Syarikat Ng & Anuar v Besgrade Plywood Sdn. Bhd. (KA-24NCvC-136-04/2023)

BESGRADE PLYWOOD SDN BHD [Company Reg. No. 199401007340 (293019-V)]

COMPUTER FORMS (MALAYSIA) BERHAD [Company Reg. No. 196101000393 (4423-H)] …RESPONDENT GROUND OF JUDGMENT

In this action, the Applicant, a firm of solicitors, invoked interpleader proceedings seeking the court’s determination as to the rightful party entitled to the return of a sum of money described as a deposit. The contesting parties are the First and Second Respondents, each asserting a claim to the said deposit. 19/01/2026 08:15:18

At the outset, it is pertinent to observe that this interpleader proceeding is properly instituted, given that the Applicant lays no claim to the deposit and in light of the competing claims thereto. I find that the Applicant has demonstrated and fulfilled the following requirements of the first stage of an interpleader proceeding: -

it has no property in the subject matter, other than for costs;

it is willing to dispose of the subject matter as the court directs;

it may face a potential suit by one or more parties and that prospect is genuine;

there exist a real conflict between the claimants. Accordingly, the procedure adopted by the Applicant is appropriate, given the existence of competing claims and the necessity of avoiding a multiplicity of proceedings, particularly in the present case which arises from a stakeholder’s interpleader - Hong Leong Bank Bhd v Manducekap Hi-Tec Sdn Bhd & 25 Ors [2009] 1 AMR 784; [2009] 7 MLJ 124; Tan Kau Tiah @ Tan Ching Hai v Tetuan Teh Kim Teh, Salina & Co (a firm) & Anor [2013] 5 AMR 97; [2013] 4 MLJ 313; [2013] 5 CLJ 161, FC; Alliance Bank Malaysia Bhd v Hapsah bt Md Nor [2010] AMEJ 0030; [2011] 7 MLJ 494 Chin Leong Soon & Ors v Len Chee Omnibus Co Ltd & Anor [1970] 2 MLJ 228, FC.

Apart from the Applicant, the Respondents have filed affidavits. This Court has also recorded oral evidence of two witnesses who, at the material times are the directors of another entity, SH Trading Co. Kluang Sdn. Bhd. That recording of oral came about upon an application made by the Second Respondent under Order 39 r 1 of the Rules of Court 2012, which initially was rejected, but was reversed by the Court of Appeal upon an appeal.

Having heard the parties and carefully considered all the evidence before me, I directed that the deposit held by the Applicant be released to the Second Respondent.

Dissatisfied with my decision, the First Respondent has filed a notice of appeal dated 24 November 2025.

The following are my grounds in arriving at my decision.

The First Respondent is the proprietor of four (4) pieces of lands held under :

Grant 101898 Lot 5633 Mukim Kluang, Daerah Kluang, Negeri

Grant 92956 Lot 5634 Mukim Kluang, Daerah Kluang, Negeri

Grant 92957 Lot 5635 Mukim Kluang, Daerah Kluang, Negeri

Grant 92959 Lot 5636 Mukim Kluang, Daerah Kluang, Negeri Johor. (“the Lands”)

The Second Respondent is the interested buyer of the Lands.

The Applicant is the solicitors appointed by the First Respondent.

By a letter of offer to purchase dated 9 September 2022 (“OTP”), the First Respondent agreed to sell, and the Second Respondent agreed to purchase, the Lands for the agreed consideration of RM30 million. The OTP further set out the terms governing the manner in which the parties were to complete the transaction.

Subsequently, by a letter dated 21 October 2022, the Respondents executed what was termed a Variation Letter of Offer to Purchase (Variation Letter), whereby certain amendments to the OTP were agreed upon, including a reduction of the purchase price from RM30 million to RM28 million.

More importantly, as regards to the payment terms, the original terms in the OTP were entirely cancelled and the following was agreed to:-

As regards to the time for the execution of the Sale and Purchase Agreement that event is provided in clause 3 which reads as follows:

From the clauses as set out above it is clear the earnest deposit is paid subject the execution of the Sale and Purchase Agreement which in turn will only occur if the Second Respondent secured a loan to finance the completion of the purchase. I must pause here to observe that the terms of the Variation Letter make no specific mention of the right of forfeiture of the earnest deposit. Instead, it is worded in the reverse: it speaks of the obligation to refund the same which became the contentious issue as will be seen below.

