The court clarified that collateral contracts cannot coexist with statutory forms of contracts, as statutory terms prevail.

Introduction

[1] This is an appeal against the decision of the learned judge of the High Court of Malaya in Penang, allowing the respondents' (the plaintiffs in the Court below) claim for, inter alia, a declaration that the termination of a sale and purchase agreement dated 2 September 2010 ("the SPA") between the respondents and the appellant (the defendant in the Court below) was null and void. The learned judge also allowed for damages to be assessed, on the basis that the respondents be returned to their original position prior to the termination of the SPA.

[2] For ease of reference, the respondents will be referred to as they were in the Court below, namely as the plaintiffs, and the appellant as the defendant.

[3] The sale and purchase agreement in question related to the sale by the defendant, as vendor, to the plaintiffs as purchasers, of a unit in a condominium described as the "One Ritz" project located in Georgetown, Penang. The defendant terminated the SPA on the grounds that the plaintiffs had failed to comply with their fundamental obligation to make progress payments as and when they fell due. After due notice to this effect, in accordance with the relevant contractual provisions, the SPA was terminated on 10 December 2011.

[4] The learned judge's finding was that the termination of the SPA was void on the grounds that the defendant's agent had made certain binding representations and assurances to the plaintiffs. The judge found that the SPA ought to be read together with these assurances and representations. In other words, the High Court effectively found that these representations and assurances were binding to the extent that they comprised a collateral contract, which sat alongside the SPA. However, the learned judge further found that the defendant, in breach of these binding representations, or the collateral contract, had failed to perform its obligations.

[5] The learned judge further found that as the defendant failed to call salient witnesses to deny or affirm the veracity or otherwise of these binding representations, the plaintiffs' case was the more probable of the two versions. In short, the learned judge accepted that there subsisted a collateral contract whereby the defendant agreed to an earlier date for delivery of vacant possession as well as the provision of other undertakings.

[6] We heard this appeal on 4 September 2014 and allowed the same with brief grounds. We append below our full grounds for allowing this appeal.

Salient Facts

[7] The plaintiffs are citizens of Australia and reside there. They intended to make Penang their second home under the Malaysia My Second Home programme. To this end, they engaged the services of property agents and were advised of several available properties. Eventually they were referred to one Ms Elaine Khoo ("Khoo") who worked for a developer of a condominium project known as the Kelawai View Condominium. Khoo advised them about this project and after procuring advice from their bankers and solicitors, the plaintiffs decided not to proceed with the purchase of a unit in the project as they had been advised that it was a high risk purchase, due primarily to the developer's financial status. This was in or around 7 October 2009.

[8] Subsequently, some time in August 2010, the plaintiffs received a call from Khoo, the defendant's agent, advising that the Kelawai View Condominium project had changed its name to "One Ritz" and that new directors had been appointed to the company. After making the requisite checks, the plaintiffs corresponded with Khoo with a view to purchasing a unit in One Ritz. In the course of these negotiations, Khoo stated that