2011 MarsdenLR 3747 ; 2011 MarsdenLR 1

ZAINUN ALI, RAMLY ALI, ZAHARAH IBRAHIM
MWE PROPERTIES SDN BHD – Appellant
Versus
SAW LIP KEAN – Respondent

A binding contract is established by conduct and part performance despite the absence of a formal agreement; claims for refunds of deposits are not valid if the claimant is in breach.

Headnote:(A) Contracts - Principles governing the formation of contracts - Validity of agreements based on written forms and conduct - Right to recover deposits and payments made upon termination of contract - When will a contract be considered binding despite the absence of a formal written agreement - Principles established in Hillas & Co. v. Arcos Ltd (1932) and Cornish v. Abington. (Paras 20, 22, 39)

(B) Breach of Contract - Claimant's entitlement to refunds upon breach of contract and evidential burden related to assurances - Moneys paid under compulsion of law are non-recoverable. (Paras 40, 44)

Facts of the case:
The appellant, a property developer, was sued by the respondent for the return of deposits totaling RM742,213.46 following the latter's discontinuation of property purchases after initial agreements were signed, while the appellant counterclaimed for losses due to the respondent's breach. (Paras 1-2, 3)

Findings of Court:
The court found a binding contract existed based on correspondences and part payments, rejecting the respondent's claims for a refund, ruling that he was in breach when he failed to complete transactions as the appellant was always willing to proceed. (Paras 45, 46)

Issues: The primary legal questions were whether a concluded agreement existed and the implications of part performance and assurances for a loan on the enforceability of contractual obligations. (Paras 19, 20)

Ratio Decidendi: The court determined that a binding contract existed, with no conditions precedent regarding financing, and upheld that moneys paid cannot be recovered where the parties had acted on a contract despite formalities not being met. (Paras 24, 44)

Result: Appeal allowed; respondent's claims for refunds dismissed; costs awarded to appellant.