It is pertinent to observe that, in relation to the timing for the Second Respondent to secure financing, no specific period is prescribed. Rather, the parties have made it contingent upon the right of refund. A careful scrutiny of Clause 2.5(ii) suggests that the Second Respondent must apply for and secure financing within 60 days from the date of the Variation Letter. This led the First Respondent to submit - an issue I shall analyse later in this judgment - that the right to a refund has been lost, thereby giving rise to a right of forfeiture.

It is not in dispute that the Second Respondent had neither secured financing nor obtained rejections from two financial institutions to enable the parties to move to the next milestone, namely the execution of the Sale and Purchase Agreement within 60 days from the date of the Variation Letter. The Second Respondent, however, advanced a different construction of the 60‑day period, contending that it should be computed from the date of acceptance of its offer by the First Respondent. On this footing, the Second Respondent maintained that, since the First Respondent only accepted the terms and returned the Variation Letter on 7 November 2022, the 60‑day period would lapse only on 6 January 2023.

It is to be noted that the Second Respondent in its affidavit, Encl. paragraph 9 admitted that even by 20 January 2023 it had not obtained any loan from any financial institution. On that date a significant event took place where the Applicant acting on instructions from the First Respondent issued a letter dated 20 January 2023 alleging that as the Second Respondent, despite being given financing by the banks, had decided against proceeding with the next step of signing the Sale and Purchase Agreement. Accordingly, the earnest deposit stands forfeited. That letter, is as follows:-

That letter was met with a swift reply on the same day where the solicitors of the Second Respondent refuted the First Respondent’s allegations regarding the loan and the supposed intention not to pursue the purchase. It was emphasised that the Second Respondent, being a listed entity, was subject to disclosure and compliance requirements before loan financing could be secured. More fundamentally, the Second Respondent, through its solicitors, reaffirmed its intention to proceed with the purchase of the Lands and requested a 30‑day extension, until 20 February 2023, to complete the bank loan process.

As regards to the forfeiture of the earnest deposit, the solicitors for the Second Respondent empathically disputed the First Respondent’s entitlement to forfeit the same.

The next event occurred on 16 February 2023 where the Applicant, as solicitors, in a short reply for the First Respondent stated that the earnest deposit “has been forfeited” and that the earnest deposit would be released to the First Respondent. No specific mention was made in that on the rejection of the request for extension.

On 28 February 2023 the solicitors for the Second Respondent then replied stating that the 2nd Respondent has obtained financing from RHB Bank in the sum of RM21 million and thus wishes to proceed with the purchase of the Lands. At the same time the Second Respondent also stated that it is aware that the First Respondent has secured a new buyer for the Lands and in view thereof the Second Respondent “has no objection for a full refund [of the earnest deposit] and thereafter both parties shall have no claim against each other”.

As mentioned above, the Applicant, pursuant to instructions, declared in its letter of 16 February 2023 that the earnest deposit stood forfeited. The deposit, however, continues to be held by the applicant. The applicant averred that Ms. Pek, an officer of the First Respondent, had repeatedly contacted the applicant by telephone to request its release. The applicant was apprehensive that, if the deposit were released to the First Respondent, it would face a suit from the Second Respondent.

The Applicant filed this application seeking an order of the Court to issue an interpleader notice against the First Respondent and the Second Respondent, both of whom claim an interest in the earnest deposit of RM600,000.00 (currently held by the applicant as trustee/stakeholder), requiring them to appear before this Court to explain their respective rights, claims, and interests in the said earnest deposit, so as to enable this Court to determine and adjudicate their entitlement and claims over the said earnest deposit. The case for the First Respondent

The First Respondent claims of the earnest deposit are based on the following grounds:

The Letter of Offer to Purchase dated 9 September 2022 and the Variation of the Letter of Offer to Purchase dated 21 October 2022 are binding upon the First Respondent and the Second Respondent.

(ii) The Second Respondent has breached the terms agreed upon in the Letter of Offer to Purchase and the Variation Letter of Offer to Purchase, and the 60‑day period provided under the Variation Letter of Offer expired on 20 December 2022. An extension of time was granted twice, namely for a period of 45 days pursuant to the OTP dated 9 September 2022 and subsequently extended for a further period of 60 days pursuant to the Variation Letter of Offer dated 21 October 2022, whereby the Second Respondent was given time until 20 December

A further extension of 30 days until 20 February 2023 was not agreeable by the First Respondent.

