lord Pearson).

The plaintiff sued for damages for his dismissal without notice by the defendants by whom he was employed as chief clerk on a rubber estate at Labis. The substantial issue in this case was whether the defendants were justified in summarily dismissing the plaintiff from his service. The defendants in their defence alleged the following acts of misconduct by the plaintiff: (a) failing to maintain a proper record of telephone calls made on the account of Bertam Estate as at 1 April 1964; (b) attempting to persuade one Simon to destroy the record of telephone calls which he (Simon) maintained with effect from 1 April 1964 as instructed by the manager of Bertam Estate; (c) failing to draw the attention of the acting manager of Bertam Estate to the fact that the shopkeeper on Bertam Estate - Durian Tunggal Division - had failed to pay the shop rent for the months of June and July 1961; (d) directing the shopkeeper aforesaid to credit his personal account with the sum of $150 which represented the shop rent for the months of June and July 1961, taking advantage of such credit and failing to reimburse the estate with that amount; (e) failing to draw the attention of the manager of Bertam Estate to the fact that the shopkeeper aforesaid did not pay the rent for the month of October 1962; (f) directing the shopkeeper aforesaid to credit his personal account with the sum of $50 which represented the shop rent for the month of October 1962, taking advantage of such credit and failing to reimburse the estate with that amount; (g) removing from Bertam Estate and being in possession of a copy of a document intituled 'Special Report by RPS Clay' which was at all material times the property of the said estate. The plaintiff denied each of the alleged acts of misconduct.

Held: (1) allegations (a), (b), (c) and (e) by themselves did not constitute sufficient ground for summary dismissal; (2) on the facts the defendants have proved allegations (d) and (f) beyond reasonable doubt, therefore the defendants were justified in summarily dismissing the plaintiff; (3) the report in allegation (g) came to the estate while the plaintiff was still its chief clerk. He did not do anything wrong in making a copy of it, unless he did so with the intention of publishing it; (4) because of his summary dismissal the plaintiff was not entitled to any damages for wrongful dismissal.

Motilal v Guthrie Agency (M) Ltd [1968] 1 MLJ 211 High Court, Kuala Lumpur (Gill J).

The defendant was in occupation of a bungalow belonging to the plaintiffs which he occupied for the more effective performance of his duties as chief clerk. He was dismissed by the plaintiffs and he was asked to vacate the premises. The plaintiffs asked for an order that the defendant do quit and vacate the premises. The defendant contended that the termination of services was contrary to the agreed procedure and that the dispute regarding this matter was before the industrial court.

Held: (1) where a person occupied premises as a servant of the owner for the more effective performance of his duties as such servant and he is dismissed, he has no right to continue to occupy the premises; (2) even if it is decided that his dismissal was wrongful, this being a contract for personal services, the court would not enforce specific performance of the contract to employ him and the defendant would only be entitled to damages, including compensation for loss of the use of the bungalow; (3) therefore there must be an order in favour of the plaintiffs.

Anglo-Oriental Plantations Ltd v D'Cruz [1967] 1 MLJ 83 High Court, Seremban (Ismail Khan J).

The first application was by the defendant ('the bank') to strike out the plaintiff's statement of claim whereas the second application was by the plaintiff for judgment under O 14, Rules of the High Court 1980 for declaratory relief and under O 18 for specific performance. The plaintiff was the owner of several pieces of land ('the lands'). On the strength of charges created over the lands, several loans/banking facilities had been granted to various borrowers, one of which was Monsia Investments Pte Ltd ('Monsia'). All the borrowers defaulted in their obligations to the bank under the various loans/banking facilities whereupon a redemption agreement ('the agreement') was entered into between the plaintiff and the bank. The agreement provided for the redemption of the lands from the bank upon payment of a total sum of RM20m. RM2m was to be paid upon execution of the agreement (which was accordingly paid) and the balance of RM18m on the expiration of 15 months from the date of the agreement; a bank guarantee of that amount was to be delivered to the bank on or before six months from the date of the agreement. Subsequently, the plaintiff's request for extension of time was refused. At the time the agreement was entered into, the bank had already commenced proceedings to have the land sold ('the foreclosure proceedings'). At the same time, Monsia, which was one of the borrowers, obtained an ex parte injunction restraining the bank and the plaintiff from proceeding with or completing the agreement. On appeal to the Supreme Court, Monsia's proceedings was stayed. The bank argued that the present action was res judicata due to the earlier foreclosure proceedings instituted by the bank. The bank also argued that the agreement did not preclude the bank from claiming more than RM18m, ie the full amount due under the charges if there should be default by the plaintiff of its obligations under the agreement. The bank also argued that time was of the essence of the agreement and that the injunction in the Monsia suit had frustrated the agreement. The bank also contended that no specific relief should be granted to the plaintiff.

Held, dismissing the bank's summons and granting the plaintiff's application: (1) the decision in the foreclosure proceedings did not preclude the plaintiff from filing and proceeding with the present action; (2) the maximum sum recoverable in any proceeding by the bank cannot be greater than RM18m. The agreement replaced the charges recited in it and once it was entered into, the effect was to denude those charges of any legal effect; (3) reading the agreement as a whole and taking into account the surrounding circumstances and the factual background including the genesis and the objective aim of the transaction, it is clear that the parties did not intend time to be of the essence. The requirement to pay interest in the event of default is an indicia that time is not of essence; (4) the benefit of the bank was not lost by the delay in performance occasioned by the injunction; (5) after taking into account all matters operating against the plaintiff in the context of specific relief (delay, unclean hands, acceptance of breach) the court nevertheless would exercise its discretion in the plaintiff's favour; (6) the order of stay granted by the Supreme Court had the automatic effect of putting an end to the injunction as well. No application to dissolve the injunction was necessary.

Kuala Lumpur Landmark Sdn Bhd v Standard Chartered Bank [1994] 2 MLJ 559 High Court, Kuala Lumpur (Anuar J).

The plaintiff had been injured while performing his work at the factory of the defendants and had been blinded as a result of the accident. He instructed solicitors who arranged a settlement of his claim. The plaintiff subsequently repudiated the settlement and brought an action for damages.

Held: (1) as a general rule it is against public policy to allow settlements between solicitors on behalf of their respective clients in accident cases to be challenged with impunity; (2) a settlement like other contracts is voidable on specific grounds, as for example, undue influence, misrepresentation, fraud or mistake; (3) in this case, the plaintiff had not shown any such specific grounds and therefore the application of the defendants to strike out the writ of summons must be allowed.

Yap Chee Meng v Ajinomoto (Malaysia) Bhd [1978] 2 MLJ 249 High Court, Kuala Lumpur (Harun J).

This was an appeal against an order that the bankruptcy notice taken out by the appellant creditor be set aside on the ground that the judgment debt had been satisfied by the tender by a third party of a cheque for a smaller amount than the sum due as payment in full, which cheque was accepted and cashed by the creditor. It was argued by the appellant that on the facts there was no accord and satisfaction and in any event s 64 of the Contracts (Malay States) Ordinance 1950 had no application where the parties stood to each other in the position of judgment debtor and decree holder.

Held: as the creditor had accepted the tender by cashing the cheque and retaining the money he must be taken to have agreed to discharge the debtor from any further liability.

Kerpa Singh v Bariam Singh [1966] 1 MLJ 38 Federal Court, Kuala Trengganu (Barakbah CJ (Malaya).

This case originated as a probate action which arose from the existence of three or four wills alleged to have been executed by one Chi Liung, deceased, shortly before her death. The deceased was the governing director of a private company known as Chi Liung & Son Ltd, holding only 30 out of the 3,000 shares issued by the company. Out of the remaining 2,970 shares, the present appellants between themselves owned 2,100 shares. After four days' hearing, the parties agreed to settle their dispute on terms set out in the schedule to a court order dated 15 December 1969. The order provided that the estate of Chi Liung, deceased, be administered as on an intestacy, that the terms of the settlement agreed to between the parties and annexed as a schedule to the court order be made a rule of court and that all parties including those who were not parties to the probate action, do have liberty to apply. The settlement was mainly concerned with the manner in which the parties were to acquire, by purchase, shares in the company. Sometime after the settlement, one of the parties filed a notice of motion seeking to extend the period fixed for her to complete the purchase of the shares. Although it was objected to by the other parties, the learned judge who heard the motion granted an order of extension of time on 21 March 1970. This was an appeal from the order granting extension of time. The issue which arose turned on the court's power of jurisdiction to vary its own order.

Held, allowing the appeal: (1) the terms of settlement undoubtedly formed part of the court order which must be assumed to have been made with the consent of all the parties in the probate suit. The form in which it was made could not give rise to any question; (2) although there was no specific mention in the court order regarding stay of proceedings, there could be no doubt that it was a final order in that it finally determined the dispute between the parties in relation to the wills set up, which was the only subject-matter of the probate action; (3) in the present case, the terms of settlement, which were not within the ambit of the probate action, constituted a contract between the parties to the probate action in relation to their shares in the company. A substantial number of shares in the company belonged to persons who were not parties to the action. As a contract for the sale and purchase of all the company's shares required the concurrence of those persons, the parties to the action were to execute and to procure the execution of an agreement by all those other persons. Such an agreement was in fact duly executed. The contract, embodied in the terms of settlement in the schedule to the order in so far as it related to the company's shares, was accordingly fully performed by the execution of that agreement by all the necessary parties, including parties who were not parties to the probate action. As from the execution of that agreement the rights and obligations of all parties in relation to the company's shares must be governed by that agreement; (4) nowhere in the schedule to the arrangement was there any reference to that schedule being made a rule of court. It was the schedule to the order which was made the rule of court. As an agreement in terms of the settlement was in fact made, particularly when it involved parties other than those who were parties to the probate action, the result was to supersede the whole of the order, with the exception of two clauses which could still have been summarily enforced by an action in the probate proceedings. Apart from those two clauses, the rest of the schedule no longer existed for it to operate as a rule of court. Thus, by entering into the agreement contemplated by the order, the parties in fact agreed to substitute a new contract within the meaning of s 61 of the Contracts (Malay States) Ordinance 1950, so that the original contract as contained in the order need not be performed. This new contract could be enforced only in a fresh action for specific performance or damages, to which all parties to the agreement would have to be joined, and its terms could not be varied on a motion in the probate action itself; (5) after a judgment by consent has been passed and entered, it cannot afterwards be varied on the ground of mistake, except for reasons sufficient to set aside an agreement. The general rule is that after a judgment has been passed and entered, even where it has been taken by consent and under a mistake the court cannot set it aside otherwise than in a fresh action brought for the purpose unless (a) there has been a clerical slip or omission, or (b) the judgment as drawn up does not correctly state what the court actually decided and intended to decide, in either of which cases the application may be made by motion in the action. The same rule must apply, a fortiori, where the parties have entered into an agreement in pursuance of the terms of settlement embodied in the consent order; (6) they do not confer any right to ask the court to vary the order; (7) the words 'liberty to apply' in an order, prima facie, mean that when the order was drawn up its working out might involve matters on which it might be necessary to obtain a decision of the court;therefore what the learned judge purported to do by his order of 21 March 1970, was to vary the terms of his order of 15 December 1969, which order had already been fully performed by the parties. This he did not have the jurisdiction to do in the same proceedings. Tomline order considered.

Tong Lee Hwa & Anor v Chin Ah Kwi; Tong Chong Fah v Chin Ah Kwi [1971] 2 MLJ 75 Federal Court, Kuala Lumpur (Ong CJ (Malaya).

The plaintiffs obtained judgment from the Supreme Court of British Columbia, Canada against one Christopher Chua Kung Siew ('Chua') in the sum of C$2,184,144.10 ('the judgment sum') together with interest and costs. Chua failed to pay any part of the judgment sum and on 20 July 1990 Chua was adjudged a bankrupt in the same court. Pursuant to the receiving order made against him, Coopers & Lybrand ('the trustees') were appointed the trustees of Chua's estate. Chua held a membership ('the membership') at the Singapore Island Country Club ('SICC') and on 22 May 1992 he gave a power of attorney to his sister-in-law Madam Heah Siew Inn ('Heah') who purported to transfer the membership to the defendant who is her godson. SICC was not informed of Chua's bankruptcy prior to the transfer. On 30 April 1993 the plaintiffs obtained an order under s 38 of the Act authorizing the plaintiffs to commence action in Singapore or elsewhere. On 6 May 1993, the trustees assigned and transferred all their rights title and interest in the membership to the plaintiffs. On 2 June 1993 the plaintiffs commenced proceedings in Singapore in Suit No 1189 of 1993 ('the suit') against the defendant. After service of the writ of summons in the suit the defendant and the plaintiffs through their respective solicitors negotiated a settlement on the following terms: (a) the defendant would pay the plaintiffs S$130,000 in exchange for the plaintiffs' agreement to relinquish their claim on the membership; (b) the defendant would pay the plaintiffs' costs agreed at S$10,000; (c) the defendant would pay the total sum of S$140,000 by 9 July 1993; (d) upon payment the suit would be discontinued with the defendant's consent. On 9 July 1993 after the plaintiffs' solicitors had forwarded the notice of discontinuance to the defendant's solicitors for indorsement of their consent, the latter wrote to say that as the membership had ceased due to Chua's bankruptcy pursuant to r 43(a)(ii) of SICC's rules ('the rule') the defendant would not pay the agreed sum unless the plaintiffs gave him an indemnity. Rule 43(a)(ii) states that any member who has been adjudged bankrupt as from the date of such adjudication ceases to be a member. It appeared that the defendant had received a letter from SICC on 5 August 1993 stating that Chua's membership had ceased because of his bankruptcy and that accordingly the subsequent transfer to the defendant was of no effect. The defendant's request was promptly rejected by the plaintiffs' solicitors who gave notice that if the required payment was not made on time, the plaintiffs would institute a fresh action based on the settlement. Accordingly on 15 July 1993 the plaintiffs commenced these proceedings and sought an order that the defendant pays to them forthwith S$140,000 together with interest at 10% from 10 July 1993. The plaintiffs contended, inter alia, that (1) the court could not look behind a settlement which had been reached bona fide between the parties, on the basis of any subsequent development or knowledge; (2) even if it could do so, there had been a mistake not of fact but of law, in that the defendant's allegation was not that the plaintiffs do not have an assignment from the trustees but that the effect of the assignment was no longer valid.

Held, dismissing the plaintiffs' claim: (1) a mistake of fact is an exception to the rule that a court will not look behind a settlement or compromise reached bona fide between two parties, where the mistake is one which goes to the root of the compromise and is one shared by both parties. In this case, the very existence of the membership was fundamental to the settlement reached between the parties. The basis of the settlement was clearly the sale by the plaintiffs of the membership to the defendant and not, as contended by the defendant, for the amount the defendant had agreed to pay for it. Both parties thought the membership still existed at the time the settlement was reached but because of the rule, this was not so; (2) (obiter) as for the plaintiffs' other argument that the mistake if any is one of law, whilst it is clear that a mistake of law at common law will not vitiate an agreement, the position in equity is not so clear. Even if the plaintiffs' contention is correct, it is to be noted that the plaintiffs' claim for specific performance is a claim in equity and therefore the common law position on mistake of law may not be applicable.

Ong & Co Pte Ltd v Ong Choon Huat Watson [1994] 1 SLR 491 High Court, Singapore (Lai Siu Chiu JC).

P had taken out a fire policy from D in respect of the premises where P had carried on business of dealing in motor spare parts and accessories. A fire had occurred at P's premises and P made a claim to D. The policy contained warranty no 9A stating, inter alia, that P shall hold such licence as required by the local authority. At the time the policy was taken out, no regulations required P's business to be licensed. Subsequently, regulations were enforced requiring P's business to be licensed. When the fire took place, P's business was unlicensed. P only obtained a licence after the fire had occurred. D rejected P's claim on the ground that warranty no 9A was breached and this entitled D to repudiate the policy. P claimed under the policy. D also argued that P's action was filed 12 months after the occurrence of the fire and P's claim was therefore barred by condition no 19 of the policy. P had lodged a police report about the fire in which he estimated his loss at M$300,000. P gave a similar estimate of his loss to the adjuster. The adjuster, however, estimated P's loss to be M$101,946.86. D thus argued that since the adjuster's estimate was very much less than P's claim, P was making a fraudulent claim and D was entitled to reject P's claim under condition no 13 of the policy.

Held, allowing the claim: (1) in insurance law a warranty is a term, the breach of which entitles the innocent party to repudiate the insurance contract. The breach of warranty no 9A entitled D to repudiate the insurance contract. Warranty no 9A was, however, impossible of fulfilment ab initio and was therefore void ab initio; (2) applying the doctrine of severance, the rest of the policy could stand after severing warranty no 9A which was void ab initio; (3) condition no 19 had cut down the period within which an insured might bring an action for breach of contract to a period less than the period allowed by the law of limitation. Condition no 19 is therefore void by virtue of s 29 of the Contracts Act 1950; (4) D had failed to prove that P's claim was fraudulent beyond a reasonable doubt. P was hazarding a guess because all the account books and receipts, inter alia, upon which an accurate estimate could have been made had gone up in flames. P made the estimate to take into account some margin for bargaining. The potential tendency of adjusters to play down the value since they were retained by insurers, was also considered. There was no breach of condition no 13.

Ong Choon Lin t/a Syarikat Federal Motor Trading v The New Zealand Insurance Co Ltd Civil Suit No 330 of 1983 High Court, Ipoh (Peh Swee Chin J).

Coramas Sdn Bhd v Rakyat First Merchant Bankers Bhd & Anor [1994] 1 MLJ 369 Supreme Court, Kuala Lumpur (Harun Hashim and Edgar Joseph Jr SCJJ and Lim Beng Choon J).

See CONTRACT, Vol 3, para 3179.

The plaintiffs were company directors who resided in Australia. The first and second defendants were directors and shareholders of the third defendant company which was incorporated in Singapore with a paid-up capital of S$100,000. The company's business was food processing and it had a factory cum bakery in Jurong and operated two cafe outlets. It was agreed between the plaintiffs and the first and second defendants that the former would buy from the latter 60% of the share capital in the company for S$210,000. The plaintiffs paid S$40,000 as downpayment for the shares and subsequently paid the defendants another S$120,000 by a cheque issued in favour of the company and S$60,000 by way of a separate cheque issued in favour of the two defendants. The plaintiffs and the two defendants visited the offices of a law firm to sign the agreement to formalise the purchase and sale of shares in the company but the plaintiff was shocked to find a clause in the draft to the effect that the plaintiffs were required to execute a guarantee in the sum of S$440,000 in favour of the bank. Accordingly, he refused to sign the draft. Later, the plaintiffs demanded the return of the sums of S$180,000 and S$40,000 which the two defendants ignored. The defendants then called off the agreement and the plaintiffs commenced proceedings against them. The plaintiffs alleged, inter alia: (a) that it was part of the agreed terms for their purchase of the 60,000 shares in the company that the two defendants would produce detailed accounts of the company to show that it was solvent and free of liabilities; (b) that when the contract was drawn up, it contained terms different from those envisaged by the plaintiffs, in particular that they were required to further execute a guarantee in favour of the bank; (c) that the defendants did not transfer any of the 60,000 shares and thus the consideration for their payment of S$160,000 had failed. The defendants contended that the plaintiffs' three payments totalling S$220,000 were deposits meant to secure the completion of the agreement and the performance of the obligations thereunder by the plaintiffs. They submitted that the plaintiffs repudiated the agreement by failing/refusing to complete the sale of the shares, and to execute the written contract and the bank guarantee.

Held, dismissing the plaintiffs' claim: (1) based on the evidence, it was clear that the plaintiffs, not the two defendants, were in breach of the oral agreement reached between the parties to purchase 60,000 shares in the company; (2) the plaintiffs attempted to renege on the agreement. On their part, the two defendants were willing and able to perform the agreement, as evidenced by the first defendant's conduct after the plaintiffs returned to Australia and the various faxes from the law firm to the plaintiffs. The two defendants could not transfer the 60,000 shares to the plaintiffs until after the latter had signed the bank's guarantee in exchange for the bank's consent to the sale and purchase. The two defendants accepted the plaintiffs' repudiation of the agreement.

Fritz Karl Schnell & Anor v Thomas Edward Dorn Suit No 2140 of 1993—High Court, Singapore (Lai Siu Chiu J).

D entered into an agreement to purchase shares from V. It was provided that if D defaulted on payment of instalments of the purchase price, he was to transfer the shares back to V for a stated sum. This sum was not a genuine pre-estimate of V's loss nor did it represent the true value of the shares. D defaulted on an instalment. P, as assignee of V's rights, sued for specified performance of the re-transfer clause. The High Court gave judgment to P. D appealed.

Held, allowing D's appeal: (1) the retransfer clause was a penalty because the shares were to be retransferred at a fixed price regardless of how much D had already paid. The intention of the clause was that D was to be punished for any default; (2) the court would not enforce the penalty clause, but would offer P the alternative of selling the shares to recover the instalments due. Alternatively P could have an order for ascertainment of the value of the shares and the order of specific performance would stand if the net value of the shares did not exceed the stipulated re-transfer price. If P declined these alternatives, he would have to commence a fresh action to recover the balance of the instalments owing.

Jobson v Johnson [1989] 1 All ER 621 Court of Appeal, England (Kerr, Dillon and Nicholls LJJ).

The respondents and a few others were shareholders in a company known as BHPL. On 30 October 1991, the shareholders entered in a shareholders' agreement whereby they agreed that the affairs of BHPL would be regulated by the provisions of the shareholders' agreement. One Pillai and BHPL were also parties to the shareholders' agreement, although they were not shareholders of BHPL. On 26 August 1992, the appellant offered to purchase the respondents' shares in BHPL. The offers were accepted and completion date was agreed to be 7 October 1992. Clause 8.2 of the shareholders' agreement stated that it was a condition precedent to the right of any shareholder to transfer shares that the transferee executes, in such form as may be reasonably required by and agreed between the other shareholders, a deed of ratification and accession under which the transferee shall agree, inter alia, to be bound by the shareholders' agreement. In accordance with cl 8.2, the respondents prepared the deed for the appellant's execution. The appellant however, refused to execute the deed on two grounds; (1) Pillai and BHPL had not been made parties to the deed and (2) the form of the deed had not been agreed to by the other shareholders. The respondents commenced proceedings against the appellant seeking an order for specific performance and a declaration that the appellant was in breach of the sale and purchase agreements and an order for damages and costs. The appellant in its affidavit in reply counterclaimed and asked for similar orders against the respondents. At the first hearing in the High Court, the judge ordered specific performance by the appellant and adjourned the remaining prayers to a later date. At the second hearing, the judge upheld the respondents' claim and declared the appellant to be in breach of the sale and purchase agreements. The appellant appealed against the orders made at the second hearing.

Held, allowing the appeal: (1) the agreement of the other shareholders to the form of the deed was required before the appellant could be called upon to execute the same. Since the form of the deed had not been agreed to by the other shareholders as at 7 October 1992, the appellant was entitled to refuse to execute the deed; (2) even if the appellant had been in anticipatory breach by having wrongfully refused to execute the deed unless Pillai and BHPL were made parties to the deed, the sale and purchase agreements remained in force and the respondents were not discharged from their contractual obligation to obtain the consent of the shareholders to the form of the deed.

Compagnie Gervais Danone v Asian Capital Partners Ltd & Ors [1995] 1 SLR 361 Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Goh Joon Seng J).

The plaintiff was at all material times a business adviser to a major bank in Malaysia. The defendants were a stockbroking firm operating in Penang. On 7 February 1987 the plaintiff sued the defendants claiming damages for breach of contract. The plaintiff claimed that the defendants had failed to sell 830,000 Sri Hartamas shares ('the shares') as instructed by him and this had caused him loss. The plaintiff gave evidence that on 5 November 1985, he had instructed the defendants' managing director, Hwang, to issue four contract notes in respect of the shares. On each of the contract notes the defendants had made two endorsements. The first of which was printed to read 'This contract is subject to the Rules of the Kuala Lumpur Stock Exchange' and the other typed in capital letters to read 'LAST DATE FOR DELIVERY 14/11/85'. The plaintiff had wanted to sell the shares to settle moneys he owed the Standard Chartered Bank in Singapore. He gave evidence that on or about 6 November 1985, Hwang had informed the plaintiff that he had found a buyer for the shares at the price of M$2.90 per share. The plaintiff sent 100,000 of the shares to the defendants. In respect of the remaining 730,000 shares, which were pledged to the Standard Chartered Bank in Singapore, the plaintiff gave evidence that he had on 8 November 1985, telephoned the manager of the bank and told her to send the shares to the defendants in Penang. The bank were unable to deliver the shares, neither did they receive payment. The shares were never sold by the defendants and on or about March 1987, the Singapore bank sold the shares at about M$1.00 per share. Hwang denied that the plaintiff had asked him for buyers for the shares. His testimony was that one David Chua had telephoned him on 5 November 1985 to inform him that a Madam Tan had arranged with the plaintiff for the sale of the shares through the defendants (so that Madam Tan could make use of her margin facility with the defendants) for the price of M$2.90 per share.

Held, dismissing the claim: (1) on the evidence there was no earthly reason why the plaintiff in Kuala Lumpur would seek out the defendants in Penang to find a buyer for his shares. His credibility was more than suspect and the court was satisfied that the plaintiff was not telling the truth when he testified that he had commissioned the defendants to find a buyer for the shares. The court found as a fact that the transaction had been a married or pre-arranged deal between the plaintiff and Madam Tan; (2) with respect to contracts for the sale of shares, time was of the essence of the contract both at law and in equity; (3) the position in Malaysia in respect of share transactions was, as it was in England, that it was as regulated by the rules and regulations and usage of the stock exchange unless there was a special agreement between the parties to the contrary. The rules and usages of the stock exchange were admissible and relevant to be used in determining the terms and incidents of the contractual relationship existing in a share transaction as came into existence between the plaintiff and the defendants; (4) it was clear that it was deemed that the contract notes gave notice to anyone reading the notes that the defendants were holding themselves out as being involved in the transaction as brokers and not as principals. The terms of the contract between the plaintiff and the defendants as evidenced by the contract notes was that the delivery had to be effected not later than 14 November 1985 and that time was of the essence. Delivery had to be effected by delivery to the stockbroker of the shares together with the relevant registrable memoranda of transfer. Rule 11(2)(b) of the Rules of the Stock Exchange made it clear that payment for the shares need only be made before 11am on the second market day following a valid delivery and not against delivery. There was not even a proper tender of the shares; (5) the burden of proving delivery was on the plaintiff. This he had not proved.

Huang Francis v Hwang & Yusoff Securities Sdn Bhd [1992] 2 MLJ 379 High Court, Kuala Lumpur (VC George J).

The plaintiff and the defendant entered into a written agreement for the sale and purchase of shares in a private limited company. The defendant defaulted in the payment of the purchase price and the plaintiff applied for summary judgment against it. In opposing the application, the defendant contended that: (a) the plaintiff had corrected its statement of claim by way of affidavits and this is not allowed; (b) it had entered into the agreement under duress and pressure; (c) s 132C(i) of the Companies Act 1965 (Act 125) was not complied with by the plaintiff; (d) the transaction was ultra vires the plaintiff company; (e) for specific performance, there should not only be good consideration but also valuable consideration; and (f) a contract for the sale of shares is not a proper subject for specific performance.

Held, allowing the application: (1) there were no defects or omissions in the statement of claim, and the affidavits filed by the plaintiff do not seek to supplement or amend or correct the statement of claim; (2) the exact acts of duress and pressure and who were subjected to them and what the acts of concealment and deception were were not divulged. In any event, the fact that the alleged duress and pressure were said to have been applied prior to the agreements entered into and the agreements were subsequently completed without any protest does not show that the duress and pressure defence was made bona fide and it is so lacking in merit that it can be said to be frivolous and vexatious; (3) it is ridiculous to suggest that every time a company sues on a contract, it has in its statement of claim vis-ê-vis the contract to plead more than the fact that it had entered into the contract on which the suit is based; (4) s 20 of the Companies Act 1965 provides that an outsider, other than a debenture holder or the minister, may not raise ultra vires. The defendant is an outsider and not a debenture holder or the minister; (5) there is no rule that for specific performance, good consideration is not good enough and that there should be valuable consideration. In any event, it would be most inequitable and unconscionable to allow the defendant at this stage, having agreed that each of the parties should go its separate way, to seek the aid of equity to avoid its legal obligations; (6) the authorities show that a seller of shares not freely saleable in the open market is entitled to specific performance. As such, the present contract for the sale of shares is enforceable by specific performance.

Pamaron Holdings Sdn Bhd v Ganda Holdings Bhd [1988] 3 MLJ 346 High Court, Kuala Lumpur (VC George J).

P had purchased all the shares of company X from D. In addition to the agreed price, P had paid to D a sum of money equal to the rental deposit that X had paid to the landlord of its premises. P had made this payment to D on D's representation that the deposit came from D's own funds and not the assets of X. P claimed that D's representation was untrue.

Held, allowing P's claim: the court was satisfied that D had not paid the deposit our of her funds but had used the assets of X. Accordingly, P was entitled to a refund of the additional sum paid to D.

Amy Chan v Chong Tsui Hua District Court Appeal No 66 of 1987 District Court, Singapore (Ibrahim bin Burhan, District Judge).

The appellant alleged that the respondent, in breach of trust failed to deliver to the appellant 100,000 shares in Kian Joo Can Factory Bhd (the company). The appellant prayed for an order that the respondent deliver up the shares, or alternatively, general damages for non-delivery of the shares and interest and costs. The shares were listed in the Kuala Lumpur Stock Exchange. On 16 June 1994, the appellant filed an application for leave to enter final judgment against the respondent for an order that the respondent deliver up to the appellant the shares or its value thereof together with interest. The application was allowed. The respondent, however, failed to comply with the said order and judgment. The appellant subsequently filed an application for assessment of damages under the said order. The application was supported by an affidavit. No affidavit, however, was filed by the respondent in rebuttal. Among the items claimed by the appellant were: (i) the value of the shares; (ii) the dividends declared; (iii) bonus shares; and (iv) the warrant offer. The matter came up for hearing before the Senior Assistant Registrar (the SAR) but before that, the appellant withdrew its claim for the warrant offer. The SAR granted damages together with interest but refused to award the appellant's claim under (ii) and (iii). The appellant submitted that the dividends and bonus shares were declared by the company and that the bonus shares were not issued gratuitously because their nominal value was paid in full or in part by the capitalized profits or reserves which could otherwise have been distributed to the shareholders as a cash dividend. The appellant also submitted that like dividends, an appellant who has been awarded a decree of specific performance can recover as damages, the bonus shares declared. The respondent submitted that since the respondent was no longer in possession of the said shares, therefore the assessment of damages should only be compensatory for non-delivery of the said shares. The respondent also contended that there was no actual proof led by the appellant to show its intention to claim the disputed claims. There was also the issue as to the value to be imputed to the bonus shares.

Held, allowing the appeal and setting aside the decision of the SAR: (1) since the shares were as listed in the Kuala Lumpur Stock Exchange, all bonus shares that accrue to the said shares ought to go with the claim for the shares proper or its equivalent in value. The appellant is therefore entitled to both the dividends declared and the bonus issue. Moreover, the terms of the trust deed clearly spell out in unequivocal terms the right of the appellant to the dividends and the bonus issue; (2) even if there was an order for specific performance and even if the respondent was able to deliver the shares, the appellant would have been entitled to all bonus shares that had accrued as a result of its right of ownership of the said shares; (3) since the respondent is unable to return the shares, he was rightly ordered to pay the value of the said shares, and the appellant would be entitled to all the benefits it was entitled to as a result of its right to own the said shares which would include therefore the dividends declared and the bonus issue; (4) the proper date for the assessment of damages for the lost bonus shares was the date on which the said bonus shares were first offered for sale and thus made available or listed on the share market.

Tom Manas Enterprise Sdn Bhd v Soh Ah Wah Suit No D5-22-145-1994 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

City Securities Pte Ltd (in liquidation) v Associated Management Services Pte Ltd [1996] 1 SLR 727 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, PARA, , Vol 3.

Communication Technology Sdn Bhd ('the company') was a Malaysian company which dealt in communication equipment. On 14 March 1990, the defendant sold 306,000 ordinary shares in the capital of the company to the plaintiffs, a Malaysian publicly listed company. As a result of the purchase, the plaintiffs acquired a 51% equity interest in the company while the defendant retained a 19% equity interest therein. The terms and conditions of the sale were contained in a written agreement dated 10 January 1990 ('the agreement'). In this action the plaintiffs alleged that the defendant was in breach of the agreement in two respects. Firstly, he was in breach of certain warranties he had given on the company's financial standing. Secondly, he had not complied with his guarantee in cl 17 that the company would earn a certain aggregate pre-tax profit. The plaintiffs contended that the company had been notified by the Malaysian Customs and Excise Department that it (the company) had been knowingly underdeclaring prices of telephones and computers. The notice stated that the company had been evading paying customs duty amounting to RM634,097.47. The plaintiffs further contended that the aggregate profits of the company guaranteed by the defendant was RM1.4m. The aggregate profits actually earned by the company was RM356,702. The plaintiffs therefore sought payment of the shortfall. The defendant's position was that the customs duty was payable by the company as a separate legal entity and that accordingly, he himself had no liability for such duty and could not be made to bear the same except in so far as it affected the value of the shares in the company. As regards the guaranteed profits, the defendant argued that there was a collateral agreement between the plaintiffs and the defendant that the plaintiffs would procure RM5m financing for the company.

Held, entering interlocutory judgment for the plaintiffs: (1) there was a flagrant breach of the terms of the agreement. The accounts did not give a true and fair view of the state of affairs and financial position of the company because they did not disclose that the company had underdeclared the value of its goods to the Customs and had, at the least, a possible liability in respect thereof. The defendant knew the facts, in particular that a part of the cost of the goods to the company had not been declared to the Customs. Therefore he could not truthfully believe that such a true and fair view was given by the accounts; (2) the existence of the collateral agreement was entirely dependent on the defendant's credibility, in the absence of any documents supporting it and the plaintiffs' denial of such an agreement. The court was not able to accept the defendant's contention as to the existence of a collateral agreement; (3) even if there had been a collateral agreement of the kind asserted by the defendant, in order to succeed in his defence he would have had to show that by reason of its breach the company's profits suffered. He had to do this on a balance of probabilities. The defendant did not produce any evidence which supported his allegations; (4) it was obviously important to the plaintiffs as potential investors in the company that the company should be able to make a certain minimum profit after they took over. Their projections as to the value of their investment would be upset if such profits did not materialize; (5) where a company should be given money on a specified date, it is not adequate compensation to give the company that same sum two or three years later. The company should have been put in funds as soon as the shortfall was ascertained. If it had the money then it would have been able to use it. Having been deprived of this opportunity, the payment of RM1,043,298 alone would not compensate it for the loss sustained. It was therefore proper to award interest.

Pengkalen Holdings Bhd v Tan Cheng Hye Originating Summons No 502 of 1992 High Court, Singapore (Judith Prakash JC).

In this case, the respondents had brought an action for specific performance of an agreement for the sale by the first five appellants (vendors) of 10,200 shares of $100 each issued and fully paid up or at least 51% of all such shares issued in the Oriental Bank of Malaya Bhd (the sixth appellant) at the price of $160 a share. They also asked for an injunction restraining the vendors from parting with or disposing of the said shares. At the same time the respondents applied ex parte for an injunction restraining the vendors from parting with or disposing of any of the shares and also an injunction restraining the bank from registering the transfers of any such shares to persons other than the respondents. Gill J (as he then was) who heard the application granted an interim injunction. Subsequently the appellants applied to the court for an order that the order made ex parte before Gill J be discharged. Raja Azlan Shah J ([1969] 2 MLJ 110) rejected the application on the ground that the appellants had not satisfied him that the facts upon which the injunction was granted no longer existed. On appeal it was alleged: (a) even on the facts and pleadings disclosed by the respondents no legal contract had been disclosed by the respondents; (b) if such contract had been concluded it could not be specifically enforced under the provisions of the Specific Relief (Malay States) Ordinance 1950; and (c) the contract was illegal as an offence under s 363(3) of the Companies Act 1965 (Act 125), had been committed as there had been an offer of shares to the public.

Held, dismissing the appeal: (1) the facts disclosed that there was a probability of an agreement having been concluded between the parties; (2) a temporary injunction under s 50 of the Specific Relief (Malay States) Ordinance1950, like an interlocutory injunction in England, may be granted where the court is satisfied that there is a substantial question to be tried and until the case is tried, a case has been made out for the preservation of the property in the meantime in status quo; (3) it was not obvious on the facts disclosed that an offence under s 363(3) of the Companies Act 1965 had been committed in that there had been an offer to the public.

Nicholas & Ors v Gan Realty Sdn Bhd & Ors [1970] 2 MLJ 89 Federal Court, Kuala Lumpur (Azmi LP, Ali FJ and Syed Othman J).

The defendant was a securities dealer based in Ipoh. The terms of the defendant's business licence stipulated that its business had to be conducted only at its Ipoh address, and that it had to comply with all the rules and regulations of the Kuala Lumpur Stock Exchange (`the KLSE'). The plaintiff was a Hong Kong company dealing in securities in Singapore. The defendant contracted to purchase two blocks of shares from the plaintiff, the first for 6 million shares in Grand United Holdings Bhd (`the GUH shares') and 5.88 million shares in Growth Industrial Holdings Ltd (`the GIH shares'). The total purchase price for both blocks was S$26,433,600. The defendant drew up a contract which it dated 17 May 1985 showing the purchase of the GUH shares from the plaintiff. On the same day, the defendant entered into a contract to sell the same shares to Orange Grove Pte Ltd Singapore (`Orange Grove'). The plaintiff did not document the sale of the shares to the defendant until 20 May 1985. On 10 June 1985, the defendant sent to Orange Grove a confirmation letter expressing the terms and conditions of the sale, and stating the payment and delivery date of the shares to be 21 November 1985. On 14 June 1985, the plaintiff sent the defendant a similar letter calling for confirmation of the terms and conditions of the plaintiff's contract. The date of payment and delivery of the shares was 21 November 1985. The defendant gave confirmation by its letter dated 24 June 1985 retaining the date of delivery for 21 November 1985 but imposed the terms of the KLSE on the contract and changed the date of payment to 22 November 1985. On 10 June 1985, the defendant made out its contracts for the sale of the GIH shares to Eastronics Pte Ltd Singapore (`Eastronics') and Orange Grove, and on 11 June 1985, the defendant sent them confirmation letters of the sale. The plaintiff however documented the purchase of the GIH shares on behalf of the defendant only on 11 June 1985 on terms that settlement was to take place on 10 December 1985 and issued a bargain confirmation to the defendant. On 14 June 1985, the plaintiff sent a formal letter to the defendant to confirm the terms and conditions of this transaction. The letter was worded in similar terms to the plaintiff's earlier letter regarding the GUH shares. The defendant responded with its own letter on the same date but insisted the KLSE terms applied and that the date of payment be changed to 12 December 1985. To fulfil their contracts with the defendant, the plaintiff bought the shares from a third party and paid them. In November 1985, when the plaintiff attempted to deliver the GUH shares to the defendant and obtain payment, the defendant at first made a part payment and then refused to honour their bargain, stating that it did not have the money. In response to the failure of Pan-Electric to meet its commitments, the stock exchanges in both Singapore and Kuala Lumpur collapsed in the opening days of December 1985. Pan-Electric had a substantial shareholding in GUH and GIH, and thus the shares became worthless. Both the KLSE and the SSE issued notices in early December 1985 which strictly prohibited forward contracts. The dealings between the parties were reported both to the KLSE and the Monetary Authority of Singapore (`the MAS') and they initiated investigations. Shortly thereafter, the defendant entered into a novation agreement with Tan Koon Swan, a substantial shareholder of GUH, who agreed personally to take over all the liabilities of the Pan-Electric Group to the defendant in respect of the shares. Orange Grove and Eastronics were both companies in the Pan-Electric Group. The plaintiff was not a party to the agreement and could only look to the defendant to recover the price of the GUH and GIH shares it had sold to the defendant. The plaintiff filed a writ in the Ipoh High Court for breach of contract. The defendant submitted that it was not liable to pay on the following grounds: (i) the proper law of the contract was Singaporean law under which the contracts were illegal; (ii) the plaintiff had acted in violation of its licence and Singapore law in failing to disclose it was acting as a principal and the defendant thereby had a right to rescind the contracts under s 34 of the Securities Industry Act 1973 of Singapore (`the Singapore Act'); (iii) that the plaintiff was only entitled to damages and not the price of the shares; and (iv) that the plaintiff was involved in an illegal funding scheme in order to allow the Pan-Electric Group to roll over the shares. After a succession of delays, three amendments to the defence, and a dismissed appeal to the Supreme Court, the trial finally ended in favour of the plaintiff. The trial judge (see [1996] 2 MLJ 97) found that Malaysian law was the proper law of the contracts, and dismissed the allegations of illegality. He commented adversely on the credibility of the key defence witness, Phillip Fung, as well as the failure of the defence to call Tan Koon Swan. He also found the defence under s 34 of the Singapore Act an abuse of process. GUH underwent a reconstruction after the plaintiff had closed its case. The plaintiff sold some of the GUH shares to mitigate its loss. The defendant was ordered to pay S$24,611,985.56 and the plaintiff was ordered to return the unsold shares after payment. The defendant appealed, contending that: (i) the proper law of the contracts was Singapore law; (ii) the contracts were illegal under both the law of Singapore and Malaysia; (iii) the trial judge had erred in failing to consider the evidence of Tan Kok Liang; (iv) the plaintiff was not a licensed dealer at the time the contracts were made; and (v) incorrect principles had been applied in assessing the true measure of damages payable to the plaintiff, without proper regard to the provisions of the Sale of Goods Act 1957. The defence also submitted that due regard should have been given to the expert evidence on the effect of the relevant laws of Singapore applicable in this case.

Held, dismissing the appeal: (1) parties were bound by their pleadings. The defendant could not, after admitting in its pleadings that the plaintiff was licensed, argue the contrary at the trial or in any appeal thereafter; (2) the trial judge correctly concluded that Malaysian law was the proper law of the contracts. There was a clear distinction between the question of jurisdiction and the issue of proper law. In the present case, the jurisdiction of the Ipoh court was not challenged nor was it suggested that Ipoh was a forum non conveniens. The relevant factors to consider were the territory where the contracts were made, the fact that the defendant could only legally make the contracts in Ipoh and the circumstances showing payment and delivery of the shares in Ipoh where the breach occurred; (3) the contracts were not illegal. Although the KLSE and SSE (Singapore Stock Exchange) had issued notices that forward contracts were illegal, the contracts in question were made before the circulars were issued, and the fact that the KLSE and MAS did not initiate legal action against the parties despite their full knowledge of the transactions indicated that the KLSE and MAS thought there was nothing illegal in the contracts. Furthermore, the plaintiff was not a member of the KLSE and was not bound by its rules. The KLSE rules would only apply to transactions to the extent to which the parties had not contracted otherwise. Here, the parties expressly contracted out of whatever KLSE rules which were inconsistent with their private arrangements; (4) in any case, since the plaintiff purchased the shares to the order of the defendant and paid for them, the plaintiff was entitled to recover the full price at which the defendant contracted to buy the shares from the plaintiff even though this price was in excess of what the plaintiff had actually paid to acquire them; (5) the total omission of the defence to put or suggest to the plaintiff's director Mr Guarnori that the plaintiff through its directors had actively participated in a funding scheme of Tan Koon Swan's to rig and manipulate the market in the GUH and GIH shares made the defence witnesses' testimony on those accusations worthless; (6) unless the circumstances were exceptional, the defence should not be permitted to recall the plaintiff's witnesses for cross-examination after the plaintiff had closed its case; (7) the existence of Singapore statutes, the rules of Singapore institutions and the pronouncement of Singapore courts were `facts' to be proved by evidence. The effect of their application to the facts of this case was a question of law for the Malaysian court to decide. The evidence of experts on how the Singapore laws and regulations were to be interpreted or applied was `opinion' evidence which the Malaysian court may accept or reject; (8) expert opinion was only admissible as evidence where the facts upon which that opinion was based had been proved in the trial or had to be deemed to be proved. Opinion evidence should not even be offered on the basis of uncontested proven facts unless the foundation for the opinion offered was clearly stated, and was based on credible admissible evidence which would be given at the trial. If the integrity of experts was to be respected, they should desist from suggesting escape routes from liability based on unproven allegations; (9) the allegations that the contracts were void or unenforceable by reason of public policy or because they were contrary to s 84 of the Malaysian Securities Industry Act 1983 were without merit and not supported by the evidence. There was no evidence to support the contention that the parties had agreed between them to create a false or misleading appearance of active trading in the shares on the KLSE or anywhere else. The testimony of the defendant's two experts' concerning this issue should be excluded because it was highly prejudicial and had no probative value whatsoever because there was no evidence to show the plaintiff was a party to the scheme. Even if there was a technical violation of the KLSE rules, that did not invalidate those contracts or make them illegal; (10) the allegations that the contracts were unenforceable by virtue of the plaintiff's actions in violation of its licence were not supported by the evidence. It had to be emphasized that whilst experts could testify as to the interpretation and application of foreign law, the court should be wary of opinion evidence which purported to predict how a foreign court would decide issues which had not come before it. The plaintiff complied with reg 19 of the Securities Industry Regulations 1974 (Sing) because as soon as all the terms and conditions of the contracts crystallized, they did issue their bargain confirmation letters. The defendant did not produce evidence to counter the plaintiff's documents, and hence it had to be concluded the plaintiff had acted in accordance with Singapore law; (11) the defendant's arguments that the plaintiff's failure to disclose it was acting as a principal and thus was in breach of s 34 of the Singapore Act were not supported by the evidence. The defence in s 34 was only available to the defendant if it did not dispose of the securities after purchasing them from the plaintiff. In this case, the shares were immediately sold to Orange Grove and Eastronics; (12) the defendant's submission that only nominal damages were available to the plaintiff was properly rejected by the trial judge. The plaintiff led evidence that at the date of the breach, the shares were worthless, and the defendant did not counter this evidence. The remedy was in damages subject to such mitigation, as the plaintiff was able to achieve. On the day fixed for completion of the contracts, the market price of the shares was nil. So the damages the plaintiff was entitled to on that date was the full balance of the contract price. The evidence showed that after the defendant repudiated the contracts, the plaintiff tried to mitigate its loss by proposing a sale of the shares to the defendant on mutually acceptable terms, and only when the defendant declined did the plaintiff sell the shares to third parties and give notice to the defendant, inviting further negotiations as regards the unsold shares. The plaintiff was under no general duty to hold onto the shares after the breach in order to get the best price because the measure of damages for a buyer's refusal to accept shares was the difference between contract price and market price on the date fixed for completion. The defendant's insistence that the trial judge and this court should ignore the plaintiff's sales of the GUH shares left the court no choice but to set aside the third and fourth orders of the trial judge; (13) (per curiam) O 25 r 8(1)(b) of the Rules of the High Court 1980 made it mandatory for the written report of the expert a party wished to call to be disclosed to the other parties in the action within ten weeks of the close of the pleadings. This rule, however, only applied in personal injury actions. As a result, in other kinds of actions, the parties could so arrange the conduct of their action as to evade the need to disclose their expert's report until the last moment (see also O 38 r 6). This was very undesirable. There was an urgent need for the rules of our courts to be amended by adding provisions similar to O 38 rr 35-44 of the Rules of the Supreme Court in England. In the meantime, in non-personal injury actions, the parties had to ensure that the summons for directions contained specific directives to ensure that all experts' reports were filed and served when the action was entered for trial.

