Ultra Racing (M) Sdn Bhd v Hai Soon Leong Sdn Bhd (B-02(NCvC)(A)-942-05/2022)

a declaration that the termination or the sale and purchase 13 agreement between the plaintiff and defendant was lawful;

that the defendant is to return the original title to the property 15 and transfer the same to the plaintiff; and 16

that the defendant is to return vacant possession of the property 17 within 14 days of the court’s order. 18 19 [4] In OS 1031, the defendant, as applicant, sought for, among others, 20 the following orders: 21 22

a declaration that the sale and purchase agreement dated 23 25.10.2018 between the plaintiff and defendant is valid and 24 subsisting;

a declaration that the termination of the SPA was invalid; 26

an order for the SPA be executed by the parties by way of 1 specific performance;

that specific performance against the plaintiff is enforced to 3 perfect the said sale and transfer of the property to the 4 defendant;

additionally, and/or in the alternative, the plaintiff is to pay the 6 defendant damages in lieu of specific performance; and 7

a declaration that the registration of the defendant as the owner 8 of the property is valid. 9 10 11 B. Background Facts. 12 13 [5] The plaintiff (as vendor) and the defendant (as purchaser) have 14 entered into a Sale and Purchase agreement dated 25.10.2018 (the SPA) 15 for the sale of a property held under individual title No. HS(D) 167739, 16 Mukim Semenyih, District of Hulu Langat, State of Selangor (the 17 property). The SPA was prepared by Messrs Ng Say Wooi & Partners, 18 the solicitors representing the defendant. The plaintiff, at that material 19 time was not represented. 20 21 [6] The salient terms and condition of the SPA, among others, are as 22 follows: 23 24

the purchase price was RM 4,000,000.00.

the total earnest deposit plus deposit was RM400,000.00. 26

the defendant shall have three (3) months from the date of the 1 SPA to complete the purchase by paying the balance purchase 2 price of RM3,600,000.00 to the plaintiff.

should the defendant fail to complete the purchase within the 4 time stipulated, the plaintiff shall grant an extension of time of 5 one (1) month from the expiry date of the SPA subject to the 6 payment of interest of 1% per annum. 7 8 [7] The completion date of the SPA fell on 24.1.2019 and subsequently 9 the extended completion date fell on 23.2.2019. 10 11 [8] At the request of the defendant, the plaintiff agreed to give an 12 extension in writing of time of another three (3) months until 25.5.2019 13 (the final extended completion date) for the defendant to pay the balance 14 purchase price. 15 16 [9] However, after the final extended completion date had lapsed, the 17 defendant was still unable to pay the full balance purchase price to the 18 plaintiff. 19 20 [10] Nevertheless, on 24.4.2019 the defendant’s financier has paid the 21 redemption sum of RM2,490,988.17 to Hong Leong Bank Berhad, the 22 registered chargee of the Property in order to redeem the charge 23 registered over the said Property. After deducting the payment of the 24 redemption sum, the balance purchase price that was remained unpaid 25 was RM 1,109,011.83. Unfortunately, despite the full balance of 26 purchase price remained unpaid, the transfer of the Property was 27 S/N B02vY/rJqEiVdeJ5ptxV2g registered by Messrs YC Pang, Chong & Gordon, the defendant’s 1 financier’s solicitors. 2 3 [11] It must be noted that at the date of transfer of the Property, the 4 plaintiff was not represented and the whole matter pertaining to the 5 registration of the transfer of the Property was conducted by the solicitor 6 for the defendant who prepared the SPA and the defendant’s financier’s 7 solicitor without the participation of the plaintiff. 8 9 [12] Subsequently, the defendant again requested for another extension 10 of the completion date of the SPA from the plaintiff. At this point of time, 11 the plaintiff appointed Messrs Tan Kong Hai & Tui to represent them. 12 13 [13] The plaintiff, through its solicitors responded to the request, via 14 letter dated 24.7.2019 stating that they would only agree to give another 15 extension of the completion date of the SPA up to 15.8.2019 subject to 16 the following conditions: 17 18

the defendant shall pay the Differential Sum of RM400,000.00; 19 and 20

the defendant shall pay the late payment interest on or before 21 31.7.2019. 22 23 [14] The defendant paid the Differential Sum of RM400,000.00 which 24 was held by its solicitor as stakeholder for the plaintiff but has failed to 25 pay the late payment interest on or before 31.7.2019. 26 27 S/N B02vY/rJqEiVdeJ5ptxV2g [15] Via letter dated 21.8.2019, the plaintiff notified the defendant that 1 subject to the payment of the late payment interest on or before 2 28.8.2019, the plaintiff would agree to give an extension until 4.9.2019 for 3 the defendant to pay the full balance purchase price. 4 5 [16] The defendant failed to pay the full balance purchase price of the 6 Property on or before 4.9.2019. The plaintiff did not agree to give the 7 defendant further extension of time for the completion of the SPA and in 8 the words of the plaintiff, the SPA ‘remained lapsed as on 25.5.2019’. 9 10 [17] Subsequently, on 11.9.2019, the plaintiff’s solicitor sent a letter of 11 termination of the SPA pursuant to clause 4 of the SPA and the plaintiff 12 also refunded the sum of RM2,890,998.17 received from the defendant. 13 14 [18] The defendant objected to the termination of the SPA. They also 15 refused to accept the refund of RM2,890,998.17 and the defendant’s 16 solicitor then returned the cheque back to the plaintiff’s solicitor. The 17 defendant also refused to return the title of the Property and the vacant 18 possession of the Property to the plaintiff after the termination of the SPA. 19 Consequently, the plaintiff filed OS 1485. 20 21 [19] In response to OS 1485, the defendant filed OS 1031 seeking, 22 among others, to declare that the termination of the SPA was unlawful 23 and to enforce the said SPA. 24 25 [20] In so far as OS 1485 is concerned, the defendant contended the 26 following facts: 27

The plaintiff and the defendant initially signed a Letter of Offer to 1 Purchase cum Temporary Receipt prepared by Roof Realty Sdn 2 Bhd on 7.8.2018 and 8.8.2018 to purchase the Property.

