DALAM MAHKAMAH PERSEKUTUAN MALAYSIA
(BIDANGKUASA RAYUAN)
RAYUAN SIVIL NO.02-18 TAHUN
2003(W)
(kini dikenali sebagai Eastern Pacific
Industrial Corporation Berhad)
KONG LONG HUAT REALTY SDN BHD … RESPONDEN
(Dalam perkara Mahkamah
Rayuan Malaysia
Rayuan Sivil No. W-02-82
tahun 1999
Di antara
(kini
dikenali sebagai
Eastern
Pacific Industrial Corporation Bhd)
Dan
Kong
Long Huat Realty Sdn Bhd … Responden)
ABDUL MALEK AHMAD, FCJ
ABDUL HAMID MOHAMAD, FCJ
The respondent is the registered proprietor of
land held under Lot No. 8761, CT 25148, Mukim Kajang in Selangor. The appellant entered into a sale and
purchase agreement dated 11th October 1989 with the respondent to
purchase it at the agreed price of RM 550,000.
At the time of execution of the agreement, the appellant had paid the
respondent RM 50,000 and by clause 3(a) thereof, the appellant was to pay the
balance of RM 500,000 on or before 9th January 1990.
7. The appellant then filed a summons in chambers for an order that the following issues be heard pursuant to Order 33 rule 2 of the RHC namely:
(a) whether clause 3(a) of the agreement dated 11th October 1989 entered into between the plaintiff as purchaser and defendant as vendor relating to that piece of land held under C.T. 25148 Lot No. 8761 Mukim Kajang, Daerah Ulu Selangor Darul Ehsan, entitles the plaintiff to an automatic extension of 30 days for completion upon payment of interest of 8.5% per annum calculated on a day to day basis during the extension period;
(b) other related issues including whether the
said agreement of sale and purchase was validly terminated.
8. The learned High Court Judge held that the extension
of time under clause 3(a) of the agreement was not automatic but subject to the
payment of interest and the appellant had failed to pay the balance of the
purchase price on 9th January 1990.
It was also clear, she said, that under clause 14 of the agreement, time
was of an essence and it was crucial for the balance of the purchase price to
be paid on or before 9th January 1990 should the extension of time
is not obtained.
9. She added that there was no evidence that the
appellant had applied for the extension of time when they could not pay the
balance of the purchase price. She also
said that no other action was taken to show that the appellant had done all
that they were required to do and this was fatal to a claim for specific
relief. Not only did the appellant not
pay the balance of the purchase price within the agreed period, she said, but
they had not asked for the extension of time from the respondent knowing that
the balance of the purchase price could not be paid on the expiry date of the
agreed period.
10. The claim for specific relief was dismissed with
costs. However, the learned High Court
Judge referred to section 18(2) of the Specific Relief Act 1950 which states:
“If in any such suit the
court decides that specific performance
ought not to be granted, but that there is a contract between the parties which
has been broken by the defendant and that the plaintiff is entitled to
compensation for that breach, it shall award him compensation accordingly.”.
11. She said the termination of the contract was due to the appellant and not the respondent and, therefore, she dismissed the appellant’s claim for damages. She, however, allowed the respondent’s claim for the RM 50,000 deposit to be forfeited to the respondent based on clause 9 of the agreement which states:
“9. In the event that the Purchasers fail for any reason whatsoever
(save and except upon the rescission of the sale and purchase referred to in
Clauses 11 & 12 hereunder) to complete the sale and purchase of the said
property the Vendor shall forfeit from the Deposit paid herein the sum of
Ringgit Fifty Thousand (Rgt 50,000.00) only as agreed liquidated damages and
cause the remainder of the Deposit and all other monies paid hereunder by the
Purchaser to be refunded to the Purchasers and the Purchasers shall where
vacant possession of the said property has been delivered re-deliver vacant
possession of the same to the Vendor and thereafter neither party shall have
any claim against the other and the Vendor shall be at liberty to sell or
otherwise deal with the said property in such manner and to and with such
persons as the Vendor shall deem fit without tendering or offering the said
property to the Purchasers.”.
12. Dissatisfied with this decision, the appellant appealed to the Court of Appeal. The Court of Appeal agreed with the finding of the High Court, as regards clause 3(a) of the agreement, as can be seen from the relevant excerpts of the Court of Appeal judgment reproduced below:
“12. Reverting to the present case we agree that the words “shall grant” appearing in clause 3(a) taken by themselves would mean that the defendant is under obligation to grant the extension to the plaintiff without the plaintiff having to apply for the extension. However, as stated above word or words in an agreement ought not to be construed in isolation, they need to be construed within the context of the agreement as a whole. Looking at clause 3(a) it is clear that the plaintiff is required to complete the purchase of said property within 90 days of the date of the agreement. This 90-day period, however, is subject to a further extension of 30 days upon payment of interest by the plaintiff on the balance sum at the stipulated rate. The question that arises is whether this interest is payable only if the plaintiff decides to proceed with the purchase or is payable in any case whether the plaintiff decides to proceed with the purchase or otherwise. We think the answer to this question is crucial to the issue before us whether the plaintiff needs to give notice of its intention to have the Complete Date extended or otherwise. What clause 3(a) provides is that the purchaser is entitled to an extension of the Completion Date “upon payment of interest on the outstanding balance…”. In our view the plain meaning of this would be that the purchaser will have to pay interest on the balance sum if he wants to have the Completion Date extended. Thus, by necessary implication, in order to bring this provision into effect it is incumbent upon the purchaser to notify the vendor of his intention to have the Completion Date extended.