YK Fung Securities Sdn Bhd v James Capel (Far East) Ltd [1997] 2 MLJ 621 Court of Appeal, Kuala Lumpur (Shaik Daud, NH Chan and Mahadev Shankar JJCA).

Ho Shee Jan v Stephens Properties Sdn Bhd [1986] 2 MLJ 43 High Court, Kuala Lumpur (Chan J).

See COMPANIES AND CORPORATIONS, Vol 3, para 576.

The plaintiff in this case obtained a judgment against the defendant for a sum of M$716,359.75. He proceeded to execute the judgment on race horses belonging to the defendant. On 20 July 1983, the plaintiff obtained an injunction from the High Court, restraining the defendant or his agent, the claimant or any other servant from removing, disposing or transferring or otherwise dealing with the horses. Subsequently the plaintiff attached the horses on 10 March 1984. In the meantime, the claimant, intending to exercise a lien on the horses for unpaid trainer's fees, obtained judgment on 30 January 1984 in respect of the trainer's fees. The plaintiff, nevertheless, proceeded to attach the horses. The horses were sold by mutual consent of the claimant and the plaintiff and it was agreed that the parties would leave it to the court to decide who was entitled to the proceeds of the sale. This was an appeal by the plaintiff against the decision of the senior assistant registrar ordering that the claimant was entitled to the proceeds of the sale of the said horses which amounted to $66,000. The issue before the present court was whether the claimant, as trainer of the said race horses, had a lien over them.

Held, dismissing the plaintiff's appeal: (1) the principle of the right of continued possession is a necessary ingredient of s 123 of the Contracts Act 1950 (Act 136). Another important ingredient of the section is that the bailee must exercise his labour or skill in respect of the goods bailed. The claimant must also have a right to retain the said horses until he receives due renumeration; (2) on the facts, all three requirements of s 123 of the Contracts Act 1950 have been satisfied and the claimant, therefore, had a lien over the horses; (3) the claimant was entitled to the proceeds of the sale of the horses after all execution expenses have been deducted; (4) the plaintiff will pay the costs of this appeal to the claimant.

Sethia Financial Services Ltd v Nicholas Chu Fai Hung; Mak Siau King (Claimant) [1986] 1 MLJ 433 High Court, Kuala Lumpur (Zakaria Yatim J).

The parties had entered into a contract whereby in return for a sum of money the respondent handed over a business conducted by himself in Robinson Road, Singapore, to the appellant for a period of 18 months. It was agreed that during this period the appellant was to remit to the respondent in India a sum of Rs 60 per mensem. At the end of the period the business was to be handed back on payment of the sum previously paid, less any deficiencies on the remittances. It was also agreed that after the expiry of the said period the respondent should give to the appellant sufficient space for his stamp business at a reasonable rent. Subsequently it appeared that the remittances were not made and the respondent returned from India and wanted his business back. There was an arbitration as a result of which a second agreement was entered into. This provided for the holding back of the business on the payment of a sum specified. There was no mention of the retention by the appellant of space to be given by the respondent after the holding back. The respondent applied for specific performance of the agreement but refused to allow the appellant to retain the space occupied by him for his stamp business. The trial judge held that the original agreement (including the promise as to the space to be retained by the appellant) was abrogated by the second agreement and he decreed specific performance.

Held: (1) there was no express abrogation of the former agreement as to the retention of space by the appellant and there was nothing to show that the performance of the second agreement made the performance of that part of the first agreement impossible; (2) as the respondent was not willing to perform that part of the agreement and allow the appellant to retain the space for his business the action for specific performance should have been dismissed.

Abdul Wahab v Syed Ahmad [1952] MLJ 45 Court of Appeal, Singapore (Murray-Aynsley CJ, Thomson and Storr JJ).

The defendants issued an option to the plaintiffs to purchase a bungalow. However, the defendants had earlier entered into a contract with an architect to rebuild the bungalow. The sale of the bungalow to the plaintiffs was subject to an amicable settlement with the architect to terminate that contract with no further compensation. A handwritten clause to that effect was added to the option. The plaintiffs exercised the option. The defendants, however, could not obtain the architect's consent to terminate the agreement. The defendants did not complete the sale on the ground that the handwritten clause was not fulfilled. Before the scheduled date of completion, the plaintiffs filed this action seeking declarations that the defendants were not entitled to rescind the option and the plaintiffs were entitled to exercise the option and specific perfomance of the agreement or damages in lieu of specific performance. A preliminary point was raised at the outset of the trial whether evidence was admissible of an oral term that the defendants alleged was agreed to regarding a contract that they had entered into with building contractors.

Held, dismissing the plaintiffs' claim: (1) the alleged oral term came within proviso (b) to s 94 and evidence on the term was admissible. The plaintiffs' own evidence was that not all the terms agreed to were set out in the option. Secondly, the parties did not have the benefit of legal advice when the option was prepared. Thirdly, the handwritten clause was added by a person with no drafting skills; (2) the defendants were not under an absolute duty to obtain the consent of the architect and the contractors to terminate the building contract made between them. Their duty was to make reasonable efforts to obtain it. The defendants had made reasonable efforts to get the architect to agree to terminate his contract without compensation. The sale and purchase contract was subject to an amicable cancellation of the architect's contract. The defendants had asked for the architect's agreement, and he had refused. There was neither allegation nor evidence of collusion or connivance between them. The defendants had discharged their obligation and they were entitled to withdraw from the sale on the ground that there was no amicable termination of the architect's contract. On this basis alone, the plaintiffs' action must fail; (3) another impediment to their action was that they filed their action before the scheduled date of completion on 30 July. The cause of action has not accrued because the defendants could only be said to have defaulted if they failed to perform on the date of performance. A contracting party would not have to wait till the date of performance to sue if the other party was guilty of anticipatory breach. There was no conduct by the defendants which amounted to an anticipatory breach. In any event, the plaintiffs were not proceeding on anticipatory breach. They wanted specific performance of the agreement. That could only mean that they regarded the contract as subsisting and capable of performance when they filed their action. That being the case, they had sued too early, before the cause of action accrued; (4) the other prayers for relief were misconceived because the declarations were not needed, in the circumstances.

Ang Kim Leng & Anor v Koh Tze Kad & Anor [1996] 3 SLR 41 High Court, Singapore (Kan Ting Chiu J).

The owner of the subject property was one Quah Hong Guan ('Quah'). On 12 January 1983, Quah mortgaged the property to the respondent bank to secure payment of all moneys owing by Guan Huat Hardware Ltd to the bank. On 15 July 1986, Quah entered into an agreement to sell the property to Goh Hock Choon Pte Ltd ('GHC'). GHC on 27 August 1986 lodged a caveat against the property claiming an interest therein as purchasers. A dispute subsequently arose between Quah and GHC, and GHC initiated an action against Quah on 25 October 1986 claiming rescission of the sale agreement. In early November 1986, Quah started negotiations with the appellants for the sale of the property while the proceedings with GHC were in progress. On 27 November 1986, Quah wrote to the appellants confirming that the property had been 'sold' to the appellants for $830,000 and informing them that the transfer of the property would be effected 'after settlement with M/s Goh Hock Choon Pte Ltd'. There was, however, no reply to this letter from the appellants. On 4 December 1986, an agreement in writing between Quah and the appellants for the sale and purchase of the property was executed ('the sale agreement'). At the time of the execution of the sale agreement, Quah had already obtained written planning permission for the development of two pairs of semi-detached bungalows on the property. Under cl 6 of the sale agreement, the sale was subject to the appellants obtaining an extension or renewal of the existing planning permission. On 6 January 1987, the appellants received a letter from the competent authority which stated that their request for the extension was unnecessary as the existing planning permission was valid until 24 October 1987. Quah was not informed of this by the appellants. On 13 October 1987, the appellants' solicitors wrote to Quah's solicitors stating erroneously that they had obtained the extension and that 'the agreement had become unconditional'. They also enclosed the engrossed transfer for execution and requested for the completion account. The sale was not completed. On 16 March 1987, GHC lodged another caveat against the property claiming interests as holders of an equitable lien arising from the payment of the deposit under the agreement of 15 July 1986. On 8 June 1987, the appellants lodged a caveat claiming interest as the purchasers of the property. On 23 October 1987, the respondents as mortgagees exercised their powers of sale and sold the property at an auction for S$1.21m. After paying the cost involved in the mortgagee sale and deducting the amount outstanding under the mortgage, the respondents held a surplus of S$415,778.41. On 26 October 1987, the appellants instituted proceedings against Quah claiming the return of their deposit and damages. On 7 November 1987, the appellants informed the respondents of the suit and requested the respondents to hold the surplus proceeds pending the outcome of the dispute. The respondents were not agreeable and eventually, they paid the surplus proceeds to Quah. On 21 July 1989, the appellants commenced these proceedings for a declaration that by virtue of s 68(1) of the Land Titles Act (Cap 157) ('the Act'), the respondents were the trustees of the surplus proceeds and the appellants as purchasers were entitled to the same. Alternatively, the appellants claimed an equitable lien on the surplus proceeds for the deposit they had paid to Quah. The trial judge found that the sale agreement by reason of cl 6 was conditional on the respondents obtaining an extension of planning permission. However, he further found that this condition was for the sole benefit of the appellants and that they had waived it by the letter of 13 October 1987. Secondly, the trial judge also found that on the terms as provided in Quah's letter dated 27 November 1986, the sale was conditional on Quah achieving a settlement with GHC. Since this was not achieved before the completion of the mortgagee sale, the trial judge held that the sale agreement remained conditional and was hence incapable of being specifically performed. As such, he found that the appellants did not become equitable owners of the property and thus did not 'appear from the land register to be entitled to the mortgaged property' under s 68(1) of the Act. In addition, the trial judge held that the failure by the appellants to seek specific performance in their action against Quah meant that they had treated the contract as being rescinded and had therefore lost their right to seek specific performance. On the alternative claim, the trial judge held that for there to be a purchaser's lien, the sale agreement must be capable of being specifically enforced by the appellants. Since he had found that the appellants did not have this right, he held that they had no equitable lien on the balance of the sale proceeds. See [1994] 1 SLR 164. The appellants appealed.

Held, allowing the appeal: (1) the letter of 27 November 1986 was written prior to the execution of the sale agreement an did not form part of the parties' agreement; (2) the sale agreement was a conditional contract by virtue of cl 6. However, cl 6 was for the exclusive benefit of the appellants and they had waived this condition; (3) at the time the action against Quah was commenced, he had not been in a position to complete the sale with the appellants as the sale by the respondents bound him. In the circumstances, it would have been idle to seek specific performance. The appellants therefore could not be deemed to have rescinded the sale agreement by taking action against Quah and claiming only the return of the deposit and damages for breach of contract; (4) irrespective of whether the sale agreement was specifically enforceable or not when the mortgagee sale was completed, the appellants had an equitable lien for their deposit on the surplus proceeds of sale; (5) as the appellants had lodged a caveat claiming an interest in the property as purchasers and their caveat had been notified in the land register, they were persons who appeared from the land register to be entitled to the mortgaged property. By paying the surplus of the sale proceeds to Quah, the respondents were in breach of the duty they owed to the appellants under s 68(1) of the Act.

Chip Thye Enterprises Pte Ltd v Development Bank of Singapore Ltd [1994] 3 SLR 613 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

Francis v Municipal Councillors of Kuala Lumpur [1962] MLJ 407 Privy Council Appeal from Malaysia (Lord Evershed, Lord Morris of Borth-Y-Gest and Mr LMD de Silva).

See CONTRACT, Vol 3, para 2096.

Penang Han Chiang Associated Chinese School Association v National Union of Teachers in Independent Schools, West Malaysia [1988] 1 MLJ 302 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

See CONTRACT, Vol 3, para 2097.

Although a contract for sale of land on behalf of a minor with the sanction of the court if effected could not be upset, when specific performance is claimed the court is bound to satisfy itself not merely that the contract is not detrimental to the interests of the minor but is for his benefit.

Syed Ahamed bin Mohamed Alhabshee v Puteh bte Sabtu [1922] 5 FMSLR 243 High Court, Johore (Brown J).

A originally sought an order of specific performance against R, to compel R to obtain subdivision approval for a factory unit and to transfer strata title to A. When the matter came to trial, the order of specific performance was redundant as the necessary action had been already taken. The issue was whether A was entitled to obtain damages in lieu of specific performance. The learned trial judge held ([1988] 1 MLJ 363) that cl 11 of the sale and purchase agreement precluded a claim for damages in law but allowed damages in equity. However, it was held that the High Court had no power to award equitable damages. A appealed.

Held, dismissing the appeal: (1) the Court of Appeal interpreted cl 11 as precluding all claims for damages that the court might have jurisdiction to award, whether in law or equity; (2) the power to award equitable damages in England was statutory. However, even before the intervention of statute the Court of Chancery had in exceptional cases awarded equitable damages. This jurisdiction remained uncertain and indeterminate as it was superseded by legislation before it could develop. In the absence of fuller argument on the point, the Court of Appeal preferred to reserve the question of whether the High Court had a power to award equitable damages to a later date; (3) the appeal was dismissed with costs.

Shiffon Creations (S) Pte Ltd v Tong Lee Co Pte Ltd [1990] SLR 141 Court of Appeal, Singapore (Lai Kew Chai, Chan Sek Keong and Coomaraswamy JJ).

The jurisdiction to award damages in addition to or in lieu of injunction or specific performance is based on statute and is not a matter of inherent jurisdiction of the court.

Shiffon Creations (Singapore) Pte Ltd v Tong Lee Co Pte Ltd [1987] SLR 563 High Court, Singapore (LP Thean J).

[Annotation: See also entries digested under Contract (Sale and purchase of land).]

See contract, para V [44].

Chin Tai Kong v Chin Koi Ting Civil Suit No S 196 of 1983—High Court, Sandakan (Richard Malanjum J).

The first defendant was the executor of the estate of one Mayandi (the deceased). The second defendant was the deceased's wife. The deceased granted to the plaintiff an option dated 19 July 1986 to purchase a property known as 38 Lorong Tanggam, Singapore (the property). Pursuant to an application by the second defendant, the High Court ordered the sale under the option would proceed on the basis that second defendant was entitled to a half share of the property. The sale was not completed within the period stipulated in the option. The plaintiff then commenced action against the deceased to compel him to complete the sale. Subsequently, an exchange of correspondence between the parties' solicitors occurred, resulting in an agreement to complete the sale in consideration of, inter alia, the withdrawal of the action. However, the deceased died on 20 July 1988 and the sale did not proceed. There was a further delay pending the extraction of probate. On 2 June 1992, the first defendant's solicitors wrote to the plaintiff to inform him that he refused to complete the sale. The plaintiff then took out a writ against the first defendant, but this was never served and lapsed in December 1993. In July 1994, after tendering a cheque and a serving a notice to complete on the first defendant, the plaintiff initiated this proceedings for, inter alia, specific performance. The defendants argued, inter alia, that the plaintiff had been guilty of laches and that specific performance should not be allowed as it would cause undue hardship on the second defendant. It was common ground that the latter did not have the independent means to meet any award of damages to the plaintiff.

Held, granting an award of damages in lieu of specific performance: (1) up to 2 June 1988, the plaintiff had not given any impression that he was abandoning the claim and could not be said to have been guilty of laches. After the first defendant's refusal to continue with the sale in 1988, however, the plaintiff and his solicitors appeared to have done nothing till 1 February 1994, some 18 months later, when he tendered the cheque. The court could take judicial notice of the fact that prices of landed property had risen considerably since 1992. On the facts, therefore, there was an unreasonable delay on the plaintiffs' part. An award of specific performance would, therefore, not be made; (2) the plaintiff was, however, not precluded from obtaining damages in substitution for specific performance. The measure of damages for breach of contract on the sale and purchase of property was, generally, the market value of the property at the contractual time of completion less the contract price. In certain circumstances, nevertheless, damages could be assessed as at the date when the contract was lost. This was appropriate when the innocent party reasonably continued to try to have the contract completed. In the circumstances, the proper date for the assessment of damages was three months from 2 June 1992, or 2 September 1992; (3) the second defendant's present difficulties were largely of her own making, as the alleged hardships did not exist at the date when the contract was varied. The order of court which required her to deliver up the title deeds and to vacate the property once she received half the net sale proceeds was obtained in proceedings which the second defendant herself instituted against the deceased, and neither had filed any appeal thereon. It, therefore, did not lie in the mouth of the second defendant to now say that she should not be made to comply with the order of court, which compliance necessitated a sale of the property.

Toh Tiong Huat v PM Gunasaykaran (personal representative of the estate of Mayandi s/o Sinnathevar, deceased) & Anor [1996] 1 SLR 384 High Court, Singapore (Lai Siu Chiu J).

The appellant had been cohabiting with one Victor Tham as husband and wife since 1973. In 1984, Victor purchased an apartment (the property). They lived there until Victor's death in 1989. Victor died intestate, leaving his mother, the respondent, as the administratrix and sole beneficiary. The respondent and Eric, Victor's brother, were the beneficiaries of one insurance policy, and Eric and the appellant were the beneficiaries of three other insurance policies, all taken out by Victor. The appellant's share under the three policies totalled S$196,241.56. The appellant received an advance of S$50,000 out of her share of the insurance money. After Victor's death, the appellant continued to stay in the property, making payments of the mortgage instalments due on the property until May 1992. In late March 1993 an agreement in writing was made between the appellant and the respondent in her separate capacities as administratrix and beneficiary. Under the agreement the appellant agreed to assign her interests in the four insurance policies to the respondent and the latter agreed to transfer the property to the appellant freed from encumbrances. The respondent subsequently refused to perform the agreement. She claimed that the appellant had orally agreed to transfer to the respondent Victor's car and membership in the British Club, and the appellant had failed to do so. The appellant instituted proceedings against the respondent claiming specific performance. The trial judge held that evidence of the oral agreement was inadmissible under ss 93 and 94 of the Evidence Act (Cap 97, 1990 Ed), but as the appellant had not performed the oral agreement, she had not come to court with clean hands and therefore was not entitled to specific performance, and in lieu thereof he awarded her damages to be assessed. The appellant appealed.

Held, allowing the appeal: (1) evidence of the oral agreement was not admissible to vary or contradict the agreement by virtue of ss 93 and 94 of the Evidence Act; (2) there was a mistake in the agreement in that the appellant was described in the agreement to be the beneficiary of all the four policies, when in actual fact she was not a beneficiary of one of the policies. But this mistake was not caused or contributed by the appellant and accordingly specific performance could not be refused on the ground of that mistake; (3) the agreement was not unfair to the respondent. Though the value of the property was much more than the interests of the appellant under the three insurance policies, the agreement could not be looked at as a commercial bargain but as a domestic or family arrangement and in the context of the background and prevailing circumstances. The respondent had been fully aware of the operative part of the agreement and was not under any misapprehension; (4) there were no grounds for denying the appellant specific performance. But in the exercise of the court's equitable jurisdiction, necessary terms should be imposed in order to do justice to the parties. Accordingly, specific performance was ordered on terms (i) that the mortgage payments be made by the appellant for the period from June 1992 to the date of commencement of the action, (ii) that the advance payment out of the insurance money be repaid to the respondent, and (iii) that the sums representing the value of the car and proceeds of sale of the membership of the British Club be paid to the respondent as well.

Ng Lay Choo Marion v Lok Lai Oi [1995] 3 SLR 221 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

P applied, pursuant to ord 81 of the Rules of the High Court 1980, for an order of specific performance of a sale and purchase agreement made between them and D for the purchase by D of the property in question. D had failed to pay the balance of the purchase price for the property. D counterclaimed against P for a sum of money. D claimed that the remedy of specific performance was not available to P as the only remedy which P had under the agreement in the event of the breach by D was to be paid damages by way of forfeiting the deposit of D. D contended that as the agreement had been rescinded, P were only entitled to this remedy. In the instant case, P had, in contemplation of the execution of the agreement with D, terminated three existing tenancies together with the management of the business at the premises by adequately compensating the tenants. P claimed that no business could be carried on at the premises thereafter when D failed to complete the agreement.

Held, allowing P's application and dismissing D's counterclaim: (1) an agreement is rescinded only when there is a total abandonment of the whole contract. In the instant case, the conduct of the parties clearly negatived any intention to abandon the contract as the parties had continued to negotiate even after the issue of the notice by P demanding payment of the balance of the purchase price from D. There was, accordingly, no rescission of the agreement in the circumstances; (2) having regard to s 19 of the Specific Relief Act 195, P were entitled to the remedy of specific performance. The stipulation in the agreement of a sum of money to be paid as damages in case of breach by D was not a bar to a claim for specific performance of the agreement by P; (3) in the instant case, there was no breach of the agreement by P as the extension of the completion date was mutually agreed upon by the parties. The learned judge, accordingly, rejected D's contention that P had breached the agreement by unilaterally extending the completion date of the agreement; (4) in the instant case, P had suffered loss and damage. The learned judge found that termination by P of the tenancies and the management of the business carried on the premises was done in contemplation of the execution of the agreement with D. In the circumstances damages would not be an adequate remedy to P; (5) as D had not raised any triable issue in the action, the learned judge gave judgment in favour of P in terms of the minutes of the judgment filed. D's application was, accordingly, dismissed.

Lim Sin Oo & Ors v Cheah Tjeng Siong [1989] 2 MLJ 44 High Court, Penang (Wan Adnan J).

This was an application to dissolve the ex parte injunction granted to the plaintiffs restraining the defendants from parting with their shares in the Oriental Bank of Malaya Bhd, the sixth defendant. The facts were that the first five defendants were the directors of the sixth defendant bank and they had agreed to sell their respective shares in the bank to the plaintiffs. The plaintiffs claimed specific performance and an injunction. It was argued for the applicants that the agreement was incapable of specific performance and therefore an interim injunction would not lie.

Held, dismissing the application: (1) in order to dissolve or vary an ex parte injunction the defendants must satisfy the court that the facts upon which the injunction was granted no longer exist or that it was obtained by misrepresentation or suppression of material facts; (2) in this case the shares of the bank were not available in the open market and the court could therefore order specific performance of an agreement for the sale of the shares and in this respect the defendants had not established that the circumstances had changed; (3) there was a delay in filing the application to set aside the ex parte injunction and the court would in the circumstances refuse to exercise its discretion in favour of the applicants.

Gan Realty Sdn Bhd & Ors v Nicholas & Ors [1969] 2 MLJ 110 High Court, Kuala Lumpur (Raja Azlan Shah J).

Ng Lay Choo Marion v Lok Lai Oi [1995] 3 SLR 221 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, Vol 3, para 2952.

Yam Tunku Kamariah Aminah Maimunah Iskandariah bte Sultan Iskandar v YB Dato James Ling Beng King [1989] 2 MLJ 249 High Court, Kuala Lumpur (Gunn Chit Tuan J).

See CONTRACT, Vol 3, para 2715.

The appellants and the respondent were tenants in common of a property (the property), with the appellants holding a half share and the respondent the other half. The appellants occupied the ground floor and the respondent occupied the first floor of the property pursuant to an allocation arrangement. The respondent had been thinking of giving his half share to his children but was told by David, the appellants' brother and the respondent's nephew, that he could sell his half share and buy two properties for his children with the proceeds. David then negotiated with the respondent, who agreed to sell his half share in the property to the appellants for S$480,000. Subsequently, the respondent told David to persuade the appellants to cancel the sale agreement and, in return, he would formalize the allocation arrangement of the property with the appellants, whereby the appellants would be entitled to the ground floor and the respondent the first floor. The appellants refused to cancel the sale agreement and instead commenced proceedings in court for specific performance of the sale and purchase of the respondent's half share in the property. The trial judge found that the appellants, through David, had acted unconscionably. David was an estate agent who would have known that, based on the then market prices, the respondent's interest in the property was worth more than what he was offering to pay. Moreover, as David's uncle, the respondent would undoubtedly have placed some reliance on David's representation that he could buy two other properties with the sale proceeds. The judge ordered specific performance, but at the price equal to half the value of the property, which worked out to be a sum of S$766,666.66. The appellants appealed on the ground that the court, in granting specific performance, should not have varied the consideration agreed upon by the parties.

Held, dismissing the appeal: (1) the court in the exercise of its equitable jurisdiction was entitled in very exceptional cases to grant specific performance of a contract on terms that the consideration be varied. Each case must be considered and judged on its own merits; (2) having regard to all the circumstances, the court was not disposed to interfere with the judge's exercise of her discretion.

Lee Cheng Kang & Anor v Lee Tian Kai [1996] 2 SLR 252 Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Goh Joon Seng J).

D entered into an agreement to grant a lease of land to S, on terms that S would commence and proceed diligently to develop a block of flats. The agreement was assigned to P. It was also provided in the proviso to cl 4 that 'if for any reason due to the wilful default of the tenant the development shall remain uncompleted on (the relevant date) the lease shall forthwith be granted and completed' as provided in the agreement. P did not complete the block of flats. D treated the agreement as repudiated. P sought specific performance of the agreement to grant the lease in reliance on cl 4. The High Court dismissed the action notwithstanding cl 4, on the ground that a party could not rely on his own wrong to found a legal right. The Court of Appeal affirmed the High Court's decision. P appealed to the House of Lords.

Held, dismissing the appeal: (1) it is well established that a contracting party will not in normal circumstances be entitled to take advantage of his own breach as against the other party. This rule is not limited to cases where the party in breach is seeking to avoid the contract. A party who seeks to obtain a benefit under a continuing contract on account of his breach is just as much taking advantage of his own wrong as is a party who relies on his breach to escape his obligations; (2) cl 4 if taken literally would entitled P to have the lease notwithstanding the breach of contract. However, that would be a 'bizarre' result. P could not rely on this term because to allow them to do so would be tantamount to allowing them to benefit from their own wrong.

Alghussein Establishment v Eton College [1988] 1 WLR 587 House of Lords, England (Lords Bridge, Elwyn-Jones, Ackner, Goff and Jauncey).

The plaintiffs entered into a sale and purchase agreement to purchase a house belonging to one Quah Hong Guan (Quah). Quah had mortgaged his property in favour of the defendants. The sale and purchase agreement was subject to (1) the plaintiff obtaining an extension of the written planning approval for the development of the land; and (2) Quah settling his dispute with a previous purchaser. Both conditions were not fulfilled. As to the first condition, the plaintiff had informed Quah incorrectly that permission had been obtained and had forwarded the engrossed transfer to Quah requesting for completion. The defendants exercised their power of sale and sold the house before completion. There was surplus proceeds in the defendants' hands after the sale and the plaintiffs requested the defendants to hold the balance pending the settlement of their suit against Quah. The defendants refused, and returned the surplus proceeds to Quah. Quah was made a bankrupt on 31 March 1989. The plaintiffs commenced this action for a declaration that the defendants were the trustees of the balance of the sale proceeds and that they were entitled to it.

Held, dismissing the plaintiffs' claim: (1) the plaintiffs were purchasers and not mortgagees. To be entitled to the residue, they had to be persons who 'appeared from the register to be entitled to the mortgaged property'. To be so, they must have become owners in equity under a contract of sale which was specifically enforceable; (2) the plaintiffs had commenced proceedings on 26 October 1987 in Suit 2794 of 1987 against Quah claiming the repayment of the deposit of $83,000 and damages for breach of contract. By so doing, they had elected to rescind the contract and were not entitled to specific performance thereafter; (3) as there was no specifically enforceable contract between Quah and the plaintiffs at the date when the defendants came into possession of the surplus funds on completion of the mortgagee sale, the plaintiffs were not persons who appeared 'from the land register to be entitled to the mortgaged property' under s 68(1) of the Act. Neither were they 'authorized to give receipts for the proceeds of the sale thereof' thereunder; (4) the purchaser's lien is not predicated solely upon the existence of one condition, ie recoverability of any part of his purchase moneys: another condition must also exist, ie the purchaser's right to specific performance'; (5) (per curiam) a conditional agreement may be specifically enforced if the condition was for the exclusive benefit of one part and that party decides to waive the condition.

Chip Thye Enterprises Pte Ltd v Development Bank of Singapore Ltd [1994] 1 SLR 164 High Court, Singapore (Goh Joon Seng J).

The defendant, an 84-year-old illiterate lady, was the owner of the flat in dispute. The defendant intended to sell her flat and return to China to live out her last years. She was informed by a 'friend' who acted as her housing agent that the market price of her flat was S$245,000. The plaintiff, who was introduced by the defendant's 'friend', agreed to buy the flat at the asking price of S$245,000 without any bargaining. On 26 April 1994, the defendant executed an option for the sale of the flat at S$245,000 in the plaintiff's favour. On 10 May 1994, the plaintiff exercised the option and paid 10% of the purchase price as the deposit. The completion of the transaction was to be within four months from the date of the option. However, due to some technical problem with the title, the completion date was extended by agreement to 26 April 1995. On 5 May 1995, the defendant's solicitors wrote to the plaintiff's solicitors informing them that the defendant did not wish to proceed with the sale as she had changed her mind about returning to China and was unable to find alternative accommodation. The plaintiff then took out an originating summons seeking specific performance and consequential orders. In the meantime, the defendant found out that the sale price of S$245,000 was grossly undervalued. A valuation report showed that the market price of the flat at the date of contract was about S$390,000. The defendant submitted that the circumstances of the case showed that the transaction was an unconscionable bargain and the court, therefore, should not lend its aid to the plaintiff by ordering specific performance. The plaintiff contended that mere undervalue was not a ground for the court to refuse specific performance and that the circumstances of the case had to be taken into consideration. The circumstances were that the defendant was represented by solicitors throughout the transaction and that, for 16 months, she had made no complaints about the sale. In addition, the defendant had repeatedly asked for extensions of time for completion and had also given different reasons for not wanting to proceed with the sale. The plaintiff further submitted that he was not guilty of any sharp practice or fraud and that if the defendant was misled, it was by her own agent.

Held, dismissing the plaintiff's claim: (1) the facts of the case clearly raised a presumption of constructive fraud and unconscionable bargain. The flat was grossly undervalued and the defendant was an illiterate, old, sickly woman, who was obviously ignorant of the real worth of the property and had acted without proper advice; (2) once a prima facie case of constructive fraud and unconscionable bargain has been raised against the plaintiff, the onus was on the plaintiff to show that the transaction was a fair and reasonable one, and that no advantage was taken by him of the defendant's position of weakness. The plaintiff had not adduced evidence to rebut this presumption; (3) it was a relevant factor in deciding whether there had been unfair conduct if there were other circumstances indicative of unfair conduct; (4) there was no evidence to show that the solicitors were concerned with the price. The price was already decided upon before the solicitors were involved. Further, the extensions of time for completion was not at the request of the defendant but rather it was the plaintiff's solicitors who offered to extend the time; (5) though the undervaluation of the property was an added reason which the defendant later discovered, there were no circumstances present amounting to an election or estoppel to preclude the defendant from raising this reason to resist the plaintiff's claim; (6) whether or not the plaintiff was guilty of any sharp practice or fraud was irrelevant in deciding whether there had been an unconscionable bargain, as the fraud was presumed objectively from the nature of the bargain and the circumstances of the parties. Constructive fraud could consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances; (7) it was open to the court in the circumstances to draw adverse inferences against the plaintiff for choosing to keep silent about the circumstances of the transaction, including his knowledge of the true value of the property and of the defendant's condition; (8) although inadequacy of the consideration was not itself a ground for refusing specific performance, it could give rise to an inference of fraud if the inadequacy was so great as to make it impossible to accept that the bargain was fairly made;the plaintiff's claim for the alternative remedy of damages was also disallowed. Where the validity of the contract itself was in doubt, it would not be right for the court to refuse specific performance on the one hand and yet award damages on the other.

Fong Whye Koon v Chan Ah Thong [1996] 2 SLR 706 High Court, Singapore (Warren LH Khoo J).

Tay Joo Sing v Ku Yu Sang [1994] 3 SLR 719 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See contract, Vol 3, par 2654.

This action was for specific performance of an agreement dated 27 July 1977 ('the agreement') made between the defendant and the plaintiff's father, Ng Siau Choon ('the deceased'), who was at the material time the chairman and principal officer of the defendant. Under the agreement, the defendant agreed to sell to the deceased certain of its assets and properties for RM1,669,220. The deceased paid RM166,922 as a deposit and went into possesion of the properties. At the time, however, the defendant was under investigation by the Director General of Insurance ('the DGI') on the ground that it was likely to be insolvent and the DGI had directed that none of its assets was to be disposed of without his prior written permission under s 27(2) of the Insurance Act 1963 ('the Act'). The defendant contended that the agreement was void and unenforceable and was a fraud designed to strip its assets, and that the deposit had been paid as a round robin transaction in which money was drawn from the defendant's account and paid to the deceased's account, and subsequently withdrawn and paid to the defendant. The defendant counterclaimed for vacant possession of its properties and damages.

Held, dismissing the plaintiff's claim and allowing the defendant's counterclaim: (1) the evidence was clear that the agreement was signed without the approval of the DGI and, more importantly, that the deceased did not comply with the directives regarding the offer for sale to be made first to the public by publishing advertisements in the local newspapers; (2) by the terms of the agreement, the deceased had sought to circumvent the DGI's directives and s 27(2). The agreement conferred upon the deceased full rights of immediate possession and a permanent right to occupy the properties which gave the deceased all rights over the properties as if he had completed the purchase. That amounted to the deceased having effectively procured the 'disposal of' the properties without the approval of the DGI because of the legal and equitable rights which the agreement intended to vest in the deceased; (3) specific performance will be refused where the contract is tainted with fraud, or where the plaintiff has made some positive misrepresentation or been guilty of fraudulent suppression or where the conditions for sale are misleading. The agreement was tainted with fraud and was therefore void and unenforceable against the defendant. The plaintiff's alternative claim for damages in lieu of specific performance was also dismissed; (4) the deceased was in breach of his fiduciary duties as a director of the defendant by using the agreement as a device to appropriate the assets of the defendant to himself; (5) the plaintiff had no defence to the defendant's counterclaim and as the agreement was void, the defendant was entitled to immediate vacant possession of the properties, damages to be assessed by the registrar and costs of the counterclaim.

Ng Pak Cheong v Global Insurance Co Sdn Bhd [1995] 1 MLJ 64 High Court, Pulau Pinang (Mohamed Dzaiddin FCJ).

By an agreement dated 23 February 1993 ('the agreement'), the defendants agreed to sell a flat known as Block 1 #09-302 Marine Terrace Singapore ('the property'), to the plaintiffs. The consideration for the sale was S$290,000. Pursuant to the agreement, the plaintiffs paid a deposit of S$5,000 (the deposit). Clause 4 of the agreement provided that the purchaser was to submit to the Housing and Development Board (HDB) within three (3) days from the date agreed the application for Resale/Purchase of the property failing which this contract is null and void. On 25 February 1993, the plaintiffs submitted their application for the purchase of the property to the 'HDB'. On 14 May 1993, the defendants through their solicitors wrote to the plaintiffs alleging that they had breached cl 4 and that the defendants treated the agreement as null and void. On 26 May 1993, the defendants did not attend at the resale unit at the HDB Centre in Bukit Merah pursuant to HDB's instructions given on 13 April 1993 to both parties to the agreement. In the statement of claim, the plaintiffs alleged that the defendants by failing to turn up at the HDB's office in Bukit Merah were in repudiatory breach of the agreement and they sought specific performance of the agreement, alternatively damages for breach of contract. Counsel for the defendants contended that there was a statutory bar against the plaintiffs purchasing the flat in view of s 47 of the Housing and Development Act (Cap 129) as the second plaintiff had entered into a tenancy agreement on 17 May 1993. The thrust of the arguments presented by the defendants' counsel was that as a result of the second plaintiff's lack of capacity, the application that they had made to the HDB on 25 February 1993 was defective and was not a proper application. The defendants therefore contended that the plaintiffs had failed to perform their obligation under cl 4 and were in breach of contract. The learned registrar hearing the application for summary judgment by the plaintiffs granted the defendants unconditional leave to defend the plaintiffs' claim. The plaintiffs appealed against that decision.

Held, allowing the appeal and ordering specific performance in favour of the first plaintiff: (1) from a reading of cl 4, it was difficult to understand why the application to be submitted to the HDB must not be 'defective' in the sense the defendants contended. The purpose of the application to the HDB was to seek the authority's approval for the sale and it could not be implied into cl 4 that all applications sent by proposed purchasers should be 'non-defective', in the sense that approval from the HDB must be a certainty. As long as the application that was submitted was properly completed with all the essential details included for the HDB's consideration, cl 4 would have been fulfilled; (2) there seems to be no provision in the agreement which allowed the defendants to terminate the agreement on the ground that there was a lack of capacity on the part of the plaintiffs. The defendants well knew that HDB, by their letter of 13 April 1993, had given their provisional approval to the sale. The defendants should have turned up at the HDB's office in Bukit Merah on the appointed date and time to ascertain if the sale would be approved instead of deciding otherwise unilaterally; (3) accordingly the defendants had wrongfully terminated the agreement and their conduct in not turning up at the HDB's office was a repudiatory breach of the agreement. As such there is no good defence to the action of the plaintiff; (4) on a literal reading of the 'Indemnity Clause', the court concluded that it was meant for the sole benefit of the party who was not in breach. The wording of the 'Indemnity Clause' suggested that only the party who had retracted from the sale after approval by the HDB 'shall agree to compensate the other party...'. It could not be read into the clause that the party who had not retracted from the sale 'must agree to receive'. Neither could it be implied into the clause that 'the parties agree...'. The clause only imposed a burden on the party who retracted from the sale and the party who had not retracted therefrom continued to have the option of not relying on it. If the HDB had not approved the sale due to no fault of either party, the 'Indemnity Clause' would obviously not have been applicable. However, if the approval was not given due to the fault of one party, his conduct would be similar in effect to a retraction after approval was obtained. The 'Indemnity Clause' did not affect the plaintiffs' right to specific performance as contended for by the defendants; (5) from the agreement, it was clear that the plaintiffs had entered into the agreement to purchase the flat as joint tenants. Since they were jointly and severally bound under the agreement, either one of them could have been compelled to perform their obligations under the agreement if they had been the party in breach. Similarly, either one of them should also be able to compel the defendants to perform their obligations if the defendants were in breach of the agreement; (6) as equity would not act in vain, the court ordered that the agreement of 23 February 1993 be specifically performed in favour of the first plaintiff only as the second plaintiff was not able to obtain the permission of the HDB to be an 'approved purchaser'; (7) the court had taken into account the fact that the defendants would not be prejudiced in any event if they were ordered to specifically perform the agreement in favour of the first plaintiff only as they would still be entitled to the full consideration on completion of the sale. The appropriate remedy here was to order that the defendants specifically perform the agreement of 23 February 1993 in favour of the first plaintiff.

Rabiah bte Markani & Anor v Low Buen Chek & Anor Suit No 1562 of 1993 High Court, Singapore (Lai Siu Chiu JC).

This was an application under O 81 of the Rules of the High Court 1980 ('RHC') for summary judgment for specific performance of an agreement made on 24 January 1983 as supplemented by an agreement made on 30 November 1983 between the defendant and the plaintiffs ('the Agreements') under which the defendant agreed to transfer to the plaintiffs four semi-detached double storey houses described as Lots 3,4,5 and 6 ('the houses') to be erected on a piece of land held under Country Lease No 215322802 ('the Land'). The plaintiffs were the registered owners of the Land. By the Agreements, the plaintiffs agreed to sell the Land to the defendant for a consideration of RM1,402,500. Pursuant to the Agreements, part of the consideration totalling RM420,750 shall be set off by the defendant to the plaintiffs for the houses each of which shall be completed on or before 30 November 1985. Counsel for the defendant submitted that the present action was an abuse of the process of the Court as the plaintiffs had already commenced a similar action ('the first action') which was dismissed for being time barred and which appeal against that decision is pending before the Court of Appeal. Counsel for the defendant argued that the present action is time barred because it was not commenced within six years from 30 November 1985 which is the date set for completion of the houses. The plaintiffs' counsel argued that the failure by the defendant to transfer the houses by and after 30 November 1985 constitutes a continuing breach within the meaning of s 23 of the Limitation Ordinance (Sabah Cap 72) ('Limitation Ordinance') with the result that a fresh period of limitation begins to run at every moment of the time during which the breach continues. He further argued that this action which was commenced on 22 February 1995 cannot be time barred as the completion of the houses took place only on 14 November 1994 and hence the plaintiffs' action was therefore well within time because the time limitation for specific performance as provided in item 92, Part II of the Schedule to s 3 of the Limitation Ordinance is three years from the date fixed for performance or from the time when the plaintiffs have notice of refusal of performance, that is, transfer of the houses to the plaintiff. It was further argued that as the date of the transfer of the houses is not fixed, time would start to run when the plaintiffs had notice that the receivers of the defendant failed to respond to the plaintiffs' demand made through their letter of 21 February 1995.

Held, allowing the plaintiffs' application: (1) the claim of the first action, which is for specific performance to build houses, is different from the claim of the present action for a transfer of the houses after they have been completed; (2) an action for the transfer of houses would not have succeeded or would have been premature because the first action was commenced on 6 February 1993 whereas the houses were only completed on 4 November 1994; (3) the elements required for res judicata, which is that the cause of action could have been brought in the previous action, has not been established and the plea of res judicata accordingly fails; (4) for the purposes of the Limitation Ordinance, time begins to run from the date fixed by the Agreements for the transfer of the houses, that is, there must be an express date fixed for performance rather than one to be implied; (5) since no express date has been fixed for the transfer of houses, the second limb of item 92 of the Limitation Ordinance applied, which is that, time begins to run from the date the plaintiffs had notice that performance is refused, which is the time after the defendant failed to respond to the plaintiffs' letter of demand dated 21 February 1995; (6) furthermore, since the plaintiffs treated the Agreements as subsisting and did not elect to treat the Agreements as repudiated and sue for damages, this had the effect of postponing the date of completion of the transfer of the houses and the time for transfer becomes at large until the plaintiffs give a new date for the defendant to effect the transfer. As such, there was a continuing breach of the Agreements which attracted the application of s 23 of the Limitation Ordinance. A fresh period of limitation was running at every moment of the time during the continuation of the breach; (7) accordingly, this action is not time barred.

Tung Vun Tsin & Anor v Surimas Sdn Bhd (Receivers and Managers appointed) Suit No K 22-37 of 1995 High Court, Sabah and Sarawak (Ian Chin J).