(iii) As of 20 December 2022, the Second Respondent still failed and continued to fail to provide notification and/or submit proof of rejection from two financial institutions as required under Clause 2.5 (ii) Variation Letter whereby the earnest deposit could only be refunded to the Second Respondent if the Second Respondent was unable to obtain financing with proof of rejection from two financial institutions. The Second Respondent did not fulfil this condition and accordingly the earnest deposit may be forfeited and released to the First Respondent.

(iv) There was no rejection by conduct on the part of the 1st Respondent when the 1st Respondent sold the property to the Third Party, as the sale was effected after the expiry of the period within which the 2nd Respondent must secure the loan. The case for the Second Respondent

The Second Respondent’s claims to the refund of the earnest money are based on the following grounds:

As at 20 January 2023, they had not obtained any bank loan for the purchase of the Lands.

(ii) As it had yet to obtain any loan, the Variation Letter did not automatically become void or terminated; rather, it was merely voidable at the option of the First Respondent. That option must be exercised by the First Respondent should it wish to terminate the agreement.

(iii) The Variation Letter continued to be valid and binding on both the First and Second Respondents when, on 9 January 2023, the First Respondent accepted the Third Party’s purchase offer.

(iv) The First Respondent is deemed to have rejected the Second Respondent’s offer to purchase when, on 9 January 2023, the First Respondent elected to accept the Third Party’s offer. Such election constitutes a breach by the First Respondent of the Variation Letter.

The Notice of Forfeiture dated 20 January 2023 was issued by the First Respondent on an erroneous basis, as the Second Respondent had never breached Clause 3 of the Variation Letter. Accordingly, the Notice of Forfeiture is unlawful.

The core issue before the Court is whether the First Respondent is entitled to forfeit the earnest deposit. Intrinsic to that inquiry is whether the Second Respondent is entitled to a refund. Put in neutral terms, the matter concerns the party entitled to the earnest deposit.

The facts pattern in this case is no different from the various other transactions taking place day in day out relating to real property where instead of entering into a binding contract for sale and purchase the parties would rather adopt what is commonly referred as “an open contract” or “an agreement to agree”. The hallmark of this arrangement is that the parties anticipate the formation of a formal contract at a later date upon a happening of certain event. It is unnecessary for me to allude to this practice as the learning upon the subject is sufficiently covered by the superior courts in the cases such as the decisions of the then Supreme Court in Ayer Hitam Tin Dredging Malaysia Bhd. v. Y.C. Chin Enterprises Sdn. Bhd. [1994] 3 CLJ 133; [1994] 2 MLJ 754, Kam Mah Theatre Sdn. Bhd. v. Tan Lay Soon [1994] 1 CLJ 1; [1994] 1 CLJ 9 and the decision of the Federal Court in Charles Grenier Sdn. Bhd. v Lau Wing Hong [1997] 1 CLJ 625.

In Ayer Hitam the Supreme Court had provided the following guide for the purpose of identifying the correct test that is to be applied in a case such as the present: “True it is that merely because the parties contemplate the preparation of a formal contract, that by itself will not prevent a binding contract from coming into existence before the formal contract is signed. It is not difficult to cite an anthology of cases for this proposition but we need no more than refer to Von Hatzfeldt-Wildenburg v. Alexander [1912] 1 Ch. 284 at pp. 288, 289 where the Court said this: It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract.”

Applying the principles drawn from the cases cited and upon consideration of the evidence, I hold that the Variation Letter is binding on the parties, particularly in determining the central issue of entitlement to the earnest deposit. This finding is fortified by Clause 6 of the OTP, which reads as follows:-

Following the canons of interpretations of contract, I must then determine the issue of the entitlement to the earnest deposit which was paid by the Second Respondent to the First Respondent for the intended purchase. On this I am reminded of the following observations by the Federal Court in Catajaya Sdn Bhd v. Shoppoint Sdn Bhd & Ors [2021] 3 CLJ 159 FC where the following passages are instructive:- “[49] In any written agreement there must be strict adherence to the agreed terms of the agreement by the parties unless expressly provided otherwise. [50] In SPM Membrane Switch Sdn Bhd v. Kerajaan Negeri Selangor [2016] 1 CLJ 177; [2016] 1 MLJ 464, the Federal Court reversed the decision of the High Court and the Court of Appeal on the central issue on the interpretation of an agreement and held that the termination of the agreement therein was wrongful. Zainun Ali FCJ quoted an article by Professor Richard Hooley, 'Implied Terms After Belize Telecom' [2014] 73 CLJ 315 at pp. 324-325 summarizing Lord Hoffman's principles in Belize:

A court has no power to improve the instrument it is asked to construe whether to make it fairer or more reasonable. It is concerned only to discover what the instrument means.

