A party to an illegal contract cannot benefit from its own illegality; the court may refuse enforcement based on the intention to act within legal boundaries.

[1] On 16 August 2013, the learned High Court Judge allowed the respondent/ plaintiff's claim and made the following order:

(i) That a sum of RM3,225.00 be refunded to the respondent/plaintiff by the 2nd appellant/defendant.

(ii) There be interest at 5% per annum on the above sum from 1 May 2008 till full and final settlement.

(iii) Cost of RM40,000.00 to be paid to the respondent/plaintiff.

(iv) That a sum of RM4,960,000.00 be refunded to the respondent/ plaintiff by the 1st appellant/defendant.

[2] The learned High Court Judge rejected the appellants/defendants' defence and found that the respondent/plaintiff did not commit any anticipatory breach of the two agreements for the purchase of shares belonging to the 1st and 2nd appellants/defendants in a company called Amazing Green Sdn Bhd ("the company") dated 2 April 2008 and 2 May 2008 respectively. The learned judge also dismissed the defendants' counterclaim and the respondent/plaintiff's claim for liquidated and special damages.

[3] Both appellants/defendants now appealed against that decision. In this appeal the 1st and 2nd appellants shall be referred to as they were in the High Court or collectively as the 'defendants'; and the respondent shall be referred to as 'the plaintiff'.

Background Facts

[4] The defendants were all at material times the shareholders in the company. The company had 100 issued and fully paid shares. 90 shares belonged to the 1st defendant and 10 shares belonged to the 2nd defendant.

[5] The plaintiff entered into two separate sale and purchase agreements with the 1st and the 2nd defendants respectively for the purchase of their respective issued and fully paid shares in the company. The first agreement was with the 1st defendant and was dated 2 April 2008 (the first agreement) for the purchase the 1st defendant's 90 shares in the company for RM19.0 million. The second agreement was with the 2nd defendant and was dated 2 May 2008 (the second agreement) for the purchase of 2nd defendant's 10 shares in the company for the sum of RM5,48,225.00. The completion date for the purchase of the shares was 1 October 2008.

[6] The company was beneficially granted an agricultural land measuring approximately 2,850 hectares for oil palm plantation at Ulu Tinjar, Baram, Miri ("the land"). The legal effect of the two agreements is that the plaintiff would own the company together with its only asset that is the agriculture land that would be granted to it by the State Authority. This was clearly provided in the first agreement.

[7] Pursuant to cl 3(a)(ii) of the first agreement, the plaintiff paid a sum of RM2.5 million as part of the purchase price to the 1st defendant's solicitors, Messrs Ting Goh & Associates. This was on 30 April 2009. Under cl 6(a) of the first agreement, the defendants were to ensure the said land would be free from squatters and other encumbrances. To assist the defendants to ensure this, the defendants' solicitors were allowed to retain a sum of RM1.5 million from the balance of the purchase price to defray all costs and expenses to ensure that the said land would be free from squatters and other encumbrances at the completion date.

[8] However, when the plaintiff's representative visited the land in June 2008, the plaintiff's representative encountered squatters who claimed native customary rights (NCR) over a substantial portion of the land. This fact was communicated by the plaintiff's solicitors to the 1st defendant's solicitors. An intended survey of the said land by surveyors appointed by the plaintiff in early July 2008 was unsuccessful when they were confronted with native residents claiming NCR over the land.

[9] O