This was the plaintiffs' application by way of summons-in-chambers ('SIC') for summary judgment for specific performance under O 81 of the Rules of the High Court 1980 ('RHC'). The plaintiffs entered into a sale and purchase agreement dated 23 August 1993 ('the Agreement') to purchase a piece of property known as HS(D) 40820, PTD 18832, Mukim Plentong, Daerah Johor Bahru together with a two-storey detached house ('the Property') from the defendants at a purchase price of RM860,000. A deposit of RM86,000 was paid to the defendants on the date of execution of the Agreement. The plaintiffs' contention was that the completion date of the Agreement was 24 December 1993 as the Agreement stipulated that the completion date may be extended for a period of one month from 24 November 1993. The defendants, on the other hand, argued that the completion date as extended, was 23 December 1993 based on the conventional three months from the date of the Agreement with one month extension thereafter expiring on 23 December 1993. At the time of entering into the Agreement, the Property was charged to Bank Buruh (M) Bhd ('Bank Buruh') and pursuant to the Agreement: (1) the defendants agreed to sell the Property to the plaintiffs free from all encumbrances and with vacant possession; (2) the defendants shall discharge the existing charge over the Property and in this regard the solicitors acting for both the plaintiffs and the defendants in respect of the sale and purchase transaction ('the Solicitors') were irrevocably authorised to utilise such part of the purchase price paid by the plaintiffs as redemption money for discharging the charge over the Property; (3) on the completion date, the plaintiffs shall be let into possession of the Property. The plaintiffs applied for a loan of RM600,000 from Malayan Banking Berhad ('MBB') and this loan was approved on 13 December 1993. On 13 December 1993 itself, the plaintiffs paid the difference between the balance of the purchase price and the loan amount to the Solicitors. Before the loan could be released by MBB, the Solicitors were required to prepare the necessary legal documents and to that effect the plaintiffs executed the form of transfer. Stamp duty on the transfer amounting to RM19,800 was also paid by the plaintiffs. Due to a delay by Bank Buruh in informing the Solicitors of the redemption sum, MBB was unable to release the loan. In view of the time constraint, the plaintiffs decided to use their own funds instead of the loan from MBB to finance their acquisition of the Property. The plaintiffs were advised by the Solicitors to complete the transaction on 23 December 1993. It was claimed by the plaintiffs that on 23 December 1993, the first plaintiff gave a cheque to the Solicitors whereupon the Solicitors wrote the name of the payee as 'Bank Buruh (M) Bhd' and the amount payable as RM600,000 and that accordingly, the plaintiffs submitted that they had fulfilled the Agreement on 23 December 1993. The defendants' version of the events which took place was that the Solicitors, by their letter dated 22 December 1993, requested the defendants to attend their office on 23 December 1993. The first defendant attended the Solicitors' office on 23 December 1993 at 4pm. The plaintiffs were present at that time. The Solicitors proceeded to inform the first defendant that the loan sum has yet to be received from MBB and that the plaintiffs did not have sufficient funds to make the final payment. As such, the Solicitors requested for a further time extension of three weeks. The first defendant refused to accede to the request as one month's extension had already been given and that day itself, 23 December 1993, was the last day for completion of the Agreement. There was a further meeting between the defendants, the plaintiffs and the Solicitors that same night at a restaurant, where again, request was made for a further extension of three weeks. Again, the defendants refused and they left the restaurant thereafter. The next day, the Solicitors, by a letter dated 24 December 1993 ('TMP3') addressed to the defendants stated that: 'É pursuance to the discussion earlier the purchasers managed to raise the balance sum É'. Counsel for the defendants further raised the preliminary objections that: (1) the requirements of O 81 r 2(1) RHC has not been satisfied in that the SIC was supported by the affidavit of the plaintiffs and a statutory declaration of the Solicitors; (2) the SIC did not set out or have attached thereto minutes of the judgment sought as required under O 81 r 2(2) RHC.

Held, dismissing the plaintiffs' application: (1) the requirement referred to under O 81 r 2(1) RHC is that the SIC must be supported by an affidavit made by some person who can swear positively to the facts verifying the cause of action and stating that in his belief there is no defence to the action; (2) since 'affidavit' as defined in s 3 of the Interpretation Act 1948 includes a statutory declaration, the statutory declaration was admissible but even if this view was incorrect, this is an irregularity which the court could exercise its discretionary power under O 2 RHC; (3) there is no prescribed form in terms of the minutes of the judgment under the RHC but in any event, the defects, if any, could be treated as an irregularity under O 2 RHC; (4) the principles for an application under O 81 are the same as an application made under O 14 RHC; (5) it was understood by the parties that the completion date as extended, would be 23 December 1993. Even if the interpretation of the plaintiffs that the completion date was 24 December 1993 was correct, the parties, by their course of dealings have put an interpretation as to the expiry of the time period as 23 December 1993 and conducted their affairs accordingly. The parties have varied the contract and cannot be allowed to go back on it; (6) 'TMP3' seemed to show the conflict between the plaintiff's assertion that payment was made on 23 December 1993 at the Solicitors' office and the statutory declaration of the Solicitors that the transaction was completed at his office on 22 December 1993. This supported the defendants' allegations that the balance of the purchase price was not tendered by the plaintiffs as at the completion date; (7) on the basis that the completion date was 23 December 1993, as at 23 December 1993, the redemption sum has not been ascertained, the plaintiffs' cheque was made payable to Bank Buruh instead of to the Solicitors as required under the Agreement and there was in fact no redemption of the Property or a proper payment of the balance to the defendants; (8) on the facts, the defendants had shown that the questions of the date for completion of the Agreement, the matters which were required to be done on the completion date and whether these requirements were fulfilled as a matter of fact and law were triable issues which required oral evidence to be adduced for the determination of the court.

Chong Sui Kang & Anor v Ramarajan a/l Suriyakanan & Ors Civil Suit No 22-30 of 1994 High Court, Johor Bahru (Haidar J).

The plaintiffs were brothers and were nephews of the defendant. The plaintiffs' late father and the defendant were given a half share in the shophouse in question. The plaintiffs' late father left his half share to the plaintiffs so that they had a quarter share each. After the plaintiffs' father died, the family divided the property so that the plaintiffs had the ground floor and the defendant the entire second storey. There were separate property tax bills and electricity meters for each unit. The defendant's family occupied their unit until they purchased another property and moved out. The defendant approached the plaintiffs' elder brother ('D'), asking whether they would be interested in buying their half share in the shophouse. Negotiations ensued and the price for the shophouse was set. Both parties instructed the same solicitor to act for them in the sale transaction and an agreement for sale and purchase was drawn up, the agreement signed and the deposit paid. Two weeks later, the defendant asked for the agreement to be cancelled for family reasons. D said he would have to contact the plaintiffs who agreed to let him negotiate with the defendant to cancel the sale agreement and as an alternative, formalize the allocation of the floors between the plaintiffs and the defendant. The defendant then returned the deposit to D. The defendant's representative advised the solicitor that the defendant wished to cancel the sale agreement. The solicitor then advised D that if the matter became litigious, he could no longer act for both parties. D asked the solicitor to prepare a deed on the proposed allocation. The defendant did not sign the deed and then asked for a simpler version. A second draft was prepared but the defendant refused to sign, stating he wanted the sale agreement cancelled first. Shortly after, the defendant said he would sign the deed as long as the sale agreement was cancelled. The plaintiffs' new solicitors wrote to the defendant seeking performance of the sale agreement. Completion did not occur and the plaintiffs brought an action for specific performance and consequential relief.

Held, ordering specific performance of the sale agreement but not at the agreed consideration: (1) on the evidence, it was clear that the defendant was prompted to sell his half share in the property by the assurances of D and then sought unsuccessfully to cancel the agreement. The plaintiffs claim they never agreed through their agent, D, to the cancellation of the agreement. The question was whether the plaintiffs were in any way precluded by D's conduct from enforcing the agreement, bearing in mind that specific performance is a discretionary equitable remedy that is not granted if it would operate unjustly, even where there is no equitable estoppel; (2) there was no doubt that the plaintiffs, through D, never agreed to the cancellation of the agreement despite the return of their deposit as a precondition to the cancellation of the agreement. The deposit was returned when the defendant refused to sign the deed. It was not returned to evidence the fact that the deed had been mutually cancelled; (3) therefore, as the agreement was not cancelled before 9 June 1992, there was no need to consider the authorities in support of the argument that a parol agreement can, despite the Statute of Frauds, be admissible to rescind an agreement relating to immovable property; (4) any other reasons for refusing specific performance were to be considered. What had to be determined was whether having regard to all the circumstances, it was consistent with equity and good conscience to allow the plaintiffs to enforce the unequal bargain against the defendant bearing in mind the maxim that he who comes to equity must do so with clean hands; (5) although in itself it is not sufficient to decide whether unfair use was made of the situation. In this case, the plaintiffs were answerable for the defendant's error of judgment when being told that two properties could be bought for the price of the one sold; (6) in addition, the court also has to consider whether enforcing the agreement would cause undue hardship to the defendant or from the plaintiff's point of view whether damages would be an adequate remedy. This requires a balance to be drawn between the parties' interests. Granting the plaintiffs specific performance would allow them the entire property, enhancing its value and depriving the defendant of what his parents had given him. Refusing the plaintiffs specific performance would cause them no prejudice as they had been allotted use of the more valuable floor; (7) the question was, therefore, whether the circumstances as to how the sale came about and the inadequacy of the purchase price would deny the plaintiffs their relief? The facts did not show that the bargain was so unconscionable as to tantamount to fraud and to raise a plea of non est factum. The terms may not have been wise and they may have been risky or unbusinesslike but where the parties have agreed on these terms, the court will not refuse a decree of specific performance on the grounds of unfairness (Axelsen v O'Brien (1949) 89 CLR 219). Inadequacy of consideration would be a factor;justice would be done by ordering specific performance but not at the agreed consideration. The plaintiffs must pay half the market value of the property as at the date of the sale agreement based on three valuations. It would be inequitable to award liquidated damages on their claim for late completion and set it off against the purchase price as the defendants had suffered enough hardship.

Lee Cheng Kang & Anor v Lee Tian Kai Suit No 1597 of 1992 High Court, Singapore (Lai Siu Chiu J).

A and D entered into an agreement by which D agreed to sell to A the land in question. A was to be given vacant possession of the land after payment of the purchase price in full. However, at the request of A, D gave vacant possession of the property to A despite the fact that payment in full had not been made. A had since demolished all the buildings on the land in order to prepare the land for development. D failed to pay the last instalment due and D sued A and claimed, inter alia, for specific performance of the agreement. Clause 8 of the agreement provided that in the event of default of payment by A, D could either claim for specific performance of the agreement or liquidated damages agreed at 25% of the purchase price. D subsequently applied pursuant to ord 81 of the Rules of the High Court 1980 for specific performance of the agreement which was granted by the learned judge in chambers. The learned judge confirmed the decision he made earlier in chambers after hearing further arguments. Hence the present appeal by A. A's defence rested on two grounds, namely, adequate remedy and hardship.

Held, dismissing the appeal: (1) section 11(2) of the Specific Relief Act 1950 provides that there is a presumption that in contracts for the sale of immovable property, monetary compensation cannot be an adequate remedy. Although s 20(1)(a) of the Act provides that a contract will not be specifically enforced if the non-performance of it can be adequately relieved by compensation in money, the section is of general application only while s 11(2) deals specifically with contracts for the sale of land. Section 11(2) will, accordingly, prevail in cases involving contracts dealing with sale and purchase of property; (2) under s 21(2)(b) of the Act, the court may refuse to grant specific performance of the contract where to do so would involve hardship on A. However each case must be decided on its particular facts. In the instant case, the hardship had been brought about by A himself when he decided to embark on the development of the land without having secured adequate finance; (3) as the learned judge had exercised his discretion judicially and properly, their Lordships found no reason to interfere with the exercise of the discretion by the learned judge. The appeal of A was, accordingly, dismissed.

Sekemas Sdn Bhd v Lian Seng Co Sdn Bhd [1989] 2 MLJ 155 Supreme Court, Malaysia (Lee Hun Hoe CJ (Borneo).

Tay Tho Bok & Anor v Segar Oil Palm Estate Sdn Bhd [1996] 3 MLJ 181 High Court, Johor Bahru (Mohd Ghazali J).

See CONTRACT, Vol 3, para 2853.

The plaintiffs in this case sued the defendant for specific performance of an agreement in writing dated 22 September 1975 in which the defendant had agreed to sell her land to the plaintiffs for $700,000. The plaintiffs also claimed $300,000 as liquidated damages and $48,302 as specific damages which the plaintiffs had incurred in relation to the land. The plaintiffs alleged the defendant was to take all steps and sign all documents necessary for the early issue of the sub-divisional titles. By a letter dated 7 September 1976, the defendant repudiated the agreement on the ground that no drainage plans were submitted to the Town Council for approval. The defendant counterclaimed for quit rent in the sum of $9,941.10 and survey fees in the sum of $5,000.

Held, allowing the plaintiffs' claim and dismissing the counterclaim: (1) there was no undue delay by the plaintiffs in trying to comply with the agreement. The defendant on the other hand had acted unreasonably and wrongfully in terminating the agreement; (2) this was a proper case to order specific performance of the agreement. The plaintiffs would also be awarded $50,000 as damages; (3) the defendant was entitled to the sum of $5,000 paid by her to the private surveyor. However, she would receive it only on the date of completion of the sale.

Low Lup Piow & Ors v Lee Soh Hua [1983] 1 MLJ 304 High Court, Seremban (Ajaib Singh J).

Ku Yu Sang v Tay Joo Sing & Anor [1993] 3 SLR 938 High Court, Singapore (Warren LH Khoo J).

See CONTRACT, Vol 3, para 2895.

The plaintiff in the first action (KG 164/83) claimed against the defendant, inter alia, a declaration that an agreement dated 8 January 1974 entered into between the plaintiff and the defendant ('the agreement') was a sham. The defendant disputed the claim and counterclaimed for, inter alia, specific performance of the agreement by transferring to the defendant all the plaintiff's right, title and interest in a certain piece of land ('the land'). In the second action (KG 599/86), the plaintiff therein (the intervener in KG 164/83) claimed against the same defendant for specific performance of an agreement dated 25 February 1974, and that the land be registered in her name as purchaser/transferee free from all encumbrances. The defendant joined the plaintiff of KG 164/83 as third party. Both actions were subsequently consolidated by order of court. It was agreed that KG 164/83 would be determined first. Counsel for the plaintiff submitted that: (1) the agreement was a sham and was only to better secure the loan of RM5,000 given by the defendant to the plaintiff and that there was no bona fide sale and purchase of the land together with the house thereon; (2) there was a failure of consideration thereby resulting in the agreement being null and void; and (3) the agreement was illegal in view of the 'no dealing clause' in the document of title of the said property.

Held, dismissing the plaintiff's claim in KG 164/83: (1) having considered the evidence as a whole, including the conduct of the parties and the circumstances, on a balance of probabilities the plaintiff's contention that the agreement was a sham cannot be sustained; (2) the plaintiff admitted under cross-examination that the contents of the agreement were explained to him by a lady in the legal firm and he knew what he was signing. However, the plaintiff justified his action by saying that the agreement was to secure a loan. But if that were so, his subsequent conduct did not support such a justification. He did not show any concern for it in a way reasonably expected of an owner of a house; (3) it was doubtful that the agreement was to secure a loan as by his own admission, the plaintiff said that he had not repaid the loan. He was also uncertain from whom he took the loan; (4) cl 2 of the agreement clearly stipulated that the sum of RM8,000 was paid and the receipt was acknowledged. The plaintiff admitted knowing what he was signing and as such, he should be bound by it. The sanctity of legally binding agreements should be protected; (5) the restriction in the document of title was not one of absolute prohibition but a qualified one. Thus dealing in the land could have been done either with the consent of the Director of Lands and Survey if before the expiry of the initial ten-year period, or upon the expiry of the ten-year period as the restriction by then would have lapsed. As no immediate transfer was anticipated by the parties upon the execution of the agreement, the agreement was not illegal and void ab initio; (6) there was no provision in the Sarawak Land Code which attached a taint of illegality to the agreement.

Liong Pong Huong v Nyan Siu Lan (Wong Siew Leng, Intervener) and another action Suit Nos KG 164 of 1983 and 599 of 1986 High Court, Kuching (Richard Malanjum JC).

P entered into an agreement for the purchase of two pieces of land from D. This agreement was subsequently replaced by another agreement which incorporated the terms and conditions of the earlier agreement. This later agreement was signed by both parties. Upon the failure of D to perform the said agreement, P applied for specific performance of it. P's application for summary judgment under O 81 r 1 of the Rules of the High Court 1980 was granted by the senior assistant registrar who also dismissed D's application to strike out P's claim. D appealed against the decisions of the senior assistant registrar to the High Court. D contended that there was no validly concluded contract between the parties in the circumstances of the case and that P's claim should be struck out.

Held, dismissing the appeals: (1) in the instant case, there was a binding contract between the parties which was valid in law and enforceable. All the essential conditions were clearly stipulated in the said agreement. There was no suggestion or inference that could be drawn from the provisions as set out in the agreement that any of the terms could be renegotiated or that either party could withdraw his or its agreement to any terms already agreed upon. The signing of a sale and purchase agreement as required by the said agreement was only a mere formality; (2) as the said agreement was intended to be a binding contract for the sale of the land as it was valid in law and enforceable, D's appeals were dismissed by the learned judge.

Chiong Ah Mui v Ban Choon Co (Pte) Ltd [1989] 2 MLJ 296 High Court, Kuantan (Lamin J).

Tay Joo Sing v Ku Yu Sang [1994] 3 SLR 719 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, Vol 3, para 2654.

See contract, para VII [38].

Tay Ah Poon & Anor v Chionh Hai Guan & Anor [1997] 2 SLR 363 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

The plaintiffs applied for an order to restrain the defendant from obstructing the plaintiffs' entry to a piece of land to carry out quarry operations on the land. There was also a claim for damages and for a refund of RM60,000. The plaintiffs contended that there was an agreement made between the parties to allow the plaintiffs to enter upon the land to extract stones and for which the plaintiffs had already paid RM60,000 to the defendant. It was alleged that the defendant had fenced up the said land resulting in the stoppage of the plaintiffs' quarrying operation and orders for stones could not be fulfilled by the plaintiffs on time.

Held, dismissing the application for an injunction: (1) it was common ground that an injunction would not be granted if the plaintiffs were not entitled to specific performance of the agreement. The court had to be guided by s 20 of the Specific Relief Act which gave various instances where an injunction should not be granted; (2) the plaintiffs had effectively assigned the benefits of the agreement to T. It was also not disputed that T would effectively be selling and keeping the money in respect of the sale of stones. It would not be equitable to expect the defendant to look towards the plaintiffs, a shell of a company, knowing well that the money from the sale of extracted stones would be kept by T to which the defendant had no recourse; (3) taking the second geological report which said there was an estimated 206,250 cubic metres reserve of stones present on the land, the plaintiffs would have to pay the defendant RM500,000 if the stones were extracted. After taking into account the sum of RM60,000 already paid to the defendant earlier under the agreement, the plaintiffs still had to pay well over RM440,000 to the defendant, which amount the plaintiffs did not have the cash to pay because all the proceeds of sales would have gone to T. When this fact was considered together with the fact that the plaintiffs had disposed almost all of its assets including their right to extract stones from the land, the court was almost certain that the defendant would not be paid whatever balance that would be incurred as a result of the extraction of stones in excess of 30,000 cubic yards and it would not be in the interests of justice to order specific performance; (4) the only thing that was proven was the RM60,000 that was paid, for which the plaintiffs were entitled to recover. As for the plaintiffs' further claim for the costs of removing the overburden on the land, the absence of documents supporting the payment relating to the removal of overburden justifies the contrary conclusion.

Tanavanus Sdn Bhd v Simon Jingking Pingguan @ Simon Jenkins Suit No K22-34 of 1995—High Court, Kota Kinabalu (Ian HC Chin J).

This was an appeal from the decision of the Federal Court reported in [1978] 2 MLJ 29. The respondents had claimed specific performance of a contract for the sale of land against the appellant. The learned trial judge had found in favour of the respondents but found that there was an oral agreement enabling the respondents to pay damages for breach. He therefore gave damages in favour of the respondents. The respondents appealed to the Federal Court seeking specific performance of the contract and the Federal Court held that the respondents were entitled to specific performance. The appellant appealed.

Held: (1) the present case was one which required the exercise of the discretion of the court to order specific performance at the suit of the purchaser. The contract was one for the sale of immovable property, there was no sustainable objection that the conduct of the purchaser was such as to disentitle her to equitable relief and there was evidence that the land in question was of particular importance for use in association with her neighbouring tin mining operations, in particular the deposit of tailings; (2) there was not sufficient evidence in this case to show that the vendor had agreed if she defaulted to pay $5,000 in consideration of the purchaser agreeing not to claim specific performance and to claim only damages; (3) the fact that there was an alternative claim for damages in an action by the purchaser for specific performance of a contract for the sale of land could not be a fact relevant to the exercise of the discretion by the learned judge and the Federal Court was entitled to exercise its discretion and was correct in reversing the decision of the judge and ordering specific performance.

Zaibun SA bte Syed Ahmad v Loh Koon Moy & Anor [1982] 2 MLJ 92 Privy Council Appeal from Malaysia (Lord Diplock, Lord Elwyn-Jones, Lord Russell of Killowen, Lord Keith of Kinkel and Lord Brandon of Oakbrook).

The plaintiff claimed for specific performance of an agreement made between the plaintiff and the defendants on 11 June 1956 for the transfer of the defendants' two-eighths undivided shares in Lots 1285, 1286, 1288 and 1290, Mukim 14, Province Wellesley Central, to the plaintiff in consideration of the plaintiff's undertaking to surrender his six-eighths undivided shares in Lots No 1287 and 1289 to the defendants absolutely. The agreement was that the plaintiff was to pay for and own three-fourths of the land and the defendants were to jointly own one-fourth of the land. At first the land was worked jointly but as the arrangement was not satisfactory it was decided to sub-divide the land. The object and purpose of this sub-division was in order that each party could become sole proprietor of his share of the land originally purchased, go into possession immediately and plant and develop his land and reap the harvest. It was agreed between the parties that once sub-division was completed and new titles were issued the parties would sign the necessary cross transfer of their respective undivided portions to regularize their sole proprietorship. The defendants averred that the sole purpose of sub-division was for the purpose of cultivation and that each party was to retain his undivided interest in the different portions of the land even after sub-division and the issue of new titles. In their amended defence, they invoked s 4 of the Statute of Frauds 1677.

Held, allowing the plaintiff's claim: (1) the parties decided to sub-divide the land to get sole ownership of their portions according to their undivided shares. Sub-division was not solely for the purpose of cultivation for if it were so they would have had to share the costs and expenses of developing the separate portion and share the profits in the proportion of their undivided shares. To put any other construction on the signing, on the plans and all the surrounding circumstances, would be to indulge in ostrichism; (2) collateral oral agreements have been admitted to explain and construe the note or memorandum. Even if it is not sufficient to meet the requirement by statute that the agreement must be evidenced in writing, the fact that the plaintiff had partly performed the contract in the expectation that the defendants would perform the rest of the contract provides an equitable remedy for the plaintiff and would not enable the defendants to escape from the obligations of their contract upon the strength of the statute but the court will order specific performance of the contract; (3) no court will allow the Statute of Frauds to be used as an instrument of fraud. Hence, the Statute of Frauds will be of no avail to the defence.

Kok Ek Chooi v Cheah Soon Neoh & Anor [1982] 1 MLJ 219 High Court, Penang (Arulanandom J).

In this case, the land was registered in the name of Che Rosiah bte Awang, deceased. The daughter and son, who were the only heirs of the deceased, agreed to sell the land to the plaintiff for $8,000. An agreement was drawn up and the plaintiff paid $2,000 advance towards the purchase consideration. Clause 8 of the argument provided for the return of the advance if the vendors failed to complete the purchase in accordance with the stipulations therein contained. The defendants decided not to complete the sale and returned the advance of $2,000 to the plaintiff. The plaintiff sued the defendants for specific performance. The registrar granted the defendants unconditional leave to defend the suit. Against this order the plaintiff appealed.

Held: (1) a deed has to be construed as a whole; (2) cl 8 of the agreement does not mean that the defendants could for no apparent reason and unilaterally revoke the agreement and refund the deposit; (3) the obvious intention of the parties was that in the event the said property could not be transferred to the vendors (defendants) they shall refund to the plaintiff the deposit paid; (4) the plaintiff is entitled to the specific performance of the said agreement.

Mustapha bin Mohamed Noh v Osman bin Shahidan & Anor [1986] 1 MLJ 182 High Court, Penang (Mohamed Dzaiddin J).

This was an appeal from the decision of Gunn Chit Tuan J reported in [1980] 1 MLJ 105. The appellant had agreed to sell to the respondent her land and house. The respondent paid the sum of $2,000 as deposit and it was agreed that the balance of the purchase price was to be paid 'at a later date'. It was understood that the balance would be paid when the respondent obtained a loan from the bank and that the house, the subject matter of the purchase, was to provide the security for the loan. The appellant, however, insisted on payment of the balance before the execution of the transfer and demanded payment 'on or before 10 June 1974' failing which the appellant purported to cancel the contract. The respondent applied for specific performance of the agreement and in the High Court it was held that the respondent in this case was in a position to perform the contract and should have been given reasonable time to do so. In the circumstances, specific performance of the contract was ordered. The appellant appealed.

Held, dismissing the appeal: on the evidence and in the circumstances of this case, it is clear that 'a later date' meant in the intention of the parties a reasonable time after the loan had been approved and as it appeared that the appellant was not willing to complete, the learned trial judge was correct in ordering specific performance.

Tan Suan Sim v Chang Fook Shen [1980] 2 MLJ 66 Federal Court, Penang (Raja Azlan Shah CJ (Malaya).

The defendant agreed to sell to the plaintiff her land and house. The plaintiff paid the sum of $2,000 as deposit and it was agreed that the balance of the purchase price was to be paid at a later date. The plaintiff had to obtain a bank loan but it appeared that the loan could not be released until the transfer was executed. The defendant insisted on payment of the balance before execution of the transfer and demanded payment 'on or before 10 June 1974' failing which the defendant purported to cancel the contract. The plaintiff applied for specific performance of the agreement.

Held: the defendant in this case was in a position to perform the contract and should have been given reasonable time to do so. In the circumstances, specific performance of the contract should be ordered.

Chang Fook Shen v Tan Suan Sim [1980] 1 MLJ 105 High Court, Penang (Gunn Chit Tuan J).

The plaintiff purchased a shophouse from the HDB in 1988. A sum of S$20,000 was paid by the defendant to the plaintiff for a half-share in the shophouse. After prolonged negotiations, the plaintiff returned the S$20,000 to the defendant. However, the defendant insisted that she had an interest in the property and lodged a caveat against the plaintiff claiming a share in the property. The defendant contended that that there was an oral agreement for the property to be in both the plaintiff's and the defendant's names which ought to be specifically enforced. The plaintiff sought to remove the caveat. [bbHeld, allowing the claim: on the facts, no oral agreement could be proved as there was no evidence to show that all the terms of the alleged agreement had been concluded.

Tan Khe Tong, Eunice v Loo Leong Geok Originating Summons No 610 of 1990 High Court, Singapore (GP Selvam J).

The plaintiff sued for specific performance of an agreement of sale of a stall and transfer of a licence issued by the Pesurohjaya Ibu Kota. The defendant pleaded non est factum and that the transfer was conditional upon the approval of the local authority.

Held: (1) the onus lay on the defendant to prove non est factum. As the defendant was fully aware of the character of the document that she signed, the plea was not available to her; (2) the agreement was valid although the transfer could not in fact be made until approval was given by Pesurohjaya Ibu Kota. The defendant is therefore to make the necessary application for the approval. There would be an order for specific performance as prayed.

KE Mohamed bin Eanu v Patimah bte Mat [1972] 4 MC 205 High Court, Kuala Lumpur (Abdul Hamid J).

The defendant, on the marriage of his daughter to the plaintiff, promised in writing, inter alia, to 'build and give' to the plaintiff 'a suitable house'. He afterwards built a house, and the court was satisfied on the evidence that he did it for the plaintiff, and had let the plaintiff into possession of it in pursuance of the promise. After residing there some years, the plaintiff fell out with the defendant and quitted the house, and some time after brought a suit for specific performance by the defendant of his promise to 'build and give' him 'a suitable house'.

Held: (1) though the promise was void under the Statute of Frauds 1677 for uncertainty as to the house intended, and the court could not say what was 'a suitable house' yet the parties had, by their acts, pointed out the house intended, and the letting of the plaintiff into possession thereof, was a part performance which took the case out of the statute; (2) the house being ascertained, the promise to build and give 'a house' necessarily implied the gift of the land on which it was to be built, with such curtilage as was proper for the due enjoyment of the house.

Mahomed Salleh v Nacodah Merican [1889] 4 Ky 463 High Court, Straits Settlements (Wood J).

[Annotation: See also entries digested under Contract (Sale and purchase of land).]

Lee Thian Hua & Anor v Mohamed bin Othman Originating Summons No 246 of 1993 High Court, Singapore (Goh Phai Cheng JC).

See CONTRACT, Vol 3, para 1846.

By an agreement dated 14 February 1944, in consideration of the sum of $1,500, the defendant agreed to sell two pieces of land in the District of Klang to the plaintiffs. During the course of the Japanese occupation the land was in some way or another compulsorily acquired by the Japanese and handed over to a Japanese firm. For this compulsory acquisition compensation was payable to the owner. As the defendant was the registered owner the compensation was paid to the attorney of the defendant who paid the same to the plaintiffs. After the reoccupation of Malaya and as a result of the defendant paying the equivalent in revalued money of the compensation paid for the compulsory acquisition of the land to the Custodian of Enemy Property, the land was retransferred to the defendant. It was argued at the hearing that any rights which the plaintiffs may have had against the defendant were extinguished when the plaintiffs accepted compensation from the Japanese. It was further argued that assuming the agreement is genuine, which the defendant denied, the plaintiffs' only remedy was to claim the $3,000.

Held: (1) under the Essential (Trading with the Enemy) (Custodian) (General Vesting) Regulations 1951, the legal position in regard to the lands reverted, after the Japanese occupation had finished, to the position which existed before the compulsory acquisition by the Japanese subject to temporary vesting in the Custodian. The transfer of the lands back to the registered owner was subject to any encumbrances which existed before the compulsory acquisition by the Japanese; (2) there is no authority to show that where there is a provision in an agreement that the vendor will pay to the purchaser a certain amount of damages in the event of a failure to carry out the terms of the agreement, the purchaser of the property is precluded from claiming specific performance.

Ibrahim bin Saidin & Anor v Hitam bin Ali [1954] MLJ 19 High Court, Kuala Lumpur (Wilson J).

The applicant in the present case sought an order for mandamus under the Specific Relief Act 1950 (Act 137), s 44 against the defendants to reinstal both the telephone line and the telephone at No 42, Jalan Bawang, Kuala Lumpur. The applicant alleged that the respondents' servant or agent had wrongfully disconnected the telephone line and telephone on 14 July 1978, alleging that the applicant had installed an illegal extension, which the latter denied. The applicant's requests, followed by those from his solicitor, for reinstallation had been ignored. The respondents applied to have the application struck out on the ground that it was wrong in law. They objected on the ground that the applicant should have first obtained leave of the court before an order for mandamus could be sought.

Held: (1) since 1 June 1980, after the coming into force of the Rules of the High Court 1980, leave of court would be required under O 53 r 1(1) before an order for mandamus could be sought; (2) the applicant in this case had not succeeded in bringing his case under s 44 of the Specific Relief Act 1950. His relationship with the respondents was merely contractual under an agreement made in accordance with r 11 of the Telephone Regulations 1956. If what he alleged was true, he would have his remedy in an action for breach of contract, and therefore not be able to assert that he had 'no other specific and adequate legal remedy', a condition necessary to entitle a person to apply for relief under s 44(1) of the said Act; (3) mandamus does not lie to enforce a civil liability arising out of a breach of contract to enforce rights based on contract.

Chan Mun Poy v Director-General of Telecommunications & Anor [1981] 2 MLJ 293 High Court, Kuala Lumpur (Wan Suleiman FJ).

The defendants were the main contractors to the Lembaga Padi dan Beras Negara (LPN) for certain works and services to be rendered to the LPN. The plaintiffs were sub-contractors to the defendants. The plaintiffs claimed $16,655.90 for works and services rendered. The defendants by their defence admitted owing a sum of $12,177.70 to the plaintiffs. They also filed a counterclaim claiming that because the plaintiffs had committed a breach of the sub-contract the defendants had suffered loss and damage. Soon after the writ was issued, the plaintiffs obtained an ex parte order restraining the defendants from receiving any payments from LPN. Subsequently they applied by summons-in-chambers for leave to enter final judgment against the defendants. In view of the admission in the defence, the senior assistant registrar entered final judgment by consent for the sum of $12,177.70 and gave unconditional leave to the defendants to defend the claim for the balance. The defendants thereupon prayed for a stay of execution of the final judgment on the grounds that they had a counterclaim against the plaintiffs. The learned senior assistant registrar ordered stay of execution pending the trial. The plaintiffs (a) appealed against the decision of the senior assistant registrar to stay the execution of the final judgment and (b) applied for an order that the counterclaim be struck out. The defendants applied for the injunction obtained by the plaintiffs to be discharged.

Held: (1) in this case as a consent order had been made and in view of the counterclaim the proper order was judgment and a stay pending determination of the counterclaim; (2) the claim and counterclaim were so closely related that the defendants' claim was rightly brought as a counterclaim; (3) the defendants had not discharged the onus on them to show that the injunction was wrongly obtained; (4) on the defendants depositing the amount of the judgment in court and on their giving security to the satisfaction of the senior assistant registrar, the injunction should be dissolved.

Astim Perkhidmatan Pengangkutan Sdn Bhd v Utaraya Trading Sdn Bhd [1978] 2 MLJ 225 High Court, Penang (Arulanandom J).

The plaintiff ('CSK') was the nominated sub-contractor for the execution of electrical works under the main contract dated 20 December 1984 executed between the defendant ('Regional') and Schlumberger Overseas SA ('the employer'). By a sub-contract dated 7 January 1985 made between CSK and Regional, CSK undertook to carry out the works on the terms and conditions stated therein. CSK claimed the balance sum of $175,620 as due and unpaid from Regional, the defendant, which admitted this amount but pleaded a set-off and counterclaim against CSK in the total sum of $266,354.22. During the carrying out of the sub-contract, CSK was seriously behind in its works programme and one of the main reasons for this was the failure of CSK to obtain some of the necessary electrical equipment. It was agreed that there had been a delay of 21 days in the completion of the contract owing to the default of CSK and Regional relied on the terms of the sub-contract and claimed $2,000 per day for 21 days, ie $42,000. CSK relied on s 75 of the Contracts Act. Regional also claimed liquidated damages under cl 2(b) in the sub-contract, alleging that Regional would eventually be liable to the employer at the rate of $5,000 a day for 21 days in accordance with the terms of the main contract. The question for decision is whether the form of indemnity provided for in cl 2 of the sub-contract can properly be said to impose upon the sub-contractor an additional liability to the maximum of $2,000 a day liquidated damages provided under the sub-contract.

Held: (1) the plaintiff is entitled to judgment for $175,620 plus interest at the rate of 6% on $33,510 from 13 August 1985, and on $142,110 from September 1985 in each case until payment; (2) (c) on $12,842.76 from 18 September 1985; (3) the defendant is entitled to recover under its set off and counterclaim amounts of $42,000, $104,533.08 and $12,842.76, totalling $159,375.84, interest on which will run until the date of payment at the rate of 6%: (a) on $42,000 from 18 September 1985; (b) on $104,533.08 from 24 August 1985;the plaintiff will have costs up to 27 February 1986, and the defendant will have all costs thereafter.

Chung Syn Kheng Electrical Co Bhd v A Regional Construction Sdn Bhd [1987] 2 MLJ 763 High Court, Bandar Seri Begawan (Roberts CJ).

In this case, the defendants had sub-contracted certain building works to the plaintiffs and the claim of the plaintiffs was in respect of certain variation works carried out without the knowledge or consent of the defendants. There were provisions in the agreement for variations as per architect's instruction or deemed to be as such instruction. The senior assistant registrar gave summary judgment in favour of the plaintiffs. The defendants appealed.

Held: (1) the plaintiffs have not shown that those variations were pursuant to the architect's instructions or that they have to be deemed to be pursuant to such instructions; (2) but what the terms of the variations were or who gave them have not been disclosed; (3) certain documents received by the plaintiffs were marked variation orders;whether the works carried out by the defendants were the variations is a bona fide triable issue. The summary judgment pronounced by the senior assistant registrar was set aside and the appeal allowed with costs.

Sabah Shipbuilding Repairing & Engineering Sdn Bhd v Pernas Hall Thermotank Engineering Sdn Bhd [1986] 1 MLJ 195 High Court, Kuala Lumpur (George J).

The appellants were the main contractors of a building project under a main contract with the developers. They entered into a contract with the respondents, suppliers of ready-mixed concrete, for the supply of concrete for use in the execution of the project for the period from 1 August 1983 to 31 December 1985. It was stated in the appellants' letter of offer that the total quantity of concrete to be supplied was estimated to be 75,000m3 ± 10%. On 18 January 1985, the main contract was prematurely terminated and the appellants informed the respondents to cease delivery of concrete. At this time the respondents had delivered a total of 40,368m3 of concrete. They sued the appellants for damages resulting from the appellants' failure to place further orders for the full contract amount. The appellants argued that they had not been obliged under the contract to accept delivery of the full contractual amount of concrete, since the effect of the contract was merely to appoint the respondents the sole suppliers of concrete for the project to supply the appellants with as much concrete as was required in the project throughout the contract period. Since the project had come to an end and no further concrete was required, the appellants contended that they were under no obligation to place further orders with the respondents. Alternatively, the appellants argued that it was implied that their obligation to order concrete from the respondents was subject to the subsistence of the main contract. The trial judge, deciding in the respondents' favour, construed the contract as being one for the supply of a fixed quantity of concrete. The appellants appealed.

Held, dismissing the appeal: (1) the nature and effect of a contract must primarily be sought from the provisions of the contract themselves, having regard at the same time to the circumstances in which the contract came into being. On a proper construction of the provisions of the contract documents, the contract was clearly one for the supply of a fixed quantity of concrete; (2) further, the implication of a term that the subsistence of the contract was subject to the subsistence of the main contract was not necessary to give efficacy to the contract, and such a term should not be implied.

Turner (East Asia) Pte Ltd v Pioneer Concrete (Singapore) Pte Ltd [1994] 3 SLR 735 Court of Appeal, Singapore (LP Thean JA, Goh Joon Seng and Warren LH Khoo JJ

P were manufacturers and approved suppliers of aluminium doors for HDB projects. D were building contractors. A contract was entered into between D and HDB for the erection and completion of five blocks of single-storey terrace workshops. The date of completion was 11 May 1980 with liquidated damages for delay in completion being S$2,190 per day. D entered into a contract with P for the supply and installation of doors. The date of delivery was, subsequent to amendments, dated 'about October 1979'. Some of the doors were installed. On 16 April 1980, D wrote to P requesting that P's work be sped up as D's building contract would expire on 11 May 1980. On 15 May P wrote to D stating that delivery could only be completed by 20 June 1980 and installation completed three weeks after that. On 21 May 1980, D replied stating that they were going to engage another contractor to complete the project. On 20 May 1980 D entered into an agreement with NL for the supply and installation of doors. HDB on 6 August 1980 and 2 September 1980 granted an extension of time for completion to D with the result that no liquidated damages were imposed on D. P brought an action claiming the sum of S$34,081 being the balance of price for supply or installation of some of the doors. D counterclaimed for S$33,467 being extra costs incurred by them in respect of the sets of doors which P failed to deliver and install. One of D's defences to P's claim was that there had been a settlement of P's claim. P's defences to D's counterclaim were that they did not agree to the amended date of 'October 1979', that time was not of the essence and they also relied on cll 7 and 13 of the agreement to excuse their inability to supply and install the doors.

Held, allowing both P's claim and D's counterclaim: (1) it cannot be accepted that P did not agree to the amended date of 'October 1979' as, if the completion date for the project in the contract between HDB and D was May 1980, the doors would have to be installed well in advance of May 1980; (2) on the evidence, there was no settlement in satisfaction of P's claim. Accordingly P is entitled to judgment for the sets of doors completely installed; (3) P were only one of two suppliers of aluminium doors for HDB projects and they supplied 80% of HDB's requirements. Accordingly, they must know that D's completion date under the contract was of the essence and hence the date on which P should be ready to make delivery was also of the essence; (4) on the facts, P's failure to supply and install the remaining door did not fall within cl 7 and/or cl 13. Accordingly P were in breach which breach entitled D to terminate the agreements and to seek alternative source of supply. D were entitled to their counterclaim.

Yong Tai Loong (Pte) Ltd v Tong Tien See Construction Co Suit No 6919 of 1984 High Court, Singapore (Goh Joon Seng J).

The question in this case was whether the surety was released upon the discharge and annulment of the receiving and adjudicating orders against the principal debtor. Both the assistant registrar and the learned judge of the High Court held that the surety was discharged. The appellant bank appealed.

Held: a release in bankruptcy does not discharge the surety, as the discharge is not the act of the creditor but by operation of law, ie it is the bankruptcy law and not the creditor that discharges the bankrupt.

Lee Wah Bank Ltd v Joseph Eu [1981] 1 MLJ 11 Federal Court, Kuala Lumpur (Raja Azlan Shah CJ (Malaya).

In 1980, the Water and Sewerage Authority undertook certain construction works employing as main contractors the respondents. On 30 April 1982 the respondents entered into a sub-contract. As part of the requirement of the respondents and the employer, the sub-contractor had to provide a 'performance bond'. On the same day, a deed was executed by the sub-contractors and the appellants, an insurance company. On 14 June 1982 the respondents gave a written 'work order' to the sub-contractor to carry out the sub-contract works. The work order stated that it was subject to and fully conditioned by, inter alia, (i) the sub-contract performance bond dated 30 April 1982, and (ii) the main contract and sub-contract provisions. Disagreement arose between the respondents and the sub-contractors about alleged delays in performance by the sub-contractors. In July 1984 the respondents gave the sub-contractors ten days' notice of termination of the sub-contract but apparently afforded the sub-contractors a moratorium. Then on 20 September 1984, the respondents determined the sub-contract 'in accordance with cl 20 of the form of sub-contract'. There was a letter from the respondents' architects certifying that the contract was delayed due to the sub-contractors' lack of performance. On 27 February 1985, the respondents issued a writ against the appellants alleging that in consequence of the sub-contractors' default, the respondents had suffered damage in excess of TT$2,015,857 and claimed damages from the appellants. In its defence, the appellant admitted entering into the deed but alleged that its maximum liability thereunder was $204,328.56. The appellants made no admission of default by the sub-contractors and pleaded that no such default had been established. On 4 April 1985 the respondents took out a summons for judgment under O 14, supported by an affidavit exhibiting the deed, but otherwise merely verifying the statement of claim. An affidavit in answer deposed that there had been no breach of the sub-contract. In reply, the respondents put in evidence for the first time, that it had determined the sub-contract 'bona fide under an honest sense of dissatisfaction with the work of' the sub-contractors. Both the trial judge and (on appeal) the Court of Appeal, held that if the respondents were genuinely dissatisfied with the performance by the sub-contractors, then the appellants were liable. On that basis, they gave judgment for the respondents under O 14. The appellants appealed to the Privy Council.

Held, allowing the appeal: (1) a fundamental question arose from the nature and exact wording of the deed. In the courts below, it was assumed that since the deed was a performance bond, any failure by the sub-contractors to satisfy its terms would necessarily give rise to an obligation on the appellants, as surety, to make good the default of the sub-contractors. But that is not the literal effect of the words used; (2) on the face of the deed, the liability of the appellants is quite different. The appellants did not undertake any primary obligation to pay a fixed sum of money. It does not provide a bond at all. Therefore the provisions of para 6 (which are merely conditions granting relief from liability to pay the bonded sum) do not apply directly to the liability of the appellants at all. This is not a performance bond by the surety since the surety gives no bond; (3) it follows that the liability, if any, of the appellants has to be found in para 5, which is the only paragraph of the deed in which the appellants undertake any obligations. Therefore, on the face of it, the appellants as surety are only liable for actual breaches of the sub-contract by the sub-contractors. Unless it is shown that there has been a breach of the sub-contract, the appellants are not liable even if the respondents are dissatisfied with the sub-contractors' performance.

Guyana and Trinidad Mutual Fire Insurance Co Ltd v RK Plummer and Associates Ltd Privy Council Appeal No 37 of 1990 Privy Council on appeal from Trinidad and Tobago (Lords Keith of Kinkel, Jauncey of Tullichettle, Browne-Wilkinson and Sir Maurice Casey).

In this case, the respondent alleged that he had been given a tenancy of the premises to be used as an eating house. There was a written agreement between the parties which recited that the 'lessor wishes to lease to the lessee the said business of an eating house together with the use of the ground floor' but which stated that the 'lessor hereby lets to the lessee the ground floor only of the said premises together with the full right and liberty to the lessee to carry on the business of an eating house on the said premises'. A clause in the document stated that the relationship of landlord and tenant did not exist between the parties. The respondent had sought a declaration that he was the tenant of the said premises and was protected under the Control of Rent Act 1966 (Act 56/1966). The learned trial judge gave judgment in favour of the respondent and the appellant appealed.

Held, allowing the appeal: it was reasonably clear in this case that what was given in the document was a licence. The claim of the respondent must be dismissed and he should give up possession of the premises to the appellant.

Mohamed Mustafa v Kandasami [1979] 2 MLJ 109 Federal Court, Penang (Raja Azlan Shah, Chang Min Tat and Syed Othman FJJ).

Ismail v Haji Taib [1972] 1 MLJ 259 Federal Court, Penang (Suffian, Gill and Ali FJJ).

3 [3120] CONTRACT Tenancy agreement – Construction of agreement – Whether monthly tenancy or tenancy for life – Burton & Co v English & Co (1833) 12 QBD 218 (refd) Zimbler & Anor v Abrahams [1903] 1 KB 577 (distd) Kingswood Estate Co Ltd v Anderson [1963] 2 QB 169 (distd) Adams v Cairns (1901) 85 LT 10 (distd) Charles Clay & Sons Ltd v British Railways Board; Re Midland Railway Co's Agreement [1971] Ch 725 (distd)

On 5 April 1973, a tenancy agreement ('D2') was entered into by Mohd Kassim s/o Allapitchay ('Kassim'), the owner of the premises at 330-332 Serangoon Road ('the premises') for rental of the premises to Mdm Chiang Juat Eng ('Mdm Chiang'). On the next page of the tenancy agreement ('D3') was a statement signed by Kassim to the effect that the tenancy was to be continued by the sons of Mdm Chiang on her death or if she so assigned. On 30 January 1983 the appellants purchased the property from Kassim. On 27 March 1984 the appellants served a notice to quit on Mdm Chiang. On 15 April 1986 Mdm Chiang died. The appellants claimed judgment for possession of the premises, for the respondents and any others in occupation to deliver up vacant possession of the premises and an order for account, mesne profits, damages, costs and other relief. It was not in dispute that the Control of Rent Act (Cap 58) applied to the premises. The issue centred on the nature of the relationship between the appellants and respondents, in particular, whether it was a monthly tenancy or a tenancy for life. The appellants submitted that it was the former whereas the respondents submitted that it was the latter. The learned district judge below had held that it was a tenancy for life, thereafter for the joint lives of the sons; but did not give any reasons. The appellants appealed to the High Court.

