Introduction

[1] This is an appeal by the appellant/defendant against the decision of the Kuala Lumpur High Court dated 28 February 2013 which dismissed the appellant/defendant's counterclaim for the sum of RM3,009,254.23 against the respondent/plaintiff.

[2] We heard the appeal on 13 August 2014, after which we adjourned the matter for consideration and decision. We now give our decision.

[3] In this judgment, the parties will be referred to as they were in the High Court.

Background Facts

[4] The chronology of events leading to the counterclaim of the defendant can be summarised as follows:

(i) the plaintiff entered into a sale and purchase agreement dated 24 May 2003 ("the agreement") with a company known as Jeram Permata (Cheras Sdn Bhd) ("JP"), in which, in consideration of JP agreeing to sell a piece of land and constructing on the said land 226 medium cost apartments as staff quarters for the Jabatan Bomba Dan Penyelamat Malaysia (JBPM), under the Ministry of Housing and Local Government, the plaintiff will pay a purchase price of RM50,548,000 (out of which RM4.44 million represents the price of the said land) to JP ("the project");

(ii) a sum of RM16 million had be