Mohd Saari Yusoff JCA:

In the court below, the respondent ("the plaintiff) applied for summary judgment under O. 14 of the Rules of the High Court 1980for refund of deposit. The learned trial judge entered judgment for the plaintiff, hence this appeal by the appellant ("defendant").

The gist of the plaintiff's case was that on 13 July 1996, the plaintiff and the defendant entered into an agreement whereby the defendant undertook to procure for the plaintiff land held under H.S.(D) 98505, P.T. 719, Seksyen 16, Lot 2, Jalan 16/6, Bandar Shah Alam (hereinafter referred to as "the said land"). As consideration, the plaintiff would pay the defendant purchase price of RM22,500,000. After execution of the agreement, the plaintiff paid deposit of RM2,250,000.

It is to be noted that the title of the said land was subject to restriction in interest, which read as follows:

Tanah ini tidak boleh dijual, dipajak, digadai atau dipindahmilik dengan apacara sekalipun melainkan dengan kebenaran Pihak Berkuasa Negeri.

The agreement was subject to a number of condition precedents. One of the condition precedents was that the defendant was required to apply and obtain written consent from the State Authority for the said land to be transferred to the plaintiff.

Under the agreement, all condition precedents must be fulfilled within a period of nine months from the date of the agreement. The parties have not agreed on extension on time after expiry of nine months, although the plaintiff had approached the defendant for extension of time.

Reference was made to defendant's letter to PKNS dated 7 August 1996 (p. 91 of AR) wherein it was proposed that PKNS transfer the said land direct to the plaintiff. In response as contained in letter dated 14 September 1996 (p. 92 of AR), PKNS disagreed with the defendant's proposal but agreed to transfer the said land to the defendant. However, the fact remained that the defendant had failed to apply or at all to the State Authority for written consent to transfer the said land to the plaintiff. Clearly, the defendant had failed to fulfil the condition precedent as provided under cl. 2(1)(i) of the agreement.

As to the law on contingent contract, we can do no better than to refer to Federal Court case of National Land Finance Co-operative Society Ltd v. Sharidal Sdn Bhd[1983] 2 CLJ 76; [1983] CLJ (Rep) 282where Salleh Abas CJ (as he then was) said:

It is therefore obvious that the parties have entered into a contract of sale contingent upon the approval of the transaction by the FIC over which the parties had no control. There was no promise, nor guarantee that such approval would be given. Such a condition, in our judgment, is more than a mere essential stipulation of the contract, a breach of which entitles an innocent party to regard itself as discharged from further performance and to sue for damages. It is, however, a condition which is known in the law of contract as a contingent condition, the effect which is that a contract shall not take effect unless and until the condition is fulfilled. (see Trans Trust S.P.R.L v. Emerton; Bush v. Property, and Bloodstock Ltd. per Sachs, LJ. Until the FIC approval was given liability for further performance remained unenforceable, ie, suspended although neither the respondents nor the appellants could resile from it until it could be definitely ascertained that the condition could not be fulfilled. This is the effect laid down by s. 33(a) of the Contracts Act.

The learned Chief Justice went on to say on the same page:

As the approval in this case was refused it means that contingent event becomes impossible and the agreement therefore becomes void in accordance with s. 33(b) of the Contracts Act 1950 ... .

On the authority of the abovementioned case, upon failure of the defendant in obtaining written consent from the State Authority within the stipulated period, such failure would attract the operation of cl. 4 of the agreement, which entitled the plaintiff for