The appeal clarified the enforceability of contract clauses regarding possession and termination rights, affirming the legal basis for unilateral termination under specific contractual frameworks.

Introduction

[1] In the High Court, the respondent sued both the appellants for specific performance or damages for breach of contract under a written agreement for the sale and purchase of a property belonging to the appellants, which was damaged by a fire after a deposit was paid but before the balance of the purchase price was due to be paid.

[2] The appellants in turn brought a counterclaim for what they alleged to be a breach of contract on the part of the respondent.

[3] We shall be referring to parties in this judgment in their respective capacity in the High Court, that is to say, the appellants as the defendants and the respondent as the plaintiff.

[4] The High Court had, after a full trial with three witnesses from the plaintiff and four witnesses from the defendants, allowed the plaintiff's claim. As for the defendants' counterclaim, it was dismissed.

[5] Aggrieved by the decision of the High Court, the defendants appealed to the Court of Appeal vide Civil Appeal No: Q-02-1398-06-2012 and on 12 April 2013, the appeal was dismissed.

[6] Following the decision of the Court of Appeal, the defendants had filed an application for leave to appeal to this Court and on 19 November 2013, this Court granted leave to appeal to the defendants on two questions of law. Hence, the present appeal.

[7] We heard the appeal. At the conclusion of the hearing of the appeal, by a unanimous decision, we dismissed it. We now give our reasons.

Background Facts

[8] The background facts were very straightforward and not much was disputed although there was considerable disagreement flowing from the rival contentions of the parties with regard to the construction of several clauses in the written agreement.

[9] At all material times, the defendants were the co-proprietors of that parcel described as Lot 437 Block 22 Buan Land District, Sarawak together with one unit of double-storey intermediate terraced shophouse for commercial and residential purposes erected thereon ("the property").

[10] By the sale and purchase agreement dated 23 September 2008 ("the SPA"), the defendants agreed to sell the property to the plaintiff for RM320,000.00 out of which the plaintiff had paid a deposit of RM55,000.00 leaving a balance sum of RM265,000.00 to be settled by a bank loan.

[11] At the material time, the plaintiff's husband ("PW2") was renting the property from the defendants at a monthly rental of RM1,100.00 and the said tenancy was to expire on 31 December 2012.

[12] It has to be emphasised that after the SPA was signed, the defendants had not terminated the tenancy agreement and the tenancy continued until the occurrence of a fire on 5 November 2008 that rendered the property unfit for occupation.

[13] Shortly afterwards, on 13 November 2008, the plaintiff's solicitors served a notice of termination under cl 15 of the SPA to the defendants and requested for the return of the deposit and part payment of RM85,000.00 previously paid.

[14] Resulting from the fire, the defendants claimed and had received a sum of RM85,000.00 from the insurance company as a fire insurance compensation for the damage to the property caused by a fire.

[15] On 19 January 2009, the defendants' solicitors in reply, wrote to the plaintiff asking the plaintiff to pay within 30 days the balance of the purchase price.

[16] On 20 March 2009, the defendants' solicitors again wrote to the plaintiff's solicitors saying, "that the agreement has been mutually terminated and annulled forthwith".

[17] The plaintiff maintained that she was at all material times ready and willing to perform all her contractual obligations under the SPA if the defendants were willing to make good the loss and damage to the property caused by a fire.

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