13. In the present case not only the plaintiff failed to notify the defendant of its desire to have the Completion Date extended but in its solicitors’ letter of 10.1.1990 the plaintiff contended that it is not obliged to pay the interest on the balance sum since it has fulfilled all its obligations under clause 3(c).
14. However, from the undisputed facts before the court we find that on the completion Date neither the balance of the purchase price had been paid nor the necessary undertaking had been furnished to the stakeholders. Further, as we have said earlier, the plaintiff also failed to notify the defendant of its intention to have the Completion Date extended. Therefore, based on those facts we are of the view that the defendant was clearly acting within its right in terminating the agreement vide its letter of 10.1.1990.”.
13. Apparently, learned counsel for the appellant relied heavily on the case of Jeow Fong Mei (P) v Chong Mee Yoke (P) (1996) 1 AMR 755 to substantiate his point about the automatic right to the extension period but the issue there is clearly distinguishable as the expiry date of the extension period was in issue and the termination was sent one day too early. Here, there is no dispute as to the expiry date of the initial three month period.
14. As regards the respondent’s counterclaim, the Court of Appeal varied the order of the learned High Court Judge by summarising the situation in the following manner:
“16. Looking at the order of court dated 3.1.1999 it is clear that the learned judge had allowed the counterclaim by the defendant for the sum of RM50,000 and further ordered that an interest of 8% p.a. be paid on the said sum to be calculated from 9.1.1990 until full payment. From the facts before the court it is not in dispute that the said sum of RM50,000 was paid by the plaintiff to the defendant on or before the execution of agreement pursuant to clause 2(a). This is further confirmed by the defendant’s letter of 10.1.1990 in which the defendant proposed that all the deposits paid by the plaintiff be refunded to the plaintiff. Therefore, we agree with the contention of the plaintiff that it is erroneous on the part of the court to allow the counterclaim by the defendant on those terms. In our view that the correct order would have been that the sum of RM50,000 being the deposit paid under the agreement be forfeited to the plaintiff pursuant to clause 9. Since the said deposit had already been paid to the defendant therefore the order by the learned judge for payment of interest by the plaintiff on the said sum also ought to be set aside.
17. There is one other issue raised by the plaintiff’s counsel with regard to the forfeiture of the deposit. He contended that since the defendant in its letter of 10.1.1990 offered to refund all deposits to the plaintiff therefore rightly no order of forfeiture of the deposit should, in the circumstances, be made against the plaintiff. Learned counsel for the defendant countered by saying that the offer for refund was made with a view of the parties reaching an amicable settlement on the matter, however, since the plaintiff had elected to commence legal action against the defendant the offer could not be taken against the defendant. Reading the relevant part of the letter we agree with the contention of the learned counsel for the defendant that the offer to refund the deposit made by the defendant is subject to the plaintiff agreeing to treat the agreement as null and void. Since the plaintiff refused to treat the agreement as null and void, therefore, naturally the offer no longer stands. In the circumstances, we think the defendant is entitled to have the deposit forfeited in accordance with clause 9.
Conclusion
18. For the above reasons we dismissed the plaintiff’s appeal herein with costs, however, the order of the court directing the plaintiff to pay to the defendant the sum of RM50,000.00 together with interest of 8% p.a. thereon is hereby set aside and we substitute, therefore, with an order that the sum of RM50,000.00, being the deposit paid to the defendant, be forfeited to the defendant.”.
15. On 10th November 2003, this court gave leave to the appellant to appeal on the following questions:
(a) whether a clause in a sale and purchase agreement such as that found in clause 3(a) of the said agreement entitles the purchaser in the agreement an extension of time to complete, as of right;
(b) whether a clause in a sale and purchase agreement such as that found in clause 3(a) of the said agreement requires or necessitates the purchaser to “apply” or “ask” for the extension;
(c) whether a clause in a sale and purchase agreement such as that found in Clause 3(a) of the said agreement merely requires payment of interest for extension of time (assuming the same is payable) to be paid on a daily basis for the actual number of days of extension when the balance purchase price is paid.
16. In these circumstances, we are of the view that the appellant fell into error when they attempted to give an interpretation to clause 3(a) of the agreement on a piecemeal basis instead of reading the provision as a whole. Read in its entirety, it is clear beyond any doubt that the completion date is ninety days after the execution of the agreement but a further extension of thirty days shall be given by the respondent upon payment by the appellant of interest on the outstanding balance of the purchase price at the rate of 8.5 per cent per annum calculated on a daily basis during the extension period. With no interest paid by the appellant for the extension period and without any notification that an extension was needed despite the exchange of correspondence during the crucial period before and after the expiry of the initial period of three months, how was the respondent to know that the appellant needed an extension to complete the agreement?
17. Having considered the authorities and the arguments, we are in full agreement with the findings of the High Court and the Court of Appeal as regards the interpretation of clause 3(a) of the agreement and would answer the first question in the negative, the second question in the positive and the third question in the positive but we must add that, for the third question, a notification for the extension is essential before the expiry of the initial period and a written undertaking to pay, as opposed to actually paying, the interest for the extension period, would have sufficed.
18. Accordingly, we would dismiss the appeal with costs. The deposit is to go to the respondent to the account of taxed costs.
Dated 21st May 2004
(ABDUL MALEK AHMAD)
JUDGE
FEDERAL COURT
MALAYSIA
Date of Hearing: 13th April 2004
Date of Decision: 21st May 2004
Counsel:
Dr. Wong Kim Fatt (Christina Chia Li Eng and Khor Loke Yew with him) for the appellant
(Solicitors: M/s Christina Chia Ng & Partners)
Karpal Singh for the respondent
(Solicitors: M/s Karpal Singh & Co).