Siti Norma Yaakob JCA:

To appreciate the nature of this appeal, we need to go into some details as to the transactions undertaken by the many parties to this suit as a clear understanding of them would undo some of the confusion created by the mere reading of the appeal records themselves.

The 1st-10th appellants (plaintiffs in the Court below) were the shareholders of a private limited company known as Seri Naga Construction Sdn. Bhd. (Seri Naga), a property development company, incorporated under the Companies Act, 1965 with an authorised capital of RM1 million divided into one million ordinary shares at RM1 each. Between them, the 1st-10th appellants were the registered and beneficial owners of 700,001 shares of RM1 each in Seri Naga which also represent the paid up capital of the company. Between these ten shareholders, the 10th appellant was the majority shareholder holding more than 50% of Seri Naga's equity. Additionally the 1st and 2nd appellants were also the Directors of Seri Naga and that Seri Naga's known asset at the material time was a piece of land known as Lot 10, Grant No. 19811, Town of Ayer Hitam, District of Batu Pahat, State of Johor (the property).

On 3 November 1986, the 1st-10th appellants (the vendors), entered into a sale and purchase agreement (the agreement), with the 1st respondent company (Nusantara Timur, a defendant in the court below) for the sale of their entire shareholdings of 700,001 shares in Seri Naga to Nusantara Timur for a consideration of RM1 million. This was in effect a takeover of Seri Naga by Nusantara Timur.

The 2nd respondent and his son, the 3rd respondent (both defendants in the court below) were the Directors of Nusantara Timur which had a paid up capital of RM250,000 and the sole shareholder of Nusantara Timur was Low Nam Hui & Sons Sdn. Bhd. (the family company) owned and controlled by the 2nd respondent.

It is not disputed that under the agreement, Nusantara Timur made a deposit of RM150,000, towards the purchase price with the balance of RM850,000 to be made within 60 days after the date of the agreement ie, on or before 3 December 1986.

Under preamble (ix) of the agreement, the purchase would be completed with Nusantara Timur obtaining a loan to settle the balance of the purchase price. That same undertaking is reconfirmed by cl. 2.2.2 of the agreement. Despite attempts made by the 2nd and 3rd respondents to settle the balance, the details of which appear subsequently in this judgment, Nusantara Timur defaulted in their obligation and for this breach they are sued by the vendors for the following reliefs:

(1) Judgment for RM850,000, this being the balance of the purchase price due under the agreement.

(2) Interest thereon from 4 January 1987, the date of default to date of judgment.

(3) Interest on the judgment sum at 8% per annum from the date of judgment to the date of realisation.

(4) Damages.

That takes care of the vendors' cause of action insofar as Nusantara Timur is concerned and that is clearly averred to in paras. 20 and 21 of the statement of claim. In the Court below, the vendors succeeded with part of their claim and the learned trial Judge entered judgment against Nusantara Timur in terms of (1)-(3) supra, fixed the pre-judgment interest at 5% per annum and costs. There is no appeal against this part of the trial Judge's decision.

The trial Judge however dismissed the vendors' prayer for damages against Nusantara Timur and likewise the alternative claims by the vendors and the remaining appellants against the 2nd and 3rd respondents for the recovery of the balance of the purchase price of the shares as well as damages for breach of undertakings allegedly given by them. It is to appeal against the orders of dismissal that we were concerned with in this appeal.

We must confess that we found great difficulty in appreciating the claims against the 2nd and 3rd respondents from a perusal of the statement of claim itself as they have not been c