The obligations to pay the purchase price in a Sale and Purchase Agreement are fundamental, and failure to do so constitutes grounds for termination of the contract.

The Antecedent Facts And Plaintiffs' Claim

[1] The late Chan Yau Seng ("the Deceased") entered into a Sale and Purchase Agreement dated 25 May 2012 with the Plaintiff for the purchase of a house being built by the Plaintiff, as developer, on a plot of land known as PT 7346, Mukim Kelemek, Daerah Alor Gajah, State of Melaka, held under HS(D) 19834 ("the Property") at a price of RM338,800.

[2] The Deceased obtained a loan from Malayan Banking Berhad, the Third Party, to part finance the purchase of the Property. The total loan amount of RM297,037 comprised two components, ie the sum of RM9,137 as the premium for the Mortgage Reducing Term Assurance (MRTA) to cover the loan, and the balance RM287,900 was to pay the balance purchase price. Messrs Anuar Hong & Ong, were the firm of solicitors who acted for the Deceased in both the Sale and Purchase Agreement and the loan documentation.

[3] The loan documentation was executed and dated 6 August 2012. The Plaintiff confirmed to Messrs Anuar Hong & Ong that the Deceased had paid the difference between the loan sum and purchase price amounting to RM50,900. Therefore, the Third Party would pay all subsequent progressive payments of the purchase price to the Plaintiff, upon all pre-disbursement conditions having been fulfilled.

[4] The Third Party via letter dated 23 August 2012 gave the Plaintiff a conditional undertaking to pay the progressive payments provided that all pre-disbursement conditions of the loan are fulfilled. One of the pre-disbursement conditions would be the registration of the charge on the Property in favour of the Third Party. To facilitate the entry of the charge in favour of a financier of a property under construction where the full purchase price has not been paid, it is customary practice for the registered ownership of the property that is under construction, ie the subject property of the sale, to be transferred in the name of the purchaser and then for the charge in favour of the financier being entered, usually simultaneously one after the other. This is normally done on the basis of cross obligations or undertakings given by the parties concerned to each other.

[5] The present case is no different. The Plaintiff had forwarded the original Issue Document of Title to the Property as well as the duly executed Memorandum of Transfer in favour of the Deceased upon the Third Party's usual undertaking to pay the loan sum to the Plaintiff in accordance to the SPA. The transfer of ownership of the Property to the Deceased and charge in favour of the Third Party was registered on 29 August 2012. Then, Messrs Anuar Hong & Ong vide letter dated 3 September 2012 wrote to the Third Party advising drawdown and disbursement of the loan, progressively. The first drawdown would also include the payment of the MRTA premium to the insurance company. It is an uncontroverted fact that by that date a sum of RM169,320 in progressive claim was outstanding to be paid by the Deceased to the Plaintiff. The Plaintiff made a claim for payment this sum of RM169,320 vide letter dated 20 September 2012 supported by the Architect's Certificate.

[6] Before the Third Party made any disbursement of the loan, or any part thereof, the Deceased passed away on 27 September 2012 in a tragic road accident. The Third Party did not make any disbursement of the loan and there seems to have been some discussion between the Plaintiff, Defendant and Third Party on this matter. The Third Party through its solicitor's letter of 22 May 2013 informed the Plaintiff that the Third Party would not be making any disbursement of the loan. Nevertheless, the Plaintiff kept sending