Amongst the terms in the Letter of Offer is that the SPA must be 4 signed by the plaintiff and defendant within 14 full working days 5 upon loan approval.

Upon request and pressure by the plaintiff the SPA was signed 7 and stamped on 25.10.2018 before the defendant obtained the 8 loan. The defendant had only obtained the approval for the loan 9 on 6.12.2018. Due to the early execution of the SPA, the 10 defendant was placed in an unfavourable position as it is 11 impossible for the SPA to be completed by 24.1.2019 and 12 24.2.2109. It was contended by the defendant that the parties 13 are aware of this fact and the plaintiff had on 5.3.2019 agreed to 14 extend the completion date of the SPA to 25.5.2019.

Thereafter, there were delays in the settlement of the 16 redemption sum due to the discrepancies in the Redemption 17 Statement forwarded to defendant’s financier’s solicitors on 18 18.2.2019. This information was relayed to the defendant’s 19 solicitor via letter from the defendant’s financier’s solicitor dated 20 28.3.2019 which had caused the delay of approximately two 21 months which is beyond the expectation and control of the 22 defendant. Due to these discrepancies, the defendant’s 23 financier was unable to release the redemption sum.

On 22.4.2019, the defendant’s solicitor had forwarded the fresh 25 Redemption Statement to the defendant’s financier’s solicitor. 26 S/N B02vY/rJqEiVdeJ5ptxV2g On 29.4.2019, the defendant’s solicitor notified the defendant 1 that the redemption Sum of RM2,490,988.17 had been released.

On 19.6.2019 the defendant’s financier’s solicitor had attempted 3 to register the Memorandum of Transfer of the Property; 4 however, the transfer was rejected due to technicalities. After 5 resubmission of the transfer Form 14A, the Memorandum of 6 Transfer was duly registered on 4.7.2019.

On 18.7.2019, the defendant’s solicitor requested a further 8 extension of time from the plaintiff to complete the SPA. The 9 defendant admitted that the vide letter dated 24.7.2019, the 10 plaintiff had agreed to extend the completion date of the SPA to 11 15.8.2019 subject to the payment of the Differential Sum and 12 late payment interest.

On 25.7.2019, the defendant’s solicitor replied to the plaintiff’s 14 solicitor’s letter dated 24.7.2019 disputing the calculation of the 15 late payment interest of RM148,339.70. The defendant 16 contended that the parties had agreed that 8% late payment 17 interest shall be imposed. However, the parties could not agree 18 on the number of days in which the late payment interest 19 applies.

On 21.8.2019 the plaintiff’s solicitor forwarded a new calculation 21 of the late payment interest amounting to RM78,260.28.

On 28.8.2019, the plaintiff’s solicitor requested the plaintiff to 23 reassess the calculation of the late payment interest to include 24 the deduction of days which was beyond the expectation and 25 control of the defendant. 26 27 S/N B02vY/rJqEiVdeJ5ptxV2g 12 1 C. Decision Of The Learned HCJ 2 3 [21] After considering the application in both OS 1485 and OS 1031, at 4 paragraph [23] of the grounds of judgement, the learned HCJ decided as 5 follows: 6 7 [23] My findings on the entire pleaded case of both the Vendor (the 8 plaintiff) and Purchaser (the defendant) in OS.1031 and OS.1485 are as 9 follows: 10 11

that the SPA had not lapsed on 25.09.2019;

(ii) whilst the defendant may have breached the SPA by failing to pay 13 the Balance Purchase Price by or on 25.09.2019, the said breach 14 does not go to the root of the contract warranting the termination 15 of the SPA;

(iii) Time is no longer the essence of the SPA;

(iv) Given the fact that the failure of the Purchaser to pay the Balance 18 Purchase Price was largely contributed by the conduct of the 19 Vendor (including the error in calculating the amount of late 20 payment interest payable by the Purchaser), the Purchaser is not 21 entitled to terminate the SPA. Accordingly, the termination of the 22 SPA is not valid, null and void; and 23

