Salleh Abas FJ:

The Facts

In this appeal the facts are as follows:

By an agreement entered on 15 May 1969 the respondent sold 89 housing lots to the appellant for a total consideration of RM301,000 of which RM133,000 was paid in cash and the balance of RM168,000 was to be set off against the price of four houses which the appellant was required to build for the respondent on lots 1762, 1772, 1763 and 1771. The houses which were to be erected on lots 1762 and 1772 were two units of double-storey detached houses, whilst the houses to be built on lots 1763 and 1771 were two units of terrace houses.

Under Clause 8 of the agreement the appellant undertook to deliver these houses in a state of completion, within six months in the case of the two double-storey detached houses and twelve months in the case of the two units of terrace houses from the date of the approval of their plans, drawing and specification by the Kuching Rural District Council (KRDC). State of completion was defined by Clause 9 to mean the issuance by KRDC of certificates of fitness for occupation in respect of these houses.

Clause 24 stipulated that time wherever specified shall be of the essence of the agreement.

Under clauses 20 and 21, it was agreed that if the appellant failed to deliver these houses within the agreed time, he would be liable to pay to the respondent a sum of RM1,080 per month in respect of the double-storey detached houses and a sum of RM600 per month in respect of the two terrace houses and this liability would continue until the houses were delivered in a state of completion, i.e. until certificates of fitness were issued.

The agreement also made a provision for a forfeiture clause - Clause 23 - in the following terms:

23. Notwithstanding anything herein contained to the contrary, it is hereby agreed that if the Developer [appellant] defaults in paying the full sum of RM133,000 (Dollars One hundred and thirty-three thousand only) to the Owner [respondent] within six (6) months from the date stipulated in Clause 3(b) hereof and/or if the Developer [appellant] abandons the performance of the present Agreement or fails in execution of the construction work in the course of erection as aforesaid, then thereupon this Agreement shall ipso facto be null and void and all sums of money paid hereunder by the Developer [appellant] shall be forfeited to the Owner [respondent] and in such circumstances the Developer [appellant] shall have no claim whatsoever for the work done or for the cost of materials. (the emphasis is ours)

The agreement contained no provision for the extension of the delivery period, nor any provision as to alterations and additional works.

The appellant, however, was unable to deliver these four houses in time. In respect of the two double-storey detached houses on lots 1762 and 1772 the delivery dates were 16 March 1971 and 4 April 1971. The delivery date for the two terrace houses was 9 July 1971. He did not deliver these houses by their agreed delivery dates, but delivered them all only on 9 September 1972. He was thus late by 17 months and 20 days in respect of the first double-storey detached house and by 19 months and 2 days in respect of the second double-storey detached house and by 13 months and 27 days in respect of the two terrace houses.

During the course of constructing these four houses at the request of the respondent the appellant carried out extra work in respect of each of them for a total cost of RM5,008 and also incurred certain expenses amounting to RM881 on behalf of the respondent.

When sued for the price of extra work and the expenses of RM881, the respondent denied liability and counterclaimed a sum of RM28,800 as liquidated damages under clauses 20 and 21 of the agreement and also general damages because of the failure of the appellant to deliver the houses in accordance with the stipulated periods.

The appellant's reply to the respondent's counterclaim was that the respondent was not entitled