The doctrine of total failure of consideration entitles a party to restitution when a contract cannot be fulfilled due to the absence of a key prerequisite, such as valid permits.

(Post-Trial)

Introduction

[1] This is the written judgment prepared following the notice of appeal lodged by the defendant (encl 61) after this court gave judgment in favour of the plaintiff. I have provided broad reasons when I delivered the decision and this is the full written grounds.

[2] This is a claim for restitution due to a total failure of consideration. The plaintiff seeks to refund RM100,000.00 ("Deposit Sum") paid as a deposit to the defendant under an agreement dated 14 November 2020 between the plaintiff and defendant ("Agreement") (encl 47, p 5). The Agreement pertains to the supply of natural river sand ("River Sand") by the defendant to the plaintiff at Durian Sebatang, Teluk Intan, Perak (Sungai Perak River).

[3] After the Agreement was executed, the defendant issued an invoice dated 20 November 2020 (encl 47, p 16) to the plaintiff, requesting a deposit of RM100,000.00 in accordance with Clause (a) of the Agreement. The Clause (a) of the Agreement is as follows:

"a) The deposit RM100,000.00 (Ringgit Malaysia: One Hundred Thousand Only) received is only for the performance bond and/or execute of the Supply of Natural River Sand Agreement."

[4] The plaintiff then paid the deposit to the defendant by cheque No 245173 dated 24 November 2020 (encl 47, p 17). The defendant acknowledged receipt by issuing a receipt dated 26 November 2020 (encl 47, p 18).

[5] After paying the deposit, the plaintiff was unable to sell the River Sand to its customer in Hong Kong. The plaintiff pleaded that this was due to the defendant not having a valid permit to extract the River Sand at the time the Agreement was entered. The plaintiff claimed they were unable to dredge the River Sand. As a result, the plaintiff seeks to refund the Deposit Sum, pleading that no consideration was provided by the defendant under the Agreement.

[6] The defendant's main defence is that the plaintiff's failure to sell the River Sand to its customer in Hong Kong was beyond the defendant's control. The defendant also pleads that it had no obligation to ensure the plaintiff's success in selling the River Sand. In any event, the defendant claims that it has used the Deposit Sum to appoint Orion Maritime (M) Sdn Bhd to conduct a Marine Risk Assessment (MRA) for the plaintiff's operations. Therefore, the defendant argues that consideration was provided and there is no issue of lack of consideration.

[7] Based on these key facts, I find that there is only one main issue in this case, that is, whether the plaintiff is entitled to recover the Deposit Sum paid to the defendant on the ground of total failure of consideration. Both parties have submitted five issues to be tried by this court (encl 43). In my respectful view, the other four issues are ancillary to the main issue stated above. Accordingly, they will be addressed in the course of determining the main issue.

Decision

Preliminaries

[8] Before proceeding with my analysis, I should mention that this case was initially registered at the Magistrate's court in Kuala Lumpur before being transferred to this court under O 57 r 1 of the Rules of court 2012 (" ROC 2012") (encl 21).

[9] Following the transfer, the plaintiff filed two interlocutory applications: one under O 14 r 1 ROC 2012 for summary judgment and another one under O 20 r 5(1) 2012 to amend the Statement of Claim by removing the pleading that the plaintiff was unable to sell the Sand to its customer in Hong Kong. I dismissed both applications after a full hearing.

[10] The trial was completed in one day, during which the plaintiff called one witness, SP1 - Mrs Angie Ho Hui Yee and the defendant called one witne