the facts of the case tilts heavily in favour of the Purchaser’s 24 application for an order of specific performance. 25 26 27 28 29 S/N B02vY/rJqEiVdeJ5ptxV2g 13 1 D. Summary Of The Submission Of The Plaintiff 2 3 [22] For appeal no 939 (relating to the plaintiff’s OS 1485) learned 4 counsel for the plaintiff submitted that the learned HCJ had misconstrued 5 the facts of the case when His Lordship ruled that the plaintiff (vendor) 6 had twice agreed to grant the extension of time for the 7 defendant(purchaser) to pay the balance purchase price that had caused 8 the time to be at large. The plaintiff argued that the under section 1 of 9 the Third Schedule of the SPA the extension of time of one month is an 10 automatic extension of time which will be activated once the defendant 11 fails to pay the balance purchase price from the date of signing of the 12 SPA. This extension cannot be taken into consideration in computing the 13 number of extensions of time that had been granted by the plaintiff. As 14 such, it was submitted that there was only one extension of time of three 15 months granted by the plaintiff on 5.3.2019 which would lapsed on 16 25.5.2019. 17 18 [23] It was further submitted that the learned HCJ erred when His 19 Lordship ruled that the failure of the defendant to pay the balance 20 purchase price was largely contributed by the conduct of the plaintiff 21 especially the delay in obtaining the Redemption Statement. It was 22 submitted that at that particular point of time, the plaintiff was not 23 represented by any solicitors. The whole matter relating to the 24 Redemption Statement was handled by the solicitor who was preparing 25 the SPA who was representing the defendant. Further, the defendant’s 26 financier’s solicitor had also asked for clarification from the defendant’s 27 S/N B02vY/rJqEiVdeJ5ptxV2g solicitor to clarify on the amount of the Redemption sum. All these were 1 done without the plaintiff’s participation hence, any delay in releasing the 2 redemption sum was not contributed by the plaintiff. 3 4 [24] It was further submitted that the learned HCJ erred when His 5 Lordship ruled that time was at large and no longer the essence of the 6 SPA. It was argued that the plaintiff was not represented by solicitor at 7 the date of execution of the SPA and the whole matter of registering the 8 transfer were conducted by the defendant’s solicitor preparing the SPA 9 and the defendant’s financier’s solicitor, both acting for the defendant. 10 The plaintiff was also not asked whether they were agreeable for the 11 registration of the transfer and charge over the Property after 25.5.2019 12 i.e. the due date for the payment of the balance purchase price. It was 13 further submitted that the solicitor for the plaintiff who was only appointed 14 on 24.7.2019 had clearly notified the defendant that the SPA ‘had lapsed 15 on 25.5.2019’ and any extension of time may only be agreeable by the 16 plaintiff subject to the payment of the differential sum of RM400,000.00 17 and the payment of late payment interest. With regards to the calculation 18 of the late payment interest, it was submitted that the delay in 19 ascertaining the amount of interest payable by the defendant was due to 20 the unreasonable objection raised by the defendant in the calculation of 21 the interest. The plaintiff also submitted that any issue on delay in 22 terminating the SPA or issue about whether the time is no longer the 23 essence of the SPA should not arise because the SPA has been 24 automatically terminated by the operation of clause 4 of the SPA. 25 26 S/N B02vY/rJqEiVdeJ5ptxV2g [25] With regards to appeal no. 942 (relating to OS 1031), it was 1 submitted that the plaintiff as vendor was not at fault for the delay in 2 obtaining the Redemption Statement. The matter was handled by the 3 solicitor preparing the SPA and the defendant’s financier’s solicitor and 4 the financier i.e. Hong Leong Bank Berhad. As such the delay was 5 caused by these characters and not the plaintiff. There was also no 6 evidence that show that the defendant has the capacity to pay the 7 balance purchase price. It is further submitted that the defendant had 8 breached the SPA by not paying the balance purchase price. They did 9 not come with clean hands; hence specific performance should not have 10 been granted to the defendant. 11 12 13 E. Summary Of Submission For The Defendant 14 15 [26] In respect of appeal no. 939 (relating to OS 1485) the defendant 16 submitted that they had fulfilled all terms and conditions in compliance 17 with the of the SPA but the SPA could not be completed due to the 18 plaintiff’s refusal to provide confirmation of the extended completion date 19 of the SPA. The defendant submitted that under the SPA, payment of 20 late payment interest was never a prerequisite to its completion and the 21 plaintiff would still be entitled to late payment interest even after the SPA 22 has been completed. 23 24 [27] The defendant further submitted that at the date of termination of 25 the SPA, they have paid the sum of RM3,290,988.17 which constitute 26 82.3% of the total purchase price. Hence the failure to pay the balance 27 S/N B02vY/rJqEiVdeJ5ptxV2g purchase price should not be considered as a total failure of 1 consideration and accordingly the promised has been performed in part. 2 In this respect, the defendant submits that the learned HCJ was correct 3 when His Lordship ruled that the failure to pay the balance of the 4 purchase price within the stipulated time does not go to the root of the 5 contract and does not warrant the termination of the contract. 6 7 [28] The defendant also submits that if there was any breach on the part 8 of the defendant, it would be the shortfall of 17.7% of the total purchase 9 price, which is not sufficiently grave or fundamental for the plaintiff to 10 rescind the SPA. It is further submitted that the plaintiff did not 11 immediately make an election to rescind the SPA on 25.5.2019 but by its 12 own conduct had allowed further extension to pay the balance purchase 13 price. However, since the plaintiff had refused to sign the confirmation of 14 the extension of time, the defendant’s financier could not release the 15 balance purchase price. 16 17 [29] The defendant also submitted that by conduct of the parties, they 18 have now agreed on the new terms and conditions of the SPA i.e.: 19 20

new late payment interest of 8%;

extension of time was mutually agreed upon; and 22

vacant possession to be handed on 3.1.2019 before payment of 23 balance purchase price. 24 25 26 S/N B02vY/rJqEiVdeJ5ptxV2g [30] Hence, it was the defendant’s case that the SPA has been 1 completed and any right of the plaintiff for the delay in paying the balance 2 purchase price is in the form of late payment interest only. The plaintiff 3 could not terminate the SPA unilaterally based on their refusal to give 4 confirmation on the further extended date of completion of the SPA. It 5 follows that time was no longer the essence of the SPA. 6 7 [31] The defendant also submits that the delay of the payment of the 8 balance purchase price was primarily caused and/or contributed by the 9 failure of the plaintiff’s financier to issue an accurate Redemption 10 Statement. The defendant claimed that the discrepancies in the 11 Redemption Statement issued by the plaintiff’s financier had caused 12 delays of more than two months and the delay could not be imposed on 13 the defendant. The defendant argued that the learned HCJ was correct 14 when His Lordship ruled that the plaintiff had contributed to the delay in 15 the payment of the balance purchase price hence the termination of the 16 SPA was invalid. 17 18 [32] In respect of appeal no 942 (relating to OS no. 1031) the defendant 19 contended that they are always prepared and willing to complete the SPA. 20 They had paid the earnest deposit of RM400,000.00 and had obtained a 21 loan for the purpose of completing the SPA. The defendant also submit 22 that they come to the court with clean hands and is entitled for the order 23 of specific performance. It was further submitted that the defendant had 24 already spent RM1,270,032.00 to renovate the Property, hence it will be 25 prejudiced in the event that specific performance was not granted. 26 27 S/N B02vY/rJqEiVdeJ5ptxV2g 18 1 2 3 F. Our Decision 4 5 [33] Based on the memorandum of appeal and the submission of 6 learned counsels, the issues that require our determination are:

whether the SPA had been validly terminated;

