Nik Hashim JCA:

Background

This appeal arose out of a sale and purchase agreement relating to several pieces of land in Sungai Petani which agreement was executed on 20 March 1997 between the appellant (plaintiff in the court below) as purchaser and the respondent (defendant in the court below) as vendor for a consideration of RM71,409,848.04. At the time of the execution of the said agreement, a sum of RM7,140,984.80 being 10% of the total purchase price, was paid by the appellant by way of deposit and to account of the total purchase price. The receipt of the said sum was acknowledged by the respondent under cl. 2.1(a) of the agreement. Under cl. 2.(1)(b) of the agreement, the balance of the purchase price were to be settled in two trances as follows:

(i) 15% of the purchase price, ie, RM10,711,477.20 was payable within nine months on or before 19 December 1997; and

(ii) final balance of 75% of purchase price ie, RM53,557,386.04 was payable on or before 19 December 1997 but the appellant has a right to extension of time of nine months for this payment upon payment of interest at 8%.

The appellant failed to pay RM10,711,477.20 on 19 December 1997 nor the said RM53,557,386.04. On 4 January 1998 the respondent terminated the agreement and forfeited the deposit of RM7,140,984.80. The appellant filed a writ in the High Court applying for a declaration that the termination of the said agreement by the respondent was null and void, and the forfeited money of RM7,140,984.80 to be returned to the appellant with interest. On 29 October 2001 the learned judge dismissed the appellant's application with costs. In his judgment the learned judge found that the appellant had failed to pay the sum of RM10,711,477.20 due on or before 19 December 1997 as required under cl. 2.1(b)(i) of the agreement, and that under cl. 4.3, the respondent was to hand over the documents of titles only against payment of the entire purchase price. He was of the view that the time did not cease to be of the essence of the contract and that the termination of the contract and forfeiture of the deposit were not unconscionable or inequitable. Hence, this appeal.

Issue & Contentions

The primary issue here is whether the respondent was entitled to terminate the contract and forfeit the deposit.

The contentions of the appellant broadly cover three areas, namely:

(a) the respondent had failed to co-operate with the appellant to enable the completion of the contract in that the appellant had failed to meet the requirements set by the appellant's lender Maybank that the respondent was to deliver the land title to Maybank and create a lien-holder's caveat. The appellant alleged that the failure or refusal by the respondent to consent to lodgment of a lien-holder's caveat on the land in favour of Maybank for facilities granted to the appellant's associated company Country Heights Industries Sdn Bhd which was not a party to the sale agreement, is a non co-operation under cl. 30; and

(b) the time had ceased to be of the essence of the contract as the appellant was negotiating with the respondent over the mode and time of payment of RM10,711,477.20.

(c) the conduct of the respondent was such that it would be just and equitable for the deposit to be returned to the appellant.

It is the contentions of the respondent that there was no provision in the agreement for the creation of a lien-holder's caveat and that such a caveat was inconsistent with the express terms of the agreement. The respondent was of the view that the creation of a lien-holder's caveat, by way of third party security, was unauthorized by law. With regard to time, the respondent argued that time had not ceased to be the essence of the contract as the respondent did not enter into any negotiation with the appellant but it was the appellant who wanted to meet the respondent. Further, in the circumstances of this case, the respondent's conduct was not unconscionable, and therefore, the deposit was r