That meaning is what the instrument would convey to a 'reasonable person' or 'reasonable addressee' having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed. This objective meaning of the instrument is what is conventionally called the intention of the parties or of whoever is the deemed author of the instrument.

The question of implication arises where an instrument does not expressly provide for what is to happen when some event occurs. In most cases, the usual inference is that nothing is to happen, and the express provisions of the instrument continue to operate undisturbed. If the event causes loss to one of the parties, the loss lies where it falls.

In some cases, however, the 'reasonable addressee' of the instrument will conclude that the only meaning which the instrument can have, consistent with its other terms and the relevant background is that something is to happen in response to the particular event that has not been expressly provided for in the instrument's terms. In such a case, it is said that the court implies a term as to what will happen if the event in question occurs.

Nevertheless, that process does not add another term to the instrument; it only spells out what the instrument means. In other words, the implication of a term is an exercise in the construction of the instrument as a whole.

It follows that in every case of implication, the single question for the court is whether the implied term would spell out in express words what the instrument, read as a whole against the relevant background, would reasonably be understood to mean.”

As alluded to earlier the First Respondent has approached the issue from the reverse: that the Second Respondent has not established that it is entitled to the refund of the earnest deposit as it had failed to bring itself within the confined of Clause 2.5 (ii) of the Variation Letter. At paragraph 38 of its written submission, another layer was added to its argument: that the Second Respondent in failing to secure the loan within the period of 60 days from the date of the Variation Letter that in itself has further caused the Second Respondent’s failure to execute the Sale and Purchase Agreement within the requisite period stated in Clause 3 of the Variation Letter.

Meaning no disrespect to learned counsel, I find the submission unconvincing. It is clear that neither the OTP nor the Variation Letter contains an express clause on the forfeiture of the earnest deposit. While I recognise that the First Respondent advances forfeiture as a necessary implication - that the absence of a refund must result in forfeiture - I am unable to concur with that approach.

I am also unable to accept the interpretation of Clause 2.5(ii) urged by the First Respondent. Read in its entirety, the Clause simply provides that the Second Respondent is entitled to a refund if it fails to secure the necessary loans within 60 days from the date of the Variation Letter. It does not state that the earnest deposit shall be forfeited upon expiry of that period. I am not prepared to imply such a term, particularly in the absence of any evidence that the parties were ad idem on such a stipulation, or any reasons advanced to justify it. I further hold that nothing in the OTP or the Variation Letter indicates that the Second Respondent’s right to a refund would be lost if the loan were secured after the 60‑day period.

For the foregoing reasons, I hold that the Second Respondent is entitled to a refund, and accordingly the First Respondent’s claim to a right of forfeiture cannot be sustained.

In light of the reasoning set out above, I find it unnecessary to address the First Respondent’s contention that forfeiture is warranted to compensate for the alleged loss arising from the subsequent sale of the Lands at RM23 million, resulting in a potential shortfall of RM5 million. The cases cited, notably Cubic Electronic Sdn Bhd (in Liquidation) v Mars Telecommunication Sdn Bhd [2019] 2 CLJ 723, provide no support for that submission.

I further agree and sustain the Second Respondent’s submission that the First Respondent, by entering into a sale and purchase with the third party in the first week of January 2023 and accepting the offer to purchase on 9 January 2023 without notifying the Second Respondent, has committed a fundamental breach of the OTP and the Variation Letter. In consequence of this unconscionable conduct, the First Respondent cannot claim a right to forfeit the earnest deposit.

In the upshot and accordingly, I hereby order that the earnest deposit of RM600,000.00 kept by the applicant Messrs Ng & Anuar are to be returned to Second Respondent through Second Respondent’s solicitor Messrs Ong, Ric & Partners with accrued interest.

As regards to costs, I make no order as against or for the Applicant but order that the First Respondent is to bear cost of RM30,000.00 to be paid to the Second Respondent subject to payment of allocator. Dated : 18 January 2026 (Mohd Aimi Zaini Bin Mohd Azhar) Judicial Commissioner High Court Malaya Alor Setar Kedah Darul Aman Solicitors for Applicant : Gavin Chew Messrs. Syarikat Ng & Anuar Solicitors for the First Respondent : Zuriana Zakaria Messrs. Yang Lim & Co Solicitors for the Second Respondent : Jarret Ong, Tow Min Ric Messrs. Ong, Ric & Partners