A contractual relationship can exist even if one party is not the registered owner, provided there is mutual understanding of intentions and execution of back-to-back agreements.

Shaik Daud Ismail JCA:

This is an appeal from the decision of the High Court Kuala Lumpur which had dismissed the appellant's claim against the respondent. The appellant's claim essentially is for loss of profits arising out of the respondent's alleged breach of contract.

The background facts are that the appellant is an option holder for a property known as Lot 2084 Section 41, Kuala Lumpur, (the said property) with power to sell the said property to the respondent. It is not disputed that at all times, the appellant was not the registered proprietor of the said property and this is known from the beginning by the respondent. In fact the said property was jointly owned by seven persons living in different parts of the world and this too is known to the respondent. Through negotiations and meetings held from 14 December 1989 the respondent had offered to purchase the said property from the appellant at RM64 per sq. foot. The appellant had accepted the offer. According to the appellant, at a meeting on 17 April 1990 at the office of Messr. Zain & Co a firm of solicitors in Kuala Lumpur, the appellant had informed a representative of the respondent that:

(a) the appellant through a nominee, one Sulaiman Daud, will purchase the said property from the registered proprietors; and

(b) the nominee, Sulaiman Daud, will execute a sale and purchase agreement with the respondent to sell the said property to the respondent for a sum of RM1,218,560.

To achieve the above objectives, the parties would prepare and execute back to back agreements in that the nominee, Sulaiman Daud, would sign the sale and purchase agreement with the respondent in order to get the deposit from the respondent and using this money, the nominee, Sulaiman Daud, will execute a sale and purchase agreement with the registered proprietors. It is the contention of the appellant that the respondent was at all material times aware of this back to back transaction.

Subsequent to the meeting of 17 April 1990, another meeting was held at the office of the respondent where the officers of the respondent, the appellant and the nominee, Sulaiman Daud, were present and thereafter the respondent had instructed a sale and purchase agreement to be prepared by the solicitors Messrs. Zain & Co. As a result Messrs. Zain & Co. prepared a draft agreement to be sent to the respondent. The respondent in return indicated their satisfaction with the said draft agreement and thereafter on 25 April 1990 the same solicitors prepared four final copies of the agreement and transmitted them to the respondent for its execution. The respondent refused and failed to sign the agreement and thereby refused to proceed with the sale and purchase of the said property resulting in the appellant and his nominee not being able to purchase the said property from the registered proprietors.

The respondent on the other hand denied the averments of the appellant and contends that it was its sole intention from the very beginning to deal solely with the registered owners and would only execute a sale and purchase agreement with them. The respondent contended that the sale fell through as the appellant had failed to arrange for the execution of the sale and purchase agreement with the registered proprietors or their attorneys. The respondent denied that it had agreed to bind itself with either the appellant or his nominee.

The learned judge had dismissed the appellant's claim with costs broadly on the ground that although the respondent had agreed to purchase the said property but the agreement between it and the nominee, Sulaiman Daud, shows that Sulaiman Daud was the registered owner of the said property when at all material times, Sulaiman Daud, had not executed the agreement with the original registered owners. The learned judge also held that the option granted to the appellant had lapsed when he sought to transact the back to back agreements and that the sale of the said property to Sulaiman