(ii) whether time is the essence of the SPA;

(iii) whether the failure to pay the balance purchase price of the 10 Property was a fundamental breach of the SPA and the 11 defendant’s failure to pay the balance purchase price amounting 12 to a breach of the SPA that entitle the plaintiff to rescind the SPA;

(iv) whether the defendant is entitled to claim for specific 14 performance. 15 16 [34] At the outset, we remind ourselves that in determining an appeal 17 before us, we should refrain ourselves from interfering with the finding of 18 the trial court unless such finding was plainly wrong. In UEM Group Bhd 19 v Genisys Integrated Engineers Pte Ltd [2010] 9 CLJ 785 at p 800, 20 the Federal Court states: 21 22 “It is wells settled that an appellate court will not generally speaking, 23 interfere with the decision of a trial court unless the trial court is shown to 24 be plainly wrong in arriving at its decision. A plainly wrong decision 25 happens when the trial court is guilty of no or insufficient judicial 26 appreciation of evidence (see Chow Yee Wah & Anor v Choo Ah Pat 27 S/N B02vY/rJqEiVdeJ5ptxV2g [1978] 1 LNS 32; Watt v Thomas [1947] AC 484; and Gan Yook Chin 1 & Anor v Lee Ing Chin & Ors [2004] 4 CLJ 309)” 2 3 [35] Based on the above principle, we will now deal with all the issues 4 together. 5 6 [36] The fact that both plaintiff and defendant had entered into the SPA 7 dated 25.10.2018 is not disputed. Section 1 of Second Schedule of the 8 SPA provides that the purchase price of the Property was 9 RM4,000,000.00. Section 2 of Second Schedule of the SPA states that 10 the earnest deposit to be paid was RM400.000.00, leaving the balance 11 purchase price due from the defendant in the sum of RM3,600,000.00. 12 Section 2 (c) of the second schedule provides that the balance purchase 13 price was payable in the following manner: 14 15

