Gopal Sri Ram JCA:

This appeal raises a short point which has arisen on numerous occasions and upon which there are several decisions of the highest judicial tribunal in this country. But for the very special circumstances of this case, to which we will refer in due course, we would have been disinclined to add to the volume of legal literature already in existence upon the subject.

The facts relevant to this appeal are as follows.

The appellant is the registered proprietor of two shophouses along Jalan Station, Ipoh. He wanted to sell them. He engaged the services of a firm of estate agents M/s. Muthu & Lee, to find a buyer. The asking price was RM450,000. In November 1989, the estate agents found a buyer in the person of the respondent who was prepared to pay that sum. They then communicated with the appellant's solicitors who, on 23 November 1989, wrote the following letter to M/s. Muthu & Lee:

We refer to the telephone conversation between your Mr. E.S. Muthu and our Miss J. Devadason of even date.

Your client's offer of RM450,000 for the purchase of the above-mentioned property is accepted on the condition that a 10% deposit is paid to us on 28 November 1989 by 12 noon, and the balance purchase price to be paid to us within three months from execution of the agreement upon which vacant possession of the property will be given to your client.

We confirm that our clients have agreed to pay your commission of one per cent (1%).

Kindly be informed time is of the essence.

This transaction shall lapse should we not receive a deposit of 10% of the purchase price by 28 November 1989 by 12p.m.

The estate agents responded by their letter of 28 November 1989 as follows:

We refer to your letter JMD/LKH/41091 dated 23 November 1989.

2. We hereby confirm our client Mr. Lau Wing Hong I.C. No. 4405270 of No. 26, Jalan Datoh, Ipoh offer to purchase the above property at RM450,000 (Ringgit: Four Hundred and Fifty Thousand Only) and enclose herewith the 10% vide MBB Cheque No. 660088 as deposit subject to the sale and purchase Agreement.

3. Whereas the balance of the purchase price will be paid within three months from the date of the execution of the agreement with vacant possession.

All quit rent and assessment will be apportioned as at date of transfer.

A day later, that is to say, on 29 November 1989, one Gurbachan Singh, Kartar Singh and Teja Singh caused to be issued a writ from the Ipoh High Court against the firm of M/s. Muthu & Lee and the present appellant seeking, inter alia, specific performance of an agreement made on either 24 November or 26 November 1989 for the sale of the same two shophouses to them. On the same date as the writ was issued, these three gentlemen obtained an ex parte injunction restraining the appellant from entering into any agreement for the sale of the shophouses in question to any other person. This injunction was served on the appellant on 30 November 1989. The appellant then took the position that the agreement, if any, it had with the respondent had been rendered impossible of performance and informed the respondent accordingly.

Later, in January 1992, the appellant unsuccessfully applied to have the writ struck out for want of prosecution and to have the injunction against it set aside. On 29 October 1994, the appellant took out a summons claiming a declaration to the effect that if there was an agreement between it and the respondent, then, such agreement had been frustrated by the grant of the injunction. The learned Judge who heard the summons, dismissed it but gave no reasons for his decision. Against this decision, the appellant appealed to this Court. We heard the appeal on 17 September 1996 and dismissed it without calling upon Counsel for the respondent.

Mr. Abraham of Counsel for the appellant, in his opening address to us, identified the two issues that lie at the heart of this appeal. First, whether there was a valid and enforceable agreement between the parties to t