JUDGMENT

Mohd Noor Ahmad FCJ:

1. In this appeal, leave to appeal was granted on the following questions:

(1) Whether the parties in a civil action in the High Court are bound by the agreement reached between them on the mode and manner of determining the issues which are the subject-matter of the proceedings in the trial court?

(2) Whether the said agreement by the parties to the action amounts to dictating to the court by the parties as to how it should conduct its proceedings?

2. (1) The dispute between the parties arose out of a written joint venture agreement (the agreement) entered into between both plaintiffs and the defendant on 17 December 1974. The plaintiffs were joint owners in equal shares of a piece of land held under EMR No. 2155, Lot No. 1189 in the Mukim and District of Klang, Selangor (the Land). Under the agreement the second plaintiff was to sell half of his undivided share of the land to the defendant. The defendant was to develop the land into a housing estate. Some of the obligations of the defendant under cl. 5 of the agreement are, that the defendant was required to apply for conversion of the land from agricultural to housing at his own expense, to cause or take such steps necessary for the purpose of securing approval for sub-division of the land from the relevant authority at his own expense, to prepare plans for the construction of single storey terrace houses on the land and to construct the houses to the minimum size as prescribed, and upon completion, to allot the houses between them in the ratio as stipulated and to complete the construction of the houses within three years from the date of the agreement.

(2) The defendant was unable to carry out his obligations within the stipulated period. As such, the plaintiffs, through their solicitors gave the defendant a written notice to terminate the agreement. At this point of time, the first plaintiff, at the defendant's request, had paid the sum of RM17,408 as conversion fee and RM9,000 for drainage and irrigation fees. Upon receipt of the notice, the defendant approached the plaintiffs for the agreement to be vacated and a new joint venture agreement be substituted in its place. The plaintiffs indicated their agreement to the defendant, conditional upon certain terms being included in the new joint venture agreement, which, inter alia, the defendant to reimburse the first plaintiff a sum of RM26,408 being the conversion, drainage and irrigation fees and a sum of RM27,619.75 being quit rent paid by the plaintiffs and the defendant to deposit a sum of RM60,000 as security. The defendant did not agree and the new joint venture agreement did not come into being. Consequently, the plaintiff, through their solicitors, made a written demand on the defendant claiming, amongst others, for the reimbursement of the conversion, drainage and irrigation fees, the defendant's share of the quit rent and assessment already paid by the plaintiffs.

(3) Subsequently, the land was sold to a third party with the agreement of the plaintiffs and the defendant, as joint owners. The proceeds of the sale were distributed between them according to their respective shareholding.

3. In the action, the plaintiffs sought a declaration that the agreement has been rescinded, damages for breach of the agreement, special damages in the sum of RM47,366.60 comprising of the aforesaid fees, quit rent, assessment and interest. In the statement of defence, the defendant pleaded frustration and denied the plaintiffs' claim for reimbursement of the fees, quit rent and the assessment.

4. (1) The learned trial judge found two points were in dispute. Firstly, whether or not the conversion, drainage and irrigation fees, the quit rent and assessment as claimed had been reimbursed to the first plaintiff from the proceeds of sale of the land to the third party? And, secondly, whether at the time of the execution of the sale & purchase agreement relating to the sale of the land to the third party, t