Specific performance requires compliance with contractual obligations, and mere conspiracy allegations without evidence do not warrant trial.

SHAIK DAUD JCA

9 January 1995

This is an appeal by the second, third and fifth defendants in the court below (now the appellants) from an order of the Penang High Court entering summary judgment for specific performance pursuant to O 81 of the Rules of the High Court 1980 (‘the RHC’). At the outset, it may be pertinent to state that there are in fact two transactions in this matter. In the first transaction, the first to fifth appellants purchased a piece of land in Seberang Perai Tengah from the beneficial owners of the land in question. This transaction in fact is a subject of another proceeding which is not concerned in this appeal. In the second transaction, the plaintiff (now the respondent), ie Ramanda Sdn Bhd, purchased a portion of the said land from the first to fourth defendants, who are also the shareholders and directors of the fifth appellant, which is a company formed for the sole purpose of receiving the transfer of the land in the first transaction.

According to the statement of claim, on 4 November 1991, a written agreement, which I will refer to as the first agreement, was entered into between the first to the fourth defendants. In this first agreement, the defendants agreed to sell the land in question to the plaintiff for a sum of RM3,253,966.85. Before this, on 24 May 1991, the plaintiff had paid to its solicitors 10% of the purchase price, ie RM325,396.70, to be paid to the first to fourth defendants after the first agreement had been signed. Be that as it may, the 10% was in fact paid to the defendants even before the first agreement was signed, on the request of the first defendant and on the undertaking given that the sum paid shall be refunded if the first agreement for some reason or other is not signed.

The relevant terms which need be noted in the first agreement are as follows:

(a) a sum of RM650,793.36, which is 20% purchase price, had to be paid by the plaintiff to the defendants’ solicitors as stakeholder within three months of the date of the first agreement, and the plaintiff had in fact fulfilled this term;

(b) the sum of RM650,793.36 should only be released to the defendants by their solicitors after the plaintiff had received from the defendants a letter of approval from the authorities pertaining to zoning of the land to industrial;

(c) the balance of purchase price, ie RM2,227,776.79, is to be paid to the defendants within six months from the date of the receipt of the letter of approval pertaining to zoning of the land to industrial;

(d) the defendants are required to hand over vacant possession of the land on the receipt of the final balance of the purchase price;

(e) the plaintiff is entitled to specific performance of the first agreement; and

(f) time wherever mentioned is of the essence.

Pursuant to the above-mentioned terms, the defendants’ solicitors informed the plaintiff's solicitors by facsimile dated 26 June 1992, that the authorities had approved the zoning of the said land to industrial. Following this, the date for the completion of the sale would be 26 December 1992. On the receipt of the letter of approval, a sum of RM650,798.36 was released to the defendants by their solicitors. Upon nearing the completion date of the first agreement, the land in question was transferred to the fifth defendant, and as a result, a novation agreement had to be entered into in order to complete the sale of the land to the plaintiff and also to enable the plaintiff to arrange for its loan before the plaintiff could release the balance of the purchase price. As a result of this, the completion date of the first agreement had to be postponed.

According to the plaintiff, only one additional agreement was in fact made, and that is one dated 7 April 1993, and the relevant terms are:

(a) that this was to be additional to the first agreement;

(b) that the fifth defendant is to execute a valid transfer capable of being registered to the plaintiffs when required by the first to the fourth defendants;

(c) that the