A vendor's failure to deliver vacant possession of land by the completion date, due to encroachments, allows the purchaser to terminate the contract and seek a refund of the deposit.

[1] We will refer the parties like what they were referred to at the High Court. Thus, Code Focus Sdn Bhd will be referred to as the plaintiff while Tan Chee Hoe & Sons Sdn Bhd will be referred to as the defendant.

[2] The plaintiff is a company incorporated in Malaysia under the Companies Act 1965 with a business address at suite 8-3B, Bangunan Lim, No: 803-817, Batu 4½, Jalan Ipoh, 51200 Kuala Lumpur.

[3] The defendant, on the other hand, is a company incorporated in Malaysia under the Companies Act 1965 with an address at No: 1&1A, Jalan Ipoh Kecil, 50350 Kuala Lumpur.

[4] After a full trial, the learned High Court Judge dismissed the plaintiff 's claims with costs. Aggrieved, the plaintiff filed an appeal to this Court.

The Salient Facts

[5] By an agreement dated 10 November 1995 (here in after referred to as the "SPA"), the defendant agreed to sell and the plaintiff agreed to purchase 931,002 ordinary shares of RM1.00 each representing one hundred per cent (100%) of the issued and paid-up capital of Choo Hoe Sdn Bhd at the sale consideration of RM16 million (here in after referred to as "the purchase price"). The plaintiff agreed to purchase the equity of Choo Hoe Sdn Bhd for the simple reason that the plaintiff was interested in a piece of freehold land owned by Choo Hoe Sdn Bhd. The freehold land measured one (1) acre, zero (0) rood and twenty four point five (24.5) pole held under CT No: 12920, Lot 92, Section 46, Bandar and Wilayah Persekutuan (here in after referred to as "the land").

[6]lnter alia, the following terms and conditions were stipulated in the SPA:

(a) that upon execution of the SPA, a total sum of RM1,600,000.00 shall be paid by the plaintiff to the defendant as "deposit" representing ten per cent (10%) of the purchase price (see cl 2.2(a) and (b) of the SPA);

(b) that the balance of the purchase price amounting to RM14,400,000.00 was to be paid by the plaintiff to the defendant on or before 9 February 1996 (here in after referred to as "the completion date") (see cl 2.2(c) of the SPA);

(c) that the completion of the SPA was subject to two conditions precedent, namely:

(i) approval of the Foreign Investment Committee (here in after referred to as "the FIC approval") within seventy-five (75) days from the date of the SPA; and

(ii) approval of the defendant's shareholders in an Extraordinary General Meeting ("EGM") approving the sale of the shares to the plaintiff (see cl 3.5 of the SPA),

(d) that the defendant shall deliver vacant possession of the land to the plaintiff on the completion date (see Recital I and cl 8.1(21)(d) of the SPA);

(e) that the defendant shall refund the deposit free of interest to the plaintiff in the event the FIC approval is not obtained (see cl 3.4 of the SPA),

(f) that the defendant warrants, represents and undertakes with the plaintiff that:

(i) neither the defendant nor Choo Hoe Sdn Bhd have created any mortgages, charges, liens, encumbrances or granted any equities or options or otherwise dispose off the land or any part thereof (see cl 8.1(21)(b) of the SPA); and

(ii) there are no squatters occupying any part of the land and that the defendant shall at its own costs and expenses evict all the squatters thereto and pay all compensation thereof and/or terminate the existing month-to-month tenancy and forthwith deliver vacant possession of the land to the plaintiff on the completion date (see cl 8.1(21)(d) of the SPA),

(g) that in the event the plaintiff fails, refuses or neglects to pay the balance of the purchase price on or before the completion date, the SPA shall automatically terminate and the defendant is entitled, inter alia, to absolutely forfeit the deposit; and

(h) that time, wherever mentioned, shall be the essenc