Jeffrey Tan FCJ

(delivering judgment of the court):

Leave was granted to appeal against the order of the Court of Appeal in respect of the matter decided by the High Court in the exercise of its original jurisdiction, on the following question:

Where an agreement is silent as to the time for performance of a promise thereunder, whether a breach of the promise occurs, without any notice, after the expiry of a reasonable time pursuant to s 47Contracts Act 1950 (Act)

The pertinent facts could be summarised as follows. In 1979 and in 1982, one Carima Binaan Sdn Bhd (‘Carima’) had entered into agreements with the proprietors (‘proprietors’) of Lots 3660, 2100 and 2043 (‘lands’) in the Mukim of Pontian, Johor to develop those lands into a housing estate (joint venture). Carima failed to carry out the joint venture. Rather, instead, in 1989, Carima sold their interest in the joint venture to one MDV Properties Sdn Bhd (‘MDV’). Lots 3660 and 2100 by then had been subdivided into 115 individual lots. But MDV also failed to see through the joint venture. It was then orally agreed between MDV, the appellant and the respondent that MDV would sell those lands to the appellant upon terms that the appellant would settle the outstanding debt (RM1.55m) owed by MDV to the Hock Hua Bank Bhd (‘bank’) and would redeem those lands from the bank. It was also orally agreed that the appellant would secure a transfer of Lot 2043 to the respondent upon terms that the respondent would obtain the removal of the caveats lodged by the proprietors of Lots 2100 and 3660 with the application of the proceeds received from the sale of Lot 2043, and would settle the interest of the proprietors in the joint venture. Pursuant to that oral agreement, the appellant paid the full redemption sum (RM1.55m) and took custody and possession of the documents of title to the said 115 subdivided lots and to Lot 2043.

Later, by written agreement dated 16 February 1993 between MDV and the respondent, it was agreed that Lot 2043 would be transferred to the respondent, with RM900,000 as the consideration. It was the finding of the High Court that that RM900,000 was not paid by the respondent to MDV but was only so stated as the consideration to enable the respondent to sell Lot 2043 at that price to a third party and then to utilise the sale proceeds to settle the interest of the proprietors. As it happened, the respondent managed to settle with the proprietors of Lots 2100 and 2043 on 12 April 1993 but failed to reach accord with the proprietors of Lot 3660 who allegedly rejected all offers of settlement and refused to withdraw their caveats lodged against eight of the subdivided lots, which happened to be their beneficial entitlement under the joint venture. Given the presence of those caveats, only 107 of the subdivided lots could be transferred to the appellant. And so in a later dealing, when the appellant sold all 115 subdivided lots to one Sime Hup Sdn Bhd on 11 December 1993, only 107 subdivided lots were transferred to Sime Hup Sdn Bhd.

There was no dispute that contrary to the oral agreement, the respondent could not obtain the proprietors of Lot 3660 to withdraw their caveats. In a word, the appellant, who had purchased Lots 3660 and 2100 and so was entitled to all 115 subdivided lots, was short-changed, so to speak, by eight subdivided lots. The appellant did not accept that lying down. By letter dated 1 May 1997, the appellant gave ten days to the respondent ‘to cause the withdrawal of the caveats’. Then, by a second and final letter dated 28 May 2002, the appellant gave a month to the respondent ‘to settle with the caveators … and to show proof … that the caveats had been withdrawn …’. When those notices were not met, the appellant filed action against the respondent on 20 September 2002 for RM900,000 or damages. Those caveats were yet lodged against those eight subdivided lots when the action was tried.

It was the finding of the High Court that it was the obligation of t