Shaik Daud Ismail JCA:

The respondent had filed an originating summons in the Shah Alam High Court seeking various declaratory and consequential reliefs. The facts of the matter are that the respondent with two others owned a piece of land held under G.M. 1680 Lot No. 16359 in the Mukim of Kapar, Klang. The appellant is in the business of developing properties. By an agreement in writing dated 29 November 1988 (the principal agreement) the respondent agreed to sell and the appellant agreed to purchase the above mentioned piece of land for an agreed consideration. The purchase price was to be paid by way of RM10,000 in cash and the balance by instalments to be agreed upon. The appellant was to develop the land in two phases, phase 1 and phase 2. Simultaneously, with the execution of the principal agreement, the parties entered into a supplementary agreement (the supplementary agreement) whereby it was agreed that the balance of the purchase price was to be settled by the appellant transferring to the respondent and the other two owners of the said land completed units equivalent to twenty percent of the totally completed units constructed on the said land and it was further agreed that each completed unit would fetch a price of RM300,000.

Clause 2 of the principal agreement provides that:

This Sale and Purchase herein shall be conditional upon the Purchaser obtaining within nine months from date of this Agreement or before the expiry of any extended period as the parties may agree upon, the approval of the relevant authorities to construct a minimum of 100 units 4-storey shophouses cum apartments each of lot size measuring 20 x 80 feet.

If the said approval (hereinafter called "the building units") on the said lands is not obtained within nine months from the date of this Agreement or after the expiry of any extended period, then this Agreement shall terminate and the Vendors shall refund to the Purchasers the sum of RM10,000 only paid pursuant to Clause 1 without interest and the Purchasers' solicitors shall return the documents deposited with them pursuant to Clause 3.1 hereof to the Vendors and thereafter neither party shall have any rights against the other.

Consequently, on or about 23 July 1991, the said lands were transferred into the name of the appellant and subsequently were encumbered with a charge in favour of a merchant bank. By an extension agreement dated 1 November 1989, the dateline was extended to 28 August 1992. This dateline lapsed without the approval being obtained from the relevant authorities for the 100 units. Up to this time there appear to be no dispute. The dispute arose in 1994 and they surround the negotiations for a second supplementary agreement for a second extension of the dateline. This second supplementary agreement is dated 12 July 1994 which further extended the dateline to 15 May 1994.

It is the contention of the appellant that as at 15 May 1994, approvals had been obtained for phase 1 but not phase 2 thereof and this had been made known to the respondent but they denied this. It was contended that before the signing of the second supplementary agreement to extend the dateline, the respondent gave assurances to the appellant in respect of phase 2 so as to allow the development of phase 2 to commence within 24 months of the completion of phase 1. That gave rise to the collateral agreement for which fresh and considerable consideration was in fact given by the appellant to the respondent which is contained in another agreement called the variation agreement dated 12 July 1994, the same date as the second supplementary agreement. The variation agreement also extended the dateline for the approval to 15 May 1994.

Under the variation agreement, the appellant made a considerable consideration for the extention ie, cash payment of RM20,000 the receipt of which is acknowledged by the respondent, seven units of four-storey shop cum apartments with a market value of RM4.9 million. All