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2014 MarsdenLR 1317
HIGH COURT MALAYA JOHOR BAHRU
HAIRUDIN HARON & ORS – Appellant
Versus
SEE YONG TECK & ORS – Respondent
[Summons No: 24NCVC-273-10/2013]
A contingent contract's enforceability is dependent on the fulfillment of conditions precedent; failure to meet such conditions renders the contract void and rescindable.
Headnote:(A) Specific Relief Act, 1950 - Section 34 - Contracts Act, 1950 - Section 33 - Sale and Purchase Agreement - Plaintiffs sought rescission of SPA due to impossibility of fulfilling conditions precedent after a portion of land passed to a third party - Court found the SPA contingent on conditions which were unfulfilled, rendering the contract void. (Paras 9, 20, 26, 28)
(B) Conditions Precedent - A conditional contract requires fulfillment of necessary conditions for it to be enforceable. (Paras 10, 23, 24)
(C) Privity of Contract - A contract cannot be enforced by or against a third party not privy to it. (Paras 18)
(D) Clarity of Contract Terms - Court emphasized the clear, unambiguous language of the SPA and the necessity of adherence to its terms. (Paras 20, 27)
Facts of the case:
Plaintiffs entered a SPA for land sale; conditions for sale not fulfilled due to a third party owning a share of the land. Decision made to rescind the contract based on impossibility of fulfilling contract terms.
Findings of Court:
Contract deemed void due to unfulfilled conditions; no performance could be compelled; relief granted for rescission.
Issues: Whether Plaintiffs could rescind SPA due to a third party's share in the land, the impossibility of fulfilling conditions, and whether the contract could be enforced without breaching.
Ratio Decidendi: Court upheld that conditions precedent must be met for SPA enforcement, confirming impossibility led to rescission as per statutory provisions.
Result: Plaintiffs' application for rescission allowed; ancillary reliefs granted; Defendants' counter-claim dismissed.
| Table of Content |
|---|
| 1. basis for rescission of a spa. (Para 1 , 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8) |
| 2. legal framework for contract rescission. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 3. court's analysis on contract impossibility. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26) |
[1] This application vide Originating Summons ('OS') arises out of a sale and purchase agreement ('SPA') dated 13 July 2012 entered into between the Plaintiffs and Defendants for the sale of a plot of land in Mukim Tanjung Kupang, district of Johor Bahru to the Defendants. The Plaintiffs herein now seek rescission of the SPA, return of the deposit to the Defendants and costs of and incidental to this application. They sought the following reliefs:
"(a) the Sale and Purchase Agreement dated 13 July 2012 ("the SPA") entered into between the plaintiffs and the defendants in respect of the sale of the land held under GM 301, Lot 2117, Mukim Tanjung Kupang, Daerah Johor Bahru ("the said land") be rescinded;
(b) the sum of RM129,683.70 be paid back by the plaintiffs to the defendants;
(c) the costs of the action.".
Material Facts
[2] These are, briefly, the undisputed facts. Originally and till the date the SPA was entered into, the registered proprietors of the subject land were the following persons in the respective undivided shares as stated:
(i) the 3rd plaintiff (Abdul Rahim bin Salleh) ¼
(ii) the 5th plaintiff (Aminah binti Salleh) ¼
(iii) Haron bin Md Salleh ¼
(iv) the 4th plaintiff (Zainab binti Salleh) ¼
[3] One of the above original owners, Haron bin Md Salleh, ('the deceased') died intestate on 28 July 2011).
[4] Under the said SPA, the Plaintiffs as vendors agreed to sell to the Defendants the whole share of the subject land for the price of RM1,296,837.00 subject to the terms and conditions ('T & C') laid down in the SPA. The Plaintiffs and Defendants were represented by their own solicitors in the SPA. The express terms of the SPA which are essential to the present dispute are Recital (b), Cl 1 (1) and Cl 2A.
[5] Pursuant to a certificate called "Sijil Perakuan Faraid" issued by the Johor Bahru Syariah High Court on 24 June 2013 the estate of the deceased was ordered to be distributed among the beneficiaries as follows:
(i) Sa'adiah bt Ahsen ('Sa'adiah') 2/16 portion
(ii) 2nd Plaintiff 7/16 portion
(iii) 1st Plaintiff 7/16 portion
[6] A small estates distribution order dated 10 September 2013 was then issued in respect of the deceased's ¼ share in the subject land which ordered the said land to be distributed to the above beneficiaries in these portions: 7/64 share each to the 1st and 2nd Plaintiffs and 2/64 share to Sa'adiah. In compliance with the distribution order dated 10 September 2013 the deceased's ¼ share in the subject land was transmitted and registered in the names of these aforementioned beneficiaries in accordance with their respective shareholdings.
[7] Sa'adiah was not a party or privy of the SPA which is the subject- matter of the present action.
[8] By letter dated 1 October 2013 the Plaintiffs' then solicitors notified the Defendants' then solicitors of the distribution order and transmission of the deceased's ¼ share in the subject land to the beneficiaries in their respective shareholdings as ordered. In view of this, the letter also requested for the Defendants' agreement to a rescission of the SPA. However, Defendants' solicitors failed to reply to the said letter.
The Law Applicable
[9] The thrust of the Plaintiffs' case for an order of rescission of the contract, namely, the SPA, was that it was a contingent or conditional contract and that the conditions precedent, upon which the contractual obligations of the parties were conditional, could no longer be fulfilled.
[10] Section 34 of the Specific Relief Act, 1950 (' SRA ') governs the Court's jurisdiction to order rescission of a contract. It provides inter alia:
" Rescission of Contracts
(1) Any person interested in a contract in writing may sue to have it rescinded, and such rescission may