Held, allowing the appeal: (1) on a construction of D2 and D3, in particular cll 2 and 3 of D2, which provided that rent was payable at $263 per month and that the tenancy was to run from month to month indicated a monthly tenancy; (2) the arrangement between Kassim and Mdm Chiang was not a family settlement where a tenancy for life commonly arises; (3) the learned district judge erred in holding that the tenancy was a life tenancy;the phrase in D3 that the tenancy will be continued by Mdm Chiang's sons upon her death or assignment did not indicate a tenancy for life;in construing an agreement, all parts of a document must be given effect. Terms will not be implied if inconsistent with express terms: express terms negative implied terms. Where there is doubt, the contra proferentum rule applies. Given the express words 'month to month', the tenancy cannot be construed to be a tenancy for life.

Lim Kim Yiang & Anor v Foo Suan Seng & Ors [1992] 1 SLR 573 High Court, Singapore (Yong Pung How CJ).

In this case, the relevant facts were that on 31 March 1962 an agreement in writing was entered into between Tan Kwan, the landlord (since deceased) of the one part and Hoong Bee & Co, the tenants (respondents herein) of the other part, whereby the tenants were let into possession of the whole of the ground floor of the shop premises known as No 171-D, Jalan Rahang, Seremban, at the monthly rental of $170 as from 1 April 1962. Clause 2 provides that 'so long as the tenants shall pay the monthly rental of the demised premises punctually and promptly on the first day for every month and in any event not later than the 14th day of any month, and strictly adhere and abide by the terms and conditions contained herein, the tenants shall enjoy uninterrupted occupation of the demised premises, and the landlord shall not hinder, obstruct or determine the tenants' right to such enjoyment under any circumstances'. This agreement shall be binding on the heirs, executors, administrators and assigns of the landlord and also on the successors, administrators and executors of the tenants (see cl 7). The respondents went into occupation of the shop premises and paid the monthly rent of $170 to the landlord, Tan Kwan. After the death of Tan Kwan, the appellants became the registered co-owners of the shop premises and accepted the rent tendered by the respondents. As a result, the legal relationship of landlord and tenant was created between the parties. It was conceded that the written agreement of 31 March 1962 was never registered at the Land Registry office. The appellants claimed that the respondents were monthly tenants, and on 19 May 1978, they instructed solicitors to send a notice to quit to the respondents terminating their tenancy on 31 July 1978. When the respondents refused to vacate from the shop premises the appellants took action in the magistrate's court at Seremban for an order for possession and other incidental reliefs. The crux of the defence of the respondents was that by reason of their having paid $9,000 as premium to the late Tan Kwan they were given a tenancy in terms of cl 7 aforesaid. Even though the agreement of 31 March 1962 was not registered, they contended that they were induced by the late Tan Kwan to pay the money over in the expectation of being allowed to stay there indefinitely so long as they paid the rental regularly. They, therefore, invoke the principle of equity to protect them so that an injustice might not be perpetuated by the appellants who are the successors-in-title of the shop premises. The High Court gave judgment in favour of the respondents. The question raised in the appeal was whether the High Court was right to apply the principle of equitable estoppel to the facts of the case, and whether the agreement was enforceable in equity.

Held, by a majority (Wan Suleiman SCJ dissenting): (1) in order to raise the equitable estoppel against the appellants it was incumbent on the respondents to show that in 1962 they were induced by the late Tan Kwan (landlord) to pay over the $9,000 to him under an oral agreement or promise that the respondents would be allowed to remain in the ground floor of the shop premises as long as they liked subject only to the payment of the monthly rent regularly and promptly. The onus of establishing this payment and oral promise rested on the respondents and on the findings of the court below, they had failed to discharge it; (2) the agreement in this case was void as a lease on the ground of non-registration. Since the respondents had entered into possession under a void lease without any objection from the landlord the legal relationship of landlord and tenant arose and the respondents became tenants at will. When rent was tendered and paid monthly and accepted, the tenancy at will was converted into a tenancy for month to month. This monthly tenancy was duly determined by the notice to quit and there was therefore no valid defence to the claim of the appellants.

Tan Khien Toong & Ors v Hoong Bee & Co [1987] 1 MLJ 387 Supreme Court, Kuala Lumpur (Wan Suleiman, Seah and Hashim Yeop A Sani SCJJ).

The action arose out of a tenancy agreement entered into on 13 September 1979 between the parties whereby the plaintiffs agreed to lease from the defendants certain premises. Under cl 6(1) of the agreement the plaintiffs further covenanted with the defendants that they 'shall also pay for electricity and water consumed on the premises as metered'. The plaintiffs, with the concurrence of the defendants, installed a Siemens meter in order to measure the electricity consumed in the premises. Thereafter in each month the defendants' representative would read the Siemens meter and render a bill to the plaintiffs reflecting the charges for electricity consumed in the premises. Subsequently the plaintiffs discovered that they had overpaid the defendants in respect of the electricity charges. Each monthly electricity bill rendered by the defendants to the plaintiffs was computed by taking the number of units recorded in the Siemens meter and multiplied five times. This new figure was taken by the defendants to be the number of units of electricity consumed in the premises. The defendants denied that there was any excess payment or any mistake of fact. They alleged in their defence that the amount paid by the plaintiffs to them is based on an arrangement reached between the plaintiffs and the defendants at the commencement of the tenancy, that is, that the plaintiffs shall pay electricity charges based on the meter reading of an electric meter installed by the plaintiffs at their premises multiplied by a factor of five.

Held, allowing the plaintiffs' appeal: (1) the units as recorded on the Siemens meter correctly reflected the units of electricity consumed. There was no need for any further multiplication to ascertain the correct measure of electricity consumed; (2) whenever there is overpayment on account of a mistake of fact there would often be carelessness or negligence on the part of the payer because that is a common cause of a mistake. The law on this is not to punish a payer because he was negligent in making payments; (3) the plaintiffs have established a case that the excess payments were made under a mistake of fact; (4) the burden lies upon the defendants to prove that there was a special arrangement at the commencement of the tenancy which varied the terms of the written agreement. This they have failed to do.

Borneo Motors (S) Pte Ltd v William Jacks & Co (S) Pte Ltd [1992] 2 SLR 881 Court of Appeal, Singapore (Chao Hick Tin, Warren LH Khoo and FA Chua JJ).

A way of necessity can be derived only from a covenant to be implied in the instrument creating the term and must, therefore, come into existence, if at all, as from the date of the instrument.

Chiam Keng v Wan Min [1925] 5 FMSLR 4 Court of Appeal, Federated Malay States (Whitley JC, Reay JC, Watson JC and Woodward CJC).

See evidence, para III [79].

Tan Chee Lan & Anor v Dr Tan Yee Beng [1997] 4 MLJ 170 High Court, Melaka (Augustine Paul JC).

In this case, the plaintiffs (Johore SEDC) had accepted a tender of the defendants to extract timber from 2,060 acres of virgin land for a premium of $72,100 ($35 per acre) and tender price of $77,000. The defendants found out that the area was not virgin land and made a representation to the Forest Department which had given permission to SEDC to extract timber. The Forest Department reduced the workable area from 2,060 acres to 776 acres. The plaintiffs insisted that the defendants were liable to pay the full amount of the tender price irrespective of the fact that the defendants had ample opportunity to inspect the area and they were bound to pay the full tender price. On failure of the defendants to pay the full amount, the plaintiffs filed a suit against the defendants. The plaintiffs were also not able to produce the original tender document in court as according to them it had been destroyed in a fire.

Held: the plaintiffs should have in equity and good conscience followed the line taken by the Forest Department and reduced the amount payable to them pro rata. The amount of the tender price should therefore be reduced pro rata.

Perbadanan Kemajuan Ekonomi Negeri Johor v Lim Shee Pin & Anor [1986] 1 MLJ 184 High Court, Johore Bahru (Shankar J).

The plaintiff was the owner of five premises ('the premises'). The defendants were building contractors, who had entered into an agreement ('the agreement') with the plaintiff to restore, at the defendants' own costs and expenses, the premises, and in return, the plaintiff would transfer to the defendants three of the five premises after the restoration. Clause 2.1 of the agreement provided that it was a condition precedent of the agreement that the defendants apply for and obtain all necessary consent from the relevant authorities for the restoration of the premises, including (a) planning permission in respect of the restoration of the land; and (b) approvals from the appropriate authorities for the restoration and upgrading of the premises. Clause 2.3 of the agreement further provided that the plaintiff had an option to terminate the agreement if the defendants failed to obtain the said approvals within three months from the date of the agreement. The defendants' architects made submissions to the Urban Redevelopment Authority ('the URA') regarding the proposed restoration and the URA wrote to the architects stating that they had no objections to the proposed restoration subject to compliance by the defendants with certain stated conditions. On 8 December 1989, the plaintiff served a notice of termination of the agreement on the ground that the defendants had not obtained the requisite approvals from the competent authorities within the three-month period stated in the agreement. The plaintiff commenced the present proceedings against the defendants seeking, inter alia, a declaration that the agreement had been validly terminated. The issues were: (i) whether the defendants had failed to obtain the requisite consents and approvals required by the agreement; and (ii) whether the plaintiff had by certain acts represented to the defendants that he had waived his rights of termination under cl 2.3 of the agreement and was therefore estopped from exercising his right of termination.

Held, allowing the plaintiff's claim: (1) the requisite consent and approval contemplated by cl 2.2 of the agreement were (i) a written permission for the proposed restoration of the premises under s 9(1) of the Planning Act (Cap 232, 1985 Ed) and (ii) a building plan approval from the Building Control Division of the Public Works Department. Neither of these had been obtained by the defendants at the date of the plaintiff's termination of the agreement. The letter from the URA stating that the authorities had 'no objections to the proposal' did not amount to an approval from the URA; (2) the acts of the plaintiff relied upon by the defendants to establish their defence of equitable estoppel could not amount to an unequivocal representation that the plaintiff would not enforce his strict legal right. Furthermore, the defendants had not shown that at the time the plaintiff did those acts, he was informed by the defendants or in some other way made fully aware that the requisite consent or approval had not been obtained. Waiver requires knowledge and unless the plaintiff was aware that the defendants had not obtained the requisite consent or approval, he could not be said to have waived his right under cl 2.3 or to have unequivocally represented to the defendants that he would not insist on his strict legal right; (3) there was also no evidence or facts from which it could reasonably be inferred that the defendants had relied on any unequivocable representation made by the plaintiff such that it would be inequitable to allow the plaintiff to enforce his strict legal rights.

Mohamed Nazran v Al-Ekhwan Construction (Pte) Ltd [1991] SLR 783 High Court, Singapore (Thean J).

In this case, the parties had entered into a written agreement under which the appellants agreed to carry out and complete building works under the supervision and to the satisfaction of the respondents' architect. Problems arose in the course of the works and a supplemental agreement was made which provided, inter alia, that the respondents were 'at liberty to determine the employment of the appellants under the main contract forthwith by notice in writing' upon the recommendation of the architect in writing should he be of the opinion that the appellants had failed to maintain the progress of works as specified in the schedule to the agreement. The architect, pursuant to the said provisions, by a letter to the appellants recommended the determination of employment of the appellants under the main contract. The appellants were not in his opinion carrying out the works expeditiously and with every diligence. The respondents thereupon determined the appellants' employment under the main contract. Disputes having arisen between the parties the matter was referred to arbitration before a single arbitrator. Subsequently the parties agreed that the arbitrator should state certain points of law for the opinion of the High Court. These included the following: 'A.1 Whether I am entitled to open up review or revise an opinion of the Architect under art V cl 3 of the Supplemental Agreement pursuant to the powers conferred upon me by cl 34 of the Main Contract. A.2 Whether for the purposes of art V cl 3 of the Supplemental Agreement and the recommendation of the Architect given pursuant thereto it is sufficient that the Architect should have formed an opinion in good faith on the information available to him at the time. A.3 Whether or not by virtue of the powers conferred upon me as Arbitrator under cl 34 of the Main Contract, I am entitled to direct that Claimants' claims under paras 4 and 4A of their Points of Claim be measured and/or valued as may in my opinion be desirable in order to determine the rights of the parties and/or open up, review or revise the valuation of works executed and materials supplied by the Claimants and carried out by Pakatan purportedly pursuant to the provisions of art V cl 6 of the Supplemental Agreement.' The learned judge in the High Court answered the first and third of the questions in the affirmative and treated the second as superseded. He held that the arbitrator could review or revise the opinion of the architect under the supplemental agreement pursuant to the powers conferred upon him by the main contract - see [1979] 1 MLJ 108. On appeal, the Court of Appeal reversed the judgment of the High Court, and answered the first and third questions in the negative and the second in the affirmative. The Court of Appeal

Held: (1) on a careful consideration of the supplemental agreement, the intention of the parties to it was that the respondents could determine the appellants' employment under the main contract if, inter alia, the architect was of the bona fide opinion that the progress of the works specified in the schedule to the supplemental agreement was unsatisfactory and the architect recommended in writing to the respondents to determine the employment; (2) however stringent such a term may be, when it comes to be enforced, the courts have declared that their duty is in such cases to ascertain and give effect to the intention of the parties as evidenced by the agreement and if a term is clear and unambiguous the court is bound to give effect to it without stopping to consider how far it may be oppressive or not; (3) the powers of the arbitrator under cl 34(3) are limited to opening up, reviewing or revising the opinion or decision of the architect and the arbitrator is given no power under that clause to open up a valuation by a third party as a result of a separate contract between the parties in which they have expressly agreed that the valuation should be final and binding on them. See [1981] 1 MLJ 5. The appellants appealed to the Privy Council. Held: in this case, the conclusion must be that the opinion of the architect under art V cl 3 of the supplemental agreement was intended to be a special kind of opinion, different from the various opinions of his mentioned in the main contract and that the general powers of the arbitrator contained in cl 34(3) were not intended to apply to it. It follows that the function of the arbitrator is limited to deciding whether as a matter of fact the opinion was given and was bona fide and that the Court of Appeal rightly answered question A1 in the negative and A2 in the affirmative; (2) as agreed by the parties, question A3 was rightly answered in the negative.

Loke Hong Kee (S) Pte Ltd v United Overseas Land Ltd 1982 Privy Council Appeal from Singapore (Lord Diplock, Lord Elwyn-Jones, Lord Keith of Kinkel, Lord Lowry and Lord Brandon of Oakbrook).

An option to determine a fire policy in order to be valid should be communicated to the addressee. Where it was reasonably clear from the circumstances that the parties contemplated the use of the post as a means of communication and the plaintiffs subsequently ratified that method of communication adopted by the defendants, the cancellation of the contract was effected at the time the option was posted, even though it never reached its destination.

Lee Seng Heng & Ors v Guardian Assurance Co Ltd [1932] MLJ 17 High Court, Straits Settlements (Murison CJ).

The defendants attempted to terminate their contract with the plaintiffs vide 'cl 5(2) (second paragraph)' of the contract. Later, in another letter, they pointed out that the termination was within their absolute discretion vide cl 5(1) of the same contract. The plaintiffs disputed the validity of the termination. The sessions court, however, held that the defendants had validly terminated the contract.

Held, allowing the appeal: (1) cl 5(1) of the contract could be construed either to mean that the defendants could terminate the contract at any time without assigning reasons by giving notice, or to terminate the contract because of a breach thereof, in which case the first paragraph of cl 5(2) applied. This meant that the term 'for any reason' in para 2 of cl 5(2) meant any reason other than the breach stipulated in the first paragraph. As there were several possible constructions to cl 5(1), the contra proferentum rule applied. As such the letter of termination by the defendants should have stated the reasons for the termination of the contract. Since this was not done, the letter was not effective as a valid termination.

Bintulu Security Services Sdn Bhd v Shell MDS (Malaysia) Sdn Bhd Civil Appeal No 12-01-96 High Court, Miri (Tee Ah Sing J).

This was an application by the defendants for the consolidation of the action which was instituted in Penang with another instituted in Kuala Lumpur.

Held: (1) an examination of the claim and the averments in the affidavits in the case showed that the actions in Kuala Lumpur and in Penang were between the same plaintiffs and substantively the same defendants, though of different legal entities, and what was more important involved common questions of fact; (2) in the circumstances this was a case eminently suitable for consolidation with the Kuala Lumpur action within the scope and intent of O 49 r 8 of the Rules of the Supreme Court 1957.

Del E Webb International Hotel Co v Hotel Merlin Penang Sdn Bhd [1973] 1 MLJ 31 High Court, Penang (Chang Min Tat J).

Meidan Singapore Pte Ltd ('MSL'), the defendants in this action, are engaged exclusively in the supply and installation of power generators and transformers. The defendants are Japanese in origin and some of the transformers which feature in this dispute bear the defendants' or their parent company's brand name 'Meidensha'. In late 1989, the defendants were successful in their tender to outfit various Public Utilities Board ('PUB') sub-stations in Singapore with new transformers. Part of the undertaking entailed the dismantling, removal and disposal of some 16 outdated transformers from 12 PUB sub-stations dispersed all over Singapore and, to that end, the defendants on or about 28 February 1990 engaged the plaintiff to carry out the task of dismantling and disposal. The old transformers were not worthless and had apparently some intrinsic scrap metal value. The terms of the engagement between the parties were in due course modified and contained in a Memorandum of Agreement dated 30 June 1990. Under the said agreement the plaintiff, for the consideration stated therein, agreed to remove and dispose of 16 transformers. Between 20 February and 29 April 1991, the plaintiff caused four units of transformers to be dismantled from Tampines, Jalan Bahar, Ang Mo Kio and Bedok sub-stations. However, as a result of a number of breaches allegedly committed by the plaintiff's operatives during dismantling, especially at the Bedok sub-station, the defendants chose to terminate the agreement. In a fax notification (PB-21) dated 6 May 1991, the defendants' solicitors informed the plaintiff that the agreement entered into between the parties on 30 June 1990 had been terminated to which the plaintiffs issued an apology. The defendants did not accept the apology extended by the plaintiff. Instead, in their fax message dated 14 May 1991, the defendants catalogued the breaches committed by the plaintiff particularly during the lifting of the transformers at the Bedok sub-station. There ensued a brief exchange of correspondence between the parties' respective solicitors and the upshot was that the termination of the agreement was confirmed by the defendants' solicitors in their fax message dated 30 May 1991. The plaintiff, doubtless treating the defendants' letter as repudiation of the contract, communicated his acceptance thereof and made it known that he intended to seek compensation from the defendants. In his statement of claim the plaintiff alleges that as a consequence of the wrongful termination of the contract between the parties, he has suffered loss and damages in the sum of S$387,288. In addition to the said sum, the plaintiff also prays for a declaration that he be indemnified by the defendants against claims being made against him by third parties. The defendants by their defence deny the allegations against them and contend that they had lawfully terminated the agreement and therefore are not liable for any loss or damage allegedly suffered by the plaintiff. They aver that the agreement was terminated because of the plaintiff's breach of the express as well as implied terms of the agreement. The defendants alleged that the plaintiff had failed: (a) to provide the defendants with the appropriate workplans for the dismantling of transformers (containing details of crane operations); (b) to identify site personnel five days prior to comencement of work; (c) to comply with safety precautions; (d) to obey the defendants' instructions; and (e) to exercise care, control and discipline over worksite workers. The main issue in this case is whether the defendants are justified in terminating the agreement entered into between the parties on 30 June 1990.

Held, dismissing the plaintiff's claim with costs: (1) the requirement of a workplan is complementary and akin to the operations envisaged and one that can be reasonably implied as a term of the agreement; (2) the facts in the present case and the complex nature of the work warrant that a workplan of the sort bespoken by the defendants is an implied term to give business efficacy to the contract. In the circumstances, the objection by plaintiff's counsel that oral evidence should not be permitted to introduce a term which is not included in the written contract has little weight; (3) from the evidence, the court found that the crane operators ignored the instructions of Mr Oikubo and went about executing the lifting willy nilly without regard to the possibilities of a serious accident; (4) the safety aspect is an integral part and an implied fundamental term of the contract and inasmuch as the said fundamental term had been treated by the plaintiff's site operatives with callousness as was the case, the defendants could not be faulted for bringing about the termination of the engagement between the parties; (5) the breaches particularized were serious enough to warrant the termination of the agreement. Safety on site was a prime factor in the performance of the contract between the parties and therefore non-compliance of safety precautions at the Bedok worksite testified to a total disregard of a vital implied term of the engagement between the parties. The manner in which the Bedok operation was carried out and particularly the inadequacy of safety features in regard to the crane operation necessarily entitled the defendants to terminate the contract as they did.

Tan Bak Chin (t/a JB Forwarding Agency) v Meiden Singapore Pte Ltd Suit No 1351 of 1991 High Court, Singapore (Rubin J).

The plaintiff was a housing developer while the defendant was the registered owner of a piece of agricultural land. The plaintiff and the defendant commenced negotiations to develop the land into residential apartments. After considerable discussions the plaintiff entered into a joint venture agreement with the defendant whereby the defendant granted full exclusive rights to the plaintiff to develop the land into 104 apartments, and the plaintiff executed a guarantee performance. Pursuant to the agreement, the plaintiff submitted an application to the authorities for conversion of the land use from agriculture to residential/apartments. The Pejabat Tanah dan Galian approved the application for conversion but the layout plans had to be submitted for approval to the Pentadbir Tanah Daerah. However, whilst awaiting the approval of the layout plans, the Highland Tower collapse took place and a government directive directed all authorities to freeze any approval for development of land situated on steep hills until further notice from the Cabinet. The defendant then unilaterally terminated the joint venture agreement and forfeited the deposit. The plaintiff instituted an action for specific performance of the agreement, contending that the joint venture agreement did not provide for a termination clause to cover the present facts and circumstances and hence the purported termination was null and void. The defendant argued that the joint venture agreement was a contingent contract which on the facts alluded to had been rendered void pursuant to s 26(1) of the Contracts Act 1950.

Held, allowing the plaintiff's claim: (1) the joint venture did not provide for the termination of the joint venture agreement in the event approval was not obtained within 12 months under cl 6(b) and/or the extended time under cl 6(c). The only clause providing for termination was cl 8(i), ie only if the proper authorities had declined or refused approval for conversion of the land, layout plans or development of the land into apartments; (2) in the instant case, approval had been given by the relevant authority, ie Pejabat Tanah dan Galian and there was no decline or refusal of the requisite approval; (3) the express provisions contained in cl 8(1) were clear and unambiguous and should be given their full effect. The right to terminate could only arise in the aforesaid circumstances and the termination could only take effect upon the defendant having received a notice in writing from the plaintiff to that effect; (4) it was true that by virtue of cl 10 of the joint venture agreement, time whenever mentioned should be the essence of the agreement. However, the defendant had in fact by its very own conduct waived its right, if any, to claim that time was of the essence of the agreement when it granted extensions of two months and one month at different times for the completion date for conversion. Also, though the defendant had already given notice of the purported termination, the defendant had a meeting with the plaintiff two months after the notice of termination and on their own accord, negotiated for more favourable terms to which the plaintiff was not agreeable; (5) by reason of the aforesaid facts and circumstances, the defendant had allowed the completion date to pass therefore the time mentioned in cl 10 of the joint venture agreement was no longer the essence of the agreement; (6) in the absence of any proper resolution and/or consensus of the majority of the board of directors of the defendant to appoint Messrs Abraham Ooi & Partners and Messrs Prasad Abraham & Associates as solicitors, these firms were in fact acting without proper authority of the defendant; (7) it was fit and proper for the court to grant specific performance pursuant to cl 8(g) of the joint venture agreement and order compensation or damages against the defendant under s 18 of the Specific Relief Act 1950.

Cara Makmur Sdn Bhd v Kajang Primelands Sdn Bhd (Elaine Naemi Elisabeth Kinhult Ng, Intervener) Originating Summons No 24-270-1995—High Court, Shah Alam (Low Hop Bing J).

Perkayuan OKS No 2 Sdn Bhd v Kelantan State Economic Development Corp [1995] 1 MLJ 401 Federal Court, Kuala Lumpur (Eusoff Chin CJ, Chong Siew Fai and Lamin FCJJ).

See CONTRACT, Vol 3, para 1594.

P had rented to D some equipment for which they were now claiming unpaid rental. The dispute was whether D had terminated the contract by informing P that the equipment was no longer needed.

Held, allowing P's claim: D had not given written notification of its intention to stop hiring the equipment. When P visited D's location, no mention was made of the intention to stop the hiring. It was held that on the facts, D had not terminated the contract. Even if the equipment was unsuitable, D had affirmed the contract by not rejecting the equipment straightaway.

Drillcon Pte Ltd v Bethany Construction Pte Ltd District Court Appeal No 40 of 1988 District Court, Singapore (Liew Thiam Leng, District Judge).

The respondents, Resource Development Corp Pte Ltd ('RDC') were granted a lease of a quarry site in Pulau Ubin by the government. The respondents had also bought a new crusher plant to turn the granite blocks into granite products. Syarikat Teknikal dan Kejuruteraan Sdn Bhd ('STDK'), a company incorporated in Malaysia, were the successful tenderers and were awarded the contract for the development of the quarry site. The appellants, Teknikal dan Kejuruteraan Pte Ltd ('TDK'), were incorporated in Singapore for the purpose of carrying out the contract. By a novation agreement dated 31 July 1981, TDK were substituted as the contractors. The site, of about 35 acres, was a hill covered with trees and thick undergrowth, a cover which is known as the 'overburden'. The granite to be quarried lay under the overburden and before development was possible, the overburden had to be removed. The contract provided that RDC should remove the overburden in the initial area of 10 acres to a depth of one metre above the underlying rock surface. TDK would then develop the quarry face, quarry and transport the granite to the crusher plant to be turned into the products required by the contract. The date for possession of the site was expressed to be 1 June 1981 and the duration was stated to be a three-year term from 1 June 1981 to 31 May 1984. The contract also stated that the plant was expected to be commissioned by August 1981 and it further provided for a schedule of minimum output that TDK would have to fulfil, after the commissioning of the plant. In March 1981, RDC awarded the contract for the removal of the overburden to Chuan Joo Pte Ltd, which Chuan Joo had to complete in August 1981. However, the removal of the overburden was not completed by that date, and Chuan Joo was still on the site in September. TDK alleged that as a result, they were not able to develop the granite quarry as contemplated by the contract. TDK were warned by RDC of the imposition of liquidated damages and termination of the contract if the production figures did not improve. On 6 May 1982, RDC wrote to TDK referring to their consistent low production and formally gave notice pursuant to cl 35 of the contract, that if TDK continued to be in default, RDC would exercise their right to terminate the agreement. In reply to the letters sent by RDC, TDK pointed out that RDC had failed to clear the overburden in the initial area as they had contracted to do. TDK stated that this failure by RDC to hand over the initial area in accordance with the contract was a breach that went to the root of the contract and gave notice that if possession was not given to them within 30 days, they would rescind the contract. By a letter dated 28 May 1982, RDC gave notice of termination with immediate effect and required TDK to vacate the site. On 11 August 1982, TDK commenced action in the High Court, claiming damages for RDC's breach of contract. The learned judicial commissioner found that TDK had failed to show that RDC had not cleared the initial area to the required depth and dismissed the claim on this and other grounds. The case pleaded by RDC was that due to TDK's failure to produce the contractual quantities, they were entitled to rely on cl 35 of the contract, which provided for termination in such circumstances. After hearing the parties but before delivery of the judgment, the learned judicial commissioner invited RDC to apply to amend their pleadings to raise an alternative ground, ie that TDK had repudiated the contract by abandoning the work and that RDC had accepted this repudiation by their letter of 28 May 1982. This application was opposed by TDK but was allowed by the learned judicial commissioner, who then held in favour of RDC on this alternative ground. TDK appealed, inter alia, on the ground that on the evidence, RDC had not fulfilled their obligation in relation to the removal of the overburden. TDK also contended that the application for amendments to plead the alternative ground should not have been invited or allowed.

Held, allowing both appeals: (1) where the evaluation of the evidence involves testing the evidence against inherent probabilities or against uncontroverted facts, including the conduct of the parties, the appellate court is in as good a position as the court of first instance, although due allowance should be given to the fact that the trial court had the advantage of seeing the witnesses; (2) on testing the oral evidence of the witnesses against the indisputable facts and contemporary documentary evidence, the irresistible conclusion is that RDC left such a large amount of overburden in the initial area as to make it impossible for TDK to do any meaningful quarry development work; (3) there is a general obligation on the part of the employer not to prevent the performance of the contract by the contractor. The obligation to give possession of the site at the time provided by the contract is part of this general obligation. Conversely, the contractor has the right to carry out his work in the order he chooses. A failure to give possession of the site in accordance with the contract may amount to an interference with this right; (4) TDK is entitled to damages resulting from RDC's breach of their contractual obligation to remove the overburden in the initial area; (5) RDC had clearly purported to terminate the contract under cl 35 in their letters of 6, 14 and 28 May 1982 and they had not purported to exercise their common law right to terminate by acceptance of TDK's alleged repudiation of the contract when TDK abandoned the work; (6) RDC were in no position to rely on the low production of TDK or on TDK's abandoning work as repudiation of the contract on TDK's part, as these had resulted substantially from RDC's own breach of contract due to their failure to remove the overburden. To allow the amendments would in effect be allowing RDC to plead a case that was on the facts not open to them, and the application for the amendments to the pleadings should not have been invited or allowed.

Teknikal dan Kejuruteraan Pte Ltd v Resources Development Corp (Pte) Ltd [1994] 3 SLR 743 Court of Appeal, Singapore (LP Thean JA, Rajendran and Warren LH Khoo JJ).

China Airlines Ltd v Maltran Air Corp Sdn Bhd (formerly known as Maltran Air Services Corp Sdn Bhd) and another appeal [1996] 2 MLJ 517 Federal Court, Kuala Lumpur (Chong Siew Fai CJ (Sabah & Sarawak).

See CONTRACT, Vol 3, para 2676.

Chuan Hup Marine Ltd v Sembawang Engineering Pte Ltd [1995] 2 SLR 629 High Court, Singapore (GP Selvam J).

See CONTRACT, Vol 3, para 2028.

In this case, the plaintiffs, a Singapore company, had supplied petroleum products to the defendants. On that account, the defendants owed a large sum of money to the plaintiffs. When the plaintiffs demanded payment, the defendants agreed to clear the debt within five years. This was not acceptable to the plaintiffs who brought an action against the defendants. The defendants then applied to the court for an order that the writ of summons be struck off because of cl XIII of the agreement under which it was alleged Malaysian courts have no jurisdiction and because of arbitration clause (cl XIV) in the agreement.

Held: (1) the parties had agreed that Singapore law would govern any dispute. This did not oust the jurisdiction of the Malaysian courts to try an action arising out of the agreement; (2) where a claim is admitted it does not call for a settlement by arbitration.

Elf Petroleum SE Asia Pte Ltd v Winelf Petroleum Sdn Bhd [1986] 1 MLJ 177 High Court, Kuala Lumpur (George J).

In this case, the Kelantan State Economic Development Corp (SEDC) granted a timber concession to the defendants (OKS) who in turn entered into an agreement with the plaintiff (contractor) to fell logs and remove timber from particular portions of the concession. On 9 July 1984, the contractor caused the writ to issue against OKS for the following claims: (1) An order for specific performance by the defendants of the terms and conditions of the agreement. (2) The defendants be restrained by injunction from removing or selling timber felled by the plaintiff without the previous written consent of the plaintiff. (3) Damages, cost and further or other relief. The plaintiff caused a summons-in-chamber to be issued and with the aid of a certificate of urgency had it heard ex parte and an injunction was issued in terms of the prayer of the plaintiff coupled with an order that the defendants be restrained from moving or in any way dealing with about 1,800 tons of cut timber lying at the railway station yard at Gua Musang until further order of court. The defendants did not enter appearance within the usual eight days and the plaintiff obtained an order from the court to move and deal with the cut timber lying in Gua Musang Railway Station. The plaintiff took possession of and sold the timber. Three days later the defendants filed their application and asked for the interim injunction to be set aside and for damages. The grounds on which the defendants rely were not set out in the summons as is required by the rules (O 32 r 1 and Form 62).

Held: (1) under the terms of the contract it was for the plaintiff to fell logs and remove timber from the contract area. Since the plaintiff had already taken possession of the timber and sold it, setting aside that part of the order restraining the defendants from moving or dealing with that timber serves no purpose; (2) so long as the contract subsists, there is no reason for the defendants to complain that they are restraining them from committing breaches of it.

Koh Siak Poh v Perkayuan OKS Sdn Bhd [1986] 1 MLJ 238 High Court, Kuala Lumpur (George J).

See civil procedure, para II [28].

Sri Alam Sdn Bhd v Newacres Sdn Bhd [1997] 1 MLJ 297 Court of Appeal, Kuala Lumpur (Shaik Daud, Siti Norma Yaakob And Abdul Malek Ahmad JJCA).

The first respondent in 1976, then a 14-year-old pupil in England, was booked to return to Kuala Lumpur on a return ticket for her to depart from London Heathrow Airport by the defendant's flight No MH 893 on 26 March to arrive at Kuala Lumpur on 27 March. At the London Airport, the plaintiff was told by the defendant's representative that there was no seat for her on MH 893. She was offered accommodation in a London hotel and the defendant eventually arranged for her to fly by BA930 on 27 March and she arrived at Kuala Lumpur on 28 March. The solicitors for the second plaintiff wrote to the defendant to complain about the incident and threatened to sue for damages for negligence. The defendant denied liability and hence the plaintiffs brought this action, alleging breach of contract and negligence in that, inter alia, the defendant fed the wrong information 'Nathan Malini' into the computer and failed to make out that 'Malini Nathan' and 'Nathan Malini' was the same person, ie the first plaintiff. The plaintiffs claimed they had suffered loss and damage and the second plaintiff suffered nervous shock and required medical treatment. The plaintiffs relied on art 19 of the Warsaw Convention as amended at the Hague 1955 (applicable to Malaysia from 19 December 1974 by the Carriage by Air Act 1974 (Act 148)) reading as follows: 'The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo'. The defendant denied liability. The sessions court gave judgment in the sum of $1,500 for the first plaintiff and $500 for the second plaintiff, with interest at 6% pa and costs. The defendant appealed to the High Court. The principal issues were whether the defendant had breached the contract of carriage and whether it was negligent as alleged. The defendant relied on condition No 9 under the conditions of contract printed on page 2 of the ticket reading as follows: 'Carrier undertakes to use its best efforts to carry the passenger and baggage with reasonable dispatch. Times shown in timetables or elsewhere are not guaranteed and form no part of this contract. Carrier may without notice substitute alternate carriers or aircraft, and may alter or omit stopping places shown on the ticket in case of necessity. Schedules are subject to change without notice. Carrier assumes no responsibility for making connections'.

Held, allowing the appeal: (1) the defendant's decision not to carry the first plaintiff on flight MH 893 on 26 March was fully covered by condition No 9. Therefore there was no breach of contract by the defendant. Confirmation or representation by it was made subject to condition No 9 and it cannot be said that such confirmation or representation was made falsely or recklessly; (2) the booking was made in Kuala Lumpur in the name of 'Malini Nathan' and the ticket was issued at request made in London in the name of 'Nathan Malini', which the defendant's computer rejected. Even if it was true that the first plaintiff gave her name as Malini Nathan at the checking-in counter and the representative of the defendant failed to manipulate the computer accordingly, the defendant would still be absolved from liability for negligence in view of condition No 9; (3) art 19 of the Warsaw Convention should be read subject to art 3(2). One of the conditions stated therein was condition No 9.

Malaysian Airline System Bhd v Malini Nathan & Anor [1986] 1 MLJ 330 High Court, Kuala Lumpur (Wan Hamzah SCJ).

Fraser & Co v Tan Hay Seng [1889] 1 SLJ 143 High Court, Straits Settlements (Goldney J).

See CONTRACT, Vol 3, para 2231.

Central Provident Fund Board v Ho Bock Kee 1980 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

See CONTRACT, Vol 3, para 1627.

In this case, the appellant was the registered owner of certain lands in Seremban and the respondents were the developers. The appellant had applied for sub-division of the lands and this had been approved subject to compliance with certain conditions. The appellant agreed to sell the land to the respondents. The appellant contended that the respondents knew of the conditions imposed for the sub-division of the land and their liability for all expenses for the works. The respondents on the other hand maintained that they did not know of the conditions at the time of the agreement. The learned trial judge after a lengthy trial arrived at the conclusion that both the options and the agreement contained categorical assertions that the appellant had already obtained approval for the sub-division of her land. He accepted the evidence of the respondents that they only knew of the three conditions some seven months after the signing of the agreements. The respondents had told the appellant that the responsibility for satisfying the conditions rested with her under the agreement. The learned trial judge granted specific performance of the agreement and awarded $50,000 as damages. The appellant appealed.

Held, dismissing the appeal: the learned judge in this case was faced with two different stories and he accepted the story of the respondents as true. The appellate court was not justified in reversing the decision of the trial judge.

Lee Soh Hua v Kow Lup Piow & Ors [1984] 2 MLJ 101 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The respondents claimed to be the holders of a ticket drawn for first prize in the Sarawak Turf Club Sweep. The ticket was mutilated or destroyed or lost. The respondents applied for a declaration that: (1) they were holders of the winning ticket; (2) the decision of the Committee of the Sarawak Turf Club that the respondents were not entitled to prize money was not binding on the respondents as it was arrived at in a manner contrary to natural justice. It was a condition in the rules of the running of the sweepstake that payment was to be made only on presentation of the ticket bearing the correct number. It was a further condition that any dispute arising out of the running was to be decided by the committee whose decision would be final.

Held: (1) the committee had given the respondents a full opportunity of presenting their case and its decision was not arrived at in a manner contrary to natural justice; (2) even though it might be said that the committee members had a pecuniary interest in the result of their decision, the point was not open for decision by the trial judge as it had not been pleaded; (3) even if it had been pleaded and was therefore open for decision by the trial judge, parties to an agreement could consent to any dispute arising out of it being decided by a person who might be considered to have some financial interest in the decision; (4) its decision that the respondents had failed to produce such ticket was final; (5) the condition that the decision of the committee was final did not oust the jurisdiction of the court but was a condition precedent to the bringing of any action in court that the respondents should have obtained in their favour a decision of the committee that they (respondents) had in fact produced the winning ticket;the decision of the trial judge that production of the ticket bearing the winning number was one relating to the mode of proof rather than one going to the root of the contract was incorrect: it was a condition precedent to the right to be paid that the respondents should produce the ticket bearing the winning number.

Henry Ong Kee Chuan v Ong Hock Guan & Anor [1957] SCR 133 Supreme Court, Sarawak, North Borneo and Brunei

Sometime before 17 August 1978, the plaintiffs (DMIB), together with the first (PSD), second (LTAT), and third (KPDM) defendants and the Kedah State Development Corp (PKNK) decided to form a company to be known as IT International Sdn Bhd (ITISB), the primary object of which was the manufacture of tyres. The plaintiffs applied at the instance of the promoters for a manufacturing licence to the Ministry of Trade and Industry. The ministry approved the application by letter dated 20 October 1978 with conditions set out in an appendix to the letter, condition (c) of which was material to the decision in this case and which in substance stipulated that at least 79% of the shares of ITISB should be held by Malaysian citizens, including at least 65% to be held by Bumiputras. On 25 October 1978, the ministry issued the licence. On 13 December 1979, the promoters and Malaysian Rubber Development Corp Bhd (MARDEC) entered into a joint venture agreement (JVA) by which they agreed to form ITISB in the terms and on conditions set out in the JVA, pursuant to which ITISB was incorporated on 20 December 1979. JVA restricted the freedom to the transfer of shares, the objective being to ensure that while a member had the right to divest itself of its share in ITISB, the remaining members could ensure that their proportion of equity ownership would not be watered down by such divestment. ITISB's business fell short of projections, and three of the shareholders (the outgoing shareholders) had decided to sell their shares in ITISB. It became obvious that it fell upon the plaintiffs and/or the sixth defendant, Pernas-Sime Darby Holdings Sdn Bhd (PSDH), to buy the shares. The outgoing shareholders purported to follow the pre-emption procedures and their letters of offer were accepted by the plaintiffs. It was pointed out at the ITISB board meeting of 23 December 1982 that the plaintiffs taking up the shares would infringe condition (c). The ministry gave its views in a letter dated 1 January 1983 that any increase in the holding of the plaintiffs, the majority of the shares of which were held by non-Malaysians, would infringe condition (c) of the manufacturing licence. At a board meeting of ITISB held on 12 January 1983, the board approved the transfers of the shares of the outgoing shareholders to PSDH despite protests by the plaintiffs. On 14 January 1983, the plaintiffs filed the present suit seeking declarations that the outgoing shareholders were bound by the agreements for sale of their shares to the plaintiffs and the transfers of their shares to PSDH were null and void and for injunction and damages. On 14 January 1983, the plaintiffs obtained an interim injunction restraining the registration of the transfers. On 19 January 1983, the ministry gave approval to PSDH for the transfers to them of the shares. The plaintiffs never applied to the ministry for approval but to the Foreign Investment Committee which required them to apply to the ministry.

Held: (1) as it was the Ministry of Trade and Industry which had issued the manufacturing licence and had imposed condition (c), the Malaysian authorities referred to in the offer letters must be the ministry; (2) the plaintiffs were bound by the ruling of 4 January 1983 given by the ministry. What had been agreed was that the ministry's ruling that condition (c) would be breached by the plaintiffs exercising their rights of pre-emption then the acceptance by the plaintiffs of the offer of the shares of the outgoing shareholders was to be considered null and void and the acceptance of PSDH would be operative. The ministry's ruling was that any increase in the holding by the plaintiffs in ITISB would infringe condition (c); (3) the plaintiffs are not entitled to the declarations sought and their claims were dismissed with costs.

Dunlop Malaysia Industries Bhd v Pernas-Sime Darby Sdn Bhd & Ors [1985] 2 MLJ 101 High Court, Kuala Lumpur (George J).

Grace Shipping Inc & Anor v CF Sharp & Co (Malaya) Pte Ltd [1986] SLR 32 Privy Council Appeal from Singapore (Lord Bridge of Harwich, Lord Brandon of Oakbrook, Lord Oliver of Aylmerton, Lord Goff of Chieveley and Sir Ivor Richardson).

See CONTRACT, Vol 3, para 2217.

This was an appeal from the decision of the Federal Court ([1985] 2 MLJ 24) dismissing an appeal from the judgment of Peh Swee Chin J, holding, inter alia, that this was a case where time was not merely of the essence of the contract but fulfilment of the promise by the appellant to obtain the approval on or before a certain date was a condition precedent to the whole contract.

Held: (1) insofar as the appeal turned on issues of fact, there were concurrent findings of fact in favour of the respondent by both courts below and their Lordships of the Privy Council could find no conceivable grounds for interfering with those findings; (2) on the application of the law to those facts, both the courts below came to the correct and only proper conclusions at which they could arrive; (3) the reasons given by the Federal Court for their decision seemed to the Privy Council wholly convincing and their Lordships of the Privy Council adopted them.

Jaafar bin Ibrahim v Gan Kim Kin [1987] 2 MLJ 109 Privy Council Appeal from Malaysia (Lord Bridge of Harwich, Lord Brightman, Lord Templeman, Lord Mackay of Clashfern and Lord Oliver of Aylmerton).

Where an agreement is made for the repayment of money on the arrival of a certain ship at a certain port, and the voyage the vessel is to pursue is clearly pointed out,

Held: (1) her arrival at the port was a condition precedent, and no repayment could be required, although the vessel was unable, through stress of weather, and bankruptcy of her owner, to complete the voyage. Such vessel having been sold on the bankruptcy of her owner, and the purchaser having required and refitted her and sent her, on his own account, to the same port as that mentioned in the aforesaid agreement, but by a different route; (2) the arrival of the vessel at such port, on such second voyage, was not a performance of the condition mentioned in the agreement, as it was a new voyage, and not the one contemplated by the agreement.

Letchman Chetty v Narainan Chetty [1878] 1 Ky 467 High Court, Straits Settlements (Wood J).

In this case, the respondents had agreed to sell to the appellants a portion of their land in Kuala Lumpur. The sale involved a sub-division of the title. The respondents applied to the Collector of Land Revenue for approval of the sub-division between the portion of the land which they intended to use for a petrol filling and service station and the remainder of the land. The agreement between the respondents and the appellants provided in effect that there should be issued a title in perpetuity to the land being purchased by the appellants and a title in perpetuity to the site of the petrol filling station. The respondents were, however, told that their application for sub-division would be considered only if they surrendered the portion of the land provided for the petrol filling station in exchange for a lease for 30 years. The respondents were not willing to accept this condition and they informed the appellants that they were unable to obtain separate titles in continuation and therefore they returned the 10% deposit and considered the agreement to be null and void. The appellants disagreed and claimed specific performance and damages for breach of agreement. In the High Court, judgment was given for the appellants but on appeal by the respondents, the Federal Court held that in this case the respondents had done all that could reasonably be expected of them in pursuing their application for sub-division and when their application had not been approved, they were entitled to treat the agreement as having come to an end - see [1982] 2 MLJ 181. The appellants appealed.

Held: the Federal Court was right in holding that the respondents had done all that could reasonably be expected of them in the circumstances and the appeal should therefore be dismissed.

Lim Yee Teck & Ors v Shell Malaysia Trading Sdn Bhd [1985] 2 MLJ 265 Privy Council Appeal from Malaysia (Lord Scarman, Lord Keith of Kinkel, Lord Brightman, Lord Templeman and Sir John Megaw).

