Parties to a contract hold equitable interests; failure to comply leads to liability for breaches, necessitating adjustments based on principles of unjust enrichment.

JUDGMENT

Mohd Sofian Abd Razak JCA:

Introduction

[1] This is the appellant's appeal against the decision of the High Court Kuantan dated 11 October 2019 after a full trial allowing the respondent's claim and dismissing the appellant's Counter Claim with costs.

[2] For ease of reference, parties will be referred to as they were in the proceedings before the High Court, namely, appellants as defendants and respondent as plaintiff.

[3] Having considered the appeal records and the submissions of the parties in the appeal, it is our unanimous decision that the appeal is allowed in part with regard to the defendants' counterclaim and affirmed the order of the High Court with regard to the plaintiff's claim. We now give our reasons for the same.

Background Facts

[4] The plaintiff and the 1st defendant were in business together for many years in various enterprises and joint ventures for mutual advantage and with a view to obtaining profit jointly. The plaintiff and the 1st defendant were previously equal shareholders in 2nd defendant and the only Directors of the 2nd defendant.

[5] By a written agreement contained in the Deed dated 22 March 2011 ("the Deed"), entered into between the plaintiff, the 1st defendant, the 2nd defendant and Sri Kuantan Home Builders Sdn Bhd, the plaintiff and the 1st defendant agreed to terminate their business relationship in accordance with the terms and conditions set out in the Deed.

[6] It is perhaps pertinent to note the relevant Clauses in the Deed as follows:

Clause 3(a)

The First (Plaintiff) and Second Party (1st Defendant) hereto have agreed to end their aforesaid business relationship by the First Party (Plaintiff) transferring all his shares in P & K SB (2nd Defendant) to the Second Party (1st Defendant) and/or his nominee/s.

Clause 2(ii)(b)

The Second Party (1st Defendant) shall cause P & K SB (2nd Defendant) to transfer the 14 shop lands described in cl 3(iii)(ii) of this agreement to the First (Plaintiff) and Second Party (1st Defendant) in equal share subject to the existing charge.

Clause 2(ii)(e)

The Second Party (1st Defendant) shall secure the release of all guarantee executed by the First Party (Plaintiff) in favour of P & K SB's (2nd Defendant) creditors and shall indemnify and keep indemnified the First Party (Plaintiff) and his estate and effects against all such debts and liabilities guaranteed by the First Party (Plaintiff) and against all proceeding costs, claims and expenses in respect of them.

Clause 3(iii)

P & K SB (2nd Defendant) shall transfer the 14 shop lands to the First (Plaintiff) and Second Party (1st Defendant) subject to the existing charge in equal share.

Clause 7

The parties hereto agree that the 14 shop lands shall be developed jointly by them.

[7] In accordance with cl 3(a) of the Deed, the plaintiff had on 7 April 2011 transferred all his shares in the 2nd defendant to the 1st defendant and one Pak Lin Haw and had resigned as director of the 2nd defendant on the same date.

[8] The plaintiff contended that the 1st defendant was in full control of P&K Builders and that the 1st defendant and the 2nd defendant had breached the aforesaid relevant express terms of the Deed and the Supplementary Agreement. Both the 1st and 2nd defendant failed to effect the transfer of the specified seven lots of land to the plaintiff within a reasonable time.

[9] The 1st defendant, had proceeded to complete the development of the 14 lots of land into a badminton complex by himself or through the 2nd defendant sometime in November 2011 notwithstanding the fact that the plaintiff, by letter dated 18 July 2011 had given notice to the 1st defendant, inter alia, to stop further development works on the plaintiff's seven lots.

[10] Subsequently, by a Supplementary Agreement dated 8 November 2011 ("the Supplementary Agreement") entered into between the same parties as those to the Deed, it was agreed, specifically by cl 2 therein, that the 14 shop lot lands would be divided between the plaintiff and the 1st defend