The court upheld the enforceability of a Sale and Purchase Agreement despite the lapse of consent, affirming that substantial payments made by the appellant constituted sufficient fulfillment of contractual obligations.

JUDGMENT

See Mee Chun JCA:

Introduction

[1] The respondent/plaintiff had filed a claim against the appellant/defendant for a declaration inter alia that the Sale and Purchase Agreement dated 16 November 2001 (SPA) was null and void, frustrated and/or deemed terminated. The SPA was entered into by the respondent as the vendor and the appellant and his late father (deceased), as joint purchasers, for the sale and purchase of a double storey low cost link house in Taman Medan, Selangor (the property).

[2] The High Court Judge (HCJ) allowed the claim. We allowed the appellant's appeal for the reasons as follows.

Background Facts

[3] The consideration price for the purchase of the property was RM85,000. In respect of the SPA, the appellant and the deceased were represented by Messrs Gopalakrishnan & Co (the Firm).

[4] The property is subject to a restriction of interest whereby prior approval and/or consent from the Perbadanan Kemajuan Negeri Selangor (PKNS) ought to be obtained before executing any transfer of title to a third party. The respondent had appointed the Firm to facilitate his obligation to apply and secure the consent.

[5] The property was charged to Malayan Banking Berhad by the respondent for a loan (Maybank loan) granted to purchase the property from the previous owner, known as Yayathy a/l Perumal.

[6] The appellant moved into the property around July 2002. The reason the appellant moved in, is disputed.

[7] It is undisputed that upon execution of the SPA, a sum of RM8,500 was paid to the respondent as a 10% deposit.

[8] It is also not disputed that consent from PKNS was obtained on 25 October 2003 which was valid for 6 months. The consent has since lapsed.

[9] On 30 September 2014, PKNS agreed to transfer the property to the respondent. On 30 December 2014, the respondent became the registered proprietor of the property.

[10] Other than the declaration the SPA is null and void, the respondent also seeks a declaration he is the registered owner of the property, and the appellant is to deliver vacant possession and pay outstanding and continuing rental. The appellant has counterclaimed essentially for specific performance of the SPA.

Decision Of The HCJ

[11] The HCJ found that the SPA had lapsed, been frustrated and/or ought to be terminated by reason of the consent having lapsed through no fault of the respondent but due to the conduct of the Firm engaged by the respondent to carry out the SPA.

[12] It was also stated that the SPA was a conditional contract which cannot be enforced against the respondent when the condition precedent by virtue of cl 1.3 SPA had not been fulfilled. Reference was made to s 33 Contracts Act 1950 ( CA ) and National Land Finance Cooperative Society v. Sharidal Sdn Bhd , 1983 MarsdenLR 60 ; [1983] CLJ (Rep) 282. National Land Finance Co-operative Society essentially held that a contingent contract shall not take effect until and unless the condition is fulfilled and since the consent of the Foreign Investment Committee (FIC) had been refused, the contingent event became void in accordance with s 33(b) .

[13] There was ample evidence that the Firm delayed submission of the consent which was done two years after SPA was signed and no explanation for the delay was given.

[14] The consent was valid for six months from 25 October 2003 and lapsed on 24 April 2004. There was no evidence that the validity of the consent was extended or that any fresh application was made. This meant that the alternative argument that even if the SPA was binding and the consent had lapsed, the SPA is deemed terminated by effluxion of time and impossibility of performance.

[15] The respondent was the registered owner of the property where the appellant's case was that the balance purchase price had been paid to the Firm such that the property ought to be transferred to the appellant. However there was no evidence that the money had been received by the respondent. The proprietary rights of the respondent remained with the respon