the balance Purchase Price (hereinafter referred to as “the Balance 16 Purchase Price”) to be paid by the Purchaser to the Purchaser’s 17 Solicitors as stakeholders for the vendor within three (3) months from the 18 date of this Agreement (hereinafter referred to as “the Completion 19 Period”) or any extension of time referred to in Section 1 of the Third 20 Schedule herein as the case maybe.” 21 22 [37] The extension of time in Section 1 of the Third Schedule of the SPA 23 reads as follows: 24 25 1. In the event the Purchaser is unable to settle the Balance 26 Purchase Price within the completion period the Vendor shall 27 automatically grant to the Purchaser a further period of one (1) month to 28 S/N B02vY/rJqEiVdeJ5ptxV2g settle the same (hereinafter referred to as “the Extension Period”) 1 provided that the purchaser shall pay to the Vendor interest on the 2 Balance Purchase Price outstanding at the rate of one per centum 1% 3 per annum calculated on daily basis from the commencement of the 4 Extension Period until the date of full payment of the Balance Purchase 5 Price. 6 7 [38] The fact that the Balance Purchase Price of the Property was not 8 paid by the defendant after the expiry of the Extension Period under 9 section 1 of the Third Schedule is not disputed by the parties. The failure 10 to pay the Balance Purchase Price within the prescribed time under 11 Section 1 of the Third Schedule of the SPA tantamount to an event of 12 default under clause 4 of the SPA which provides: 13 14 15 DEFAULT BY PURCHASER AND DETERMINATION OF AGREEMENT 16 17 4. In the event of the Purchaser not paying any instalment or 18 instalments of the total purchase price to the Vendor or the said Solicitors 19 as stakeholders as the case may be within the time and in the manner 20 stipulated in Section 2 and Section 3 of the second schedule hereto, it is 21 hereby agreed between the Vendor and Purchaser that the sum or sums 22 as the case may be more particularly referred to in section 4 of the 23 Second Schedule hereto which have already been paid by the Purchaser 24 by way of earnest money which is forfeitable. Such sum or sums shall 25 accordingly be forfeited absolutely to the Vendor as agreed liquidated 26 damages. The Vendor shall at the time of such forfeiture refund to the 27 Purchaser the sum, if any, equivalent to the difference between the total 28 aggregate of all part payments of the total purchase price already paid by 29 S/N B02vY/rJqEiVdeJ5ptxV2g the Purchaser to the date of such default less the aforesaid forfeited sum 1 or sums referred to in Section 4 of the Second Schedule hereto and 2 thereafter this Agreement shall be null and void and of no effect and 3 neither party hereto shall have any claims against the other. The Vendor 4 shall be entitled at his absolute discretion to resell the said property 5 either by public auction or by private contract and at such time and place 6 and subject to such conditions and in such manner as the Vendor shall 7 think fit and without the necessity of previous tendering or offering to 8 make any sale to the Purchaser. 9 10 [39] In our opinion, clause 4 of the SPA is crucial in the determination of 11 the appeals before us. This clause provides for an automatic termination 12 of the SPA and the plaintiff may treat the SPA as null and void and of no 13 effect. This issue was raised in the Federal Case of case of Dream 14 Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441. In that 15 case, the purchaser/defendant only paid 10% deposit of the purchase 16 price and failed to pay the balance purchase price by the completion date. 17 The Federal Court took the view that the failure on the part of the 18 purchaser/defendant to pay the balance purchase price within the 19 completion date brought into operation clause 12 of the SPA (which is 20 quite similar to clause 4 in our present case). The Federal Court opines: 21 22 [75] It is very important now to take a closer look at cl 12 of the SPA: 23 In the event of the Purchaser failing or neglecting to pay the 24 balance of the purchase price on the Completion Date or on the 25 Extended Completion Date whichever is applicable a sum equivalent to 26 the sum stated in Section 7 of the schedule hereto shall be forfeited by 27 the Vendor whereupon this agreement shall be treated as null and void 28 and of no further effect. 29 S/N B02vY/rJqEiVdeJ5ptxV2g 22 1 [76] In our view, whether or not a clause in an agreement has the 2 effect of providing for automatic termination and confers on a party a right 3 to immediate termination, must be considered by the words used by the 4 parties in the particular agreement and this will depend very much on the 5 circumstances of each individual case. In the present case, however, 6 what stands out is that on a matter of substance, cl 12 expressly provides 7 that the ‘the contract shall be treated as null and void and of no effect’. 8 The contractual language is clear and plain enough. That explicit and 9 unambiguous words must be given its literal meaning. The immediate 10 consequence of the termination compellingly favours the view that 11 automatic termination was intended by the plaintiff and the defendant 12 when they mutually agreed to be bound by the SPA. In our view, cl 12, as 13 a contractual term explicitly agreed between the plaintiff and the 14 defendant, provides for the automatic termination of the SPA upon the 15 defendant’s failure to pay the balance purchase price within the 16 stipulated time period. In such a situation, there was no requirement for a 17 notice of termination to be issued by the plaintiff to the defendant. 18 19 [40] We are of the view that clause 4 of the SPA is clear an 20 unambiguous. By executing the SPA, the parties intended that the 21 purchaser must pay the balance purchase price within the time as 22 stipulated in Section 4 of the Second Schedule hereto, failing which: 23 24 i. the deposit paid under section 4 of the Second Schedule 25 becomes forfeitable as agreed liquidated damages, 26 ii. the plaintiff shall refund to the defendant the sum, if any, 27 equivalent to the difference between the total aggregate of all 28 part payments of the total purchase price already paid by the 29 S/N B02vY/rJqEiVdeJ5ptxV2g defendant to the date of such default less the aforesaid 1 forfeited sum, 2 iii. thereafter the SPA shall be null and void and of no effect and 3 neither party shall have any claims against the other. 4 iv. the plaintiff shall be entitled at his absolute discretion to resell 5 the said property either by public auction or by private 6 contract and at such time and place and subject to such 7 conditions and in such manner as the Vendor shall think fit 8 and without the necessity of previous tendering or offering to 9 make any sale to the Purchaser. 