Zaleha Zahari & Raus Sharif JJCA:

[1] This is an appeal by the defendant against the decision of the learned High Court judge, Kuala Lumpur, given on 6 May 2004. We heard and unanimously dismissed the appeal with costs. We now give our reasons. But first the facts.

[2] On 24 August 1995, the plaintiff and the defendant entered into a sale and purchase agreement ("agreement") in respect of a property known as parcel No. 07-63 Commercial Shop Lot Berjaya Star City and now known as Berjaya Times Square ("property"). The plaintiff was the purchaser and defendant was the seller.

[3] The purchase price of the property was RM1,149,971 ("purchase price"). The plaintiff paid RM1,034,793.90 being 90% of the total purchase price to the defendant ("monies paid"), part of which was financed by a loan from AmBank Berhad.

[4] Under cl. 22(1) of the agreement, the completion date for the property was 36 months from the date of agreement (completion date). Under the same clause, there was an automatic extension of three months from the expiry of the completion date. The completion date of 36 months expired on 23 August 1998. The extended period of three months expired on 23 November 1998. However, the construction of the property was not completed and delivered to the plaintiff within the extended period or on or before 23 November 1998 as according to the agreement.

[5] After 23 November 1998, the plaintiff's director, Lee Teen Nguan, met the sales and marketing officers of the defendant; others Ms. Esther and Ms. Pey Yee, who promised that the construction of the property would be completed by the end of 2001. Again, the defendant failed to keep its promise.

[6] On 27 December 2001, the plaintiff's former solicitors, Messrs Gan & Low, issued a letter, informing the defendant that the plaintiff had decided to rescind the agreement. The reason to rescind being the defendant had committed a fundamental breach of its contractual obligation ie, to complete and deliver vacant possession of the property to the plaintiff on or before the completion date.

[7] The defendant refused to accept the recission of the agreement. In a letter dated 3 January 2002, the defendant claimed that the plaintiff was not entitled to rescind the agreement, instead would only be entitled to claim for liquidated damages.

[8] Subsequently, the plaintiff sought consent and obtained reassignment of all right, title and interest from AmBank to institute legal proceedings against the defendant.

[9] But on 1 October 2002, when the plaintiff's director, Lee Teen Nguan met the defendant's sales and marketing officer, Ms Dianne Chan, he was assured that vacant possession of the property would be delivered by end of 2002.

[10] Despite the assurance, the defendant again failed to complete and deliver vacant possession. As a consequence thereto, on 5 March 2003, the plaintiff's solicitors sent a letter demanding the defendant to accept the rescission of the agreement, to refund the monies paid and to pay all damages suffered by the plaintiff within 14 days.

[11] The defendant in letter dated 10 March 2003 disputed the plaintiff's right to rescind the agreement. Hence, the plaintiff filed this originating summons seeking the following orders:

(i) a declaration that the plaintiff had rescinded the agreement dated 24 August 1995 entered into between the plaintiff and the defendant vide a letter dated 27 December 2001 from the plaintiff's solicitors, Messrs Gan & Low to the defendant;

(ii) the defendant shall repay the plaintiff the sum of RM1,149,771 being the 100% of the purchase price already paid by the plaintiff to the defendant under the agreement;

(iii) the defendant shall pay the plaintiff a sum of RM241,820.99 as at 27 December 2001 being the financing costs, legal expenses and others incurred by the plaintiff for the purpose of purchasing the property;

(iv) the defendant shall pay the plaintiff all financing costs, legal expenses and others incurred by the plaintiff f