In this case, the appellants agreed to sell to the respondents a portion of their land in Kuala Lumpur. The respondents paid a deposit of 10% and it was agreed that the balance of the purchase price was to be paid within 30 days of the appellants' notifying the respondents of obtaining separate titles in continuation for the land. At the time of the agreement the appellants had already applied for the development of a petrol filling and service station on the land and had applied for sub-division of the land. The appellants were told that their application would be considered only if they surrendered the portion of the land provided for the petrol and service station in exchange for a lease for 30 years. This condition was rejected by the appellants. The appellants' solicitors thereupon informed the respondents that they were unable to obtain separate titles in continuation and therefore they returned the 10% deposit and considered the agreement to become null and void. The respondents' solicitors disagreed and returned the earnest money. Subsequently, the respondents claimed specific performance and damages for breach of agreement. The learned trial judge gave judgment for the respondents and the appellants appealed.

Held: in this case, the appellants had done all they could reasonably be expected of them in pursuing their application for sub-division and when their application was not approved, they were entitled to treat the agreement as having come to an end.

Shell Malaysia Trading Sdn Bhd v Lim Yee Teck & Ors [1982] 2 MLJ 181 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

In this case, the appellant claimed specific performance of an agreement for the purchase of land from the respondent. The respondent had agreed to sell his share in 10 lots of land out of 13 lots owned by him. The purchase price was to be paid by instalments but it was agreed that the purchaser should retain the title deeds before the purchase price was paid in full in order to enable him to arrange for the sub-division and development of the land. The appellant paid the first instalment of the purchase price and the mortgage on the land was discharged but the title deeds were not handed by the respondent to the appellant. As a result, the appellant refused to pay the second instalment when it was due. Subsequently, however, he paid two sums of $1,000 to the respondent. The respondent demanded payment of the balance of the second instalment and when he received no reply, he served a notice terminating the agreement and forfeiting the sum of $5,000 deposit. The respondent returned the balance of $7,500 by cheque to the appellant less the sum forfeited but this was returned by the appellant, who denied any breach of the agreement and gave the respondent notice to fulfil his obligations under the agreement. Eventually the appellant brought the action for specific performance against the respondent. There were two main issues in the case: (1) whether there was a condition precedent requiring the respondent to hand over the title deeds to be retained by the appellant prior to the payment of the second and third instalments; (2) whether the appellant had waived such condition by making the two payments of $1,000 each towards the second instalment. The learned trial judge held that there was such a condition precedent but it had been waived by the appellant. The appellant did not pay the balance of the second instalment and therefore his application for specific performance was dismissed. The appellant appealed.

Held: (1) the handing over of the title deeds to the appellant for his retention was a condition precedent to the payment by the appellant of the second instalment but in the circumstances the payment of the two sums of $1,000 towards the second instalment amounted to a waiver of his right to retain the title deed; (2) the appellant had failed and refused to pay the balance of the second instalment even after the expiration of the extended time and after he sued the respondent for specific performance. This was not a case where it is just and equitable to grant specific performance; (3) in the circumstances it would be unconscionable to allow the deposit to be forfeited by the respondent and it is just and equitable for the money to be returned to the appellant.

K Umar Kandha Rajah v EL Magness [1985] 1 MLJ 116 Federal Court, Kuala Lumpur (Salleh Abas CJ (Malaya).

An option to determine a fire policy, in order to be valid, should be communicated to the addressee. Where it was reasonably clear from the circumstances that the parties contemplated the use of the post as a means of communication and the plaintiffs subsequently ratified that method of communication adopted by the defendants, the cancellation of the contract was effected at the time the option was posted, even though it never reached its destination. A verbal notice of claim, though in the absence of express stipulation for a written one, is valid if communicated to the insurance company. Where, however, notice was given verbally to the clerk of the company who had no discretion in the matter and there was an express provision in the policy for written notices,

Held:

Lee Seng Heng & Ors v Guardian Assurance Co Ltd [1932] MLJ 17 High Court, Straits Settlements (Murison CJ).

Heller Factoring Sdn Bhd (previously known as Matang Factoring Sdn Bhd) v Metalco Industries (M) Sdn Bhd [1995] 2 MLJ 153 Court of Appeal, Kuala Lumpur (Zakaria Yatim, Mahadev Shankar and Abu Mansor JJCA).

See CONTRACT, Vol 3, para 2169.

Disturbances existing in the Native States of Larut between two opposing factions or kongsis of Chinese, relative of the possession of certain tin mines there, a number of mines belonging to the faction or kongsi of which the defendant was a headman, were taken from them by their opponents. The 'Muntri' as the chief authority of the country, sided with the defendant's faction or kongsi, and with his knowledge and consent, the defendant and others, headmen of that faction or kongsi, applied to the plaintiff's firm for help in money and provisions, in arms, ammunition and food, for their 'armed men to an unlimited credit'. In consideration of the plaintiff's firm agreeing to render this help, the defendant, by an agreement made in Penang, agreed that after the conclusion of peace between the two factions or kongsis, he would pay the plaintiff's firm, seven-tenths of the percentage which their faction or kongsi received from the miners on all tin obtained by them at their mines; but should the defendant change his mind and not pay seven-tenths, he was to pay the plaintiff's firm $10,000 per month in lieu thereof. The agreement provided, in a separate clause, that should the mines 'fall in other hands than those of the defendant's faction, or kongsi, or should the mines be wrenched from the hands of the defendant's faction or kongsi so that they became unable to draw their aforesaid percentage', then the plaintiff's firm could not claim payment of the seven-tenths. The plaintiff's firm provided the necessary moneys and goods up to the extent of $60,000; with the help so rendered, the defendant's faction or kongsi were able to recover most of the mines they had lost, and on the British government shortly thereafter interfering and bringing about peace, and establishing a residency in Larut, the defendant and his co-headman and their miners, met, and with the knowledge and consent of the British residency made a further agreement with the plaintiff, which, after reciting the previous agreement and the fact that the supplies had been rendered and thereby most of the mines had been recovered, and that peace had been restored, provided and declared that the defendant and his co-headman and their miners were to follow and abide by such previous agreement. The defendant's faction or kongsi thereafter received their aforesaid percentage from their miners and thereout paid seven-tenths thereof to the plaintiff's firm for about two years, whereby the debt to the plaintiff was reduced by $15,000. While the plaintiff's firm were thus collecting their seven-tenths, the British government, with the consent of the Perak authorities, took possession of, and re-allotted, the mines among the Chinese mine owners, and thereafter issued a proclamation prohibiting the further levying of the aforesaid percentage, and proceeded to levy a duty on tin for themselves, for the up-keep of the government of the country, whereby the plaintiff's firm were deprived and hindered from obtaining their seven-tenths. The plaintiff's firm sued the defendant for the balance of their advances.

Held, the plaintiff could not recover: (1) and the acts and proclamation aforesaid, were acts within the provisions of the aforesaid clause, and the agreements were rendered impossible of performance, as the subject matter of them the percentage, had been put an end to; (2) but Lord Tenterden's Act, 9 Geo IV c 14, is not in force here. Section 4 of the Limitation Act XIV of 1859 only deals with acknowledgments in cases of a 'legacy or debt', and does not, like Lord Tenterden's Act, extend to 'actions on the case, grounded on any simple contract', so that a letter written by direction of a defendant, though not signed by him, but from which a promise to pay may reasonably be inferred, is a sufficient acknowledgment under the old law, prior to Lord Tenterden's Act, to revive his liability. A promise to pay 'when of ability' will revive the debt, if it can be shown, by evidence, that between the date of the promise, and the commencement of the action for recovery of the debt, the defendant has had the ability. In an action for breach of an agreement, the plaintiff, in answer to a defence of the Statute of Limitation, put in evidence the three following letters written, within six years of the commencement of the action, by the defendant's directions, and with his name, but not signed by him: (1) 'It is true that the kindness bestowed by you...is to no small extent. Although others may be ungrateful, I cannot be so bad as that...it is really on account of my being hard up that I wish to put the matter to right, it is not within my power to do it...should in future I receive the sum from government, I will not be ungrateful to you'; (2) with regard to the matters mentioned in your letter, you say you wish me to manage to pay one half of the amount, but should I have any means in my powers, I have nothing to complain of even if I had to pay the whole; (3)

Koh Seang Thye v Chung Ah Quee [1886] 4 Ky 136 High Court, Straits Settlements (Wood J).

[Annotation: Until the passing of the Limitation Ordinance 1896, the English Limitation Acts of 1623 and 1705 as modified by Indian Act XIV of 1859 and by the Civil Law Ordinance IV of 1878, formed the law in force in the Colony relating to the limitations of suits. Section 170 of the Civil Procedure Ordinance V of 1878 enabled the Statute of Limitation to be pleaded.]

The plaintiff is a licensed finance company incorporated in Malaysia having its registered office in Kuala Lumpur and a branch office at Kuching. By a certificate of incorporation on change of name dated 19 December 1985, the plaintiff changed its name from Malaysia Borneo Finance Corporation (M) Bhd to MBf Finance Bhd. On 7 April 1989, the plaintiff entered into a hire-purchase agreement ('the hire-purchase agreement') with the first defendant who was then trading as Forward Enterprise. Notwithstanding the change of name of the plaintiff, the plaintiff used a printed form of the hire-purchase agreement which bore the old name of the plaintiff. After execution of the hire-purchase agreement, a copy thereof was sent to the first defendant and on such copy there was stamped the new name of the plaintiff with its Kuching branch address. The subject matter of the hire-purchase agreement comprised of, inter alia, four units of forklifts ('the goods'). The hire-purchase price was RM319,950 and after deducting the initial payment of RM81,500, the balance of RM238,450 inclusive of term charges was to be paid by 35 monthly rental of RM6,624 and one final rental of RM6,610. The second defendant executed a guarantee on the same day the hire-purchase agreement was made. In the guarantee, the name of the plaintiff was in its new name. The first defendant defaulted in payment of monthly rental. By letter dated 29 October 1990 to the first defendant, the plaintiff demanded the first defendant to deliver up the goods but the first defendant failed or refused to do so. The plaintiff was not able to repossess the goods as they were not kept at the address given in the hire-purchase agreement and could not be located. The plaintiff sued the first and second defendants and claimed for a sum of RM198,711.88, interest thereon and costs. The deputy registrar entered judgment for the plaintiff against the first and second defendants under O 14 of the Rules of the High Court 1980 ('the RHC'), and struck out the counterclaim of the first defendant under O 18 r 19 and O 92 r 4 of the RHC. The defendants appealed.

Held, dismissing the appeal: (1) the plaintiff acquired its new name in 1985, ie some three years and four months before the existence of the hire-purchase agreement between the plaintiff and the first defendant on 7 April 1989. Therefore, the first defendant had intended to contract with the plaintiff and had so contracted by his signing of the hire-purchase agreement though the plaintiff by then had changed its name from Malaysia Borneo Finance Corporation (M) Sdn Bhd to MBf Finance Bhd. Further evidence could also be found in the guarantee between the second defendant and MBf Finance Bhd wherein the number of the hire-purchase agreement was cited. In addition, MBf Finance Bhd with its Kuching address was stamped on the first defendant's copy of the hire-purchase agreement; (2) from the reply received from the road transport authority, a forklift was not a motor vehicle and therefore the hire-purchase agreement was not subject to the Hire-Purchase Act 1967 ('the Act'). It therefore follows that the agreement was not subject to the Act as the goods were not goods as specified in the First Schedule to the Act to resist the defence that the agreement was void and unenforceable owing to various non-compliances with the provisions of the Act; (3) though it was not a hire-purchase within the provisions of the Act, any hire-purchase instrument involving movable property was required by s 4 of the Hire-Purchase Registration Ordinance of Sarawak (Cap 71) to be so registered. The hire-purchase agreement and the guarantee were contained in a single document which was duly registered with the registrar on 20 April 1989 as shown by the endorsement made at the foot of the guarantee. Therefore, the defendants' defence that the agreement was not enforceable as it was not registered, could not be sustained; (4) the hire-purchase agreement was signed on behalf of the plaintiff by one Chua Chai Hua, the then branch manager of the plaintiff. Being the representative of the plaintiff, Chua Chai Hua had the implied authority of the plaintiff and the hire-purchase agreement was of a nature that no seal of the company was required; (5) the title to the property initially vested in the dealer as the original owner of the goods to be sold at the price of RM271,000. This price was paid to the dealer when the dealer received the sum of RM81,000 from the first defendant and the balance RM190,000 from the plaintiff. On receipt of the price, the dealer had divested its title to the goods and such legal title had vested in the first defendant and the plaintiff jointly according to the proportion of the payments made by both of them. By s 3 of the Bills of Sale Ordinance of Sarawak (Cap 68), in order for the hire-purchase agreement in this case to be construed as a bill of sale, the plaintiff or the first defendant must have exclusive title in the goods to the exclusion of the other. The title to the goods was not exclusive to the plaintiff or the first defendant and in the circumstances, the hire-purchase agreement was not a bill of sale; (6) the plaintiff had demanded that the first defendant delivered up the goods but the first defendant failed or refused to do so. The plaintiff was not able to repossess the goods as they were not kept at the address given in the hire-purchase agreement and could not be located. Therefore, the plaintiff cannot be faulted for non-mitigation of its losses. Moreover, s 75 of the Contracts Act 1950 was irrelevant in this respect as the section refers to liquidated damages and penalty imposed in the contract between the parties in the event of breach; (7) the terms relating to payment of initial deposit, monthly instalments, and interest on overdue rental or other payments form part and parcel of the hire-purchase agreement. The parties had signed on the last page of the agreement. It was vexatious on the defendants' part to say that just because no signatures or initials appeared against the respective clauses, they did not form part of the hire-purchase agreement; (8) the counterclaim by the first defendant related to the plaintiff's claim in the action and also to dealings between the plaintiff and the first defendant trading under the name and style of Borneo Welded Mesh. If there was going to be a counterclaim by Borneo Welded Mesh, there must first be a claim by the plaintiff against it. In this case, Borneo Welded Mesh was a stranger to the action. The counterclaim by the first defendant was clearly vexatious and an abuse of the process of court. The whole counterclaim of the first defendant was without any basis and the court therefore allowed the application of the plaintiff under O 18 r 19 of the RHC; (9) (obiter) the change of name of a company would not absolve it of any rights and obligationsbefore the change took effect. Whatever legal proceedings there were, by or against the company before the change, would not be rendered defective. After the change of name, any legal proceedings pending or which might have been commenced by or against it but for the change of name, may be continued or commenced by or against it by its new name.

MBf Finance Bhd (formerly known as Malaysia Borneo Finance Corp (M) Bhd) v Ting Kah Kuong & Anor [1993] 3 MLJ 73 High Court, Kuching (Abdul Kadir Sulaiman J).

The first respondent had obtained a bridging loan from the appellants to develop certain lands into a housing estate ('the Dungun project') and a loan to purchase certain lands in another place for the same purpose ('the Alor Gajah project'). The loan facilities were secured by legal charges over the said lands. The duration of the facilities was for a period of four years. A term in the loan agreement provided that all facilities were subject to periodic review and repayable on demand. The amount disbursed by the appellants had been used for the development of the project. Before the end of the four-year period, the appellants issued a writ for repayment of the principal sum plus interest. The loan facilities were also withdrawn because the interests were never serviced nor paid. The appellants had never served upon the first respondent a letter of demand until after the facilities were withdrawn. The first respondent counterclaimed for breach of contract. The High Court dismissed the appellants' claim and allowed the first respondent's counterclaim. Damages were awarded against the appellants in the sum of RM6,000,000 each for the Dungun project and the Alor Gajah project, RM5,000,000 aggravated damages for injuries allegedly suffered by the Sultan of Terengganu, and payments totalling RM1,774,835.50 to third parties. The appellants appealed against the learned judge's conclusion that they had committed a breach of the agreement and against the quantum of damages awarded against them.

Held, allowing the appeal in part: (1) what the appellants granted to the first respondent was a bridging finance operated under overdraft. As such, until the first respondent commenced receiving proceeds of sale, it was under no obligation to pay anything towards the principal sum or the interest. The appellants were aware of this when they agreed to compound the unpaid interest. There was also nothing in the loan agreement which required the first respondent to make repayment by fixed instalments or which allowed the appellants to impose a penalty on interests or instalments remaining unpaid; (2) the overdraft facility was for a specific period of four years. The appellants were therefore not entitled to issue the recall letter just because the interest was not serviced. It would have been otherwise if the amount disbursed had been used for purposes other than that agreed upon or the project had been abandoned; (3) the appellants, in recalling the loan mid-term, had committed a breach of the agreement; (4) the law as to the measure of damages for breach of contract as provided under s 74 of the Contracts Act 1950 is the same as that in England, and requires that the damage or loss suffered must be within the contemplation of both parties. Here, the loss of profits on the housing project which the first respondent would suffer was the natural and probable result of the breach of agreement by the appellants and which the appellants knew; (5) for the quantum of damages for the loss of profits in respect of the Dungun project, on a balance of probabilities, the estimate by the quantity surveyor of the profits if the project were completed, which amounted to RM5,394,722, was accepted and preferred to the assessment of RM6,200,000 by the High Court. Interest was also awarded at 5% pa from the date of accrual of the cause of action until judgment under s 11 of the Civil Law Act 1956, and thereafter, until payment, at the rate of 8% pa under O 42 r 12 of the Rules of the High Court 1980; (6) for assessment of damages in contract, once the claimant has proved that the kind of damage suffered was foreseeable, the guilty party is liable to the full extent of it, whether foreseeable or not, provided that the extent of the damage claimed has been established on a balance of probabilities. In this light, as the loss of profits in respect of the Alor Gajah project was dependent upon the application of profits expected from the Dungun project, it would be too remote and was therefore disallowed. The High Court's award of RM6,000,000 was therefore set aside; (7) in respect of exemplary damages, the first respondent had not established its claim in accordance with the principles set out in Rook v Barnard and Cassell v Broome. The High Court's award of RM5,000,000 was therefore set aside; (8) there was no evidence that the third parties concerned had received damages from the first respondent. This was therefore disallowed and the High Court's award was set aside; (9) the appellants' claim for recovery of the loan is allowed. There is no ground in law for exempting the first respondent from liability to repay the loan. However, the appellants were in breach of contract in prematurely recalling the overdraft. The first respondent must, however, pay the agreed rate of interest on the loan, and interest of 5% pa from the time the overdraft was prematurely withdrawn until judgment under s 11 of the Civil Law Act 1956, and thereafter, until payment, at the rate of 8% pa under O 42 r 12 of the Rules of the High Court 1980; (10) the typescript words of the facility letter, which constituted the contract, provided for a term loan and contradicted the printed words which provided that the loan should be repayable on demand. In such a situation, the contra proferentum rule applies and the 'on demand' provision must be rejected in favour of the 'term loan' provision. This is so even if all the provisions were in typescript words; (11) if the contract of loan is construed as an on demand loan, the borrower is entitled to some reasonable time to repay as the facility letter provided that the facilities were subject to periodic review. The case of Broadloom Corp (1968) v Bank of Montreal et al sets out the factors that must be analysed in determining what length of time is reasonable; (12) the appellants were in breach of the contract also because there was no evidence that the appellants had carried out the periodic survey they had promised and then given the first respondent a reasonable time before recalling the overdraft facility.

Bank Bumiputra Malaysia Bhd Kuala Terengganu v Mae Perkayuan Sdn Bhd & Anor [1993] 2 MLJ 76 Supreme Court, Kuala Lumpur (Abdul Hamid Omar LP, Edgar Joseph Jr and Eusoff Chin SCJJ).

The plaintiff's claim was for the refund of RM4,000 paid by him to the defendant as deposit for the purchase of a lorry pursuant to an agreement between the parties ('the contract'). The agreement did not state the delivery date for the lorry but the plaintiff was told that the vehicle would be ready for delivery at the end of October 1989. Clause 2 of the contract stated that delivery should be taken within seven days of notification of delivery. Clause 4 stated that no deposit would be refundable in the case of cancellation. On 4 November 1989, the defendant gave notice to the plaintiff to take delivery of the vehicle ('the notice'). The notice stated that in the event that the plaintiff failed to take delivery within seven days of the date of the letter, the defendants reserved the right to dispose of the vehicle and, in the event, his deposit would be forfeited. The plaintiff contended that first, the RM4,000 paid by him was not a true deposit, and, even if it was, the defendant had no right to forfeit it except in the event of cancellation of the contract, which the plaintiff never intended. Further, the only right afforded to the defendant under cl 2 of the contract, in the event that the plaintiff failed to take delivery within the specified time, was for him to charge the plaintiff for storage costs, not to dispose of the lorry.

Held, dismissing the plaintiff's claim: (1) the fact that the payment of a sum is not expressed 'as a deposit does not, for that reason alone, render the payment any less a true deposit. The intention of the parties to regard the payment as a deposit may be garnered by examining the agreement as a whole. A 7% deposit on a contract for the sale of a lorry was nothing unusual or extortionate. In the court's judgment, therefore, it was the intention of the parties that the sum claimed was intended to be a deposit and part payment towards the purchase price; (2) where time is not specified for the performance of a contract, the engagement must be performed within a reasonable time, which is a question of fact. In the circumstances, reasonable time had been given to the plaintiff to complete the contract. Failure to do so amounted to a repudiation of the contract; (3) cll 2 and 4 of the contract were to be read together. This meant that the defendant had a choice to either allow the defendant extra time and claim storage charges or terminate the contract on account of the plaintiff's refusal to perform, in which case he had the right to forfeit the deposit; 'cancellation' in cl 4 included repudiation of the contract by the plaintiff.

Yap Kok Heng (t/a Ehsan Enterprise) v International Auto Enterprise Sdn Bhd Civil Appeal No R2-12-105-92 High Court, Kuala Lumpur (Wan Adnan J).

This was a construction summons which concerned a valuation clause in an investment agreement (the agreement). The agreement was made on 14 May 1992 between the defendants and one Seow Khoon Seng (the deceased) who has since died. The deceased had founded a company, Pioneer Die Casting Co Ltd (the company). By the agreement, the defendants had acquired 3,510,000 shares at $1.40 per share with the object of listing the company on the Stock Exchange of Singapore within three years from the date of the agreement. In the event of the company not being listed, the deceased was given an option to reacquire the shares from the defendants. The terms of the option provided, inter alia, that the value of the shares was to be based on the net tangible asset value (NTA) of the company at the end of the financial year immediately preceding the date on which the option was exercised, based on the audited financial statements of the company. The auditors of the company, M/s Ernst & Young, were also auditors of the defendants. For the purposes of the acquisition, the plaintiffs wrote to M/s Ernst & Young asking for a valuation of the shares of the company. On the basis of the NTA figure provided by M/s Ernst & Young, the plaintiffs exercised the option. However, the defendants also obtained a separate, revalued NTA figure from M/s Ernst & Young, and on that basis, rejected the NTA figure upon which the plaintiffs made their offer. The issue was whether the NTA figure was one which required a revaluation of the assets of the company and its subsidiaries.

Held, allowing the plaintiffs' application: (1) according to the true construction of the valuation clause, the NTA was to be ascertained on the basis of the finalised financial statements of the company for the year ending 1994 without a revaluation of the assets of the company. This was because the definition of the NTA had as its starting point the financial statements of the company for the financial year preceding the exercise date, that is, 31 December 1994. To have revalued the assets and drawn up fresh financial statements would have been an act outside the four corners of the agreement as it would not have been based on the financial statements for the year ended 1994 but extraneous documents not stipulated in the clause; (2) the construction of a document was a matter of law for the courts. In the case of a contract, it was to ascertain the mutual intention of the parties as expressed in the words of the agreement. It was an objective exercise and therefore the parties could not have given evidence as to their intention or views on the matter. What had to be ascertained was what was to be taken as the intention which reasonable people would have had if placed in the situation of the parties; (3) the subsequent conduct of parties to an agreement or other concerned parties could not be looked at to construe a written agreement except when variation or estoppel was an issue. Consequently, the court did not consider the evidence on the conduct of the parties, the auditor and the legal advisers as the evidence relating to the conduct of the parties was entirely irrelevant.

Estate of Seow Khoon Seng v Pacific Century Regional Developments Ltd [1997] 1 SLR 509 High Court, Singapore (GP Selvam J).

In this case, the respondent brought an action against the first appellant, the insurance agent, for outstanding premium and against the second appellant as guarantor. In their defence, the defendants contended: (a) the first appellant had not been supplied with the particulars of the claim; (b) upon a proper construction of the relevant agreement entered into by the first appellant with the respondent company the claim was without basis; (c) the alleged guarantee by the second defendant was illegal, inoperative and of no effect. At the trial before the sessions court the defence contended that: (i) the respondent company could claim premium only in respect of the period when it was on risk, and since in some cases premium was not paid by the insured although cover notes had been issued, the respondent company was not on risk; and furthermore, some policies had been cancelled by the plaintiff company and in respect of these it was not on risk; (ii) the first appellant had ceased to operate at 131-A, Jalan Perisai, Taman Sri Tebrau without the consent of the respondent company and therefore under cl 14 of the agency agreement the agency had been thereby terminated. These issues had not been pleaded. The President of the sessions court upheld the unpleaded contentions of the defence and dismissed the respondent's claim. On appeal, the High Court reversed the decision of the President and gave judgment for the appellant. The respondent appealed.

Held: (1) the appellants had failed to establish their case on the issues raised in the statement of defence; (2) the issues brought up at the trial had not been pleaded in the statement of defence and therefore the contentions should not have been entertained; (3) even if the unpleaded issues had been properly pleaded in the statement of defence, the appellants could not succeed as (a) the defence had not queried the statement of accounts sent monthly to the first appellant, (b) where cover notes were issued but premia were not paid in full, the respondent company was still on risk, and (c) the appellant could not take advantage of his own wrong to put an end to the contract.

Gimstern Corp (M) Sdn Bhd & Anor v Global Insurance Co Sdn Bhd [1987] 1 MLJ 302 Supreme Court, Kuala Lumpur (Salleh Abas LP, Mohamed Azmi and Wan Hamzah SCJJ).

See criminal law, para VIII [58].

Challenger Technologies Pte Ltd t/a Challenger Microcomputer Products v Attorney General [1997] 2 SLR 472 High Court, Singapore (Choo Han Teck JC).

In this case, the appellants, who were architects, claimed under an agreement under which they were engaged to prepare a layout plan for housing development. The layout plan was not submitted for approval by the architects but by the respondents themselves. The plan was not approved but approval was given to another amended plan. The respondents offered $800 for the work done but the appellants claimed the sum of $65,500. The respondents also claimed that the charges should be in accordance with the Institute of Architects' scale of fees but this was disputed by the appellants. The assistant registrar gave the respondents conditional leave to defend upon payment into court of the sum claimed and this was upheld in the High Court. The appellants appealed.

Held: if all the main points had been properly adverted to in the pleadings the finding of the court would have been that there were bona fide triable issues in this case. In the circumstances, the appeal must be dismissed.

Seniwisma S & O Akitek Planner v Perusahaan Hiaz Sdn Bhd [1980] 2 MLJ 37 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The appellants entered into a contract with the respondents for the sale of 50 tons of Zanzibar cloves, of which the respondents were importers and stockists. By an exceptions clause it was provided that the contract was 'subject to force majeure and shipment'. The respondents, at about the same time, also entered into contracts to sell to various buyers various quantities of cloves. Due to a shortage of supply as a result of an insufficient quantity of cloves being shipped by the Zanzibar suppliers, the respondents could not carry out all their commitments and wrote to the appellants terminating their contract. The appellants had, however, in the meantime made two contracts for the resale of the cloves. Since the appellants did not receive any cloves from the respondents they were unable to fulfil their contracts of resale. They agreed, however, to pay compensation totalling $43,000. In an action for damages for breach of contract brought by the appellants against the respondents, the trial judge held that the respondents were protected from liability by the exceptions clause, and that the quantity of cloves in fact shipped by the respondents were in fulfilment of definite contracts which had been entered into by the respondents and which were subject to no condition as to shipment. He accordingly held that the respondents were under no obligation to supply the cloves to the appellants. The Court of Appeal, by a majority, affirmed the decision of the learned trial judge. On further appeal to the Privy Council,

Held: the exceptions clause 'subject to force majeure and shipment' must be construed as meaning that the contract was (a) conditional upon the sellers not being prevented by circumstances amounting to force majeure from carrying it out and (b) conditional upon the sellers being able to procure the shipment of cloves to the quantity and of the description referred to in the contract. The words 'subject to shipment' in this contract could not be construed as making the contract conditional on the respondents choosing to ship the cloves and thinking it fit to allocate them to this particular contract; nor could they be construed as enabling the respondents to excuse their failure to deliver by reference to their other commitments.

Hong Guan & Co Ltd v R Jumabhoy & Sons Ltd [1960] MLJ 141 Privy Council Appeal from the Straits Settlements (Lord Tucker, Lord Jenkins and Lord Morris of Borth-Y-Gest).

See contract, para VII [43].

Frans Bambang Siswanto & Anor v Coutts & Co AG Suit No 110 of 1996—High Court, Singapore (Chao Hick Tin J).

The plaintiffs, a company supplying computer software packages, were invited by the National Computer Board (NCB) to submit tenders for the supply of various software packages to statutory and government departments (the Government Authority) and were successful in three tenders. In the invitation to tender, the total quantity required for each package was specified but qualified with the words `up to' and the list of estimated requirements prefaced the `quantity' columns with `quantity up to'. The terms and conditions in the tender specifications applied to the contracts awarded under the successful tenders. This action was brought under the contract awarded under the second tender. The letter of award stated the contract value to be S$1,681,550 and that, under the terms of the contract, the plaintiffs were to lodge a security deposit with NCB to the sum of S$84,080 being 5% of the contract value. The Government Authority placed orders for only 22.2% (S$373,273) of the maximum quantity stated in the tender documents. The plaintiffs claimed that it was an express term of the contract that the Government Authority would have purchased the quantity of software stated in the tender or, alternatively, that the latter was obliged to purchase software packages up to the stated contract value of S$1,681,550.

Held, dismissing the claim: (1) the tender documents and letter of award did not disclose any express term as pleaded by the plaintiffs. The invitation to tender, which formed part of the contract, referred to the relevant software packages and the `estimated requirements'. It specified various packages and the quantities required as `quantity up to', making it obvious that the quantity of each package specified was the maximum required; (2) it was apparent from cl 3.1 of the invitation to tender that the specified quantity of each item set out only the upper limit which would have been purchased. It also set out what the parties had to do when the maximum quantity had been reached, but this could not have been interpreted to mean that the Government Authority had to place orders up to the respective limits; (3) the 5% security deposit based on the stated contract value was read strictly as a formula for calculating the security deposit and did not indicate the Government Authority's obligation to place orders up to that value; (4) the submission that the Government Authority was at least obliged to purchase a quantity `close to' the quantity stated was rejected. The plaintiffs' case was founded purely on an express term which could not reasonably be gleaned from any of the contractual documents and it was therefore not open to them to argue that the contract envisaged a substantial performance by the other party. In any event, it was not pleaded in the plaintiffs' claim.

Challenger Technologies Pte Ltd t/a Challenger Microcomputer Products v Attorney General [1997] 2 SLR 472 High Court, Singapore (Choo Han Teck JC).

See criminal law, para VIII [58].

Challenger Technologies Pte Ltd t/a Challenger Microcomputer Products v Attorney General [1997] 2 SLR 472 High Court, Singapore (Choo Han Teck JC).

See sale of goods, para V [90].

China Resources (S) Pte Ltd v Magenta Resources (S) Pte Ltd [1997] 2 SLR 707 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu And LP Thean JJA).

Ottoman Bank of Nicosia v Ohanes Chakarian [1938] MLJ 71 Privy Council Appeal from Cyprus (Lord Thankerton, Lord Wright and Sir George Rankin).

See CONTRACT, Vol 3, para 2088.

The defendants had purchased a certain immovable property at a public auction held pursuant to an order for sale made by the court under the provisions of the National Land Code 1965 upon the application of the party to whom the property was charged. Among the conditions of sale was condition 8 which provided that the property was sold subject to all existing tenancies, if any, and all claims of tenants and occupiers by contract, custom, statute or otherwise, and condition 12 which provided that 'upon payment of the balance of the purchase money the purchaser shall be let into possession or the receipt of the rents and profits of the properties'. On 22 March 1966, the plaintiffs had gone into occupation of the property pursuant to a registered lease granted by the previous owners. The lease was for a period of ten years but carried a term that the plaintiffs had the option to renew the lease for a period of ten years at an increased monthly rental and thereafter, for a further period of ten years at a further increased monthly rental. It was a term of the lease that the plaintiffs, if desirous of exercising the option, had to give notice of their desire six months before the expiry of the period. The plaintiffs had not exercised the option in the manner or within the time specified or at all but had continued in occupation of the property. Upon expiry of the initial period of ten years, the then owners of the property had continued to receive rent from the plaintiffs. The defendants had taken out an originating summons claiming against the plaintiffs' possession of the property under O 89 of the Rules of the High Court 1980. Another judge had held in that case that the summary procedure under O 89 did not apply as the plaintiffs were tenants holding over after termination of their tenancy. The plaintiffs then commenced the instant action by writ of summons, claiming, inter alia, a declaration that they were the lawful tenants of the property, and an order that the defendants be restrained from interfering with or disturbing their lawful and actual possession and use of the property. The plaintiffs obtained on an ex parte application an interlocutory injunction restraining the defendants from interfering with or disturbing their occupation and use of the property until further order. The defendants applied inter partes for an order, inter alia, for a declaration that possession of the property be delivered to them, that the injunction be discharged, that an injunction restraining the plaintiffs from interfering with the defendants' possession of the property be granted, and for damages. Among the defences raised by the plaintiffs was that the judgment of the court in the originating summons estopped the defendants from proceeding with their application. Following judgment in the present action, there arose a further issue, namely, as to whether the court had the power to vary its order after it had been extracted.

Held, allowing the defendants' application: (1) it could not be gainsaid that upon expiry of the initial term of ten years the previous owners and the plaintiffs had agreed to continue the relationship of landlord and tenant on the basis of a monthly tenancy since the rent was payable with reference to the month; (2) the ratio decidendi of the judgment in the originating summons was limited to the proposition that as the plaintiffs were tenants holding over after termination of their tenancy the summary procedure under O 89 was not applicable and nothing more. All other observations made in the judgment were thus of necessity obiter dicta; (3) the plaintiffs had not, after the expiry of their lease, taken the precaution of protecting their short tenancy of less than three years by endorsement in the register document of title as provided for in s 316(1) of the National Land Code 1965. The effect of their omission was to defeat the plaintiffs' tenancy or, in other words, their tenancy was not binding on the defendants. As for any tenancy exempt from registration granted by the chargor after the date of registration of the charge concerned, and even with the consent of the chargee, it will not bind the purchaser unless it has become protected by an endorsement under s 316(1) of the Code prior to the date of registration of the certificate of sale. And, as for any tenancy exempt from registration granted by the chargor before the registration of the charge concerned -- as in the present case, since the plaintiffs' lease expired on 21 March 1976, after which they held over as monthly tenants and the charge was registered later -- it will not bind the purchaser unless it has become protected by endorsement prior to the date of registration of the charge; (4) it made no difference that condition 8 of the conditions of sale had provided that the property was sold subject to all existing tenancies, if any, and all claims of tenants and occupiers by contract, custom, statute or otherwise. This condition must be understood to refer only to tenancies binding on the purchasers. Short tenancies of less than three years not protected by endorsement under s 316(1) of the Code were not binding on the defendants, and were obviously excluded from the contemplation of condition 8. In any event, any attempt to contract out of clear statutory provisions would be void and wholly ineffective as being contrary to public policy. Condition 12 must be read in the same light; (5) the defendants were entitled to possession as the plaintiffs were in unlawful possession of the property, ie they were trespassers or, at most, bare licensees and, on the evidence, had been given ample notice before action. Furthermore, service of the summons-in-chambers was itself a notice of termination of the licence. Indeed, prior to the issue of the summons-in-chambers, the defendants' then solicitors had served the plaintiffs with a notice to quit dated 20 November 1980 requiring them to quit and deliver vacant possession within 14 days from the date of receipt thereof, which was more than sufficient notice to a bare licensee; (6) the defence of estoppel based on the judgment of the other judge could not arise as there could be no estoppel against a statute, specifically the various provisions of the Code referred to; (7) the declaratory order granted was to be varied so as to require the plaintiffs to deliver vacant possession forthwith to the defendants. Apart from the slip rule, the court has an inherent power to vary its own orders so as to bring it into harmony with the order which it obviously meant to pronounce. A mere declaratory order would not have conveyed the intention of the court.

Hotel Ambassador (M) Sdn Bhd v Seapower (M) Sdn Bhd [1991] 1 MLJ 221 High Court, Penang (Edgar Joseph Jr J).

The defendants were the owners of the bulk carrier Mosgulf. In September 1989, one of the generators on board the Mosgulf sustained damage. An auxiliary generator was required until the ship's own generator had been repaired. On 29 September 1989, the manager telexed Barwil Agencies enquiring if the latter could supply an Aggreko portable generator of certain specifications. The ship was then on her way from Rotterdam to Taichung via Singapore. The plaintiffs, an associate company of Barwill Agencies, then offered by telex of 2 October 1989 to supply a generator on a monthly rental of S$24,450 complete with standard and specified additional attachments. For consumables they were to be billed separately. The Aggreko generator offered by the plaintiffs was hired from Yeow Kong Electrical Co (Pte) Ltd ('Yeow Kong'). Since the vessel was trading on a worldwide basis it was not known when and where the generator could be redelivered. So it was finally agreed that the hire would be for a minimum period of three months at S$24,450 per month. The generator was then installed on board while the vessel was in Singapore on 11 October 1989, with various accessories and consumables. The consumables did not include anti-freeze as none was requested. In January 1990, while the ship was at the Black Sea Russian port of Yushny, the ambient temperature fell to around minus 20¡C. In consequence, the cooling water of the generator froze, causing cracks to the cooling pipes and casings. The generator became unworkable. It was eventually returned to Singapore in May 1990 as cargo on board another vessel, the Nedloyd Seoul. The defendant had paid hire charges only for the period 11 October 1989 to 10 March 1990. The plaintiffs thereupon commenced these proceedings for the sum of S$110,118.75 being arrears of hire charges from 11 March 1990 to 10 May 1990 and loss of earnings from 11 May to 10 August 1990 plus miscellaneous items. The defendants denied the plaintiffs' claim and counterclaimed for the expenses incurred in connection with the replacement of the generator off Singapore and the return of the replacement generator to Singapore amounting to US$22,081.45. The High Court dismissed the plaintiffs' claim and allowed the defendants' counterclaim. The plaintiffs appealed

Held, allowing the appeal: (1) implied terms as to fitness of the goods for a particular purpose for which it is hired is governed by s 9(4), (5) and (6) of the English Supply of Goods and Services Act 1982. This arises when the contract of hire is made in the course of business and the particular purpose for which the goods are hired is made known to the bailor of the goods. But, by s 9(6), no such term is to be implied when the circumstances show that the bailee does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the bailor. It was clear that the defendants at no time relied on the skill and judgment of the plaintiffs. Further, it was also not unreasonable for a generator delivered in the tropics to be delivered without anti-freeze; (2) the defendants' duty as bailees was to take reasonable care of the generator whilst it was in their possession. The onus was on the defendants to show that they had discharged this duty of care; (3) the defendants' officers were in breach of their duty of care in neither applying anti-freeze liquid (available at any major temperate port) nor draining completely the cooling system, resulting in damage to the generator.

Fast Marine Supply Pte Ltd v Owners of the Ship or Vessel 'Mosgulf' [1994] 1 SLR 354 Court of Appeal, Singapore (Karthigesu JA, Goh Joon Seng and Chao Hick Tin JJ).

The plaintiffs sued the defendant for breach of contract of bailment in respect of one carton of merchandise in the sum of $3,442.97. Loss of the carton was admitted by the defendant but it was argued that the defendant's liability was limited to $1,000, as provided in the Penang Port Commission Byelaws.

Held: (1) there was no implied term in this case in regard to the limitation of liability; (2) byelaw 79 of the Penang Port Commission Byelaws 1957 was ultra vires the powers given by the Penang Port Commission Ordinance 1955 and was therefore void; the defendants were therefore liable for the full value of the articles lost.

Jackson's Malaya Bhd v Penang Port Commission [1973] 2 MLJ 27 High Court, Penang (Chang Min Tat).

The plaintiffs were residents of a maisonette block in Amber Estate developed by the defendants. The plaintiffs claimed that in each of their respective contracts a term would be implied that the defendants would develop Amber Estate, insofar as the siting, positioning and orientation of the buildings to be erected thereon, in accordance with the layout plan of the defendants' brochure. The plaintiffs alleged that the defendants, by 'proposing to make material alterations and variations to the site layout, namely the erection of a 13-storey block of maisonettes in place of the said 2-storey town houses' without the consent of the plaintiffs, were in breach of the said contract. The plaintiffs also contended that the defendants intended to act 'falsely and contrary to the representations made by them to the purchasers and each of them in and by the said brochure'.

Held, dismissing the plaintiffs' claim: (1) there was no implied term or condition in the contracts of the plaintiffs that the defendants would develop Amber Estate, insofar as the siting, positioning and orientation of the buildings to be erected thereon, in accordance with the layout plan of the defendants' brochure; (2) the defendants' representation was an innocent misrepresentation which was not a term of the contract and did not amount to a warranty; (3) the plaintiffs were attracted by the statement in the brochure that the 'development offers residents a panoramic view of the sea and the neighbouring islands'. On the evidence, Amber Estate, as subsequently developed, offers a panoramic view of the sea and the surrounding islands.

Chan Chor Tng & Ors v Housing & Urban Development Co (Pte) Ltd 1980 High Court, Singapore (Wee Chong Jin CJ).

The bill of exchange would be worthless if there was no implied undertaking to go to the place (Singapore) mentioned in it.

Mayandee Chetty v Sultan Meracayar [1872] 1 Ky 350 High Court, Straits Settlements (Hackett J).

The respondent Tay Kim Wee took up employment with the employers, the appellants, with effect from 1 August 1959. The conditions of service were all spelt out in a letter of 29 July 1959, from the employers to the respondent. One of the terms providing for the payment of commission was as follows: 'Commission: After the development of sales of equipment and chicks, a certain amount of commission will be given from the profits'. When the respondent entered the service of the appellants on the terms set out in the letter, the poultry project contemplated under the paragraph headed by the word 'commission' was then under study. The sale of animal feed was one of the principal activities of the appellants. He headed and throughout his employment remained responsible for the sale of animal feed. By 1965, the poultry project in the form of hatchery for chicks and the sale of day-old chicks came into fruition. It involved the import of parent breeders from the United States of America, raising them in Singapore, producing hatching eggs, hatching them and selling the day-old chicks to poultry farmers in the rural areas of Singapore and Malaysia. The respondent was appointed concurrently the Manager of the Hatchery Division. The Hatchery Division of the appellants performed well and on the evidence it was undisputed that the respondent's contribution to its success was singular and significant. He was exceptionally devoted to his work. Although the Hatchery Division returned handsome profits, the respondent did not before his resignation from the appellants claim his commission; nor did he provide for such claims when he was preparing some of the budgets for the appellants. Not unexpectedly the financial accounts of the appellants relating to the years in question were prepared on the basis that no such commission was payable. The respondent on 25 April 1981, tendered to his employers his letter of resignation, ending his employment on 31 July 1981. By a letter of 4 June 1981, the respondent for the first time claimed commission in accordance with the terms of his letter of appointment. The appellants declined to entertain the claim. The respondent claimed a total sum of $162,369.10 from the appellants on the basis of the number of chicks sold for the period from 1975 to 1981 ex hatchery or direct at two cents per chick commission. Not receiving payment, the respondent commenced proceedings in the High Court on 12 August 1981. In the High Court, he obtained judgment in the sum of $80,000 on a quantum meruit as recompense for services rendered over a period of six years ending with the date of the filing of the writ of summons herein on 12 August 1981, and interest thereon which the learned judge in his discretion fixed at a lump sum of $20,000 in respect of the same period of six years. The appellants appealed against the said judgment.

Held: (1) the claim to a quantum meruit in the present case was contractual in nature. The implied promise to pay a reasonable commission, as found by the learned judge, is and should properly be treated in the same way as other implied terms in the law of contract. The court was satisfied that the learned judge had properly applied the principles adumbrated in Way v Latilla [1937] 3 All ER 759; (2) the learned trial judge was right in law in holding that on a proper construction of the paragraph there was no concluded contract obliging the appellants to pay a commission since the essential term as to the amount of the commission was left blank. However, considering all the circumstances, the learned judge was right to imply a contract to pay a quantum meruit which would be fixed after taking into account what would be a reasonable commission in all the circumstances; (3) a fair reading of the entire letter of appointment supported the conclusion that it was the intention of the parties that the respondent was to receive in addition to salaries and other benefits an incentive based on the profits of the Hatchery Division earned from year to year. The express provision for the payment of a commission which fails as a binding agreement because of the absence of the essential term as to the amount or rate of the commission was nevertheless a substantial factor in support of the implication of a contract to pay a quantum meruit; (4) the selfless inactivity of one party and the ignorance of the other party are a very poor foundation to support any implied consensual variation of the contractual term to pay a quantum meruit; (5) the learned trial judge's assessment of $80,000 was reasonable and the imposition of interest at $20,000 was also fair in all the circumstances of the present case.

Gold Coin Ltd v Tay Kim Wee [1986] SLR 68 Court of Appeal, Singapore (Lai Kew Chai, Chua and Thean JJ).

