JUDGMENT

Zulkefli Makinudin 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) of the Contracts Act 1950 ("the Act") when on the contrary the respondent 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:

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

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

(iii) 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 s. 56(1) should be read together with s. 40 of the Act in determining the question as to whether the appellant as the party that was obliged to perform its promise had refused to perform it promise in its entirety by not doing any of the things it promised to do within the time specified by the contract. A reference to ss. 40 and 56(1) of the Act clearly showed that the right to rescind a contract by way of termination only arises when there has been a total failure of consideration. What is of significance on the facts of this case is that there is no question of the appellant not having done anything on the construction of the property as undertaken by them vide the SPA. Indeed the facts before the court showed that the construction of the property was completed and was in the state of delivery to the respondent. It is my view that the entitlement of the respondent in this case is confined and limited to compensation in the form of LAD as agreed upon in the SPA and that the respondent has no right to rescind the SPA.

[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) of the Act. This is evidenced by the conduct of the respondent itself in having several negotiations with the appellant with a view to expediting the completion of the construction of the property before intimating to the appellant of its decision to rescind the SPA. The respondent also took such a long period of time after the stipulated period and the extended period of completion to rescind the SPA. The fixing of a period within which the contract is to be performed as laid out in cl. 22(1) of the SPA therefore does not make the stipulation as to time to be the essence of the contract under cl. 32 of the SPA.

Gopal Sri Ram FCJ:

[6] 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 p