The Rt Hon LMD de Silva :

The judgment of their Lordships was delivered by

This is an appeal from a judgment and decree of the Court of Appeal at Kuala Lumpur Supreme Court which reversing a judgment of the High Court entered judgment in favour of the plaintiff (the respondent on this appeal) against the defendant (the appellant on this appeal) for the return of a deposit made by the plaintiff on an agreement for the purchase by him from the defendant of 22 lots of land and for damages for the breach thereof by the defendant.

The following recitals and clauses of the agreement are relevant to the matters in dispute between the parties:

Whereas the Vendor has caused Building Plans prepared by Lee Eng Tong of No. 24, Sultan Street, Klang (hereinafter called the Architect) which have been approved by the Town Council, Klang, under Plans Nos 185/55, 185A/55, 185B/ 55, 185C/55 and 185D/55 for the erection of 21 Terrace Houses on the said Property:

And Whereas the Purchaser intends to erect the said 21 Terrace Houses for sale and agrees to give priority for such sale to the 36 Tenants of the Vendor of premises known as Nos 102, 104, 106, 108, 110, 112, 114, 116, 118, 120, 122, 124, 126, 128, 130 132, 134, 136, 138, 140, 142, 144, 146, 148, 150, 152, 154: 156, 158, 160, 162, 164, 166, 168, 170 and 172 Meru Road, Klang (hereinafter called the Tenants):

And Whereas the Vendor has agreed to sell and the Purchaser bas agreed to purchase the said Property for the sum of Dollars Sixty-six thousand ($66,000) only and the Vendor agrees to transfer such lot or lots of the Property described

in the said Sch to the Purchaser or any of his nominees or assigns free from all encumbrances as the Purchaser shall elect subject to the terms and conditions as mentioned hereafter:

NOW THIS AGREEMENT WITNESSETH as follows:-

1. Now in consideration of the above premises and in consideration of the sum of Dollars Fifteen thousand ($15,000) only paid by the Purchaser to the Vendor, the receipt whereof the Vendor hereby acknowledges, as part payment towards the said purchase price it Is mutually agreed as follows:-

2. The Purchaser shall pay to the Vendor a further portion of the purchase money in the sum of $24,000 (Dollars Twenty-four thousand only) on or before the 23 June 1956 and the balance of the purchase money in the sum of $27,000 (Dollars Twenty-seven thousand only) shall be paid by ihe Purchaser to the Vendor on or before the 23 December 1956.

3. As and when the Purchaser pays to the Vendor each sum of $3,000 (Dollars Three thousand on forming part of the payments mentioned in cl 2 above, the Vendor shall transfer to the Purchaser or any of his nominees or assigns any one lot of the said Property described in the said Sch provided the above-mentioned sum of $24,000 (Dollars Twenty-four thousand only) shall be paid in full by the Purchaser to the Vendor on or before 23 June 1956 and the balance of the purchase money in the sum $27,000 (Dollars Twenty-seven thousand only shall be paid in full by the Pdrehager to the Vendor on or before the 23 December 1966. Upon payment of the full amount of the purchase money in the sum of $66,000 (Dollars Sixty-six thousand only) the Vendor shall transfer to the Purchaser the balance or all of the Property as described in the said Sch to the Purchaser or any of his nominees or assigns.

6. The Vendor shall produce for the purpose of inspection, when necessary, any or all of the titles in respect of the said Property to the Purchaser or to any of his nominees or assigns when requested by the Purchaser.

7. Upon signing of this Agreement the Vendor shall inform all his said 36 Tenants regarding the priority given to them to purchase any of the said 21 Terrace Houses according to the normal terms and conditions of sale offered by the Purchaser. This priority shall hold good for a period of fourteen (14) thys from the date of this agreement, after which the Purchaser shall reserve his right to sell