Turner (East Asia) Pte Ltd v Pioneer Concrete (Singapore) Pte Ltd [1994] 3 SLR 735 Court of Appeal, Singapore (LP Thean JA, Goh Joon Seng and Warren LH Khoo JJ).

See CONTRACT, Vol 3, para 2988.

In this case, the appellant had been engaged by the respondent union as their executive secretary. While he was on medical leave he gave the respondent six months' notice of resignation. He remained on medical leave until the expiry of the notice and he then claimed salary for the period. Wan Suleiman J held that the appellant was not entitled to his salary while he was on medical leave ([1974] 1 MLJ 217).

Held, allowing the appeal: as there was no term in the contract of employment that no salary was payable during incapacity, the appellant was entitled to his salary during the period of such incapacity.

Balan v National Electricity Board Employees Union [1975] 1 MLJ 91 Federal Court, Kuala Lumpur (Gill CJ (Malaya).

Heron, Gethin-Jones & Liow v John Chong [1963] MLJ 310 Court of Appeal, Singapore (Wee Chong Jin CJ, Tan Ah Tah and Buttrose JJ).

See CONTRACT, Vol 3, para 2095.

In this case, the respondent claimed the sum of $960,000 from the appellant as the brokerage fee or commission of 3% of the total purchase price of real property in Pahang. The learned trial judge concluded that there was an implied contract to pay the respondent the commission or brokerage as a broker for its involvement in the successful purchase of the land by the appellant. The question arose whether it is customary that such commission was payable at 2% of the purchase price. The respondent's counsel appeared to have conceded that '3% is not in accordance with the customary payment'. The learned judge therefore awarded commission at the rate of 2%. The appellant appealed and the respondent cross-appealed on the quantum and on the omission to award interest.

Held: (1) the learned judge was correct in deciding on the question of fact that there was an implied contract to pay the respondent brokerage as a broker; (2) in view of the concession by the respondent's counsel, the learned judge was correct in awarding commission at 2% but it is clear that he had inadvertently omitted to award interest on the sum. The cross-appeal should therefore be allowed in part.

Pembangunan Maha Murni Sdn Bhd v Jururus Ladang Sdn Bhd [1986] 2 MLJ 30 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

There is no usage of trade applicable to Straits trading vessels between Singapore and Penang which permits their touching in at Malacca, so as not to render it a deviation, when such vessel is insured only 'for voyages between Singapore and Penang'.

Armoogum Chitty v Lee Cheng Tee & Anor [1868] 1 Ky 181 High Court, Straits Settlements (Maxwell CJ).

An alleged custom to the effect that owing to a course of dealing in Singapore, it was an inevitable presumption that the holder of scrip, in the names of third parties, with blank transfers attached, has unlimited authority to deal with the shares, was held not to have been proved.

MacPhail & Co (Ipoh) Ltd v P & O Banking Corp [1931] SSLR 157 High Court, Straits Settlements (Terrell J).

D1 was the owner of a ship built by B. The balance of the purchase price was payable by 14 promissory notes, the amount being secured by a first preferred mortgage in B's favour. The promissory notes were guaranteed by P, the bank. P secured D1's obligations to it by taking a second preferred mortgage of the ship and a personal guarantee from D2. D1 defaulted on the promissory notes. P paid B and debited D1. P then entered into an agreement with D1 under which the ship was to be managed by G. G did not insure the ship adequately. It was lost and the insurance proceeds were insufficient to pay the debt. P issued a writ against D1 and D2 for the amount outstanding on the mortgage together with interest. The judge gave judgment to P for the sum claimed together with compound interest. The defendants appealed on the ground that P was under a duty of care to ensure that G adequately insured the vessel. They also contended that P was not entitled to compound interest.

Held, allowing the appeal in part: (1) it must be able to say that the insertion of the term is necessary to give business efficacy to the contract; (2) in this case, the contract was not of a defined type in which the law will imply a term unless the parties have expressly excluded it. Nor was it possible to imply a term on the ground of business efficacy. This being so, there was no duty in contract or tort on P to ensure that G insured the ship adequately. Accordingly, the defendants' appeal on this point failed; (3) there is a distinction between a term implied in a contract because it is what the parties must have agreed and a term implied by law. When the court implies a term in a contract it is sometimes laying down a general rule that in all contracts of a certain type some provision is to be implied unless the parties have expressly excluded it. In other cases the court is being asked to rectify a particular contract by inserting in it a term which the parties have not expressed. Here it is not for the court to say that the suggested term is a reasonable one the presence of which would make the contract better or fairer;once P had closed D1's account by demanding repayment, the relationship between them became one of debtor and creditor. P no longer had the right to charge compound interest on the amount outstanding in the absence of a binding agreement or custom. As there was no such agreement or custom, P was not entitled to recover compound interest. The defendants' appeal as to compound interest was allowed.

National Bank of Greece SA v Pinios Shipping Co No 1 & Anor, The 'Maira' [1989] 1 All ER 213 Court of Appeal, England (O'Connor, Lloyd and Nicholls LJJ).

The respondent agreed to sell to the appellant 20 shares belonging to him in a partnership. The other partners refused their consent to the transfer of the shares after most of the consideration for the sale had passed from the appellant to the respondent. The appellant had previously brought proceedings against the respondent to recover the money he paid to the respondent and obtained judgment. The question of damages for breach of contract was discussed in these proceedings and the court indicated willingness to entertain a further action claiming damages.

Held: (1) s 12 (2) of the Partnership Ordinance (Cap 67 Sarawak) did not render illegal an agreement by a partner to sell shares in a partnership entered into without the consent of the other partners; (2) the subsequent refusal of the other partners to consent to the transfer of the shares was not, in the circumstances, an event so unforeseeable that a condition covering the impossibility thus arising was to be implied. The parties should have foreseen the possibility and therefore should have expressly provided for it. Consequently, no term could be implied in the contract to cover this eventuality; (3) the appellant was not estopped by the judgment in the earlier proceedings from bringing the present claim for damages.

Lau Hock Chiong v Sim Kheng Hong 1960 Supreme Court, Sarawak, North Borneo and Brunei

Pasuma Pharmacal Corp v McAlister & Co Ltd [1965] 1 MLJ 221 Federal Court, Singapore (Thomson LP, Wee Chong Jin CJ (Singapore).

See CONTRACT, Vol 3, para 1679.

A was the subsidiary of T, a Taiwanese company. R, a distributor of electronic goods in the UK, ordered TV sets from T. However, as there were quota restrictions on imports of TV sets from Taiwan, T proposed that A should supply some of the sets to R. It was an express term of the agreement that the TV sets supplied by A would be issued a Singapore certificate of origin. Goods were shipped pursuant to the agreement, but were detained by UK customs. Import of TV sets into the UK was governed by an EC Regulation that stipulated a local content requirement of 45% before goods would be accepted as having originated in a particular country. The TV sets shipped by A did not meet the 45% criterion and therefore were treated as being Taiwanese in origin. The sets were detained and R had to pay £95,000 for their release. R sued A for £95,000 together with interest at 17%. The trial judge gave judgment in favour of R. A appealed.

Held, dismissing the appeal: (1) in this case the contract documents could not have been the whole contract because it was not disputed that a term was included which was not set out in writing, viz, that the TV sets should be issued with a certificate of Singapore origin. Therefore it was proper for the court to look at the extrinsic oral and documentary evidence to determine whether there was any other term in the agreement; (2) the trial judge after considering the evidence had come to the conclusion that L, who conducted negotiations on behalf of A, was aware of the 45% rule. A was therefore deemed to know of the rule since L had power to bind A or at least had a duty to inform A about the need to ensure 45% local content; (3) the fact that a certificate of origin was stipulated for must have been to ensure a minimum local content. It was likewise a term of the contract that the local content would be at least 45%. A was therefore in breach of their contract; (4) the damage was not too remote. R had paid the £95,000 to recover the TV sets. This was in order to mitigate the loss. Where as a result of a defendant's breach of contract a plaintiff takes reasonable steps to mitigate and incurs expenses, the plaintiff may recover damages to indemnify himself; (5) the rate of 17% was not unreasonable. It was correct to arrive at the rate on the basis of the rate at which R could borrow in sterling at the material time; (6) the court had power to award damages in a foreign currency. In the present case it would be more appropriate to award damages in sterling rather than in Singapore dollars, and the judgment was varied to this extent.

Tatung Electronics (S) Pte Ltd v Binatone International Ltd [1991] SLR 204 Court of Appeal, Singapore (Yong Pung How CJ, Chua and Karthigesu JJ).

The Sandakan Turf Club (`the club') was a society formed in 1983 for the purpose of carrying on gaming activities in Sandakan. It received authorization and a licence to conduct on-course and off-course betting which included conducting public lotteries. In 1984, the club entered into a written agreement (`the agreement') with the respondent pursuant to which the respondent set up a fully-equipped racecourse at its own cost and appointed agents throughout Sabah to accept bets from members of the public. When the Pool Betting Act 1967 (`the Act') was subsequently extended to Sabah in 1989, the authorities in Sabah cancelled the original licence granted to the club and issued an amended licence which contained a condition which was absent in the original licence. The condition stated that `the licence shall be personal to the licensee and shall not be transferable in any manner whatsoever'. In 1994, when the Federal Ministry of Finance informed the club that it would cancel the amended licence, the club submitted an application to the Ministry for a new licence under the Act which was to commence from 1995. The Federal Ministry of Finance in due course issued a licence to the club under s 5 of the Act (`the 1995 licence'). The licence contained a host of conditions, some of which were absent in both the original and amended licences. One particular condition prohibited any transfer or assignment of the whole or part of any the rights, duties and obligations appearing in the licence. There then followed an exchange of correspondence between the club and the respondent. The respondent subsequently applied to the High Court for, inter alia, a declaration that the 1995 licence issued to the club and any renewals thereof was within the scope of the agreement between the club and the respondent and that the respondent had the exclusive right to conduct certain gaming activities in Sabah. The High Court granted the declarations and other relief asked for. The club appealed to the Court of Appeal, contending that the judge erred in law when he failed to appreciate that the agreement became void for illegality upon the issuance of the amended licence and the 1995 licence. The two issues before the court were: (i) whether the trial judge was right in law in implying a term into the agreement to the effect that the word `licence' appearing therein included the 1995 licence; and (ii) whether the agreement became illegal and void after the issuance of the amended and 1995 licences.

Held, allowing the club's appeal: (1) where a contract was couched in unambiguous language, the court had to give effect to it. But where the terms of a contract were ambiguous, then the court may imply a term in order to uphold the transaction. The exception to the strict rule which arose when there was an ambiguity in the meaning that was to be attached to words in a contract had no application to the present case. It was not the respondent's case that the term contended for should be implied because the agreement was capable of being construed in one of two ways. Neither did the judge proceed upon that basis. It followed that the rule of construction that must be adopted in the present case was that which applied to the interpretation of contracts, the meaning of which was unambiguous; (2) the judge adopted a wholly erroneous approach to the case. This was not a case where detailed terms were omitted. On the contrary, the parties had spelt out their rights and obligations very clearly and made provision for certain contingencies. The judge acted to provide for an event which the parties were content to leave untouched because they had specifically made provision for cancellation of the licence if another contingency arose; (3) the club had, by the terms of the agreement, assigned to the respondent all the rights and benefits conferred by the original licence. The respondent was to do everything the club could do by virtue of the original licence. In return, the club was to receive 2% of the gross takings; (4) it was clear that Parliament intended not merely to prescribe a penalty but to prohibit the performance of the gaming activities set out in paras (a)-(c) of s 21 of the Act. The prohibition is not express. But it was plain enough for the court to discern by necessary implication. If s 21(1) was read in any other way, it would negate its true effect and frustrate Parliament's intention to regulate and control gaming activity throughout the country; (5) (obiter) even upon the view that the Act was silent on whether it did prohibit the assignment or transfer of a licence, the agreement was nevertheless illegal and void because it violated the terms of the new licence. It did not matter that the prohibition against transfer or assignment appeared as a condition in the new licence and not in the Act. Having regard to the scheme and policy of the Act, it did not matter whether the prohibition against assignment was contained in the Act or merely in the licence. The result was the same. In the present case, the agreement, if countenanced, would defeat the Act. The agreement therefore fell squarely within s 24(b) of the Contracts Act 1950 and was, by reason thereof, illegal and void.

Datuk Yap Pak Leong v Sababumi (Sandakan) Sdn Bhd [1997] 1 MLJ 587 Court of Appeal, Kuala Lumpur (Gopal Sri Ram, Abdul Malek Ahmad and Mokhtar Sidin JJCA).

Under a policy of marine insurance, a consignment of plywood was insured by the appellants. The policy incorporated the institute cargo clauses (all risks) in the edition dated 1 January 1963. On discharge of the goods, some were found to be missing and others to be damaged. The respondents as consignees of the goods and assignees of the policy claimed against the appellants in respect of both the shortage and the damage but the appellants denied liability. Any claim against the carriers would become time-barred in March 1981. Following correspondence between the parties, in the course of which the appellants through their solicitors asserted that the respondents were bound by the terms of the bailee clause in the policy to preserve the claim against the carriers, the respondents commenced proceedings against the carriers in Japan in order to preserve the time-bar. The respondents also commenced proceedings in Singapore against the appellants claiming their losses under the policy. They obtained summary judgment in respect of the short delivery. Thereafter their claim in respect of the cargo damage was compromised. But there remained outstanding the question of costs incurred by the respondents in commencing proceedings against the carriers in Japan. The respondents contended that the appellants were responsible for the costs. The appellants on the other hand contended that the bailee clause in the policy imposed upon the respondents the obligation to preserve the claim against the carriers for the benefit of the appellants but at the respondents' expense. Wee Chong Jin CJ dismissed the respondents' claim but the Court of Appeal ([1983] 2 MLJ 15) allowed the appeal from the High Court's decision. On appeal to the Privy Council,

Held, dismissing the appeal: (1) and a request by them to the respondents to perform their duty under the relevant contract could not give rise to any duty to indemnify the respondents, unless the contract expressly or impliedly imposed such duty upon them; (2) the appellants in this case were simply asserting that the respondents were under an obligation, under the bailee clause, to preserve their right as against the carriers. They were justified in so doing;however, in marine insurance, a term must be implied in the contract, in order to give business efficacy to it that expenses incurred by an assured in performing his obligations under the second limb of the bailee clause shall be recoverable by him from the insurers in so far as they relate to the preservation or exercise of rights in respect of loss or damage for which the insurers are liable under the policy.

Netherlands Insurance Co Est 1845 Ltd v Karl Ljungberg & Co [1986] SLR 1 Privy Council Appeal from Singapore (Lord Bridge of Harwich, Lord Brightman, Lord Griffiths, Lord Oliver of Aylmerton and Lord Goff of Chieveley).

First National Bank of Chicago v Tan Lai Wah 1980 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Rajah JJ).

See CONTRACT, Vol 3, para 1858.

Energy Shipping Co Ltd v UDL Shipping (Singapore) Pte Ltd [1995] 3 SLR 25 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, Vol 3, para 3159.

P claimed for general damages for trespass, nuisance and injury to their two plots of land, namely, lots 48 and 55, allegedly caused by the development activity of D1 and their contractor, D2, on neighbouring land, resulting in obstruction of access from these lots to the public highway. P further claimed (i) exemplary and aggravated damages; (ii) specific performance of the contractual right of way in order to obtain for themselves a right of carriageway for the two lots of land to the public highway and (iii) an injunction in aid thereof. D denied the allegations of trespass and nuisance and relied on inevitable accident and the plea of abatement of nuisance. In regard to the claim for specific performance, D contended that P's claims were barred by abandonment, acquiescence, delay, waiver and limitation. P had earlier sold some of the neighbouring lots of land to D1. Clause 11 of the sale and purchase agreement provided that the sale of the lots to D1 was subject to the right of way on the existing access road over one of the lots (ie lot 39) sold to D1 and which provided owners of neighbouring lots including P access to the public highway. D1 had subsequently constructed houses on the lots purchased by them from P and had failed to provide in the layout plan for the area developed by them the right of way mentioned above. Some of the constructed houses had already been sold to third party purchasers. Despite repeated demands by P, D1 had failed to provide for a registered easement of way so as to provide access to the neighbouring lots. In constructing the houses, D2 had encroached onto lot 55 which they used as a place of storage for bricks, machinery, cranes and other building materials. D2 had also dumped soil from the construction site onto lot 55 and 48.

Held, granting judgment for P: (1) in the circumstances, subject to the defences of laches, limitation, acquiescence, abandonment and waiver, P had succeeded in establishing liability in tort damages for trespass, nuisance and injury to lots 48 and 55 resulting in obstruction of access therefrom to the public highway; (2) in the instant case, cl 11 did not expressly provide for the creation of an easement of way under the provisions of ss 286(1) and 288(b) of the National Land Code 1965. However, applying the officious bystander test, terms would be implied by law where they arose from the presumed intention of the parties and were necessary to give efficacy to the parties' transaction. In the circumstances of the instant case, considering the subject matter of the agreement and the nature of the relationship of seller and buyer, there arose by implication a contractural obligation on the part of D1 to execute a valid and registrable instrument in due form for the creation of an easement of way within the meaning of ss 286 and 288(b) of the Code in order to give business efficacy to cl 11, for otherwise, those adjoining lots would be rendered landlocked. D1 had, accordingly, acted in breach of cl 11; (3) in the instant case, proprietary estoppel applied to estop D1 by their conduct from denying P a right of access from P's lots over D1's land to the public highway. It was manifestly clear that but for the promise made by D1 to provide for a right of way as stipulated in cl 11, the sale would never have gone through. P, to the knowledge of D1, clearly relied on that promise when they entered into the sale and purchase agreement. In their original layout plan, D1 had in fact provided for the access but in the amended plans, they did not; (4) the English doctrine of equitable estoppel applies under the Code provided that its application is not inconsistent with the aims and objectives of the Malaysian Torrens system; (5) in the circumstances, P were not entitled to an order for specific performance for the grant of a right of way from lots 48 and 55 over D1's lot 39 in question. To grant an order for specific performance would occasion great hardship to D1 since it would involve the demolition of the houses constructed which had already been sold to third party purchasers. The learned judge, however, made an order analogous to specific performance by directing D1, subject to certain conditions, to do certain acts with a view to providing a limited access from lots 48 and 55 to the public highway, in order to prevent the lots from being landlocked; (6) as regards P's claim for damages in respect of trespass, nuisance and injury to lot 48, the learned judge awarded P M$100,000 by way of general damages for diminution in value of lot 48, in particular for loss of amenity in that P would now have a single access of about 12 ft wide offered by D1 instead of an access consisting of two branches with a combined width of 30 ft envisaged in cl 11 of the agreement. As for the wrongful use by D of lot 48 for the storage of building materials and as a working platform for a period of ten months, P were awarded M$5,000. The learned judge made no award in respect of P's claim for destruction of the family house on lot 48 which had been left vacant for about 20 years and which at the material date had been vandalized and had become a very run-down house. In any event, any award under this head would be merged under the award for diminution in the value of lot 48 already made. P were awarded M$25,000 by way of exemplary damages in respect of lot 48 as D's wrong doing was committed with a profit-making motive, high-handedly and outrageously, with a contumelious disregard for P's rights and that P were the victim of D's punishable behaviour; (7) as regards the claim for damages in respect of trespass, nuisance and injury to lot 55, the learned judge granted orders by way of mandatory injunctions requiring D to forthwith remove all material, debris and spoil that had been dumped on the lot and to restore it to its natural state to the satisfaction of the relevant authorities. As P would not suffer any damage for diminution in value to lot 55 upon compliance by D with the orders, no award for damages under this head was made. An award of M$12,000 was awarded to P for the use and occupation by D of the lot for the storage of building materials, a working platform and a rear access. A sum of M$50,000 was awarded to P by way of exemplary damages in respect of the lot. The learned judge was of the view that the acts of trespass committed by D to lot 55 were far more serious than those to lot 48 when judged from the point of view of the financial gain made by D at the expense of P and the conduct of D generally; (8) in the circumstances, P's claim were not barred by laches or acquiescence. The learned judge found P's explanation for the delay in commencing proceedings reasonable. Apart from the conduct of the parties generally, the learned judge found that P had made strenuous objections and attempts at negotiation. The defences of abandonment and waiver also failed as the learned judge was of the view that P did not have the intention of abandoning or waiving their rights under cl 11 of the agreement; (9) D had also contented that as cl 11 of the agreement could only operate as an agreement to grant an easement and as P had failed to take any action to enforce that agreement within six years from the date of the breach, P's claim was now statute-barred under s 6(6) of the Limitation Act 1953. The learned judge was, however, of the view that cl 11 did not by itself create an easement of way but was primarily a restrictive covenant which had the effect of imposing upon D1 or their assigns the restriction regarding the use of lot 39 in question. In his Lordship's opinion, an owner of land to which the benefit of a covenant restricting the use of other land has been attached, may enforce that restriction by injunction against any person who subsequently owns or occupies the burdened land except one who obtains the land for value without notice of the covenant. In the instant case, as each act of obstruction of the existing access road gave rise to a fresh cause of action for each day's obstruction, P's claim was accordingly not statute-barred; (10) P were also entitled to an equitable easement in respect of the right of way in question. The learned judge was of the view that D1 having obtained a registered transfer of lot 39 from P, the effect of which was that D1 had been paid in advance for the grant of the easement of way, thereafter held it as bare or constructive trustee for P. Accordingly, P had acquired beneficial interest in an equitable easement under the doctrine of constructive trust. In the circumstances, the defence of limitation also failed because s 22(1)(b) of the Limitation Act 1953 provides by way of exception, that no period of limitation prescribed by the Act applied to an action by a beneficiary under a trust being an action to recover from the trustee trust property in the possession of the trustee and converted to his use. In the instant case, D1 had converted the trust property, ie the equitable easement in respect of the right of way by building upon it the houses in question which partly obstruct access to lots 48 and 55 respectively; (11) in the circumstances of the case, D1 had also estopped themselves out of the Limitation Act so that they are not entitled to rely on the defence of limitation. In the instant case, as D1 had by their words and conduct led P to believe that P would be provided a right of way, from their (P's) lots which otherwise would be landlocked, D1 should not be allowed to go back on them when it would be unjust or inequitable for D1 to do so; (12) in the instant case, the doctrine of mutual benefit also applied. As D1 had taken the benefit of the transaction by receiving a valid and registrable transfer of the lands concerned from P, they could not now repudiate the burden imposed upon them by cl 11 of providing the right of way stipulated therein and so were bound by the covenant to do so. In other words, D1 had taken the transfer of the lands concerned subject to the condition imposed under cl 11; (13) against D, interest at the rate of 6% pa on all compensatory general damages was awarded for the period from date of service of the writ until date of judgment under s 11 of the Civil Law Act 1956 and thereafter at the rate of 8% pa until satisfaction under ord 42 r 12 of the Rules of the High Court 1980. As for special damages, interest at the rate of 3% pa was awarded for the period from date of accrual of cause of action until trial.

Alfred Templeton & Ors v Low Yat Holdings Sdn Bhd & Anor [1989] 2 MLJ 202 High Court, Penang (Edgar Joseph Jr J).

The second defendants by an updated option expiring on 30 June 1980 offered to sell Nos 2/2A and 6/6A, Moonstone Lane for $620,000. The plaintiffs exercised the option. Clause 5 of the option provided for the annulment of the sale 'in the event of any of the answers to such requisitions being unsatisfactory'. On 6 May 1980, a reply was received from the authorities in answer to a requisition on the land concerned. The answer stated that 'the road widening line is inserted by the Roads Branch in accordance with the current standard and will be applicable if and when the lot comes for redevelopment'. The sole question before the court was whether the contents of the said letter amounted to an 'unsatisfactory answer' to a requisition within the meaning of cl 5 of the option.

Held, dismissing the plaintiffs' application: (1) there can be no implied term that the contract was conditional upon the property being capable of redevelopment or that, if it could be redeveloped, there would be no scheme affecting its redevelopment; (2) the fact that if and when the property is subsequently redeveloped some portion of it would be compulsorily acquired for road widening purposes thus diminishing the value of the property is immaterial.

Tatlien Hardware Pte Ltd v Tan & Lie & Anor 1980 High Court, Singapore (Wee Chong Jin CJ).

Lee Hooi Lian v Kuay Guan Kai [1990] 2 MLJ 345 High Court, Singapore (Chao Hick Tin JC).

See CONTRACT, Vol 3, para 1561.

P financed a sale and leaseback trans-action by B under which B sold certain specified machines to P, which then leased them back to B. D guaranteed the obligations of B. It transpired that the machines did not exist and that B had defrauded both P and D. B was made a bankrupt. P sought to enforce the guarantee against D, which disclaimed liability.

Held, dismissing the claim: (1) sensibly construed against its objective setting, the guarantee was subject to an express condition precedent that there was a lease in respect of four existing machines. Alternatively, such a condition precedent was implied into the guarantee. This accordingly disposed of P's claim; (2) the common law rules as to mistake regarding the quality of the subject matter, like the common law rules regarding commercial frustration, are designed to cope with the impact of unexpected and wholly exceptional circumstances on apparent contracts. Such a mistake must substantially be shared by both parties and must relate to facts as they existed at the time the contract was made. The mistake must render the subject matter of the contract essentially and radically different from the subject matter which the parties believed to exist. That belief must have been reasonable; (3) applying the law to the facts, D had reasonable grounds for believing that the machines existed. The subject matter of the guarantee was essentially different from what it was reasonably believed to be. There was therefore an operative common law mistake and the guarantee was void ab initio.

Associated Japanese Bank (International) Ltd v Credit Du Nord SA & Anor [1988] 3 All ER 902 High Court, England (Steyn J).

The appellants are building and civil engineering contractors and were appointed the main contractors by Singapore Treasury Building Pte Ltd ('the employer') to carry out and complete the construction of a 52-storey office building at Shenton Way (Treasury Building). The building's design provided for the building to be supported by structural steel works consisting, inter alia, of multiple cantilevered primary girders connected to the central lift core to support each of the floors. The contract specifications required all the structural steel works to be treated with a spray-on of two-hour rated fire protective coating. The respondents are fire protective coating specialists and by a sub-contract were employed by the appellants to carry out the supply, application and completion of the fire protection coating. The coating material selected for use and application was 'Monokote' fire protection spray. The Monokote spray carried out by the respondent was subject to ASTM testing. The testing was conducted by Messrs Sanberg, who were employed by the employer as the testing agents. The respondents contended before the arbitrator that the testing agents insisted upon carrying out tests which went far beyond the guidelines of an agreed quality control programme and were unreasonable in amount or detail. The respondents in order to mitigate the loss which they would otherwise have incurred by having to go over much of their work more than once sprayed an excessive thickness of Monokote onto many of the members of the steelworks from the 11th level upwards in order to ensure that their work would pass the unreasonable thickness testing conducted by Messrs Sanberg. The cost of the material incurred in the application of this additional thickness was claimed at S$449,632, to which was added a sum of S$19,200 for labour cost, thereby totalling S$468,832. The claim was referred to arbitration, and the arbitrator allowed the entire claim of S$468,832. The appellants applied under s 28(3)(b) of the Arbitration Act for leave to appeal against certain parts of the award. Leave to appeal was allowed only against that part of the award involving the testing. The main complaint made on behalf of the appellants was that there was no legal basis for sustaining the claim. The respondents submitted that the claim was founded, first, on an implied term of the sub-contract and, second, on an express term thereof. It was submitted that in order to give business efficacy to the sub-contract, there was an implied term that the sub-contract works would not be rejected on the basis of testing that was unreasonable in amount or detail.

Held, dismissing appellants' appeal: (1) and one of such sub-contracts was that between the appellants and the respondents. This sub-contract must have been entered into with the approval or consent of the employer; (2) it cannot be disputed that the respondents entered into the sub-contract with full knowledge - at any rate, they were deemed to have knowledge - of the relevant provisions of the main contract and, in particular, those pertaining to testing of the 'Monokote' spray by the testing agents and the requisite qualifications and experience of the testing agents. Both the appellants and the respondents must have entered into the sub-contract on the assumption that the provisions of the main contract which were to be performed by the employer and the appellants would be observed and performed by them respectively; (3) cl 27 of the sub-contract provides that the appellants and the respondents 'shall render each other all necessary assistance in making claims against the employer arising from the sub-contract'. Implicit in this express obligation is an obligation on the part of the appellants to do and carry out all co-operative acts and things necessary to give effect to that provision which would include requiring the employer to observe and perform its obligations under the main contract; (4) hence, it must have been within the contemplation of the appellants and the respondents that the provisions of the main contract which pertain to or affect the performance by the respondents of the sub-contract and which were on the part of the employer to be observed and performed, the respondents would look to the appellants to ensure that they would be observed and performed by the employer; (5) in these circumstances, there must be implied a term that the appellants as the main contractors would ensure that these provisions of the main contract would be observed and performed by the employer, and that the employer's servants or agents, in discharging the duties assigned to them under these contracts, would discharge their duties with reasonable diligence and with reasonable skill and care and would not act unreasonably with respect to the sub-contract works carried out by the respondents, and that where the duties involve the testing of the sub-contract works, these servants or agents would not subject the works to unreasonable testing. Such an implied term is both reasonable and necessary so as to give business efficacy to the sub-contract; (6) in the context of the provisions of the contracts, the question is what terms can reasonably and necessarily be implied to give business efficacy to the sub-contract. In approaching this question, a broad view of the main contract must be taken. That contract was entered into by the employer and the appellants to accomplish one objective: the successful construction and completion of the Treasury Building. Below and subsidiary to this contract were multiple sub-contracts contemplated by the parties as necessary for the purpose of achieving that objective;the learned arbitrator found that the sub-contract works for thickness had been subjected to extreme and unnecessary testing; by necessary implication, the learned arbitrator found that the testing conducted by the testing agents fell short of the reasonable standard of skill and competence. That was, therefore, a breach of the implied term that the testing agents would discharge their duties with reasonable diligence, skill and care.

Ohbayashi-Gumi Ltd v Industrial Fireproofing (Pte) Ltd Originating Motion No 64 of 1990 High Court, Singapore (LP Thean J).

P purchased 500 traveller's cheques from D. The agreement governing the purchase of the cheques provided that there would be a refund of the value of any lost or stolen cheques 'subject to approval by the issuer'. The cheques were stolen from P's car (he had left the door unlocked). D declined to refund the money and P sued.

Held, allowing P's claim: (1) the object of the transaction is security, otherwise the traveller might as well carry cash. The issuing bank has had the traveller's money and has contracted with the traveller to pay the cheque when countersigned. The issuing bank invariably requires prompt notification of loss, so that ordinarily the bank will know before any cheque is presented that the countersignature is a forgery. In these circumstances, it is necessary to imply an obligation of some sort on the part of issuing banks to refund the value of lost or stolen traveller's cheques; (2) there is no reason to qualify this obligation by confining it to cases where the loss has occurred without negligence or recklessness. Such deficiencies on the part of the traveller do not determine whether the issuer is out of pocket; (3) in this case there was an express term governing refund, but subject to the issuer's discretion. However, the issuer could not withhold approval on grounds not covered by the contract. There was no express or implied term in the contract that the negligence of the purchaser would preclude him from obtaining a refund.

Elawadi v Bank of Credit and Commerce International SA [1989] 1 All ER 242 High Court, England (Hutchison J).

This was a claim for damages for breach of contract for the sale of goods. The goods in question were steel pipes manufactured in Germany. The plaintiffs were stockists, who resold steel pipes locally and to overseas buyers. The defendants' main business was galvanizing steel products. As a subsidiary business, they also imported steel pipes in bulk to sell wholesale in Singapore. The contract of sale between the defendants as sellers and the plaintiffs as buyers dated 22 June 1988 was evidenced by a 'sale confirmation letter' from the defendants to the plaintiffs. The material contents of that letter included the specifications of the pipes required and price. Six different kinds of pipes were ordered. Partial delivery was permitted in that shipment was to be effected between June and August 1988 subject to availability of shipping space. The letter also promised that 'mill certificates will be provided.' At the time the sale confirmation letter was signed, the fourth and fifth lots were on the way to Singapore or were already in Singapore. On 25 June 1988, the last two lots were delivered by the defendants. No mill certificate accompanied the delivery. The delivered pipes did not conform to the specifications with regard to length in that some of the pipes exceeded the stipulated length. Those pipes were sent to the defendants for shortening to conform to the required length. The plaintiffs took the excessive lengths with them and paid the defendants for the cutting and galvanizing services. The invoice together with the mill certificate was delivered about two weeks after the delivery of the pipes. The plaintiffs paid the full price of the invoice. Disputes arose out of the delivery of the first four lots of smaller diameter and thickness. The plaintiffs in their pleadings asserted that the first and second lots were longer than the permitted specification and that they were pitted. As regards the third and fourth lots, the plaintiffs having examined them after their arrival in Singapore accepted them as being within the specification. Later, the plaintiffs rejected them and refused to take delivery. Their pleaded case was that there was no mill certificate accompanying those two lots. The defendants admitted the over-length but denied liability as the only ground for rejection which the plaintiffs gave at the time of the delivery of the first two lots was that the pipes were pitted; there had been no mention of over-length or the absence of the mill certificate. The defendants asserted that the plaintiffs had agreed to appoint a surveyor to inspect the first two lots but had delayed in doing so. Eventually, when a survey did take place, the surveyor had found no pitting; it was then that the over-length was noticed. The defendants contended, further, that neither over-length nor nondelivery of the mill certificate entitled the plaintiffs to reject the goods, relying on the previous acceptance of two lots even though there had been over-length and mill certificates had not accompanied them.

Held, dismissing the plaintiffs' claim: (1) where there was a contract for the sale of goods by description, there was an implied condition that the goods should correspond with the description. A buyer was entitled to a reasonable opportunity of examining the goods before deciding whether to accept or reject them. On the facts, the plaintiffs had been given a reasonable opportunity to examine the goods. Such examination, if performed, would have revealed that there was over-length. The over-length was in disconformity with the description and it gave the plaintiffs a right to reject the pipes; (2) where a buyer rejected goods on the grounds of non-conformity with the terms of contract, the seller was entitled to make another delivery of goods answering the terms of the contract provided the second delivery was within the contractual time for delivery. The plaintiffs, however, had initially not stated that over-length or failure to deliver the mill certificate were grounds for rejection. If these grounds had been raised, the defendants could have cut off the over-length and galvanized the ends of the pipes when they took them back, and taken action to procure the mill certificates; (3) where a buyer rejected goods by giving no reason or by giving a wrong reason, he could still subsequently justify his rejection on a fresh ground provided such ground did in fact exist at the time of rejection. This principle did not apply if the seller within the contractual time of delivery could have rectified the non-conformity and made another delivery within the contractual time. Although the two other grounds for rejection had been open to the plaintiffs in August, they could not raise these grounds subsequently: the plaintiffs' failure to raise the grounds in August denied the defendants the opportunity to correct the non-conformity before the survey and to offer a second delivery. Since there was no express time limit for delivery, the goods only had to be delivered within a reasonable time. The conduct of the plaintiffs showed that December had not been too late for the defendants to make a redelivery as they were prepared to take delivery after inspection in December. Thus, the plaintiffs were precluded from raising the grounds in January 1989 as it precluded the defendants from making a second delivery. Alternatively, such a ground had been waived and could not be revived after the protracted delay; (4) further, with regard to the mill certificate, the term which called for it was not a condition in the sense that a breach of it could allow the innocent party to treat the contract as repudiated, and to reject the goods concerned. A condition was a term 'so essential to its very nature that its non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all.' It was the delivery of the goods which constituted substantial performance of the contract, not delivery of the mill certificate, which was only of secondary importance; (5) in any case, it was not an implied term of contract that the mill certificate must be provided simultaneously with the delivery of the goods. The court, when asked to imply terms into a contract, would first ask whether the implication alleged was necessary. On the evidence before the court, including the failure of the plaintiffs to insist on the mill certificates from the beginning and the previous acceptance of goods without mill certificates, the court could not hold that such an implication was necessary.

Chuan Hiap Seng (1979) Pte Ltd v Progress Manufacturing Pte Ltd [1995] 2 SLR 641 High Court, Singapore (GP Selvam J).

This was an appeal from the judgment of the learned Chief Justice on a claim in contract brought by the appellants against the respondents. The question at issue was as to the proper construction of a paragraph of the appellants' letter to the respondents, which was confirmed by the respondents: 'In the event of Bangkok not being interested we will sell locally or elsewhere and in the unlikely event of the lot not being disposed of by the time your next shipment arrives about a couple of months later, you will agree to take it over from us at landed costs'. It was argued for the appellants: (1) there was an implied term that the respondents were under an obligation to do nothing to prevent the arrival of their next shipment about a couple of months later upon which the appellants' right depended and (2) the arrival of the next shipment was a condition precedent to the appellants' right to have the cement taken back, and that although there may have been no obligation on the part of the respondents to see that the condition was fulfilled there was an obligation on them to see that the appellants were not damnified if the condition was not fulfilled.

Held: (1) no term can be implied which is not necessary to the express contract and would manifestly have been assented to if propounded; (2) in this case no such term, as contended for by the appellants, could be read into or implied from the contract and therefore the appeal must be dismissed.

Sino-British Engineering Corp (Malaya) Ltd v MA Namazie Ltd [1949] MLJ 212 Court of Appeal, Singapore (Evans, Brown and Gordon-Smith JJ).

CCS Ltd ('the company') operated a scheme under which it issued charge cards to cardholders who used them for the purchase of petrol from various garages. The system was similar to other credit card purchases, the cardholder signing a slip which would eventually be presented by the vendor to the company for payment. The company financed its business by factoring its debts to C Ltd. In January 1985 the company went into creditors' voluntary liquidation. Many of the vendors had not yet been paid. The liquidator collected money from cardholders. The present action was brought to determine whether the money should be paid to C Ltd (the factoring company) or to the unpaid vendors. It was argued by the vendors that payment by card was only conditional payment and that if the company failed to pay, the cardholders were obliged to do so. On this basis the vendors claimed the benefit of the money collected from the cardholders. The High Court held that the money should be paid to C Ltd. An appeal was brought to the Court of Appeal.

Held, dismissing the appeal: (1) whether payment by credit card amounted to absolute or conditional payment by the cardholder to the vendor depended upon the terms of the contract between both those parties; (2) this contract was at best oral. The sale contract was made by putting fuel into the tank before the parties had met. The tender of the card and signing of the voucher were often conducted in complete silence. In these circumstances the correct approach was that the court should seek to infer from the parties' conduct and the surrounding circumstances what was a fair term to imply; (3) in this case, the vendor knew that he would be paid by the company. He did not know who the purchaser was nor could he trace him. These factors pointed to the conclusion that the vendor had agreed to accept payment by card as a substitute for cash, and that the purchaser's obligation to the vendor ceased upon the acceptance of payment by card; (4) the cardholder's obligation to pay the company arose irrespective of whether the company had paid the vendors. If the vendors' argument was correct, this would result in the possibility that the cardholder would have to pay twice, once to the company and, in the event that the vendor was not paid by the company, again to the vendor. It was not contemplated in the cardholder agreement that the cardholder would be called upon to pay the vendor in the event that the company failed to do so; (5) the Court of Appeal agreed with the trial judge that the cardholder's obligations to the vendors were absolutely, not conditionally, discharged by the vendor accepting the voucher signed by the cardholder. The appeal was accordingly dismissed.

Re Charge Card Services Ltd [1988] 3 All ER 702 Court of Appeal, England (Sir Nicolas Browne-Wilkinson VC, Nourse and Stuart-Smith LJJ).

In this case, the plaintiff company had been selling printing material and newsprint to the first defendant company. There was some dispute as to the actual amount due to the plaintiff. Finally parties entered into a compromise agreement and the defendants agreed that the total value of goods received by them amounted to $1,475,000. The plaintiff agreed to permit the defendants to pay 45% of the said amount in 24 monthly equal instalments commencing from 25 February 1981 or within one month after the audit of the accounts of the defendant company and approved by the board of directors. In case of default in the payment of one or any instalment for a period of 30 days after the same had become due, the whole of the original debt of $1,475,000 would become payable immediately. The second defendant company guaranteed the performance of the above agreement by the first defendant company. The first defendant company failed to make payment of any instalments. They contended that the agreement provided two options, ie payment of instalments from 25 February 1985 or within one month after the audit of the accounts and approval thereof by the board of directors of the defendant company and as the accounts had not been audited there was no call to commence the payments of the instalments.

Held: (1) there was an implied term in the agreement that the audit of the first defendants, accounts and approval thereof by the board of directors should be effected within a reasonable period say within three months. Anything more than that would be unreasonable; (2) there was no excuse for the first defendants not to have commenced the payment one month after 11 August 1982 by which date the actual audit had been made; (3) the plaintiffs were entitled to claim the whole amount of $1,475,000 with interest and costs.

Percetakan Solai Sdn Bhd v Kin Kwok Daily News Sdn Bhd & Anor [1986] 1 MLJ 240 High Court, Kuala Lumpur (George J).

Chip Thye Enterprises Pte Ltd v Development Bank of Singapore Ltd [1994] 3 SLR 613 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See CONTRACT, Vol 3, para 2945.

CIE Commerciale Sucres et Denress v C Czarinkow Ltd; The 'Naxos' [1990] 3 All ER 641 House of Lords, England (Lords Bridge, Brandon, Ackner, Oliver and Jauncey).

See CONTRACT, Vol 3, para 1936.

The plaintiff sold 388 bundles of sawn timber ('the 388 cargo') to the Yong Swatt Wood Supply Co Ltd of Bangkok ('the consignee'). The 388 cargo was loaded on the 'Taveechai Marine' ('the vessel') which was chartered by the defendant. The plaintiff alleged that the defendant had, in breach of duty and/or contract and/or negligently delivered the 388 cargo to the consignee in Bangkok without production of the bill of lading and were thereby guilty of conversion, resulting in damage to the plaintiff of RM388,410.80, being the sale price. The plaintiff obtained a warrant of arrest against the ship in Sandakan. The defendant, however, alleged that the 388 cargo was never delivered to the consignee as the consignee had rejected it due to the plaintiff's breach through late delivery, and in any event, the defendant was either exempt from liability under art IV r 2(g) of the Merchant Shipping (Implementation of Conventions Relating to Carriage of Goods by Sea and to Liability of Shipowner and Others) Regulations 1960 ('the regulations') or its liability was limited by cl 2(a) of the bill of lading to the sum of RM329,800. The defendant counterclaimed for wrongful arrest of the ship and argued, inter alia, that the plaintiff could not succeed in its claim for conversion as no demand had been made for the return of the 388 cargo. It was not disputed that the 388 cargo was taken to the consignee's warehouse after the consignee had paid the customs duties but the consignee asserted that it had done so to obtain the release of other cargo which was shipped together with the 388 cargo and denied that payment of the duties amounted to acceptance of the 388 cargo.

Held, allowing the plaintiff's claim for RM388,410.80 and dismissing the defendant's counterclaim: (1) the documentary evidence showed that the consignee was prepared to accept the 388 cargo though it was shipped late and the letter of credit had expired. Furthermore, the payment of the customs duties by the consignee was inconsistent with the actions of a person who had rejected the cargo since there was insufficient evidence to establish, as a matter of practice or law, the allegation that the consignee was obliged to pay the duties on all cargoes before any cargo could be discharged in Thailand; (2) the court found that the defendant had delivered the 388 cargo to the consignee without the production of the bill of lading and was therefore guilty of conversion. A demand for the return of the 388 cargo was unnecessary because the defendant was no longer in possession of the 388 cargo and the plaintiff had the option either to sue the defendant for conversion or the consignee for goods sold and delivered; (3) if intention is an ingredient for the tort of conversion, then the intention could be inferred from the facts. The 388 cargo could not have found its way into the warehouse except with the permission of the defendant. The defendant must have intended that the consignee should take delivery of the 388 cargo which adversely interfered with the rights of the plaintiff; (4) as the court had already found fault on the part of the defendant, art IV r 2(g) of the regulations could not exempt the defendant from liability. The contract made between the parties could not be interpreted so widely as to exclude the liability of the defendant for its own fault; (5) the contention that the liability of the defendant was limited to only RM329,800 by cl 2(a) of the bill of lading failed as the clause could only operate so long as the goods remained in the actual custody of the defendant or his servants. As the 388 cargo was no longer in the actual custody of the defendant but had been delivered to the consignee, this clause could not be called upon by the defendant to limit its liability; (6) (obiter) (i) the limitation contained in cl 2(a) of the bill of lading must surely have been intended by the parties and must therefore be given its plain and ordinary meaning. Since the limitation was not a clause excluding all liability, it could not be regarded as unreasonable or counter the object or intent of the contract. Therefore, the limitation clause was valid and if it applied, the damages recoverable by the plaintiff would only be RM329,800; (ii) where words in a document could apply to two persons or things, such a situation is generally regarded as a latent ambiguity for which further evidence is admissible to resolve the ambiguity.

The 'Taveechai Marine'; Owners of Cargo Lately Laden on Board the Ship or Vessel 'Taveechai Marine' v Owners of and Other Persons Interested in the Ship or Vessel 'Taveechai Marine' [1995] 1 MLJ 413 High Court, Sabah and Sarawak (Ian Chin J).