10 11 [41] In interpreting the agreement, as a general rule, the court will give 12 effect to the plain and unambiguous meaning of the terms agreed upon 13 by the parties. It does not matter what the parties thought the contractual 14 term meant. The court’s primary concern is the what that has been 15 expressly agreed upon and stated in the agreement (see Mulpha Pacific 16 Sdn Bhd v Paramount Corp Bhd [2003] 4 MLJ 357) This principle is 17 further explained in the case of Berjaya Times Square Sdn Bhd 18 (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd 19 [2010] 1 MLJ 597 at p 620, the Federal Court adopted the principle in the 20 United Kingdom and states: 21 22 “[43] …. The most recent statement of the guideline to the interpretation 23 of contract statutes and other instrument is to be found in Attorney 24 General of Belize & Ors v Belize Telecom [2009] UKPC 10, where 25 delivering the advise of the board, Lord Hoffman said: 26 27 S/N B02vY/rJqEiVdeJ5ptxV2g The court has no power to improve upon the instrument which it is called 1 upon to construe, whether it be a contract, a statute or articles of 2 association. It cannot introduce terms or make it fairer or more 3 reasonable. If it is concerned only to discover what the instrument means. 4 However, that meaning is not necessarily or always what the authors or 5 parties to the document would have intended. It is the meaning which the 6 instrument would convey to a reasonable person having all the 7 background knowledge which would reasonably be available to the 8 audience to whom the instrument is addressed…It is this objective 9 meaning which is conveniently called the intention of the parties or the 10 intention of the Parliament, or the intention of whatever person or body 11 was or is deemed to have been the author of the instrument.” 12 13 [42] Based on the above principle, the plaintiff is entitled under clause 4 14 of the SPA to terminate the SPA when the defendant failed to pay the 15 balance purchase price of the said property. This is the bargain that had 16 been agreed to by the parties and the court should give effect to such 17 bargain. In view of the fact that clause 4 also allows the plaintiff to threat 18 the SPA as null and void in the event of default of payment of full 19 purchase price, we are of the view that the SPA had been automatically 20 terminated (or in the words of counsel and the learned HCJ, “the contract 21 had lapsed”) when the defendant failed to make the payment of full 22 purchase price by 25.9.2019. 23 24 [43] We will now consider whether the defendant’s failure to pay the full 25 balance of purchase (i.e. the defendant’s breach) goes to the root of the 26 contract warranting the termination of the SPA and whether time is no 27 longer the essence of the SPA. 28 S/N B02vY/rJqEiVdeJ5ptxV2g 25 1 [44] It is not disputed that the defendant did not pay the full balance 2 purchase price after the expiry of the one (1) month automatic extension 3 of time under clause 4 on 23.2.2019. The plaintiff granted the defendant 4 request of an extension of time until 25.5.2019. Despite such extension 5 of time, there was no full payment of balance purchase price paid by the 6 defendant. However, the defendant appeared to have acted unilaterally 7 when they paid the redemption sum on 29.4.2019 and then on 18.6.2019 8 they managed to register the transfer of the said property from the 9 plaintiff. At all material times, the plaintiff was not represented by a 10 solicitor, hence no action was taken by the plaintiff to enforce its rights 11 under clause 4. It was after the defendant made another application for 12 extension of time to pay the full balance purchase price that the plaintiff 13 appointed a solicitor and on 24.7.2019 the plaintiff’s solicitor responded 14 to the request stating that the plaintiff is agreeable to another extension 15 of time provided that the defendant should pay the differential sum of 16 RM400,000.00 and late payment interest by 31.7.2019. 17 18 [45] The above facts are relevant in determining whether the plaintiff is 19 entitled to the reliefs in OS1485. The same is also relevant in determining 20 the defendant’s OS1031. 21 22 [46] Put in the nut shell, the main crux of the appeal before us concerns 23 the issue of the right of the plaintiff as a result of the defendant’s breach 24 of clause 4 of the SPA. As a general rule, under the circumstances of the 25 present appeal, the plaintiff is entitled to repudiate the SPA when the 26 S/N B02vY/rJqEiVdeJ5ptxV2g defendant has refused to perform or disabled itself from performing the 1 whole of the terms of the SPA. 2 3 4 5 6 [47] S 40 of Contract Act 1950 (the Contract Act) provides: 7 8 When a party to a contract has refused to perform, or disabled himself 9 from performing his promise in its entirety, the promisee may put an end 10 to the contract, unless he has signified, by words or conduct, his 11 acquiescence in its continuance. 12 13 [48] The effect of a breach when time is stated as an essence of the 14 contract, s 56 (1) of Contract Act provides: 15 16 When a party to a contract promises to do certain things at or before a 17 specified time, and fail to do any of such things at or before the specified 18 time, the contract, or so much of it as has not been performed, becomes 19 voidable at the option of the promise, if the intention of the parties was 20 that time should be of the essence of the contract. 21 22 [49] The interplay between section 40 and 56 of Contract Act had been 23 discussed in Berjaya Times Square (supra) where Gopal Sri Ram FCJ 24 held that: 25 26 [27] In the second place, particular attention must be paid to the wording 27 of the subsection. It says ‘any such thing’ within the stipulated time. The 28 S/N B02vY/rJqEiVdeJ5ptxV2g words ‘any such thing’ refer to the promise in its entirety. In my 1 judgement, s.56(1) should be read together with s 40 of the Act when 2 determining whether a promisor has committed a breach of such a nature 3 that goes to the root of the contract. This is sometimes described as a 4 fundamental breach. In the third place, s 56(1) as is the case with the 5 other provisions of the Act are ipsissimis verbbis the corresponding 6 provisions of the Indian Contract Act 1872. That Act was drafted at a time 7 in history of the English common law when decided cases, spoke of the 8 voidability of broken contracts and a right to rescind such contracts. This 9 is what Lord Wilberforce in Johnson & Anor v Agnew referred to as ‘the 10 contrary indication’ that ‘may be disinterred from old authorities’. In my 11 judgement, the phrase ‘becomes voidable at the option of the promisee’ 12 in s.56(1) means this: a party not in default has a choice whether to put 13 an end to the contract or signify his or her acquiesces in its continuance 14 when the party in default commits a fundamental breach of contract by 15 not performing his entire promise within the time stipulated by the 16 contract, provided that time is of the essence of the contract. 