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2025 MarsdenLR 6196
HIGH COURT SABAH & SARAWAK KUCHING
KASSIM MOHAMMED MAHRUF & ANOR – Appellant
Versus
PERFECT PEARL SDN BHD & ANOR – Respondent
[Originating Summons No: KCH-24NCVC-13-5/2023]
The court affirmed that upon fulfilling contractual conditions, parties are entitled to payment, regardless of alleged breaches affecting other contract provisions.
Headnote:(A) Sale and Purchase of Shares Agreement - Clause 3.3(iv) - Letter of Undertaking - Payment obligations - Plaintiffs sought RM4,296,000.00 and RM3,226,062.00 as 20% of consideration and undertaking sums respectively - Court declared that Defendants fulfilled obligations under Clause 3.3(iv) and ordered payment - Payment under unstamped LOU contingent upon stamping and penalty settlement. (Paras 2, 56)
(B) Contract Interpretation - The court emphasized that contracts must be interpreted as a whole, giving effect to all clauses - Conditions for payment under Clause 3.3(iv) were met by the Plaintiffs. (Paras 42, 44)
Facts of the case:
Plaintiffs filed an Originating Summons seeking payment under SPA and LOU dated 26 June 2015, asserting that conditions for payment were satisfied. Defendants counterclaimed, alleging breach of warranties by Plaintiffs. (Paras 1, 11, 24)
Findings of Court:
Plaintiffs fulfilled conditions under Clause 3.3(iv) of the SPA, thus entitled to payment of RM4,296,000.00 and RM3,226,062.00 under the LOU, subject to stamping. (Paras 44, 56)
Issues: Whether Plaintiffs are entitled to payment under Clause 3.3(iv) of the SPA and the unstamped LOU; interpretation of contract terms. (Paras 17)
Ratio Decidendi: The court ruled that upon fulfilling conditions outlined in Clause 3.3(iv), the Plaintiffs are entitled to payment, as the Defendants' claims regarding breaches did not affect this obligation. (Paras 46, 49)
Result: Originating Summons allowed; Defendants ordered to pay specified sums.
| Table of Content |
|---|
| 1. plaintiffs' claim and court's decision (Para 1 , 2 , 4 , 5) |
| 2. factual background of the spa and lou (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 3. dispute over payment interpretation (Para 16 , 17 , 18 , 19 , 20) |
| 4. plaintiffs' and defendants' arguments (Para 22 , 23 , 24 , 29 , 30 , 31 , 36 , 37) |
| 5. court's interpretation of contract clauses (Para 38 , 39 , 40 , 41 , 42) |
| 6. clarification on payment conditions (Para 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51) |
| 7. final ruling and orders (Para 53 , 54 , 56) |
(Enclosure 1)
Introduction
[1] The Plaintiffs filed an Originating Summons (Encl 1) seeking a total of RM4,296,000.00, representing 20% of the consideration sum, under cl 3.3(iv) of the Sale and Purchase of Shares Agreement (SPA), and RM3,226,062.00, representing 20% of the undertaking sum under the unstamped Letter of Undertaking (LOU), both dated 26 June 2015, against the Defendants.
[2] After reviewing the affidavit evidence and submissions from both parties' counsels, I delivered my decision on 22 November 2024, as follows:
(a) A declaration that the 1st and 2nd Defendants have fully or reasonably fulfilled the terms of clause 3.3(iv) of the SPA, dated 26 June 2015.
(b) A declaration that the 1st and 2nd Defendants are obligated under cl 3.3(iv) of the SPA to pay the Plaintiffs RM4,296,000.00, which is the consideration sum for the land described in Recital (c) of the SPA.
(c) A declaration that the 1st and 2nd Defendants are obliged under the unstamped Letter of Undertaking, dated 26 June 2015, to pay the Plaintiffs 20% of the undertaking sum.
(d) The 1st and 2nd Defendants are ordered to pay the Plaintiffs RM3,226,062.00, which is 20% of the undertaking sum.
(e) Interest on the sum in paragraph (b) at the rate of 5% per annum, from the date of judgment until full realization.
(f) However, with respect to paragraphs (c) and (d), payment under the unstamped LOU shall only be made once the LOU is stamped and any applicable penalty is settled by the Plaintiffs.
[3] The Defendants' Counterclaim as stated in para 24 and 25 of the AIO No 2 was dismissed, as it was deemed relevant only to the final payment under cl 3.3(v) of the SPA.
[4] Dissatisfied with this decision, the Defendants filed a Notice of Appeal on 17 December 2024.
[5] Below are the grounds for my decision.
Brief Background Facts
[6] On 26 June 2015, the Plaintiffs (Vendors) and the Defendants (Purchasers) executed the SPA (Ex. KMM-1 AIS of Plaintiff) and the LOU (Ex. KMM-2) in relation to the sale and purchase of the issued shares in Handalas Sdn Bhd ("Handalas"). The 1st Plaintiff held 900,000 shares, and the 2nd Plaintiff held 100,000 shares, out of a total of 1,000,000 ordinary shares in Handalas.
[7] Clause 3 of the SPA outlines the agreed Purchase Consideration between the parties.
[8] Clause 3.3(iv) of the SPA provides:
"Upon completion of the final survey and the receipt by the Purchaser of the acknowledgment of submission of the survey plan of the land by the Land and Surveys Department, a sum of 20% of the Consideration of the Land shall be paid SUBJECT to the Vendor producing a letter or written confirmation from Malaysian Biotech Corporation (MBC) stating that the Company has no further liability under any grant or loan given by MBC to the Company, failing which, the Purchaser shall retain a sum of RM2.5 million from this payment and shall remit the same to the Vendor when the said letter or written confirmation from MBC is produced by the Vendor to the Purchaser."
[9] The Plaintiffs, through their letters, demanded payment of the balance of the consideration sum in accordance with cl 3.3(iv) of the SPA and Item 2 of the unstamped LOU.
[10] In response, the Defendants, through their letters, refused the Plaintiffs' demand, asserting that the Plaintiffs had breached the warranties, terms, and representations under the SPA.
[11] The Plaintiffs filed this Originating Summons (Encl 1), seeking RM4,296,000.00, or 20% of the conside