3 [3202] CONTRACT Terms – Main and supplemental agreements – Construction in light of facts – Interpretation and effect of terms – Prenn v Simmonds [1971] 1 WLR 1381 (folld) Measures Brothers Ltd v Measures [1910] 2 Ch 248 (refd) Australian Hardwoods Pty v Commissioner for Railways [1961] 1 WLR 425 (refd) Green v Low 22 Beav 625; 52 ER 1160 (refd)

The respondents were the developers of a commercial building known as Golden Mile Tower ('the building'). The appellants, in their former name, entered into five sale and purchase agreements ('the sale agreements') on 5 December 1973 with the respondents for the sale of five floors of the building. The purchase price under cl 14 of each of the sale agreements was to be paid as follows: (1) 20% thereof on signing the sale agreement; (2) 75% thereof within 14 days after the production by the respondents of 'the certificate of fitness for occupation whether temporary or permanent' issued by the competent authority; and (3) the balance of 5% on the issue of nine subsidiary strata certificates of title ('SSCTs') to the nine office units comprised in the sale agreements and the transfer thereof to the appellants. The 20% of the purchase price for each floor was duly paid. On 6 December 1973, five supplemental agreements ('the supplemental agreements') were entered into by these parties providing for, inter alia, the immediate payment of the 75% of the purchase price by the appellants though the respondents had not produced the certificate of fitness for occupation as required. The said 75% was duly paid. The respondents undertook to obtain the 'certificate of fitness for occupation from the competent authority' on or before 31 December 1974, failing which they would be liable in damages as prescribed under cl 2 of the supplemental agreements. On 11 August 1975, the temporary occupation licence ('TOL') was issued and possession of the abovementioned premises was given to the appellants. On 14 June 1978, the certificate of fitness for occupation ('COF') was issued. Pursuant to disputes between the parties, three actions between them were commenced (two by the appellants and one by the respondents): (1) In the first action, the appellants claimed against the respondents the sum of $1,114,243.25 as the balance of the liquidated damages due to them, alleging that the respondents had failed to obtain 'the certificate of fitness for occupation from the competent authority' by 31 December 1974 under cl 2 of the supplemental agreements. The respondents resisted the claim relying on the issue of the TOL as their compliance with the said cl 2. If, however, they were liable to pay liquidated damages, they agreed that the period of 1 January 1975 to 11 August 1975 should only be counted. (2) In the second action, the appellants sought an order for specific performance and damages for breach of contract alleging that the respondents had not obtained the SSCTs and did not complete the sale of the premises within reasonable time. The respondents denied that they had breached the contract, and averred that the time of issue of the SSCTs was not specifically stipulated in the sale agreements and therefore, not the essence of the contract, and that as possession of the premises had been delivered to the respondents, they as beneficial owners could deal with the premises as if the SSCTs had been issued. They alleged that the appellants were not entitled to the relief of specific performance as they themselves had not fulfilled their obligation of paying maintenance fees and service charges under cl 13 of the sale agreements. (3) In the third action, the respondents claimed against the appellants the sum of $503,093.70 being the arrears of maintenance fees and service charges under cl 13. The appellants resisted the claim alleging that the respondents had refused to adjust the maintenance fees and service charges based on the nett rentable area as ascertained from the issued SSCTs; that the respondents had breached the sale agreements by failing to maintain the common parts of the by liability to pay any further sums. The appellants also counterclaimed for $91,306.49. These actions were consolidated on 20 March 1987 and the trial judge dismissed the appellants' first action subject only to payment of $380,000 as admitted in the statement of claim. The appellants' second action was also dismissed. In the third action, judgment was given to the respondents. [See Collin Corp (Pte) Ltd v Chong Gay Theatre Ltd [1992] 1 SLR 503.] The appellants appealed against the judge's decisions. The issues raised were: (1) For the first action, (a) whether upon the true construction of cl 2 of the supplemental agreements, the issued TOL for the building came within the meaning of 'certificate of fitness for occupation' in cl 2 of the supplemental agreements and therefore upon the issue thereof, the respondents' liability for liquidated damages ceased; and (b) if the answer was in the affirmative, whether in ordering that credit be given to the respondents for the payment of $380,000 made on their behalf to the appellants, by implication, it was ordered that the appellants pay the respondents the sum of $116,519.46. (2) For the second action, (a) whether the respondents were obliged under cll 11 and 12 of the sale agreements to obtain, within a reasonable time, the SSCTs and upon the SSCTs being issued, to transfer the premises to the appellants within reasonable time; and (b) if so, whether the respondents had failed to discharge those obligations. (3) For the third action, whether the learned judge had erred or misdirected himself on the facts.

Held, allowing the appeal in part: (1) the words 'certificate of fitness for occupation, whether temporary or permanent' in cll 14(b) and 18 of the sale agreements mean TOL or COF, which are issued properly by the competent authority, and the words 'certificate of fitness' in cl 1 of the supplemental agreements means 'certificate of fitness for occupation whether temporary or permanent', ie TOL or COF. Having regard to the factual circumstances surrounding the execution of the supplemental agreements and the context of cll 14 and 18 of the sale agreements and cl 1 of the supplemental agreements, the words 'certificate of fitness for occupation' in cl 2 have the same meaning as they have in cl 1. The TOL issued by the competent authority for the building on 11 August 1975 came within the meaning of the words 'certificate of fitness for occupation' in cl 2. Under that clause, the respondents were liable for liquidated damages at the rate therein provided for the period 1 January 1975 to 11 August 1975 being the date of issue thereof; (2) on the claim for liquidated damages, the respondents had admitted liability for the amount covering the period 1 January 1975 to 11 August 1975 and having given credit for the amount paid on behalf of the respondents as admitted in the statement of claim, the appellants' claim had been wholly satisfied and ought to be dismissed. The learned judge had not intended to order, and had not in any way ordered the appellants to pay to the respondents the sum of $116,519.46 or any part of it. As such, para 2 of the judgment dated 15 June 1989 requiring such payment was obviously inserted in error and ought to be expunged; (3) as the sale agreements did not provide a specific time, the respondents were under cl 11 obliged to obtain within a reasonable time (a) approval for subdivision under s 9(3) of the Planning Act and (b) the SSCTs, and under cl 12, within a reasonable time, upon the issue of the SSCTs to execute the transfers of the premises to the appellants; (4) on the facts, the respondents had been guilty of inordinate and unreasonable delay in obtaining the SSCTs and were in breach of cl 11, and also of cl 12, for up to the date of hearing of the appeal, they had still not executed the transfers of the premises to the appellants. They were therefore entitled to specific performance. The failure or refusal by the appellants to pay any maintenance fees and service charges did not disentitle them to the decree of specific performance of the sale agreements. The payment of maintenance fees and service charges was not a condition precedent to or the 'consideration' for obtaining the SSCTs under cl 11 and the completion of the sale under cl 12. The 'consideration' for cl 11 and 12 was the payment of the purchase price, of which 95% had been paid and the appellants were and are ready and willing to pay the remaining 5%, whilst that for payment of maintenance fees and service charges was expressly stated as that for the provision of lift services and maintenance of the common parts of the building under cl 13; (5) the trial judge was justified in finding that the appellants had not proven that they suffered any loss from the delay in the issue of the SSCTs; (6) with respect to the third action, the trial judge had not erred in his finding nor misdirected himself in any way.

Lee Kai Corp (Pte) Ltd v Chong Gay Theatres Ltd [1992] 2 SLR 689 Court of Appeal, Singapore (Yong Pung How CJ, LP Thean and Rajendran JJ).

The defendants sold their shares in a company to the plaintiff in consideration of allotment of shares in the plaintiff company to the defendants. The plaintiff brought this action against the seven defendants for, inter alia, breach of warranty. Four of the defendants became appellants in the present appeal. After the writ was filed, there were negotiations between defendant No 7 and the plaintiff. The plaintiff wrote a letter dated 1 April 1989 ('the 1989 letter') to defendant No 7 wherein the plaintiff offered to accept defendant No 7's offer to settle on condition that certain payments be made within 180 days. This offer was allowed to lapse. On 4 April 1990, defendant No 7 wrote a letter ('the 1990 letter') to the plaintiff with an offer to settle. This letter made reference to the 1989 letter, in particular, the plaintiff was to 'withdraw the ... Civil Suit ... as stated in their letter of 1 April 1989'. The settlement offered in the 1990 letter was accepted by the plaintiff by a signature at the foot of the letter confirming 'acceptance of the offer and conditions as stated above'. This was without any qualification. After the sum was paid, four of the defendants (the appellants) applied to strike out the plaintiff's statement of claim under O 18 r 19 of the Rules of the High Court 1980. Relying on the 1990 letter, they averred that the plaintiff's action could no longer be maintained. The plaintiff relied on the 1989 letter and contended that the 1990 settlement could not operate to release the appellants from their claim.

Held, allowing the appeal: (1) the terms of a contract may be contained in more than one document, for example, where one of two documents expressly or by necessary implication refer to another document as being subject to the said other document thereby causing the terms of the other document to be incorporated by reference into the first-mentioned document. Such an effect will initially depend on the construction itself of the first-mentioned document; (2) it is the sole function of the court to construe a document with a view to finding the intention of the parties. This is, in reality, to find the meaning of the words, for such meaning is equivalent to the intention of the parties for the purpose of interpretation; (3) unless there was strong reason to disregard the words about withdrawing the civil suit, they would have to be accorded the meaning they clearly convey. Such reason may be that the words were so repugnant to the rest of the 1990 letter that they ought to be totally disregarded by applying the golden rule of construction; (4) the words 'as stated in their letter of 1 April 1989' were, more probably than not, mere words that qualify the particular civil suit and could not be construed as having the effect of incorporating the terms of the 1989 letter except by an unjustifiable stretch of imagination; (5) the High Court always has an inherent jurisdiction to prevent abuse of its process irrespective of whether it is expressly called for or not in an application under O 18 r 19 unless such an application is limited solely to the ground that any pleading does not disclose a reasonable cause of action or defence. The lower court should have scrutinized the evidence in order to decide whether the action was bound to fail; (6) for a court to reach a similar decision on an application under O 18 r 19, there must, in all probability, have been an absence of conflict of material evidence and affidavits on material points so that seemingly triable and difficult issues could be readily decided in such a way as to lead to the conclusion that the action was bound to fail.

Raja Zainal Abidin bin Raja Haji Tachik & Ors v British-American Life & General Insurance Bhd [1993] 3 MLJ 16 Supreme Court, Malaysia (Abdul Hamid Omar LP, Peh Swee Chin and Mohamed Dzaiddin SCJJ).

The Mass Rapid Transport Corporation of Singapore ('MRTC') contracted out the construction of its Eastern track to Resources Development Corporation Pte Ltd ('the defendants'). Thus the defendants became the main contractors. Walter Wright Mammoet (Singapore) Pte Ltd ('the plaintiffs'), who carried on the business of crane rental and heavy lift rigging, were appointed by the defendants as sub-contractors. The work to be carried out by the plaintiffs was lifting and positioning of a number of concrete viaduct beams to form part of the raised railway track at the junction of Upper Changi Road and Bedok South Avenue 1. The agreement between the parties was contained in correspondence between the plaintiffs and the defendants - that is a letter of 29 June 1987 from the plaintiffs to the defendants and a letter of 2 July 1987 from the defendants to the plaintiffs. In the letter of 2 July 1987, the defendants included a clause which stated that the plaintiffs were to 'provide insurance for the beam, all equipment, machineries, and personnel'. On 8 July 1987, during lifting operations, the ground under the crane track subsided. In consequence the crane in question tilted forward and the beam being lifted descended and hit the ground. At the same time the boom of the crane hit the cross-head. In the result the beam, the boom of the crane and the main body of the crane suffered damage. The boom, subsequently, had to be cut into segments and removed from the site. After the accident, all further activities by the plaintiffs were stopped and not resumed at all. The plaintiffs were compensated by their underwriters in respect of the crane. The underwriters thus became subrogated to the plaintiffs' rights against the defendants. The purpose of this action was to recover the loss suffered by the plaintiffs. In addition to negligence, the claim was also based on breach of contract and repudiation of contract. The claims presented included certain uninsured heads. The defendants, inter alia, pleaded a defence based on the plaintiffs' obligation under cl 5 in the defendants' letter to procure insurance. They said that the plaintiffs by reason of the clause were not entitled to pursue their claim against the defendants. Before the commencement of trial, counsel for both parties asked the court to give a ruling on the defence based on the insurance clause. The parties were willing to waive their other heads of claim and asked for a decision on the meaning and effect of the insurance clause. The defendants agreed not to proceed with their counterclaim even if the decision was in their favour. Finally, for the purpose of the determination of the preliminary issue of law it was assumed that the defendants were negligent in that they did not properly and adequately prepare, compact and level the ground to withstand a pressure of 20 tonnes per square metre for the crane to traverse the ground and stand on the ground while launching the beam.

Held, giving a ruling on the preliminary issue in favour of the defendants: (1) on the assumption that the defendants were in breach of contract and/or in breach of their common law duty of care in failing to prepare the ground where the cranes were to travel and operate so that it could withstand a minimum pressure of 20 tonnes per square metre, the court decided and declared that the insurance requirement in the agreement between the parties disentitled the plaintiffs (and their insurers) from proceeding against the defendants for their alleged breach of contract or duty; (2) it is important to note that whether the contract is contained in the two letters or the defendants' letter alone, the obligation to procure insurance in respect of the crane and the beam is an integral term of contract. It is a contractual obligation imposed on the plaintiffs. It was a bargain between the parties; (3) the obligation was one of the items for which the defendants paid a consideration of S$48,000. In other words, the premium for the insurance to be secured by the plaintiffs was included in the total consideration paid by the defendants. Accordingly, if the plaintiffs failed to procure the insurance they would be in breach of contract; (4) the plaintiffs in this case were under an obligation to obtain the insurance 'current in the trade'. There was no question that the plaintiffs had complied with the term by procuring such an insurance; (5) the insurance clause was not for the benefit of the plaintiffs alone as otherwise the inclusion of the plaintiffs' obligation as a covenant for consideration would have no subject matter to bite; (6) the insurance clause in the present case makes the defendants' position stronger by stipulating that insurance for the beams was to be procured by the plaintiffs; (7) the provision does not seek to exempt the defendants from liability but states how the parties agreed to deal with such liability. It stands apart from the principles governing exemption clauses.

Walter Wright Mammoet (Singapore) Pte Ltd v Resources Development Corporation Pte Ltd [1994] 3 SLR 121 High Court, Singapore (GP Selvam J).

The plaintiffs granted to the defendants an option to purchase a property at Jervois Road ('the property') at the price of S$2.1m. Clause 6 of the option provided, inter alia, that the vendor covenants to pay the development charges in connection with the said planning approval. Prior to giving the option, the plaintiffs had obtained planning permission from the competent authority and stated, inter alia, that a development charge of S$130,152 was payable. On 10 August 1989, the defendants' solicitors wrote to the plaintiffs' solicitors that they had received a reply from the Chief Planner which stated that the in-principle planning would expire six months from 7 January 1989, and that accordingly, the expiry date had passed. In view of cl 6 of the option, the plaintiffs were required to produce documentary proof that the in-principle approval was still alive. On 8 August the in-principle approval would seem to have lapsed. Correspondences were exchanged and the sale and purchase was completed on the defendants' terms and the sum of S$130,152 was to be held by the plaintiffs' solicitors as stakeholders pending the appeal against the development charge. Subsequently, the plaintiffs found out that the defendant had resold the property to City Developments Ltd. The plaintiffs' solicitors then wrote to the defendants informing them that they wanted to release the stakeholder's sum of S$130,152. The defendants' solicitors disagreed. The plaintiffs then applied for a declaration that they are released from their obligation under cl 6 of the option to pay the sum of S$130,152 or any other sum as development charge and a declaration that the plaintiffs' solicitors be released from their undertaking to hold the said sum as stakeholder. The plaintiffs argued that the resale of the property had resulted in a frustration of cl 6.

Held, granting the applications: (1) the true construction of cl 6 of the option is that the covenant of the plaintiffs thereunder to pay the development charge was not unconditional. The covenant is conditional in two respects. Firstly, it is referable to the development for which in-principle approval was given, and not any other approval. Secondly, it is payable only when 'same is due and payable', ie when the property is developed in accordance with that in-principle approval. The covenant is a benefit in the hands of the defendants, and one which they may assign to a subsequent purchaser, subject, however, to the same conditions; (2) therefore, the only issue before the court is whether the evidence is sufficient to prove that the development charge is no longer payable with respect to the in-principle approval that was granted to the plaintiffs with respect to the property; (3) the plaintiffs, in the court's view, have proved that the development charge will never become due. The circumstances of this case are such that no prudent man ought to suppose it will become payable. The defendants made an open offer to accept 50% of the amount of the development charge in full and final settlement of any claim by the defendants to such charge as may be payable. The offer made no commercial sense if there was any prospect of the development charge becoming due. Whether or not it would ever become due and payable was a fact within the knowledge of the defendants as they must know the terms of which they had sold the property to City Developments Ltd. The defendants were not at risk as to the ability of the plaintiffs to pay, and so there was no risk in that respect. However, it made good commercial sense for them to accept 50% of the stake if they had no expectation of at least 50% of the development charge being payable at all.

San Rafael Properties Pte Ltd v Mainland Realty Co Pte Ltd Originating Summons No 1260 of 1991 High Court, Singapore (Chan Sek Keong J).

Ang Kim Leng & Anor v Koh Tze Kad & Anor [1996] 3 SLR 41 High Court, Singapore (Kan Ting Chiu J).

See CONTRACT, Vol 3, para 2944.

The plaintiffs' claim was for specific performance of an oral agreement for sale of a freehold property known as unit 8-J ICB Shopping Centre, Yio Chu Kang Road, Singapore 1954 (the defendant's property) allegedly concluded between them and the defendant. The defendant denied such agreement was reached, and argued that it was at best an agreement subject to contract and in any event was not enforceable since no sufficient note or memorandum of alleged agreement, pursuant to s 4 of the English Statute of Frauds 1677, was signed. The plaintiffs' evidence was that the defendant went over to his office and the parties discussed the sale of the property. It was not disputed that on the conclusion of the discussion, a cheque for S$18,000 was drawn by the first plaintiff in favour of the defendant as payment of the deposit amounting to 10% of the agreed price, with a phrase on the back of the cheque which the plaintiffs asserted was evidence of the oral agreement of the sale. The defendant argued that he was forced to visit the first plaintiff's office because of a threat by the first plaintiff to reveal an alleged affair between the defendant and one Mock Thay Moi; and that no agreement was reached because the parties had agreed that the sale would be subject to contract, as no completion date was agreed and other matters incidental to the sale had to be first resolved.

Held, allowing the first plaintiff's claim: (1) on the evidence, an agreement was reached between the first plaintiff and the defendant for the defendant to sell the property to the first plaintiff at the agreed price with completion of the sale to take place in December 1993. The evidence indicated that there was an agreement to sell, and it was not subject to contract; (2) the material terms of the agreement related to the parties, the property and the price, and these items were recorded on the back of the cheque. Even if that were not so, the omission of the completion date was for the benefit of the defendant, and the first plaintiff conceded to or was prepared to concede to it. As such, the omission of the completion date ought not to preclude the first plaintiff from bringing this action. In any case, even if the completion date were not for the benefit of the first plaintiff, the defendant's solicitors had admitted in writing that the parties had agreed to a December 1993 completion date and this together with the document would constitute a sufficient note or memorandum.

Loh Chin Kok & Anor v Lee Teck Seng Paul [1997] 1 SLR 478 High Court, Singapore (Christopher Lau JC).

The plaintiff obtained summary judgment for $607,347.76, together with interest and costs arising from a claim in respect of the defendants' purchase of 500,000 shares ('the shares') in Everpeace Corp. The defendant excuted a margin agreement with the plaintiff which allowed him to buy and sell at the exchange. By the terms of the margin agreement, the defendant was to pay the plaintiff a margin deposit equivalent to 30% of the market value of the shares bought. The cost of the shares at the time of purchase was $758,250. The defendant paid $227,475 and a further $1,562.20 being interest for October 1985. Statements of accounts were sent to the defendant from May 1986 to April 1987. The defendant appealed against the summary judgment and applied for a stay of execution pending appeal to the Supreme Court. The plaintiff had argued that oral evidence was not adminisible in view of s 92 of the Evidence Act 1950 (Act 56). It was submitted that this did not apply where the documents do not constitute a contract as the debit note for the purchase of the shares was not signed by the defendant although his name was typed in; and it stated that the shares were bought on the defendant's order. Further, the defendant alleged that the contract was not between him and the plaintiff.

Held, dismissing the defendant's appeal and application for stay of execution: (1) the relevant debit note stated the name of the defendant in his personal capacity and the defendant had signed the margin agreement with the plaintiff. He even paid the 30% deposit required and paid interest. He was subsequently furnished with the relevant monthly statements of accounts to which he had no objections, protests or queries. Further, the reference to another proceeding between the plaintiff and the third party is founded on a different transaction. The allegation that this contract was between the third party and the plaintiff therefore failed; (2) where documents clearly state that goods were ordered by one party, they should not be allowed to bring oral evidence to contradict the terms of the contract and to show that the goods were ordered for another. As such, no triable issue has been raised by the defendant; (3) apart from the averments of the defendant, it cannot be said that the plaintiff was in a state of poverty even if it used the judgment sum to pay off its other liabilities. Further, the defendant had not disclosed his assets and liabilities in full under O 47 r 1(3) of the Rules of the High Court 1980 for a stay of the writ of seizure and sale. A deposit of $3,000 for an appeal where the judgment sum is for $60,347.76 can hardly be a substantial guarantee should the defendant fail in his appeal.

YK Fung Securities Sdn Bhd v Ronald Yeoh Kheng Hian [1989] 3 MLJ 490 High Court, Ipoh (Abdul Malek J).

The plaintiff/respondent had claimed to be indemnified for the loss of his car. The defendant/appellant company did not dispute the theft but resisted the claim on the ground that the plaintiff in his proposal form had made a declaration which was false in several aspects. In answer to the questions whether he had made a claim under any motor vehicle policy, he had said 'no'; and in answer to the question whether he was or had been insured in respect of any other vehicle, he gave the name of another insurance company. The plaintiff had in fact made a claim but this was more than three years prior to the proposal and he had said he had been advised by the agent that he need not disclose this. Also he left it to the agent to put in the name of the defendant in answer to the second question. The learned trial judge after hearing the evidence of the plaintiff and the agent held that the answers to the questions were not material. On appeal,

Held, allowing the appeal (Suffian FJ dissenting): (1) the answers to the questions had become terms of the contract of insurance and by reason of ss 91 and 92 of the Evidence Ordinance 1950 it was not open to the plaintiff to adduce oral evidence to contradict, vary or add to or subtract from them; (2) the truth of the answers had been made a condition of the policy and it was not open to the trial judge to consider the question whether the answers to these questions were material or not.

China Insurance Co Ltd v Ngau Ah Kau [1972] 1 MLJ 52 Federal Court, Alor Star (Azmi LP, Suffian and Ali FJJ).

The plaintiff's claim against the first defendant was as principal, and against the second defendant as surety for a total sum of $22,805.79, being the price of electrical goods sold and delivered by the plaintiff to the first defendant. On 17 August 1966, the first defendant was indebted to the plaintiff in the sum of $13,780.72, for electrical goods sold and delivered. On the same day, the second defendant wrote a letter to the plaintiff in which it agreed that, if the plaintiff would forebear from suing the first defendant for the said debt and carried on supplying the first defendant with electrical goods and materials on credit, it would be responsible to the plaintiff for the payment due. The plaintiff accordingly did not sue and further supplied the first defendant with the said goods. Therefore, the amount claimed was made up of two sums, ie $13,780.72 for goods supplied before the letter was written, and $9,024.57 for goods supplied thereafter. The first defendant did not enter appearance and judgment was entered against them in the sum of $22,805.79. The second defendant denied that the sum claimed or any other sum was due by them to the plaintiff. They guaranteed payment for goods supplied after they wrote the letter, ie $9,024.57, and as it had already been paid to the plaintiff after issue of the writ, there was nothing due by them to the plaintiff. Plaintiff's counsel submitted that this was an extremely informal contract; that the terms were not fully set out in the letter of 17 August 1966; that proviso (b) to s 92 of the Evidence Act (Cap 5, 1970 Ed) was therefore applicable; and that the contract being partly oral and partly in writing, oral evidence was admissible to prove the oral part of the agreement.

Held: (1) proviso (b) to s 92 of the Evidence Act applies only when there is a separate contemporaneous oral agreement as to a matter on which a document is silent. As the plaintiff had relied entirely on the letter of 17 August 1966, and had not pleaded any separate oral agreement, it was not entitled to tender oral evidence to prove that there was a separate oral agreement under which the second defendant was liable for payment of the plaintiff's claim for $13,780.72; (2) therefore, since the letter of 17 August 1966 did not support the plaintiff's claim for the balance of $13,780.72, the claim against the second defendant for the said sum failed. Obiter: even if the second defendant had orally undertaken to be responsible for the payment of $13,780.72 due to the plaintiff, the said undertaking was unenforceable by reason of the Statute of Frauds 1677 which requires such an undertaking to be evidenced by some memorandum or note, in writing, signed by the second defendant, because the undertaking was a promise to answer for the debt of another.

Sigma Cable Co Ltd v Nam Huat Electric & Sanitary Co & Ors 1969 High Court, Singapore (Choor Singh J).

In a written contract, oral evidence is admissible to show that a document executed by a party was never intended to be acted upon as an agreement but was brought into existence for the purpose of creating evidence of some other matter.

Tyagaraja Mudaliar v Vedathanni [1936] MLJ 79 Privy Council Appeal from India (Lords Thankerton and Alness and Sir John Wallis).

The respondent developed a piece of land in the Mukim of Johor Bahru into a housing estate and built low cost houses ('the premises') and rented them out. The appellant was one of the occupiers of the premises. The terms and conditions of the appellant's tenancy were governed by a tenancy agreement dated 6 September 1977 which included an option to purchase the premises on completion of a period of tenancy of three years at a price to be determined by the respondent. The appellant exercised his option to purchase the premises in June 1980 and the respondent offered to sell the premises to the appellant for a sum of RM14,000. However, the appellant rejected the offer on the basis that it was not in compliance with an oral representation made by the representative of the respondent, one Tan Sri Dato' Hj Basir ('Tan Sri Basir') who was present at the meeting in September 1978, together with other officers of the respondent and a member of the state legislative assembly (PW2), which was held for the purpose of discussing the option where the purchase price was quoted as being between RM7,000-RM8,000. Consequently, the respondent withdrew their offer of sale. In December 1985, the respondent gave the appellant a month's notice to vacate the premises. A second notice to quit was given in July 1986. The appellant has yet to give up possession to this day. In proceedings filed against the respondent in March 1986, the appellant claimed, inter alia, for: (i) a declaration that he was entitled to purchase and the respondent was obligated to sell the premises to him; (ii) specific performance of the tenancy agreement; (iii) damages in addition to or in lieu of specific performance; and (iv) an injunction restraining the respondent from evicting him from the premises. Whilst denying liability to the appellant's claims, the respondent counterclaimed for arrears of rental, vacant possession of the premises and mesne profits. The trial judge dismissed the appellant's claim and allowed the respondent's counterclaim. Hence this appeal. It was the appellant's contention that the respondent was contractually bound to sell the premises to him at the purchase price of between RM7,000-RM8,000 and not at RM14,000 by virtue of the oral representation made by Tan Sri Basir. The appellant, however, failed to serve the subpoena on Tan Sri Basir. The issues raised before the court were: (i) whether Tan Sri Basir made the representation; (ii) if so, whether the burden shifted to the respondent when the appellant failed to serve the subpoena on Tan Sri Basir; (iii) whether an adverse inference under s 114(g) of the Evidence Act 1950 ('the Act') could be invoked against the respondent; and (iv) whether the counterclaim had been proved against the appellant.

Held, dismissing the appeal with costs: (1) (per Siti Norma Yaakob JCA) The trial judge held that there was no evidence to show that Tan Sri Basir made any oral representation as to the purchase price of the premises. At the very most, the absent witness merely stated that he would discuss the matter with the other members of the board of the respondent. As this was a finding of fact, the court would not disturb the finding of the trial judge. In any event, a perusal of the notes of evidence confirmed that finding to have been correctly made; (2) and (ii) the respondent denied even making one; (3) (per Siti Norma Yaakob JCA) for this very reason, the adverse inference under s 114(g) of the Act relied upon by the appellant cannot be accepted as establishing that if the witness had been produced, his evidence would work against the respondent. There was no obligation in law for the respondent to produce the witness as that obligation rested with the appellant, the party who made the allegation, and the fact that the appellant was unable to do so was fatal to his case. For this very reason too, the adverse inference under s 114(g) was invoked against the appellant; (4) (per Siti Norma Yaakob JCA) as for the counterclaim, there was the contemporaneous evidence in the second notice of eviction and the fact that the appellant had failed to deliver vacant possession of the premises to this day, and as such, his continued occupation of the premises without payment of any rent was that of a trespasser. Added to this was the clear and unequivocal admission by the appellant that he had not been paying the rental of the premises since July 1985. On this unrebutted evidence, there was no justification to disturb the finding of the trial judge that the counterclaim had been proved against the appellant; (5) and since he had rejected the offer to buy at the higher price, the appellant's claim must surely fail; (6) (per Siti Norma Yaakob JCA) according to s 103 of the Act, a person who alleges must prove such allegation. Thus, it was incumbent upon the appellant to produce Tan Sri Basir as his witness to prove the allegation. The fact that the appellant was unable to secure the attendance of Tan Sri Basir as a witness did not shift the burden to the respondent to produce the witness and testify as to what he had uttered because: (i) the respondent had never raised such an allegation;(per Abdul Malek Ahmad JCA) since the appellant's claim rested solely on the oral representation by Tan Sri Basir who did not give evidence; since his own independent witness (PW2) did not support this allegation;(per Mokhtar Sidin JCA) on the evidence, it was clear that there was no offer by Tan Sri Basir to sell the premises at the lower price. The figure of RM7,000-RM8,000 was only an offer by the appellant to buy the premises which was never accepted by Tan Sri Basir purportedly to be representing the respondent. As such, the appellant failed to prove that a contract existed between him and the respondent for the sale of the premises at the price of RM7,000-RM8,000.

Juahir bin Sadikon v Perbadanan Kemajuan Ekonomi Negeri Johor [1996] 3 MLJ 627 Court of Appeal, Kuala Lumpur (Siti Norma Yaakob, Abdul Malek Ahmad and Mokhtar Sidin JJCA).

The respondent wanted to purchase a new car from the appellants. He paid a deposit of S$2,000 and signed a vehicle order agreement (the order form) and a certificate of entitlement (COE) bid form. The respondent later changed his mind and informed the appellants that he wished to cancel his order. The respondent also submitted a letter of cancellation which stated that he would treat the deposit as being forfeited. The appellants subsequently commenced an action against the respondent for loss of profits and for conversion of the COE. At the trial, the respondent gave evidence that the sales representative had represented to him that there would be an increase in the price of the car and, to secure a purchase at the existing price, the respondent need only confirm the order by executing the order form. The respondent also alleged that he was told that if he wished to cancel the order, he would only lose the deposit sum. The sales representative did not give evidence. The district judge allowed the oral evidence of these representations to be admitted. The district judge, in dismissing the action, accepted that the respondent was induced to sign the order form by these representations and held that these oral representations prevailed over the written terms of the order form. The appellants appealed to the High Court. They contended, inter alia, that the district judge had, contrary to ss 93 and 94 of the Evidence Act (Cap 97, 1990 Ed), erred in admitting the oral representations as evidence and that by the terms of the order form, the appellants were entitled to forfeit the deposit and claim for any damage or loss suffered by them.

Held, dismissing the appeal: (1) there was ample evidence before the district judge to justify her finding that the sales representative had represented to the respondent that the only penalty for cancellation of the contract would be the forfeiture of the deposit of S$2,000; (2) the order form was intended to be a contract between the parties. Section 93 of the Evidence Act was therefore applicable and evidence could be led in respect of other terms as agreed only if those other terms fell within the exceptions to the rule against parol evidence in s 94 of the Evidence Act; (3) the oral representations were inconsistent with the written terms of the order form which entitled the appellants to claim damages and were therefore not admissible under s 94(b) of the Evidence Act; (4) the oral representations were, however, admissible under s 94(a) of the Evidence Act as, if proved, they could entitle the party misled to an order for rectification of the contract as they were, at the very least, made recklessly without caring whether they were false or true; (5) the clause in the order form excluding any other previously agreed terms not contained therein did not affect the admissibility of oral evidence under s 94. So long as the requirements of s 94 were complied with, oral evidence was admissible whatever the written contract provided. The district judge was, therefore, entitled to find that the respondent was induced to sign the order form by a fraudulent misrepresentation; (6) there was no merit in the appellants' claim for conversion of the COE. There was no evidence that the COE was the property of the appellants and the evidence indicated that they were merely the agents of the respondent in his bid for the COE. The respondent had applied for the COE and it had been issued to the respondent. Further, the COE was non-transferable.

Exklusiv Auto Services Pte Ltd v Chan Yong Chua Eric [1996] 1 SLR 433 High Court, Singapore (S Rajendran J).

Exklusiv Auto Services Pte Ltd v Chan Yong Chua Eric [1996] 1 SLR 433 High Court, Singapore (S Rajendran J).

See CONTRACT, Vol 3, para 3077.

Bulsing Ltd v Joon Seng & Co 1969 High Court, Singapore (Chua J).

See CONTRACT, Vol 3, para 2021.

Chew Tong Shing v Hotel Royal Ltd [1992] 2 SLR 787 Court of Appeal, Singapore (Yong Pung How CJ, LP Thean and Goh Joon Seng JJ).

See CONTRACT, Vol 3, para 1855.

A shipping order to the master of a ship requiring him to receive on board 100 tons of tin for London at £3 10s per 20 hundredweight and signed by the defendants was held to be a binding contract and parol evidence to show that the defendants contracted merely as agents was held to be inadmissible. Such a shipping order is, however, subject to mercantile usage in the place where it is made.

Fredericks & Ors v Dunlop & Ors [1873] Leic 369 High Court, Straits Settlements (Hackett J).

Development & Commercial Bank Bhd v Kredin Sdn Bhd [1993] 1 CLJ 307 High Court, Kuala Lumpur (VC George J).

See CONTRACT, Vol 3, para 2546.

Reliance Shipping & Travel Agencies v Low Ban Siong [1996] 2 MLJ 543 Court of Appeal, Kuala Lumpur (Siti Norma Yaakob, VC George JJCA and Ahmad Fairuz J).

See CONTRACT, Vol 3, para 1636.

Realvest Properties Sdn Bhd v Co-operative Central Bank Ltd (In receivership) [1996] 2 MLJ 461 Federal Court, Kuala Lumpur (Chong Siew Fai CJ (Sabah & Sarawak).

See CONTRACT, Vol 3, para 2511.

Government of Malaysia v Thelma Fernandez & Anor [1967] 1 MLJ 194 High Court, Kuala Lumpur (Raja Azlan Shah J).

See CONTRACT, Vol 3, para 2917.

On 5 October 1989 the appellants as second mortgagees sold certain premises at an auction to the respondents at the price of Jamaican $11.5m. Clause 4 of the contract provided for the payment of a deposit of 25% of the contract price and this deposit was duly paid by the respondents to the appellants' solicitors. The contract provided that the remainder of the purchase money was to be paid within 14 days of the date of the auction, whereupon the appellants were to execute a transfer of the property to the respondents and to lodge such transfer for registration. Clause 15 of the contract provided that time should be of the essence of all time limits contained in the contract. Clause 13 of the contract provided, inter alia, that if the respondents should fail to observe or comply with any of the foregoing stipulations on their part, the deposit would be forfeited and the appellants would be at liberty to resell the property either by public auction or private contract. On the date fixed for completion (19 October 1989) the respondents' solicitors sent to the appellants a letter of undertaking from the Jamaica Citizens Bank Ltd to pay the balance of the purchase price, subject to certain conditions. The appellants' solicitors rejected this undertaking and gave the respondents 24 hours to provide satisfactory undertaking. The respondents attempted to do so on 20 October 1989, but the appellants' solicitors again rejected it. On 23 October 1989, the appellants wrote to the respondents, rescinding the contract and purporting to forfeit the deposit. The respondents refused to accept this, and on 26 October 1989 tendered to the appellants the balance of the purchase price with interest. The appellants returned the cheque the next day. On 24 November 1989, the respondents started proceedings, claiming specific performance or, alternatively, relief from forfeiture of the deposit. The trial court rejected both of the respondents' claims. The respondents appealed to the Court of Appeal but did not pursue the specific performance claim. On the respondents' alternative claim for relief from forfeiture and the return of the deposit, the Court of Appeal held that the respondents were entitled to relief from forfeiture to the extent that the deposit exceeded 10% of the price but did not award any interest on that sum. The appellants appealed to the Privy Council against the decision, and the respondents cross-appealed, claiming that it should have been awarded relief against the whole of the the 25% deposit and should also have been awarded interest.

Held, dismissing the appeal and allowing the cross-appeal: (1) in general, a contractual provision which requires one party in the event of his breach of the contract to pay or forfeit a sum of money to the other party is unlawful as being a penalty, unless such provision can be justified as being a payment of liquidated damages, being a genuine pre-estimate of the loss which the innocent party will incur by reason of the breach. One exception to this general rule is the provision for the payment of a deposit by the purchaser on a contract for the sale of land; (2) it is not possible for the parties to attach the incidents of a deposit to the payment of a sum of money unless such sum is reasonable as earnest money. The question is therefore whether or not the deposit of 25% in this case was reasonable as being in line with the traditional concept of earnest money or was in truth a penalty intended to act in terrorem. In order to be reasonable, a true deposit must be objectively operating as 'earnest money' and not as a penalty; (3) in this case, to determine whether the deposit was reasonable or not, the correct approach is to start from the position that, without logic but by long continued usage both in the United Kingdom and formerly in Jamaica, the customary deposit has been 10%. A vendor who seeks to obtain a larger amount by way of forfeitable deposit must show special circumstances which justify such a deposit; (4) formerly the normal practice in Jamaica was to require a deposit of 10%. This was changed by the introduction of a transfer tax by the Transfer Tax Act 1971, where a transfer tax of 7.5% was payable on a transfer of land on sale; (5) in the present case, the appellants sought to justify the amount of the 25% deposit in part by reference to the amount of the transfer tax payable, viz $862,500. This evidence indicates that far from the amount of the deposit having been fixed upon as a reasonable amount of earnest, the amount was substantially influenced by fiscal considerations having nothing to do with encouragement to perform the contract. Therefore this evidence falls far short of showing that it was reasonable to stipulate for a forfeitable deposit of 25% of the purchase price or indeed any deposit in excess of 10%; (6) therefore it has no right to such a limited payment. If it cannot establish that the whole sum was truly a deposit, it has not contracted for a true deposit at all; (7) the appellants have contracted for a deposit consisting of one globular sum, being 25% of the purchase price. If a deposit of 25% constitutes an unreasonable sum and is not therefore a true deposit, it must be repaid as a whole. The appellants have never stipulated for a reasonable deposit of 10%;the appellants may have suffered some damage as a result of the appellents' failure to complete. If so, the appellants are entitled to deduct the amount of such damages from the 'deposit' of 25%.

Dojap Investments Ltd v Workers Trust & Merchant Bank Ltd Privy Council Appeal No 41 of 1991 Privy Council on appeal from the Court of Appeal of Jamaica (Lords Keith of Kinkel, Jauncey of Tullichettle, Donaldson of Lymington, Browne-Wilkinson and Sir Christopher Slade).

Neither s 75 of the Contracts (Malay States) Ordinance 1950, nor the principles of law laid down in decisions dealing with promises to pay specified sums in case of breach of contract apply to cases of forfeiture of deposits for breach of stipulations even when some of them are but trifling while others are not such. In such cases, the rule is that where the instrument refers to a sum deposited as security for performance, the forfeiture will not be interfered with, if reasonable in amount.

Maniam v State of Perak [1957] MLJ 75 High Court, Ipoh (Thomson J).

This appeal raises the issue as to the approach which the courts should adopt in determining whether a clause in a commercial contract which the appellants entered into with the respondents in connection with the construction of a highway project is unenforceable as being penal in effect. The contract contained an arbitration clause; but the present proceedings were initiated by the appellants to determine the preliminary issue. The clause in question, cl 29, pertained to the amount of liquidated damages payable in the event of delay in the construction and the missing of certain key dates. The trial court held that the clause was a penalty whilst the Court of Appeal held that it was a liquidated damages clause. The appellants appealed.

Held, dismissing the appeal: (1) it is to the advantage of parties to a contract to know with a reasonable degree of certainty the extent of their liability and the risks which they run as a result of entering into the contract. This is particularly true in the case of building contracts; (2) but the principle was always recognized as being subject to fairly narrow constraints and the courts have always avoided claiming that they have any general jurisdiction to rewrite the contracts that the parties have made; (3) the use of the phrase 'penalty' or 'liquidated damages' is not conclusive as to the real intention of the parties; (4) the essence of liquidated damages is a genuine covenanted pre-estimate of damage; (5) the question of whether a sum stipulated is a penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract and not as at the time of the breach; (6) the various tests used to assist in this task of construction are: (a) It will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved. (b) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid. (c) There is a presumption that it is a penalty when a single lump sum is made payable by way of compensation on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage; (7) however, the court has to bear in mind that what the parties have agreed should normally be upheld. Any other approach will lead to undesirable uncertainty especially in commercial contracts; (8) the fact that the issue has to be determined objectively, judged at the date of the contract was made, does not mean what actually happens subsequently is irrelevant, since it can provide valuable evidence as to what could reasonably be expected to be the loss at the time the contract was made; (9) the penalty jurisdiction was first introduced by the Courts of Equity and subsequently extended to other situations by the courts of law;the essence of a penalty is the payment of money stipulated as in terrorem of the offending party;arguments based on hypothetical situations should not be allowed to divert attention from the correct test as to what is a penalty provision - namely, is it a genuine pre-estimate of what the loss is likely to be? - to the different question, namely, are there possible circumstances where a lesser loss would be suffered?

Philips Hong Kong Ltd v Attorney General of Hong Kong [1993] 2 CLJ 272 Privy Council on Appeal from the Court of Appeal of Hong Kong (Lord Templeman, Lord Goff of Chieveley, Lord Browne-Wilkinson, Lord Woolf and Sir Christopher Slade).

In this case, the Minister of Communications applied by way of summons-in-chambers that the writ of subpoena ad testificandum issued on behalf of the plaintiffs be set aside on the ground that the issue of the said writ was vexatious and an abuse of the process of the court. The plaintiffs and the defendant in Civil Suit No 1191 of 1973 were litigating over the terms of an agreement, one of the clauses of which expressly stated that the agreement was conditional upon the coming into force of the law requiring the use of safety helmets by motorcyclists and scooterists. The law had not at the time of the suit come into operation. The plaintiffs issued the writ of subpoena ad testificandum and served it on the applicant or his representative to give evidence on behalf of the plaintiffs as to why the law had not yet been introduced. The applicant in his affidavit in support of the application stated that: (1) neither he nor any of the officials in his ministry had any knowledge of the matters in Civil Suit No 1191 of 1973 and were not in any position to give any relevant evidence; (2) neither the applicant nor any of the officials in his ministry was in a position to give evidence on matters relating to the policy or implementation of any law which matters are the collective responsibility of the Cabinet; and (3) it is highly against the public interest to require any minister or any public official to disclose to any person the policy and the implementation of any law prior to its publication as such disclosure would be detrimental to interests of the state. The plaintiffs contended, inter alia, that the application was premature. The minister should claim privilege from disclosing official matters at the appropriate time when giving evidence on behalf of the plaintiffs in the civil suit.

Held: (1) the minister or his representative was in no position whatsoever to give relevant evidence in the dispute between the plaintiffs and the defendant. Whatever policy the government may have in relation to safety helmets, the plaintiffs' case against the defendant depended on the validity of the agreement between them based on facts which were not within the knowledge of the applicant or his representative; (2) the writ in this case was not issued bona fide for the purpose of obtaining relevant evidence and its issue therefore was an abuse of the process of the court and it should be set aside.

Pit Stop Auto Accessories v Tan Kock Siang; The Minister of Communications (Applicant) [1974] 2 MLJ 79 High Court, Kuala Lumpur (Ajaib Singh J).

The plaintiffs, who were husband and wife, sued the defendants, who were Swiss bankers, for losses suffered by them on account of an alleged breach of contract committed by the defendants in the investment of funds placed by the plaintiffs with the defendants. On or about 1 February 1993, the plaintiffs executed a number of documents in Indonesia where they opened an account with the defendants' branch in Zurich, Switzerland. The defendants were given a mandate to invest in a portfolio of instruments of medium `risk'. The plaintiffs alleged that the defendants had breached the terms of their mandate in that they had, inter alia, invested in high risk derivative instruments instead. The defendants applied to strike out the writ on two grounds, first, that there was a jurisdiction clause that the sole place for proceeding was Zurich and second, on the basis of forum non conveniens. The learned assistant registrar refused the defendants' application to set aside the writ. The defendants appealed.

Held, allowing the appeal: (1) the terms of the agreement and the documentation relating thereto indicated that there was no room for argument that the banking arrangement was made other than in Zurich. While the defendants had a Singapore representative office at the material time, the reference to the opening of an account with the Singapore representative office was purely for the purpose of communications. It was not possible to assert that the investment arrangement was made with the defendants' Singapore representative office; (2) the plaintiffs argued that the jurisdiction clause in the documentation stipulated that the sole place of proceeding was the town where the office of the Bank concerned was situated and this could have encompassed Singapore. However, it was clear the jurisdiction clause required the proceedings to be held in Zurich. The burden rested on the plaintiffs to show why the contractual terms on jurisdiction should not have been given effect to, which the plaintiffs were unable to do so; (3) on the point of forum non conveniens, the facts disclosed that the natural forum to determine the dispute was at Zurich, which was a distinctly more appropriate forum than a Singapore court; (4) on the issue of fraudulent misrepresentation, the evidence adduced by the plaintiffs showed that the alleged misrepresentation did not take place in Singapore but in Jakarta, which made the governing law Indonesian law, instead of Singapore law.

Frans Bambang Siswanto & Anor v Coutts & Co AG Suit No 110 of 1996—High Court, Singapore (Chao Hick Tin J).