17 18 [50] With regards to whether time is the essence of the contract, His 19 Lordship in Berjaya Time Square (Supra) approved the pronouncement 20 of law in the case of Hind Construction Contractors v State of 21 Maharashtra AIR 1979 SC 720 as follows: 22 23 [40] ….The issue was whether time was the essence of the contract. The 24 court of first instance held that time was not of the essence of the 25 contract. On appeal, the High Court reversed on other ground not 26 relevant to the present discussion. On further appeal, the Supreme Court 27 set aside the judgment of the High Court and restored the finding made 28 at first instance. Tulzapurkar J when delivering the judgement of the court 29 (Chandrachund CJ (India) and AP Sen J concurring) quoted the following 30 S/N B02vY/rJqEiVdeJ5ptxV2g passage from Halsbury’s Law of England at (4th Ed) Vol 4 at para 1 1179: 2 3 The expression time is of the essence means that a breach of condition 4 as to the time for performance will entitle the innocent party to consider 5 the breach as a repudiation of the contract. Exceptionally, the completion 6 of the work by a specified date may be a condition precedent to the 7 contractor’s right to claim payment. The parties may expressly provide 8 that time is of the essence of the contract and where there is power to 9 determine the contract on a failure to complete by a specified date, the 10 stipulation as to time will be fundamental. Other provisions of the contract 11 may, on the construction of the contract, exclude an inference that the 12 completion of the works by a particular date is fundamental, time is not of 13 the essence where a sum is payable for each week that the work 14 remains incomplete after the date fixed, nor where the parties 15 contemplate a postponement of completion. 16 17 Where time has not been made of the essence of the contract or, by 18 reason of waiver, the time fixed has ceased to be applicable, the 19 employer may by notice fixed a reasonable time for the completion of the 20 work and dismiss the contractor on a failure to complete by the date so 21 fixed (Emphasis added) 22 23 The learned judge then proceeded: 24 It will be clear from the aforesaid statement of law that even where the 25 parties have expressly provided that time is of the essence of the 26 contract such a stipulation will have to be read along with other 27 provisions of the contract and such other provisions may, on construction 28 of the contract, exclude the inference that the completion of the work by a 29 particular date was intended to be fundamental; for instance, if the 30 contract were to include clauses providing for extension of time in certain 31 S/N B02vY/rJqEiVdeJ5ptxV2g contingencies or for payment of fine or penalty for every day or week the 1 work undertaken remains unfinished on the expiry of the time provided in 2 the contract, such clauses would be construed as rendering ineffective 3 the express provision relating to the time being of the essence of the 4 contract…. 5 6 ……[41] I respectfully accept that the foregoing passages are an 7 accurate statement of the law governing s 56 (1) of the Act. In my 8 judgement, while individual contracts will fall to be interpreted in 9 accordance with their own terms, it is a useful guide to construction that a 10 stipulation as to time must be read along with other provisions of the 11 contract to determine if time is truly the essence of the contract. Further, 12 a clause providing for the payment of a sum whether as a fine, a penalty 13 or as liquidated damages calculated on daily basis for the period that the 14 work undertaken remains unfinished on the expiry of the time provided in 15 the contract would, in the absence of a contrary intention to be gathered 16 from the contract, point to time not being of the essence.” 17 18 [51] We are in the agreement with the decision in Berjaya Times 19 Square (supra) as cited above. Based on the facts of this case, we are 20 of the view that s 40 and s 56(1) of Contract Act ought to be read 21 together; and that the right to rescind the SPA by way of termination only 22 arise if there has been a total failure of consideration. This is an issue of 23 fact to be decided based on the facts of the case. 24 25 [52] The learned HCJ made the following important findings in his 26 grounds of judgement: 27 28 S/N B02vY/rJqEiVdeJ5ptxV2g i. when the defendant did not agree to the amount of the late 1 payment interest imposed by the plaintiff, it did not mean that 2 the SPA has lapsed (paragraph 25 of the grounds of 3 judgement. 4 ii. since the plaintiff had agreed to allow the defendant to 5 register the property in the defendant’s name, the failure of 6 the defendant to pay the balance purchase price on 7 25.9.2019 does not mean that the SPA had lapsed; such a 8 failure only result in the imposition of late payment interest 9 (paragraph 25 of the grounds of judgment). 10 iii. the failure to pay the balance purchase price on 25.9.2019 is 11 not a breach that effects the root of the contract and thus, 12 warranting the termination of the SPA, which necessitates for 13 the SPA to be terminated (paragraph 25 of the grounds of 14 judgment). 15 iv. the plaintiff had twice agreed to the extension of time for the 16 defendant to pay the balance purchase price and that the 17 plaintiff had allows the defendant to register the said property 18 in its name means that time no longer forms the essence of 19 the SPA (paragraph 27 of the grounds of judgment). 20 v. the failure of the defendant to pay the balance purchase price 21 was largely contributed by the conduct of the plaintiff. This is 22 due to the fact that there was a dispute in the calculation of 23 the late payment interest and that the plaintiff took a different 24 stand in the calculation of the late payment interest, contrary 25 to the stand taken by the defendant (paragraph 29 of the 26 grounds of judgment). 27 S/N B02vY/rJqEiVdeJ5ptxV2g vi. there was delay of more than two months by the plaintiff’s 1 side in obtaining the requisite redemption statement, hence 2 the delay cannot simply be ignored and imposed on the 3 defendant and that the SPA had not lapsed and the 4 termination of the SPA by the plaintiff is void ad initio. 5 (paragraph 32 and 33 of the grounds of judgement). 6 7 [53] It is pertinent that at this stage, that the issue of whether the failure 8 to pay the full purchase price is a fundamental breach be determined. In 9 the case of Ching Yik Development Sdn Bhd v Setapak Heights 10 Develpoment Sdn Bhd [1997] 1 MLJ 287, this court held that: 11 12 Whether a particular term is fundamental to the contract or merely a term 13 of subsidiary importance depends very much on the way in which the 14 particular contract is constructed. Nevertheless, we think it quite safe to 15 state the principle in this way. Absent any special consideration in a 16 contract for the sale of land, the obligation to pay the purchase price is a 17 fundamental term. So too is a term that the vendor has good title to the 18 property that is the subject matter of the sale. If the parties desire to 19 make some other obligation fundamental in nature, they must make it 20 dependent upon one or other of these terms. 