A transfer made under a second sale agreement is invalid when the first agreement remains unterminated and the second purchasers have knowledge of it.

Mokhtar Sidin JCA:

We have dismissed the appeal by the appellants earlier. Now, we give our reasons for doing so.

In this appeal the appellants (the second and third defendants in the court below) appealed against the decision of the High Court, Kuala Lumpur which decided in favour of the respondents (the plaintiffs in the court below). In order to avoid any confusion we will refer to the parties as they were in the court below.

The plaintiffs, by a sale and purchase agreement dated 7 January 1984 (hereinafter referred to as the first agreement) agreed to purchase and the first defendant agreed to sell a 4-storey shophouse to be built on Lot H.S.(D) 10748 MLO 6445 Mukim Plentong, Daerah Johor Bahru, Johor (hereinafter referred to as the said property) at the price of RM300,000. The plaintiffs had paid a total sum of RM160,000 of the purchase price in accordance with the Third Schedule of the agreement. The balance of RM140,000 (hereinafter referred to as the balance purchase price) were to be paid in stages by the plaintiffs from a housing loan to be obtained by them from a financial institution. By a letter dated 25 August 1984, Bank Bumiputra Malaysia Berhad approved a loan application in the sum of RM140,000 by both plaintiffs. It is to be noted that the loan agreements and the charge instruments had been duly executed by both plaintiffs. By a letter dated 16 November 1984 solicitors for the first defendant, Messrs. Arthur Lee & Company informed the plaintiffs' solicitors, Messrs. Abdul Razak Ahmad, that the memorandum of transfer of the said property to the plaintiffs was being prepared. This was in response to two letters dated 6 November 1984 and 14 November 1984 from Messrs. Abdul Razak Ahmad. Pending the completion of the said transfer the plaintiffs entered a private caveat on the said property on 7 November 1984. By a letter dated 21 December 1984, Messrs. Abdul Razak Ahmad provided all the relevant documents pertaining to the transfer to the first defendant with the request that the first defendant do complete and execute the documents and return them forthwith together with the title of the property. The first defendant failed or refused to comply with the said request.

The plaintiffs subsequently came to know that the first defendant had on 14 November 1984 entered into another sale and purchase agreement (hereinafter referred to as the second agreement) in respect of the said property with the second and third defendants whereby the said property was sold to the second and third defendants. On discovering this the plaintiffs filed a writ of summons dated 24 April 1985 in the High Court at Johor Bahru (Civil Suit No. 303-1985) against the first defendant seeking, inter alia, for specific performance of the first agreement. On 17 July 1985, the High Court at Johor Bahru issued an interim order stopping the second and third defendants from taking possession of the said property pending the disposal of Civil Suit No. 308-1985. On 1 February 1989, the plaintiffs succeeded in obtaining an order against the first defendant for specific performance of the first agreement. Copies of the interim order and the judgment for specific performance and also the order of the court in respect of this were served on all the three defendants. The three defendants did not take any step to set aside the order or appeal against that judgment.

The new solicitors for the plaintiffs, Messrs. Low Hop Bing, Koh Kong & Associates, sent the memorandum of transfer coupled with the orders and judgment stated above to the first defendant with the request that the first defendant do execute the memorandum of transfer. To date the first defendant had failed to do so. Attempts by the plaintiffs to effect the transfer from the first defendant and the relevant authorities failed. Sometime in August 1989, the plaintiffs discovered that the first defendant had been w