The defendants were at all material times a bank conducting banking business in Singapore. The plaintiffs were the customers of the defendants. When the plaintiffs opened their account in May 1981, they signed a General Agreement for Commercial Business. By cl 3(c) of this agreement, the plaintiffs were bound to verify the correctness of the statements of account sent to them and cheques returned to them and to inform the defendants of any discrepancies within seven days. Between May 1982 and March 1983, the defendants honoured 15 cheques which were later found to have been forged. The total amount debited was S$94,255.32. The plaintiffs claimed this amount from the defendants, who pleaded that they were precluded from raising the issue of the forged cheques because of cl 3(c). The plaintiffs in turn alleged that the clause was unreasonable under the Unfair Contract Terms Act 1977 [UK] ('UCTA').

Held, dismissing the claim: (1) a bank in making payment on cheques drawn by its customers acts upon the mandate given by its customer. The mandate comes into operation when the customer issues a cheque or other order or direction. If the customer's signature on the cheque was forged or unauthorized, the signature becomes inoperative. Hence, a bank has no mandate to pay on a forged cheque of a customer, and if it makes payment thereon, it is liable to its customer, unless the customer by agreement or conduct was precluded from raising the forgery; (2) the customer, on the other hand, owed a duty to the bank to refrain from drawing a cheque in such a manner as to facilitate fraud or forgery, and to inform the bank of any forgery or unauthorized drawing of cheques as soon as he became aware of it. The customer, however, in the absence of express provision, had no duty of care to his bank to prevent forgery of his cheques and was not under a duty to check his bank statements; (4) under cl 3(c) the plaintiffs were under an obligation to notify the bank of a debit arising from a cheque which had been forged or was unauthorized and forgery of a signature on a cheque fell within the scope of the clause. Consequently, if the plaintiffs failed to notify the bank within the period prescribed in cl 3(c) of such wrong debit, the statement of account became conclusive evidence that the account was and the entries were correct; (4) the provisions in cl 3(c) were clear and unambiguous, and provided a defence to the claim of the plaintiffs; (5) by virtue of s 5 of the Civil Law Act (Cap 43), UCTA should apply to a dispute concerning banks and banking. However, as the issues in the instant case were expressly governed by s 24 of the Bills of Exchange Act (Cap 23), UCTA did not apply; (6) even if UCTA did apply, cl 3(c) satisfied the test of reasonableness. The plaintiffs entered into the general agreement of their own free will. The obligations under cl 3(c) were fair and reasonable having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the general agreement was entered into. Forgeries of cheques were extremely difficult for a bank to detect. The defendants as a bank would only be able to detect them by verifying the signatures on the cheques against the specimen signatures provided by their customers. They have therefore adopted a practice of returning their customers, monthly, the original cheques drawn or purported to have been drawn by their customers which have been cleared and paid, and these are sent together with the monthly statements of the accounts of the previous months. By cl 3(c) the defendants required their customers to assume the obligations of verifying the monthly statements and cheques and notifying them of any debit or other errors in the accounts. Such obligations are not onerous, especially to a commercial organization like the plaintiffs.

Consmat Singapore (Pte) Ltd v Bank of America National Trust & Savings Association [1992] 2 SLR 828 High Court, Singapore (LP Thean J).

The vendors in this case, refused to proceed with the sale of their HDB flat. The buyers then commenced this action for specific performance. The sale and purchase agreements had a clause permitting the vendor to rescind from the agreement upon refunding the deposit and paying the purchasers 10% of the purchase price as liquidated damages. The vendors wanted to withdraw from the agreement on the ground that the property had been undervalued by the estate agent. The vendors had entered into an exclusive right of sale agreement with a housing agent to sell their property for a minimum price of S$170,000. The agreement entered into with the buyers was for S$175,000. The housing agent then made arrangements for a valuation report which stated the market value as S$170,000. Later, when the premises were readvertised, the vendors were offered S$260,000 and above.

Held, refusing application for specific performance: (1) in the present case, the existence of trust and confidence is not necessarily to be inferred from the mere placing by A of a property in B's hands to sell or let, and his occasional receipt from B of a report as to the progress of his efforts to bring about a letting or a sale; (2) there is an express stipulation as to the rights or power of the defendants as vendors without default of the purchasers to rescind and not to complete the legal transfer of the property. Clause 7 in the sale and purchase agreement is a condition which is a right in the nature of a power. The power to rescind contained in the clause is a power which, when once exercised, determines the contract for all purposes, save that the purchasers are still entitled to act under the special provisions of the clause in order to determine the amount of and to recover the damages which must be paid. The contract is determined not ab initio but only in relation to the future performance of obligations under it; (3) the parties to a contract may agree at the time of entering into it that in the event of a breach, the party in default shall pay a stipulated sum of money to the other. If the sum is a genuine pre-estimate of the loss which is likely to flow from the breach as in this case, then it represents the agreed damages and it is recoverable without the necessity of proving the actual loss suffered; (4) the mere fact that a contract contains a liquidated damages clause or a clause of a similar nature is not generally an admission that the parties have agreed that damages are a remedy or that one party has an option to pay or perform. Specific performance will nonetheless be granted if it is the appropriate remedy but the parties have the remedy of agreed damages; (5) the plaintiffs failed to establish a right to the relief of specific performance other than for liquidated damages.

Govindaraju s/o Valayathan & Anor v Ganasen s/o M Pakirisamy & Anor [1994] 3 SLR 85 High Court, Singapore (KS Rajah JC).

[Annotation: Reversed on appeal. See [1995] 1 SLR 365.]

The plaintiff brought this action against the defendant for the sum of $20,000 as money had and received by the defendant for consideration which had totally failed. The defendant had negotiated the purchase of a piece of land ('the property') with one Lim Soon Leong ('LSL'), a broker of real estate. It was agreed that the price would be $155,000 for the property and another $20,000 in cash for the furniture and fittings. Pursuant to the agreement, an option was executed by LSL on behalf of the company he owned, which was the owner of the property. The defendant gave LSL two cheques, one for $5,000 being the option money and a cash cheque for $20,000. The plaintiff testified in court that following this, he 'agreed to purchase the property at $187,000 subject to legal requisitions'. Following this, the plaintiff gave the defendant a cheque for $32,000 which was to be the defendant's profit. The plaintiff exercised the option and sent some money to the vendor of the property. Subsequently, after some correspondence between the plaintiff and the vendor, the plaintiff decided not to go through with the sale and purchase of the property.

Held, dismissing the claim: (1) the plaintiff's claim that he had agreed to purchase the property could not be right in law as the defendant had no capacity to sell. All she could do was to assign her rights under the option; (2) the court did not believe the plaintiff when he said that his purchase of the property was subject to legal requisitions. He was not buying the property from the defendant but only the right to buy it. Also, the right he was buying was contained in a document, the option. What he bought would be governed by the terms of the option. The option contained no provision on 'legal requisitions' other than the reference to the Singapore (Revised) General Conditions of Sale; (3) the court did not believe that the defendant knew what legal requisitions were. The plaintiff could not have expected the defendant to agree to nor would the defendant have agreed to such a term without extracting a similar term from the grantee of the option. The option was also in writing and any variation or addition to its terms had to be in writing; (4) even if the words 'subject to legal requisitions' were in the contract, the words were too imprecise. Additionally, oral evidence of the addition of a term to the written option would be prohibited under the Evidence Act (Cap 97, 1985 Ed). For the above reasons, the court decided that the words did not form part of the contract; (5) the plaintiff's alleged rescission of the contract was unjustified and the vendor, LSL's company, should not have accepted the rescission even if the plaintiff was right as to the alleged addition of the legal requisition clause; (6) one reason for this conclusion was that by this clause, the purchaser's right to cancel only arose if the purchasers had, by written notice to the vendor one week before the date fixed for completion, treated the contract as rescinded. No such notice was given; (7) also, the replies from the government departments were not unsatisfactory. The property would only be affected by road-widening if redevelopment of the property took place. There was no stipulation in the option or alleged legal requisition clause that the property was being purchased for redevelopment; (8) there was no total failure of consideration as between the plaintiff and the defendant. Even if this was wrong, the defendant cannot be made liable for the $20,000 because the rescission was in law and in fact not justified. It was also made and accepted without the defendant being given an opportunity to challenge the actions for the purchasers and the vendor on rescission; (9) the plaintiff's claim was therefore dismissed with costs. The defendant was not to recover the costs of producing the bundles of documents as there were no documents in dispute and instead of one bundle, three bundles were used, requiring cross referencing.

Lim Teck Hoe v Kathleen Chia Ah Lek [1989] SLR 678 High Court, Singapore (Coomaraswamy J).

The appellant claimed for the balance sum of the purchase price of logs sold and delivered to the respondent. The appellant adduced evidence that timber was sold once the logs were selected, measured and the log lists thereof prepared. This was because royalties payable to the government calculated on the basis of the log lists have to be paid before a removal pass was issued by the Forestry Department. The appellant claimed that the respondent visited their camp where one Saleem remained for a week to select and measure the logs. An invoice was prepared and sent to the respondent who made several payments. The appellant then claimed for the balance sum but the claim was dismissed by the magistrate. The appellant appealed, submitting that the magistrate erred in law by not accepting the copies of the log lists as evidence despite the fact that the log lists were not objected to when they were tendered in court as evidence. The respondent only raised the issue in their closing speech after the close of the appellant's case. The appellant further submitted that the magistrate failed to consider the fact that the respondent had paid the appellant on three occasions without any protest thus affirming the correctness of the invoice and the log lists. It was also contended by the appellant that the magistrate failed to consider the fact that the respondent did not complain after receiving the invoice. The respondents submitted that the log lists were not proved as they were prepared by an unknown person relying on notes that were not produced in court as evidence. It was also contended that Saleem was not an employee of the respondent.

Held, dismissing the appeal: (1) the learned magistrate erred in law by disregarding the log lists produced by the appellants that were already admitted by the court. As counsel for the respondent did not object to the admission of the documents till after the close of the case and only in his closing speech, he did not raise the objection at the first available opportunity. It must be regarded that the respondent had agreed to waive or had waived the improper manner in which the documents were adduced as evidence in court; (2) however, the magistrate was right in not placing any reliance on the log lists as their truth was not proved. This was in view of the massive amount of detail involved that required the notes on which the log lists were based to be adduced in court; (3) further, the appellant could not prove that the final selection was made in the camp by Saleem, whose position as their employee was disputed by the respondent. Even assuming that Saleem was there, evidence showed that the log lists were prepared even before Saleem had completed the selection of the logs; (4) the payments to the appellant did not justify the conclusion that the log lists were correct as two of the payments were made on account. There was also evidence that the respondent had requested for the purchase price be adjusted taking into account the fact that some of the logs selected were old; (5) as the complaint of the old logs was made on the day after the inspection of the logs, it meant that the complaint was made even before the invoice was issued. Therefore, it could not be said that the fact that the respondent did not complain after receiving the invoice meant that they had accepted the correctness of the invoice per se; (6) looking at the evidence of the appellant as a whole, it had failed to prove what really were the terms of the agreement regarding when the selection of the timber was deemed to have been completed. Despite the usual practice of the appellant, no attempt was made to prove that this practice was either known to the respondent or accepted by the respondent as a term of the agreement.

Tawau Resources Sdn Bhd v Southern Plywood Industries Sdn Bhd Civil Appeal No T (11) 11 of 1994 High Court, Tawau (Ian Chin J).

Perlato Coreno Marmi SRL v Ee Chin Siew (1994) CSLR VIII[2756] High Court, Singapore (KS Rajah JC).

See COMPANIES AND CORPORATIONS, Vol 3, para 41.

By an agreement dated 6 October 1972 ('the agreement'), one Nalamah d/o Sangapillay ('the purchaser') purchase a portion of land from the first and second defendants ('the vendors') for the price of RM9,000. The purchaser paid a sum of RM3,600 to the vendors as deposit. Pursuant to cl 3 of the agreement, the balance of the purchase price amounting to RM5,400 ('the balance purchase price') should be paid by the purchaser to the vendors at the office of the vendors' solicitors within 14 days of the date of the receipt by the purchaser of a notice in writing from the vendors that the main title deed to the land had been issued ('the completion date'). Clause 5 further provided that if the purchaser should fail to pay the balance price on or before the completion date, the agreement would automatically be terminated and the deposit paid would be forfeited by the vendors without notice. The purchaser subsequently caveated the land. On 5 October 1981, the purchaser's son ('the purchaser's son') received a message from an unknown third party that the document of title to the land had been obtained. On the same day, he gave a cheque for RM5,000 to the vendors' clerk. However, on the following day, payment on the cheque was stopped by the purchaser's son. He alleged that his mother asked him to stop payment because she wanted to pay through her solicitors. On 6 May 1982, the purchaser's solicitors wrote to the vendors to inquire if the document of title had been issued pursuant to cl 3. No reply was received to that letter nor to the subsequent reminders issued. The vendors then alleged that the purchaser was in breach of cl 3 of the agreement, and had thereafter sold that portion of land to the fifth defendant. The third and fourth defendants acted as trustees for the fifth defendant ('the second purchaser'). The purchaser sought specific performance of the agreement, contending that a written notice pursuant to cl 3 should have been sent to her when the document of title to the land was issued. It was also contended that the second purchaser's trust was null and void. The vendors, the second purchaser, and his trustees counterclaimed for the removal of the private caveat entered on the land by the purchaser, arguing that by issuing the cheque on the part of her son, the purchaser had varied cl 3 by doing away with the requirement for a written notice. The trial judge decided in favour of the vendors, the second purchaser and his trustees. The purchaser died in 1985, and the case was continued by her son. The purchaser's son appealed. The issue before the court was whether there had been variation of cl 3, in the manner that both parties had agreed to accept the oral notice (ie the message left by the third party for the son) in place of a written notice.

Held, allowing the appeal: (1) both parties to an agreement are entitled to vary any term of the agreement either in writing or orally save in cases, to quote s 92(d) of the Evidence Act 1950, where the contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to registration of documents. The agreement here was not of those excepted case; (2) where it is sought to prove a variation, not by an express agreement but by a course of conduct, the court must be satisfied that both parties understood the variation and intended to be bound by it; (3) if the purchaser had asked the son to stop payment of the cheque and that was done the next day, the clear inference was that she had not authorized the son to issue the cheque in the first place. The inference was strengthened by the issue of the cheque on 5 October 1981 and the haste in which the son had gone to see the vendors' clerk and lawyer on the same day. It could be inferred that after the son had informed the purchaser of what had happened, the purchaser had disagreed with such oral notice to be in place of a 14 days' written notice, and had asked him to stop payment on the cheque. The court below had failed to apply its mind to those inferences which would have inevitably arisen from the evidence; (4) it was possible that the purchaser's son could have acted as agent for the purchaser. The issue of the cheque by the son was prima facie evidence of some agency and would have been a fairly conclusive act of agency binding the purchaser if she had subsequently ratified it in writing or by conduct. However, the evidence in the present case pointed to the contrary. The purchaser had told the son to stop payment of the cheque and her solicitors had subsequently written to the vendors on her instructions to inquire if the document of title had been issued 'pursuant to cl 3'; (5) mere knowledge of a variation is not consent of a variation. From the facts of the case, the purchaser had understood the variation the vendors had in mind, but she had not intended to be bound by it. Consequently, there was no consensus ad idem about the variation of cl 3 and the purchaser could still fall back on cl 3 in its original form. Thus, the purchaser had not been in breach of cl 3 since the obligation to pay the balance price had not arisen prior to the receipt of the written notice as described in cl 3; (6) accordingly, the order for the removal of the private caveat also could not stand; (7) as there was no allegation that the second purchaser was a purchaser in good faith and for valuable consideration, the trust in so far as it related to the second purchaser in respect of the land would be declared void and of no legal effect.

Paul Murugesu s/o Ponnusamy (as representative of Nalamah d/o Sangapillay (deceased)) v Cheok Toh Gong & Ors [1996] 1 MLJ 843 Supreme Court, Kuala Lumpur (Anuar CJ (Malaya).

The plaintiff claimed specific performance of an agreement of sale of a rubber estate entered into between him and the defendants or in the alternative for damages or rescission of the contract. Under the agreement, time had been made the essence of the contract, but at the request of the plaintiff the defendants had consented to extension of time for completion on six separate occasions. Eventually, the defendants, through their solicitors, wrote to the plaintiff on 15 November 1967, insisting that the purchase be completed on the same day. As completion was not made on that day, they wrote to the plaintiff to say that the agreement was terminated. Subsequently the plaintiff offered to complete the contract but the defendants refused, taking the view that the contract was at an end.

Held: (1) once the time for completion was allowed to pass and the parties went on negotiating, then time was no longer of the essence of the contract and the defendants must give reasonable notice of their intention to abandon the contract if the balance is not paid; (2) in this case the notice of abandonment dated 15 November 1967 was not a reasonable notice and the contract had not been terminated; (3) in the circumstances the plaintiff had made out a case for specific performance of the contract.

Wong Kup Sing v Jeram Rubber Estates Ltd [1969] 1 MLJ 245 High Court, Kuala Lumpur (Raja Azlan Shah J).

The plaintiff and the defendant entered into a development agreement whereby in consideration of the plaintiff conveying to the defendant at least two units of shophouses on the land owned by the plaintiff, the defendant agreed to develop the said land in accordance with the agreement. The plaintiff contended that the defendant had delayed in carrying out the agreement and proceeded to rescind the same. The defendant contended that time was not of the essence of the agreement between the plaintiff and the defendant as the plaintiff continued to execute documents related to the agreement and handed over possession of the plaintiff's land to the defendant notwithstanding his rescission of the agreement. Therefore the plaintiff had waived any reliance on the time frame provided in the agreement.

Held, allowing the plaintiff's claim: (1) time was not of the essence of the agreement between the plaintiff and the defendant; (2) the plaintiff, nevertheless, had given reasonable time to the defendant to fulfil his obligations under the agreement vide his notice through his solicitors; (3) damages in the sum of RM69,700 with interest and costs were awarded to the plaintiff.

Lim Chuan Cheng v Tou Sii Keh [1993] 2 CLJ 339 High Court, Sibu (Steve Shim J).

In this case, the respondents had agreed to supply a substantial quantity of electrical equipment including four crystal chandeliers. Under the agreement, the date of delivery of the chandeliers was one month from the date of agreement which was on 2 December 1974. The appellants issued irrevocable letters of credit to the respondents and the shipment date was stated to be 20 January 1975. On 13 January 1975, the respondents wrote to the appellants that there would be a delay in the supply of the chandeliers. On 23 January 1975, the appellants purported to cancel the contract for the chandeliers on the ground that they were urgently required. On 27 January 1975, the respondents sent a telegram stating that the goods were ready for shipment and they were prepared to send it by air-freight. The appellants did not accept the offer and purported to cancel the contract. The respondents thereupon instituted proceedings claiming specific performance, alternatively damages. The learned trial judge held that on the facts time was not of the essence of the contract and he gave judgment for the respondents. The claim for specific performance was abandoned at the trial and the learned judge awarded damages reflecting the full contract price of the chandeliers. The appellants appealed.

Held: (1) the learned trial judge in this case was wholly right in coming to the conclusion that time was in no way of the essence of the contract; (2) the respondents were under an obligation to mitigate their damages and as no evidence had been produced to show that efforts had been made by them in this respect, there must be a retrial on the issue of damages.

Pacific Electrical Co Ltd v Seng Hup Electrical Co (S) Pte Ltd [1978] 1 MLJ 162 Court of Appeal, Brunei (Rigby (President).

The plaintiff firm claimed damages for breach of contract concerning delivery of certain machinery. In the written contract of sale, it was stipulated that shipment of the said machinery should be during July 1968. The machinery was not so shipped but the manager of the plaintiff firm entered into negotiations with the defendants. No notice fixing a reasonable time for the shipment and delivery of the machinery was given before the plaintiffs brought the action claiming damages for breach of contract.

Held: the plaintiffs had waived the initial stipulation making time the essence of the contract. If they wanted to make time again of the essence of the contract they should have given the defendants a notice fixing a reasonable time for the shipment and delivery of the machinery. As no such notice had been given, the action was misconceived and premature.

Sharikat Eastern Plastics Industry v Sharikat Lam Seng Trading [1972] 1 MLJ 21 High Court, Kuala Lumpur (Mohamed Azmi J).

In this case, the appellant had agreed to sell her lands to the respondent. At the time of signing the contracts the appellant orally agreed to allow the respondent to enter into occupation of one of the properties but she alleged that the respondent had wrongfully entered the other properties also. The respondent had failed to pay the balance of the purchase price and the appellant purported to rescind the contracts. She then brought an action to claim that the contracts had been effectively rescinded, forfeiture of the deposits, damages for trespass, mesne profits and ancillary relief. The learned Judicial Commissioner who heard the case found (a) that the actual selling price was $90,000 as claimed by the appellant; (b) that the actual date of completion was 31 March 1977 as claimed by the appellant; (c) that the first property was leased to the respondent and the respondent agreed to pay $1,000 at the end of each padi harvest every six months; (d) that the respondent had paid $36,000 to the appellant or her agent; (e) and that time was not made the essence of the contract. Since he found that the respondent was ready and willing to complete the sale, he ordered the contracts to be specifically performed. The claim of the appellant was therefore dismissed. The appellant appealed against the decision of the learned Judicial Commissioner on questions (d) and (e) as well as the order directing specific performance of the contracts.

Held: (1) although the agreement of sale contained an acknowledgment of the receipt of the deposit of $10,000, it was open to the vendor to prove that no consideration had actually been paid. In this case, the appellant had proved that the sum of $10,000 was not in fact received by her and therefore the total sum paid by the respondent was $26,000; (2) the learned Judicial Commissioner was right in holding that it was not the intention of the parties to make time the essence of the contracts and that the unilateral act of the appellant in purporting to rescind the contracts without giving the respondent reasonable notice making time to be of essence was wrong in law; (3) he must also prove that he had performed or had been at all times ready and willing to perform his part of the contract or his part of the obligations of the contract as fixed or interpreted by the court. Since the respondent was unable to bring his case under this principle, the learned Judicial Commissioner was wrong to decree an order that the contracts be specifically performed; (4) in this case the court could exercise its jurisdiction to rescind the contracts as there was no difficulty in restoring the parties to their original position. As the contracts are cancelled by the court under s 36 of the Specific Relief Act 1950 (Act 137), the respondent is not entitled to damages; (5) it is not sufficient for a purchaser to prove that he had at all times been ready and willing to complete the sale;since the contracts have been rescinded by the court, the appellant is not entitled to mesne profits in respect of her properties but only to reasonable compensation as justice may require. The respondent on the other hand is entitled to the return of the sum of $26,000 paid by him to the appellant.

Ganam d/o Rajamany v Somoo s/o Sinnah [1984] 2 MLJ 290 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

In this case, the appellant had undertaken to construct a road and drainage system on the land belonging to the respondent and to clear the land of its timber for the purpose of developing it as an oil palm estate. The agreement was terminated by the respondent. The appellant claimed that the termination of the agreement was unjustifiable and was in breach of the express or implied terms of the contract. The main question at issue was the actual time when the contract started to run. It was argued for the respondent that the period started from the date of the agreement, ie 5 August 1974. On behalf of the appellant it was argued that the agreement started on 1 August 1977 when the timber licence was issued. The learned trial judge dismissed the claim of the appellant who then appealed.

Held, dismissing the appeal: even though the work of extracting timber which was part of the appellant's contractual obligations commenced on the approval of the timber licence, the whole agreement became effective and commenced on 5 August 1974 or thereabout when the work of constructing roads and draining was started.

Nam Bee Rubber Estate Sdn Bhd v Syarikat Tanaman Perak Bhd [1986] 1 MLJ 29 Supreme Court, Kuala Lumpur (Hashim Yeop A Sani, Syed Agil Barakbah and Wan Hamzah SCJJ).

This was an appeal from the decision of the Federal Court ([1985] 2 MLJ 24) dismissing an appeal from the judgment of Peh Swee Chin J holding, inter alia, that this was a case where time was not merely of the essence of the contract but fulfilment of the promise by the appellant to obtain the approval on or before a certain date was a condition precedent to the whole contract.

Held: (1) insofar as the appeal turned on issues of fact, there were concurrent findings of fact in favour of the respondent by both courts below and their Lordships of the Privy Council could find no conceivable grounds for interfering with those findings; (2) on the application of the law to those facts, both the courts below came to the correct and only proper conclusions at which they could arrive; (3) the reasons given by the Federal Court for their decision seemed to the Privy Council wholly convincing and their Lordships of the Privy Council adopted them.

Jaafar bin Ibrahim v Gan Kim Kin [1987] 2 MLJ 109 Privy Council Appeal from Malaysia (Lord Bridge of Harwich, Lord Brightman, Lord Templeman, Lord Mackay of Clashfern and Lord Oliver of Aylmerton).

In this case, the respondent, the registered owner of a piece of land, agreed to transfer a half-share in the land to the appellant, if he could obtain approval for the conversion and sub-division of the land from the State Authority of Negri Sembilan by 31 December 1977. Such approval was not obtained before that date and the respondent relied on the provision in the agreement that 'thereupon the agreement shall become null and void and of no effect'. The approval was only obtained on 18 July 1980. The appellant claimed specific performance of the agreement and other ancillary reliefs. The learned trial judge dismissed the appellant's claim as he held that the agreement was a conditional or contingent contract and as the deadline for performance of the contingent condition had lapsed, the agreement was null and void and the appellant had no claim against the respondent. The appellant appealed.

Held: (1) this was a case where time was not merely of the essence of the contract but fulfilment of the promise by the appellant to obtain the approval on or before 31 December 1977 was a condition precedent of the whole contract; (2) the respondent promised to transfer her half-share in the land to the appellant if the approval was obtained on or before 31 December 1977. The event had not happened by the deadline and therefore under s 36(1) of the Contracts Act 1950 (Act 136), the contract became void.

Jaafar bin Ibrahim v Gan Kim Kin [1985] 2 MLJ 24 Supreme Court, Kuala Lumpur (Seah, Mohamed Azmi and Syed Agil Barakbah SCJJ).

In this case, the appellant had built a squatter house on a piece of land and had let it out to a tenant. The owner of the land made an agreement with her whereby it was agreed that the owner would pay her $600 and she agreed to quit and deliver up possession of the house by 10 April 1974. She had the option either to demolish or deliver up possession of the hut. In either event the owner was to pay her a further sum of $5,400 by way of compensation. If the appellant failed to demolish or deliver up possession on or before 10 April 1974, she agreed to pay the owner liquidated damages of $200 per day for the breach. The appellant did not fulfil her part of the bargain and the owner (respondent) brought an action seeking an order for the appellant to demolish the house and claiming damages. The appellant's defence was that the tenant of the hut refused to quit and she took out a third party notice against the tenant. In his defence the tenant stated that he had verbally agreed to quit and deliver up possession of the hut if $3,000 was paid to him as compensation. The owner paid the tenant and he vacated the house. The appellant then brought an action seeking payment of the $5,400. The two actions were consolidated and the President of the Sessions Court allowed the respondent's claim ordering the appellant to pay liquidated damages of $1 and to refund the $600. He dismissed the appellant's claim against the tenant and the owner for the sum of $5,400. On appeal the High Court affirmed the dismissal of the appellant's claim against the owner but allowed the appeal against the tenant ordering the tenant to indemnify the appellant the $600 which she had to pay to the owner and costs. The appellant appealed.

Held: (1) the agreement in this case was nothing more than an accommodation or expression of goodwill by the owner of the land to the appellant, provided the agreement was performed in time. Time was of the essence of the contract; (2) in this case, s 42 of the Contracts Act 1950 (Act 136) could not apply as (a) the performance was not done within the stipulated time as promised, (b) the appellant's plea that she was unable to perform because the tenant had refused to vacate the house cannot be accepted in view of her express undertaking under the agreement, (c) the performance by the tenant cannot be regarded as performance by the third person within the meaning of s 42 of the Act, as the tenant was in the same position as the appellant and (d) the owner by getting back the land did not get any benefit as what he got was rightly his own from the beginning; (3) the agreement clearly intended that the appellant would get the $6,000 if she herself would demolish or deliver possession of the house by 10 April 1974 and s 41 of the Contracts Act was the appropriate section; (4) in this case the appellant had helped herself to substantial gains by arrogating to herself ownership of the land, paying no rent whatever and renting out the squatter house at $80 a month for almost 20 years. In the circumstances, neither law nor equity could help her.

Letchumi Ammal v Nam Fong Housing Sdn Bhd [1982] 2 MLJ 19 Federal Court, Kuala Lumpur (Suffian LP, Syed Othman and Abdul Hamid FJJ).

The defendants had agreed to sell certain lands for the sum of $3,775,000 to one AN Karuthan Chettiar and the sum of $377,500 had been paid 'by way of deposit and part payment' in accordance with the agreement. Karuthan Chettiar assigned the agreement to the plaintiff. The sale was to be completed within 90 days from the date of the agreement and time was of the essence to the contract. The plaintiff failed to complete the sale and the defendants gave notice that the agreement was at an end and that the deposit had been forfeited. The plaintiff brought an action to recover the whole or part of the deposit on the ground that the forfeiture of the deposit was a penalty and therefore void and that the damages suffered by the defendants should be assessed.

Held: (1) where in a contract between vendor and purchaser a sum is deposited by the purchaser by way of guarantee or security for the performance of the contract of sale and time is of the essence to the contract, the purchaser, if he fails to complete the sale at the essential time, cannot recover the deposit if it bears a reasonable proportion to the purchase price and there is a stipulation in the contract as regards forfeiture; (2) the deposit of 10% was reasonable in the case of contracts for the sale of land and therefore the plaintiff in this case was not entitled to its recovery.

Jagatheesan v Linggi Plantations Ltd [1967] 1 MLJ 177 High Court, Kuala Lumpur (Gill J).

In this case, the plaintiffs agreed to purchase a rubber estate in Perak for $3 million and paid the sum of $300,000 by way of deposit and part payment. It was a term of the contract that completion should take place on 30 August 1967. At the request of the plaintiffs, time for completion was extended by one month to 30 September 1967 and on their failure to complete by paying the balance of the purchase price on that day, the defendants exercised their option to terminate the agreement and forfeited the deposit and part payment. The plaintiffs thereupon claimed the return of the deposit and part payment with interest. It was alleged by the plaintiffs that (a) the defendants were in breach of cl 10 of the agreement in that they altered the tapping system in certain areas of the estate and applied stimulant to the trees subsequent to the execution of the agreement without the plaintiffs' consent, knowledge or authority, (b) the defendants were in breach of cl 18(a) of the agreement in that they failed to or did not use their best endeavours to prevent interference by the estate labour force to access by the plaintiffs and their agents or representatives including prospective sub-purchasers to the estate and that this resulted in a repudiation of the agreement by the defendants. The plaintiffs also claimed that the time for completion had been waived by the grant of the one month's extension and that time became at large so that they were entitled to reasonable time to complete the purchase. On the facts, the learned trial judge found: (1) the defendants were not in breach of the agreement as they had used their best endeavours to ensure no interference from their labourers or other employees and there had been no prior notification of visits as required by cl 18(a); (2) the changes effected in the tapping system, the application of stimulant and the introduction of Sunday tapping were all made with the full knowledge, consent and approval of the plaintiffs and there had therefore been no breach of cl 10 of the agreement; (3) the complaints about lack of access to the estate due to interference by the labourers and the changes in the tapping system, the application of stimulant and the introduction of Sunday tapping were only a smoke screen through which the plaintiffs hoped to be able to resile from the agreement.

Held: (1) there were no breaches of cll 10, 18 or 19 of the agreement as alleged by the plaintiffs. Even if the plaintiffs had been able to prove the breaches alleged these were not fundamental breaches and would not amount to a repudiation of the agreement by the defendants as alleged and would only entitle the plaintiffs, if at all, to sue for damages; (2) the defendants were entitled to forfeit the deposit and part-payment as the plaintiffs were in breach of the agreement in not completing the purchase by paying the balance of the purchase price on the date fixed for completion; (3) by the extension of the completion date by a period of one month to a fixed date, time was not waived and did not become at large but remained at all times still of the essence and therefore there was no question that the plaintiffs were entitled, as they claimed, to be given reasonable time to complete the purchase of the estate; (4) the principle of the intervention of equity to relieve against forfeiture is not applicable where the Contracts Act 1950 (Act 136) applies in view of its specific provisions.

Siah Kwee Mow & Anor v Kulim Rubber Plantations Ltd [1979] 2 MLJ 190 High Court, Ipoh (Abdoolcader J).

The plaintiffs sued the defendants as administrators of the estate of one N, deceased, for the recovery of $10,000 which had been paid by the deceased as deposit for the purchase of a three-storey shophouse in Kuala Lumpur. Clause 3 of the option agreement dated 23 April 1964 signed by N stated: 'I/We will enter into formal agreement in the form and on such terms and conditions as your solicitors shall prescribe within fourteen (14) days from your giving notice requiring me/us to do so (time being of the essence). Failure to comply with such notice shall entitle you to forfeit the said deposit as liquidated damages and this agreement shall become null and void and of no further effect and I/we shall not be entitled to make any claim against you nor to any right title or interest in the property.' The defendants sent a notice as required by the said clause on 1 June 1964 and two reminders on 8 July 1964 and 5 August 1964. On 19 August 1964, N wrote to the defendants requesting a copy of the formal agreement for perusal. The defendants then sent a third reminder on 20 August 1964 whereupon on 28 August 1964 N wrote to the defendants to resell the property and requested the return of the deposit. As the defendants did not reply, N sent another letter on 7 October 1964 requesting a reply and stated that she did not agree to the terms and conditions of the offer of purchase. The defendants did not reply to the said letter but subsequently on 14 December 1964 sent a further reminder calling upon N to sign the formal contract and pay the further sum of $18,910 or otherwise they would cancel the transaction and forfeit the deposit and resell the property. On 17 December 1964, N replied by saying that the defendants could resell the property but that they should not forfeit the deposit for otherwise she was prepared to purchase the property upon terms to be agreed. The defendants sold the property after the expiry of the period of their last notice for the sum of $88,750, ie the original sale price.

Held: (1) the failure of the defendants to cancel the contract immediately upon completion of the period of notice of 14 days was not fatal. The failure coupled with the extension of time merely removed the element of time as being the essence of the contract; (2) N had committed a breach of the contract long before the defendants cancelled it; (3) it was the intention of the parties that the deposit was a guarantee or security for the due performance of the contract and it was liable to forfeiture; (4) the sum of $10,000 paid as deposit was reasonable for the contract of sale of the land and no equitable relief should be granted in this case.

Pan Ah Ba & Anor v Nanyang Construction Sdn Bhd [1969] 1 MLJ 39 High Court, Kuala Lumpur (Pawan Ahmad J).

The appellant had entered into a contract to sell to the respondent three pieces of land. The respondent paid $15,000 as 'advance towards the purchase price of the said lands'. It was agreed that the sale was to be completed when the appellant produced the titles of the said pieces of land which he had applied for from the authorities. Subsequently the appellant wrote to the respondent saying that he was in possession of the titles and giving the respondent 14 days to settle the balance of the purchase price and complete the sale. The respondent did not settle the purchase money within the period stipulated in the notice as he had written to the appellant to ask for one month's time to settle the difference. This letter was refused acceptance and was returned undelivered. Later the respondent wrote to the appellant to complete the sale. Getting no response he commenced an action to recover the deposit and damages. The appellant in his defence claimed that he was entitled to forfeit the deposit. The learned trial judge gave judgment for the respondent holding that the 14 days' period given in the appellant's notice was insufficient and unreasonably short. On appeal,

Held, dismissing the appeal: (1) as there was no evidence to show that the respondent-purchaser had been guilty of an unnecessary delay, there was no reason for the appellant-vendor to limit the time within which the respondent-purchaser was to complete the purchase; (2) even if the appellant-vendor had the right to give the notice making time the essence of the contract, the time given was in the circumstances insufficient and unreasonable; (3) in the circumstances there was no breach of contract which would warrant the forfeiture of the deposit.

Koh Shey Guan v Lee Kok Chan [1971] 1 MLJ 79 Federal Court, Kuala Lumpur (Azmi LP, Gill and Ali FJJ).

By a written agreement made between the plaintiff and the defendant, it was agreed that the plaintiff purchase a piece of land with the building thereon at the sum of $250,000, subject to the terms and conditions therein. The plaintiff made part payment of $25,000, and the balance of $225,000 was to be paid as follows: (a) on or before 30 October 1982, a sum equivalent to the outstanding due for the redemption of the land from the bank; (b) on or before 23 November 1982, the balance less sum paid under (a). Time was expressly declared to be of the essence to the contract. There was also an express term that failure to pay the balance as provided would entitle the defendant to forfeit the sum of $25,000 and treat the agreement as null and void and of no further effect with neither party having any claim against the other. The plaintiff failed to pay the redemption sum on or before 30 October 1982 and the defendant forfeited the sum of $25,000. On 6 November 1982, the plaintiff tendered the cheque for the redemption sum but it was rejected by the defendant. On 19 November 1982, the plaintiff tendered two cheques, one for the redemption sum and the other for the balance less the redemption sum but the cheques were returned by the defendant whereupon the plaintiff sued for specific performance of the contract. The defendant applied under O 18 r 19, Rules of the High Court 1980 for an order that the statement of claim be struck out and the action dismissed on the main ground that the statement of claim disclosed no reasonable cause of action.

Held: (1) where time has been stipulated in an agreement expressly to be of the essence it is of primary importance and the time stipulations must be adhered to; (2) the question of the reasonableness of the tender of the redemption sum within five days of the deadline is quite irrelevant, so also is the question of any requirement on the part of the defendant to give notice to the plaintiff to make payment within a reasonable time after the deadline; (3) accordingly, the statement of claim discloses no reasonable cause of action and it must be struck out and the action dismissed with costs.

Peter Ng Teck Joo v Vincent Ponniah [1985] 2 MLJ 146 High Court, Kuala Lumpur (Vohrah J).

P claimed the balance of the contractual price for work done and materials supplied in the construction and installation of a chilled water storage tank and two expansion tanks. D resisted the claim on the ground of defective workmanship, failure to complete on time and non-compliance with design.

Held, granting judgment to P: (1) D failed to establish that there was defective workmanship. As to non-compliance with the design, it was held that D were responsible for the provision of the shop drawings and could not be heard to complain if the construction done in accordance with those drawings did not suit their purposes; (2) it was not disputed that completion was late. However, D had waived any right they had to repudiate the contract on the ground of failure by P to comply with the date of completion. They had permitted P to proceed with their work on the tank, carried out periodic inspections and given them other deadlines. D were therefore limited to their right to damages for late completion. No such damage was proven. The defence therefore failed.

Dancom Engineering Pte Ltd v Takasago Thermal Engineering Co Ltd District Court Appeal No 89 of 1987 District Court, Singapore (Francis Tseng, District Judge).

By a written agreement dated 20 July 1974, the plaintiff purchased from the defendant a double-storey house for $38,500. The defendant was to complete the house on or before 31 December 1975. Time was the essence of the contract relating to payment of money. On 28 November 1975, the plaintiff received a letter from a firm of solicitors representing both parties asking him to take possession of the house and pay the final instalment of $3,850, within a given period. Between that date and 10 April 1976, the plaintiff inspected the house twice and found it not completed and letters were exchanged between the parties. On 10 April 1976, the defendant wrote to the plaintiff informing him that the uncompleted works had been fully remedied and requesting payment of the last instalment of $3,850, otherwise it would terminate the said agreement. On 13 May, the plaintiff sent a cheque for $3,850 to the solicitors paying under protest, and the said solicitors returned the cheque to the plaintiff without the defendant's instructions. On 18 May 1976, the plaintiff and the defendant's architect jointly inspected the house and the latter wrote to the defendant on 29 May 1976 requesting it to remedy the defects and uncompleted works. On 17 September 1976, the defendant wrote to the plaintiff to take over the house and pay the balance of $3,850 immediately. The plaintiff got the keys of the house on 22 September 1976. On 6 October 1976, the said solicitors instructed by the defendant requested the plaintiff to pay immediately the sum of $4,295.96 being last instalment plus interest. But on 13 October 1976, the defendant wrote to their solicitors again instructing them to terminate the said agreement. As instructed by the defendant, the solicitors wrote a letter on 16 October 1976 to the plaintiff to terminate the said agreement forthwith. The plaintiff was asked to deliver vacant possession of the house. On 20 October 1976, the solicitors sent to the plaintiff the defendant's cheque for $26,950 being refund of the monies less the sum forfeited. The plaintiff did not pay the cheque into his account and considered the agreement not terminated and still claimed that the defendant had failed to rectify the defects which he was compelled to rectify. He sent the defendant a cheque for $1,556.85, being the balance less the estimated cost of repairs of $2,293.15. Eventually on 2 February 1977, the plaintiff sued the defendant for damages for breach of contract and for delivery of the relevant issue document of title. The defendant counterclaimed for mesne profit at $800 per month.

Held: (1) the payment of the last instalment of $3,850 by the plaintiff was a tender of the said sum under protest and was therefore a good and valid tender; (2) the defendant had waived and allowed time of payment of the last instalment to pass. If the defendant had wanted to make time again of the essence to the contract, it should have given the plaintiff a notice fixing a reasonable time within which he must pay the last instalment. In the solicitors' letter of 16 October 1976, no reasonable time was fixed within which the plaintiff was asked to pay the last instalment. The said agreement was therefore not validly terminated; (3) the plaintiff was entitled to specific performance of the agreement. The defendant should deliver the document of title and execute a valid and registrable transfer in his favour; (4) the plaintiff was not entitled to any damages for delay in completion of the house. Damages should be assessed on the basis of what it would cost the plaintiff to obtain performance of the contractual undertaking by a third party. Damages were assessed at $4,586.36 with interest at 8% from date of judgment to date of payment; (5) as the plaintiff was not a trespasser after he received the letter of 16 October 1976, the defendant's counterclaim for mesne profits was dismissed. The defendant was entitled to payment of the sum of $3,850 with interest thereon at 10% as provided for in s 4(7) of the Second Schedule to the said agreement with effect from September 1976 to date of payment. Costs to be paid by each party.

Quah Ban Poh v Dragon Garden Pte Ltd [1985] 2 MLJ 159 High Court, Johore Bahru (Gunn Chit Tuan J).

P entered into two separate agreements (the 'exchange agreement' and the 'sale agreement' respectively) for the purchase of D's interests in two parcels of land. The exchange agreement was concluded between P and the first to sixth defendants; the sale agreement was entered into between P and the seventh and eighth defendants. It was a condition precedent of the exchange agreement that a grant of written permission ('the GWP') and building plan approval ('building approval') in respect of the land be obtained by P within six months of the date of the exchange agreements. Thereafter if the GWP or building approval was not obtained, the agreement was to automatically determine and each party was to be released from any further obligation. Clause 8 provided for time to be of the essence. P failed to obtain the GWP and building approval as required by the agreement. P then began these proceedings against D claiming, inter alia, a declaration that the exchange agreement and sale agreement continued to be valid and subsisting, and an injunction to restrain D from conveying the land to any third party. P asserted in the statement of claim that the condition requiring the GWP and building approval to be obtained within six months of the date of the exchange agreement was for the benefit of P, which P could and did waive. P obtained an ex parte injunction and lis pendens order affecting the land. D applied to strike out P's statement of claim. On the return day of the injunction, P moved for its continuance.

Held, discharging the injunction and the lis pendens order: (1) the present case was not a plain or obvious case for a striking out since the statement of claim, on the face of it, disclosed a reasonable cause of action. P's claim was manifestly not an abuse of the process; (2) the court found that time was of the essence and that P had failed to obtain the GWP and building approval by the contractually stipulated date, for which they only had themselves to blame; (3) the condition requiring the GWP and building approval to be obtained enured for the benefit of both the vendors and the purchasers, and was therefore not capable of being waived by P unilaterally; (4) D were thus not obliged to grant P an extension of time; (5) these conclusions were enough to persuade the court that the injunction ought not to be continued. The court was influenced by balance of convenience considerations, because it was common ground that if the GWP and building approval were not obtained shortly, the land was likely to be compulsorily acquired. If the injunctions were discharged an alternative buyer was available, who might save the land from acquisition.

Resources Mining Pte Ltd v Puteh bte Abdullah & Ors [1989] SLR 823 High Court, Singapore (Grimberg JC).

The defendant entered into an agreement with the District Officer, Kuala Selangor, for the making of certain roads. He sub-contracted with the plaintiff for the completion of this work. A clause in the sub-contract provided for the whole work to be completed within the 30th day of May 1960. On 30 May 1960, the plaintiff had not completed the work. The defendant sent him a letter terminating the sub-contract without notice and arranged for the uncompleted work to be finished by someone else. The plaintiff asked for an extension of time to complete the work but no extension was granted. The plaintiff brought an action for damages for breach of contract, alternatively for payment of a sum on the basis of quantum meruit. Gill J,

Held ([1962] MLJ 400): (1) there was no express stipulation making time of the essence of the contract and neither from the nature of the contract nor its subject matter nor from the intention of the parties could it be said that time had been made of the essence; (2) the defendant was in consequence not entitled to terminate the sub-contract without giving the plaintiff notice to complete within a reasonable period and his action amounted to a breach of contract; (3) the proper remedy of the plaintiff was in quantum meruit and not in damages and there should be judgment for the plaintiff for the amount he actually spent in the performance of the sub-contract. Observations on principles as to time being the essence of the contract. Observations on quantum meruit. On appeal to the Court of Appeal, Held: (1) the nature of the contract or of its subject matter was such that no inference could be drawn that time was of the essence; (2) accordingly, the appellant was in breach of his contract and the respondent was entitled to recover on the basis of quantum meruit. Decision of Gill J affirmed.