The court held that the Sale and Purchase Agreement was not a valid sale but a means to secure a loan, rendering the property transfer null and void due to non-payment.

JUDGMENT

Nor Bee Ariffin JCA:

Introduction

[1] The defendant entered into the Sale and Purchase Agreement dated 24 November 2015 (the SPA) with Low Yew Sun to purchase the latter's property, a residential land with a three storey semi-detached house erected thereon (the Property). Low Yew Sun who was the defendant's brother in law and the third plaintiff's husband, died on 13 September 2016. The defendant had pursuant to the SPA, transferred the Property into his name. The plaintiffs claimed that the transfer was pre-matured, unlawful and null and void.

[2] There are two main disputes between the parties: (i) whether the SPA was for the purchase of the Property or it was merely intended to serve as a security for a loan that was given to Low Yew Sun (the deceased) by the defendant and (ii) whether the defendant had breached the SPA. The plaintiffs claimed, inter alia for a declaration that the SPA was determined automatically by reason of the breaches committed by the defendant and for the re-transfer of the Property to the estate of the deceased. The defendant filed a counterclaim, inter alia for specific performance of the SPA or alternatively a refund of the loan sum.

[3] The learned Judicial Commissioner (JC) had on 21 September 2018, after a full trial, allowed the claim by the plaintiffs and dismissed the defendant's counterclaim. The defendant appealed against this order.

[4] After perusing the Appeal Records and giving much consideration to the submissions of both parties oral and written, we unanimously allowed this Appeal. We set aside the order of the High Court. In this Judgment, the appellant and the respondents will be referred to as they were in the proceedings before the High Court.

The Background

[5] The learned JC had set out both the pleaded case of the plaintiffs and the defendant at length. We adopt the facts as narrated by His Lordship JC with suitable modifications.

[6] The gist of the plaintiffs' pleaded case is summarised as follows. Before his demise, the deceased who was facing financial problems, approached the defendant for a loan of RM600,000.00 as a capital for his business and to settle his business debts.

[7] The Property was at that material time charged to Alliance Islamic Bank Berhad (the Bank). There was a caveat lodged over it by one Choo Yoong Kian. The plaintiffs claimed that the defendant insisted on settling the overdue debt to the Bank for the housing loan of the Property notwithstanding what the deceased and the third plaintiff wanted was only to obtain a loan of RM 600,000.00. They could afford to pay the monthly instalments to the Bank for the housing loan.

[8] However, at the defendant's insistence, the SPA was executed wherein the deceased agreed to sell and the defendant agreed to purchase the Property at the price of RM1,600,000.00 (the Purchase Price). This was followed by the execution of the Supplemental Agreement and the Personal Guarantee the next day on 25 November 2015.

[9] The third plaintiff was a party in the Supplemental Agreement. Pursuant to the Supplemental Agreement, the deceased and the third plaintiff as the guarantor inter alia, undertook the repayment of the loan sum of RM1,600,000.00 within one year from the date of the SPA. The Supplemental Agreement was to form an integral part of the SPA.

[10] The Personal Guarantee was between the defendant and the third plaintiff. Pursuant to the Personal Guarantee, the third plaintiff had agreed inter alia, to guarantee the repayment of the Purchase Price and payment of all other monies and liabilities in respect of the loan sum of RM1,600,000.00 and under the SPA and the Supplemental Agreement.

[11] The intention of the parties in entering into the SPA, the Supplemental Agreement and the Personal Guarantee was for the defendant to give a loan to the deceased and not to purchase the Property. The deceased and the third plaintiff were given a year to repay the loan and the defendant would not transfer the ownership of the Property as