The court ruled that a misrepresentation regarding the construction's compliance justified the termination of the Sale and Purchase Agreement, overriding the High Court's findings.

JUDGMENT

Azizul Azmi Adnan JCA:

Introduction

[1] This case involved the sale and purchase of a partially completed housing estate that was subsequently abandoned. At the High Court, the plaintiff successfully sued to recover the balance purchase price payable. The defendants appealed. We allowed their appeals for the reasons set out in this judgment. These grounds constitute the judgment of the Court.

Material Background Facts

[2] The plaintiff respondent, Lebar Daun Development Sdn Bhd (referred to here as "Lebar Daun" or the plaintiff), sold to Aster Bina Sdn Bhd (the 1st defendant at the Court below, referred to here as "Aster Bina") a partially completed development comprising 57 units of linked houses, located near Kampung Sungai Kandis in Shah Alam. The second and 3rd defendants at the High Court (who are also the second and 3rd respondents in Case No 1960 before us) were the directors of a company known as Acmar International Sdn Bhd The plaintiff alleged that the second and 3rd defendants were the alter egos and shadow directors of Aster Bina.

[3] The sale and purchase agreement (the "SPA") was executed between Lebar Daun and Aster Bina on 24 November 2017. The purchase price under the SPA was RM13.8 million, out of which Aster Bina only paid RM2.8 million. Under the terms of the SPA, Aster Bina was granted access to the properties immediately after execution of the SPA. This, according to cl 12A of the SPA, was to enable Aster Bina to commence work on the site.

[4] Payment of the purchase price was to have been made in accordance with the schedule set out in Annexure B of the SPA. A deposit of RM6.5 million was supposed to have been paid upon delivery of the instruments of transfer to Aster Bina's solicitors. The remainder was to have been paid in six tranches every month thereafter.

[5] By way of a letter dated 26 November 2018 [See page 781 of encl 7 in the Record of Appeal], the parties recorded their understanding that all the conditions precedent under the SPA had been fulfilled by 27 June 2018. This letter also recorded their agreement to vary the manner of completion. Aster Bina had previously paid RM1 million to Lebar Daun. It was to pay a further RM13 million in two tranches: RM4 million before 26 March 2019 and a further RM9 million before 26 May 2019. This effectively meant that the purchase price had been adjusted upwards, from RM13.8 million to RM14 million.

[6] Lebar Daun also agreed to deliver the relevant instruments of transfer within two days of the 26 November 2018 letter.

[7] As events transpired, Aster Bina only made a further payment of RM1.8 million towards the purchase price. Title to the properties in question were transferred to Aster Bina between 20 and 28 March 2019.

[8] The plaintiff, Lebar Daun, claimed for RM11.2 million, which was the remainder of the purchase price. The action was expressed as one for specific performance-although we would observe that it is in fact only for the enforcement of a payment obligation. In reality therefore, the plaintiff's action was merely a claim for a debt that became due under the SPA, due to Aster Bina's failure to pay the consideration in accordance with the terms of the SPA. Nothing, however, turns on this point.

[9] Lebar Daun as vendor provided representations and warranties under the SPA. At cl 10.1(j) of the SPA, Lebar Daun warranted that the report referred to in cl 4A.1(e) was valid, true and accurate. The report referred to in cl 4a 1(e) was a confirmation from the consultant of Lebar Daun to the effect that the present state of the buildings conformed with "standard code of practice and approved specification". It was common ground that the consultant in question was the architect for the development.

[10] The confirmation pursuant to cl 4A.1(e) was provided by a letter from Arkitek Berunding Sdn Bhd dated 23 February 2018 [See page 638 of encl 6 of the Record of Appeal]. This architect's confirmation was also one of the conditions precedent under the SP