21 22 [54] The decision Ching Yik Development Sdn Bhd (supra) is 23 relevant to our present case. Clause 4 of the SPA is clear and 24 unambiguous. Failure by the defendant to pay the full purchase price 25 within the time stipulated therein would entitled the plaintiff to forfeit the 26 earnest deposit paid by the defendant. Such failure will also render the 27 SPA null and void and of no effect. This is the clear indication that the 28 S/N B02vY/rJqEiVdeJ5ptxV2g parties had intended that the payment of full purchase price is a 1 fundamental term of the SPA and any breach of clause 4 goes to the root 2 of the SPA, hence the plaintiff is entitled to treat itself as being 3 discharged from further obligation under the said SPA. 4 5 [55] The consequential issue arising from the above finding is whether 6 time is still the essence of the SPA. Notwithstanding the learned HCJ’s 7 finding in paragraph [51] above, it is apparent that His Lordship had 8 missed following relevant facts, namely: 9 10 i. the plaintiff was not represented by a solicitor from the time 11 the SPA was signed. Only after the defendant had failed to 12 pay the balance purchase price by 25.5.2019 and the 13 defendant applied for another extension of time that the 14 plaintiff of a solicitor. It must be noted that it was during the 15 time that the plaintiff was not represented by a solicitor that 16 the defendant had unilaterally registered the said property in 17 its name. It was also during this that time that the issue in the 18 accuracy of the redemption sum arose and the same was 19 finalised without the knowledge or participation of the plaintiff. 20 In fact, the facts of the case show that the issue pertaining to 21 the redemption sum was handled by defendant’s solicitor who 22 prepared the SPA and the solicitor for the financier Hong 23 Leong Bank Berhad. 24 25 ii. upon the appointment of a solicitor, the plaintiff had, by way 26 of letter issued by the solicitor dated 24.7.2109, agreed to an 27 S/N B02vY/rJqEiVdeJ5ptxV2g extension of time until 15.8.2019 subject to defendant paying 1 the differential sum of RM 400,000.00 and the late payment 2 interest of RM148,339.70 by 31.7.2019. It must be noted that 3 the defendant had disputed the plaintiff’s computation of the 4 amount of the late payment interest and that the plaintiff could 5 not agree to any extension of time until the amount of late 6 payment interest has been agreed upon. In its letter dated 7 28.8.2019 the plaintiff then agreed to reduce the late payment 8 interest to RM78,260.28 to be paid by 28.8.2019 and the 9 defendant to settle and resolve the matter by 4.9.2019. 10 Instead, vide their letter dated 28.8.2019 the defendant then 11 had requested the plaintiff to further recalculated the said 12 sum. In fact, in its letter dated 25.7.2019, the solicitor for the 13 defendant had requested that the sum of RM1,830.60 being 14 the defendants’ solicitor’s legal fee to be deducted from the 15 deferential sum of RM400,000.00. It must be noted that the 16 issue of further extension of time was never raised in these 17 correspondences. The defendant also did not pay the late 18 payment interest; hence the plaintiff terminated the SPA vide 19 letter dated 11.9.2019. 20 21 [56] The above facts are relevant in determining whether, from the 22 conduct of the parties, time is still the essence of the SPA. The plaintiff 23 submitted that despite the extension of time granted to the defendant and 24 the negotiations regarding the amount of late payment interest, time 25 remains the essence of the SPA because they had given sufficient notice 26 to the defendant on the time limit to pay the balance purchase price. The 27 S/N B02vY/rJqEiVdeJ5ptxV2g Federal Court case of Sim Chio Huat v Wong Ted Fui [1983] CLJ (Rep) 1 363 was cited in support of that contention. In that case, Salleh Abbas FJ 2 (as he then was) held that: 3 4 “However, the rules contained in s.56 of the Contract Act are not different 5 from the position arrived at in common law. Yeoh Kin Pong Realty Ltd v 6 Ng Kim Pong [1962] 28 MLJ 118 at 126. The position is this: If in a 7 contract in which time is of the essence, a party fails to perform it by the 8 stipulated time, the innocent party has the right to either rescind the 9 contract, or to treat it as still subsisting. If he treats it either expressly or 10 by conduct as still continuing, the contract exists but the time ceases to 11 be of the essence and becomes at large. Consequently, he cannot claim 12 the liquidated damages under the contract unless there is a provision as 13 to the extension of time. However, this cessation can be revived and so 14 time can be restored to be of the essence by the innocent party serving a 15 notice to the party in default giving a new date of completion. (see 16 Hudson, pp. 604 & (612)). If this is done there would be a date from 17 which liquidated damages could be calculated. In the present appeal, at 18 no time did the respondent give notice to the appellant. Hence clauses 19 20 and 21 cannot be enforced.” 20 21 [57] We agree with the plaintiff contention on this issue. Since the 22 plaintiff had notified the defendant of the proposed amount of late 23 payment interest via letter dated 24.7.2019 and that the extension of time 24 until 15.8.2019 was given to the defendant, we are of the opinion that 25 reasonable notice was given to the defendant to pay the revised amount 26 of late payment interest of RM78,260.28 to be paid by 28.8.2019. 27 28 S/N B02vY/rJqEiVdeJ5ptxV2g [58] Based on the above reasons, we are of the view that the learned 1 HCJ fell into plain error when His Lordship failed to consider the relevant 2 facts in the right perspective. The evidence shows that the defendant had 3 been acting unilaterally at the beginning of the contract resulting in the 4 transfer of the property to itself before the payment of the full purchase 5 price. The transfer may have been tainted with fraud. Be that as it may, 6 the learned HCJ also erred when His Lordship puts the blame on the 7 plaintiff pertaining to the delay in obtaining the redemption sum when the 8 matter was handled by the plaintiff’s solicitor preparing the SPA and the 9 solicitor for the financier. While they are entitled to negotiate for a 10 reasonable amount of late payment interest, the defendant had acted 11 unreasonably when demanding that their legal fees to be deducted from 12 the differential sum of RM 400,000.00. Considering the evidence as a 13 whole, we are of the view that the defendant had been deliberately 14 delaying the payment of the balance purchase price thus deliberately 15 breaching clause 4 of the SPA. 16 17 [59] In the final analysis, we find that based on the facts and 18 circumstance of the case, the defendant’s breach of clause 4 of the SPA 19 goes to the root of the SPA and since time is still the essence of the SPA, 20 the plaintiff’s notice of termination vide letter dated 11.9.2019 is valid. We 21 allow appeal 939 and set aside the High Court order and consequentially, 22 we grant order in term of prayer 1,2,3,4,5,6,7,8,10 and 11 of OS 1485 23 with slight variation in respect of time to comply with the order in prayer 7 24 and 11 of 30 days. Costs of RM15,000.00 to the plaintiff subject to 25 allocator fee. 26 27 S/N B02vY/rJqEiVdeJ5ptxV2g [60] In view of our decision above, namely that the termination of the 1 SPA is valid, we find merit in the plaintiff’s appeal 942. We allow appeal 2 942 and set aside the High Court order in OS 1031. Costs of 3 RM15,000.00 to the plaintiff subject to allocator fee. 4 5 6 7 8 9 10 Dated: 14th May 2024 11 12 - SGD - 13 DATUK AZHAHARI KAMAL BIN RAMLI 14 JUDGE 15 COURT OF APPEAL, MALAYSIA 16 17 18 19 For the Appellant : Muhammad Zul Hafiz bin Mohamed Sabri, 20 Darshan Kumar A/L P Gopala Krishnan. 21 (Tetuan Tan Kong Hai & Tui [Temerloh]) 22 23 For the Respondents : Tharminder Singh A/L Ginder Singh, 24 Johan Taing Chee Fae, 25 Hazwan Lee bin Haris Lee. 26 (Tetuan Shu Yin, Teh & Taing [S.Jaya]) 27