Court determined the nature of transactions as loans rather than outright sales, affecting proprietary rights and obligations.

[1] The dispute in this appeal is about the dealings and transactions conducted over a piece of land comprised in Grant for Land (Surat Putus) No 4437, Portion No 123 in the Mukim of Sungei Pasir, District of Kuala Muda in the State of Kedah containing an area of 138 relongs 458 jembar ("the land"). The registered proprietors of the land are the three respondents before us and one Haji Abdul Latiff bin Talib ("Latiff") in equal undivided shares. Latiff is not a party in these proceedings.

[2] The land was purchased by the first respondent at a public auction on 15 December 1973, for RM80,000. Since he had successfully bidded at the auction, the land was initially registered in his name as sole proprietor on 6 February 1974, but on the same day the land was transferred and registered in his name and three others as well, they being the second and third respondents and Latiff in equal shares. It is the third respondent's evidence that he paid the first respondent, his brother-in-law RM20,000 for his 1/4 share 1 of the land. The second respondent is the first respondent's wife and Latiff is a good friend. Dealings in the land after this were conducted principally by the first respondent as he represented the other two respondents and Latiff.

[3] On 27 December 1973, just twelve days after he had successfully bidded for the land and before it was registered in his name, the first respondent entered into a sale and purchase agreement with a company known as United Enterprise (Kedah) Sdn Bhd ("the company"). Under the agreement, the company agreed to purchase the land from the first respondent for RM208,419.22 subject to the conditions, inter alia, that the land was free from all incumbrances, the sale was to be completed within twelve months from 27 December 1973, and with vacant possession. A sum of RM64,525.70 was acknowledged to have been received by the first respondent as deposit and since the amount worked out to be 30% of the purchase price, the Managing Director of the company explained that the first respondent asked for more than the usual 10% deposit as he needed the money to pay off the auction price of the land. That also explains the speed within which he managed to get a buyer for the land soon after he had acquired it.

[4] Then on 27 April 1974, through their Managing Director, the company lodged a private caveat on the land when a search revealed that the first respondent was no longer the sole proprietor of the land as his share had been diminished to 1/4 only.

[5] The sale of the land to the company did not go through as apart from the fact that the first respondent was not able to transfer the whole of the land in his own name, he was also not able to give vacant possession as the land was occupied by other third parties who claimed to have purchased the land as well. This forced the company to rescind the agreement but it is not clear from the records when that right was exercised. However at para 4 of their statement of claim, the respondents (who were the plaintiffs in the court below) have pleaded that they were notified of the rescission by letter dated 2 January 1975. Unfortunately that letter does not form part of the records but in any event, it is not disputed that with the rescission, the company also demanded the refund of the deposit as well as an unspecified amount of damages which was fixed later at RM5000.00 as costs.

[6] What happened next was the start of the dispute in this appeal. What is not disputed is that the respondent sought the services of a broker, one Wiliam Jansz, who in turn introduced him to the appellant. It is the respondents' case that from the appellant, the first respondent w