A party cannot rescind a contract for non-performance unless the breach is fundamental and affects the core essence of the contract.

Background

[1] In the claim before the High COURT, the respondent, a housing developer and the appellant, an individual, had two contractual relationships.

[2] The first was via an oral contract made in 2009. In this oral contract, Tan Swee Leong [PW1], better known as Steven Tan, the Chief Executive Officer [CEO] of the respondent approached the appellant with an offer that the appellant work as its project manager in its housing project known as 98 Greenlane Lintang Gangsa [the project]. The appellant was required to serve as project manager until the completion of that project. For ease of reference, this will be referred to as the 'employment contract'.

[3] The amount of consideration under this employment contract is disputed. The appellant maintains that it was for RM1 million whereas the respondent claimed that it was for RM500,000.00. The respondent claimed that it had advanced the appellant this sum of RM500,000.00 via a discount for the same amount in the second contractual relationship between the parties.

[4] The second contractual relationship between the parties arose when the appellant purchased from the respondent one unit of 3-storey terrace house in the project vide sales and purchase agreement dated 10 January 2013. For this purchase, the respondent gave the appellant a discount of RM500,000.00 off the purchase price of RM1,068,000.00. A credit note was issued on 12 May 2014. The appellant took out a housing loan to finance the payment of the balance of the purchase price. This second contractual arrangement will be referred to as the 'Sales and Purchase Agreement' [SPA].

[5] The appellant resigned before the project was completed. He resigned on 17 July 2014 after having worked for the respondent for 5 years. His letter of resignation was accepted by PW1, without protest.

[6] It is not in dispute that during his tenure as project manager, the appellant played a key role. Amongst others, the appellant liaised with the relevant authorities in procuring the necessary approvals of the local authority for planning and for building plans, liaised with various persons such as the consultants for the project, the landowners and solicitors and also generally assisted in the eviction of squatters on the land so that the project could be built.

[7] A year after the appellant resigned, PW1 met the appellant at Starbucks Cafe at Seagate, Penang. There, PW1 informed the appellant that the respondent wanted the appellant to refund the discount of RM500,000.00 together with interest because the appellant had resigned prematurely. PW1 also suggested the appellant sell the 3-storey terrace house as the value of the house was said to be in the region of RM1.3 million. According to PW1, the respondent wanted the refund because it was disappointed and shocked with the appellant's resignation as he had left the respondent's employment at a time when his services was most needed. The respondent was left in a quandary and the appellant's resignation had delayed the respondent's project. PW1 testified that the respondent decided to wait for the project to complete before claiming the refund from the appellant. The project was completed in March 2015; it was then ready for delivery. When the appellant refused to refund the RM500,000.00, the respondent sued.

[8] The appellant counterclaimed for payment of the balance of agreed remuneration, delivery of vacant possession of the property under the SPA, and liquidated damages.

Decision Of The High COURT

[9] The learned High COURT Judge allowed the respondent's claim and ordered a refund of the RM500,000.00 after finding that t