Zulkefli FCJ

[1]I have read the judgment in draft of my learned brother Gopal Sri Ram FCJ and I agree with the views expressed and the conclusion reached by His Lordship in allowing this appeal by the appellant. I would like to add in a few words in support of the judgment as follows.

[2]It is to be noted at the outset that the project undertaken by the appellant was never abandoned and at all material time the appellant had kept the respondent informed of the progress of the development. In my view the learned trial judge misdirected himself in holding that the failure of the appellant to deliver vacant possession of the property after 23 November 1998 amounted to fundamental breach of the agreement and therefore the agreement was voidable at the option of the respondent pursuant to s 56(1)Contracts Act 1950 (‘the Act’)did not immediately after 23 November 1998 make an election to rescind the agreement and had in fact made an unequivocal election to make further progress payments and affirmed the agreement by paying the purchase price in full.

[3]Clauses 22(1) and 22(2) of the sale and purchase agreement (‘SPA’) are relevant in support of the appellant’s case in which the observation on that clauses are as follows:

(a)there is the initial completion period of 36 months;

(b)there is then the automatic extension period of three months for the completion from the initial 36 months period; and

(c)there is the provision for liquidated ascertained damages (‘LAD’) which is to follow the event of the appellant failing to hand over vacant possession of the property within the extended period for completion.

[4]As regards the law on rescission of contract which is the main issue to be decided in the present case, I am of the view on the factual matrix of the case that s 56(1) should be read together with s 40ss 4056(1)

[5]It is also my considered view that the appellant and the respondent had not intended that time should be of the essence of the contract for purposes of s 56(1)

Gopal Sri Ram FCJ

The appellant is a property developer. It set out to develop a project originally called Berjaya Star City which is now known as Berjaya Times Square. The project is a massive venture. It has been completed. It comprises of various types of service outlets and offices. Parcels in the project were offered for sale to the public at large. The respondent is a private limited company. It wanted to purchase a commercial shop lot in the project. It entered into an agreement with the appellant to purchase such a lot. The agreement is dated 24 August 1995. Under its terms the appellant was to deliver the respondent’s lot to it on or before 23 November 1998. If the appellant delayed in making delivery, it had to pay liquidated damages to be calculated from day to day at the rate of 12% pa of the purchase price. The agreement also made time of the essence. The appellant did not make delivery within the stipulated time. Several meetings were held between the parties to determine when delivery could be made. The appellant told the respondent that it would make delivery by the end of 2001. But that did not happen. After a very brief exchange of correspondence, the parties had another meeting on 1 October 2002 at which the appellant assured the respondent that the shop lot would be delivered by the end of 2002. That again did not materialise. In early March 2003, there was yet another exchange of correspondence. The respondent demanded the return of all sums in the hands of the appellant and the latter claimed that all it was liable to pay were the liquidated damages worked out according to the agreed formula. The respondent then commenced proceedings claiming, inter alia, a declaration that the agreement had been rescinded and for an order that the appellant refund the monies in its hands. There was also a claim for damages.

The High Court found for the respondent. Its findings have been usefully summarised as follows by learned counsel for the respondent in his skel