Azmi LP:

This is an appeal against the judgment of the High Court at Malacca.

On 10 February 1965 the defendants undertook to construct immediately two buildings for the plaintiff for the sum of $26,000 on plaintiff's land at Klebang Kechil, Malacca and at the same time the plaintiff paid the defendants $5,000 as an "earnest deposit". A few days later the defendants discovered that owing to the encroachment of a neighbour's house into the lot it was not possible to construct the buildings according to the plan supplied by the plaintiff. In the meantime the defendants had already extended and strengthened an existing bridge on the land for transport of materials by lorries and also built a storehouse. The defendants informed the plaintiff of the obstruction. The plaintiff suggested the defendants proceed to construct one building only first but this the defendants refused to do. The defendants suggested alteration in the plan but this the plaintiff declined to do. A lot of correspondence passed between them through their respective solicitors. By a letter dated 7 July 1965 the plaintiff suggested that the defendants should treat the agreement as no longer enforceable subject to their refund of the deposit less any deductions for the actual cost of materials alleged to have been purchased by the defendants. Thereupon the defendants, agreeing with this suggestion, sent a list of expenses including cost of strengthening the bridge and construction of the storehouse totalling $4,472.72 and expressed willingness to return to the plaintiff $527.28 together with the materials purchased. The plaintiff did not agree to this, so the matter ultimately came to the Court.

The plaintiff filed a claim for the return of $5,000 as money paid by him to the defendants for a consideration which has wholly failed. He also alleged in his statement of claim that the defendants have not made any attempt to start work on the site or alternatively have not been able to start work on the site as the width of the proposed buildings was more than the width of the building site. He also based his claim for the return of the deposit on the ground that the contract between them has been frustrated.

The defendants denied that the consideration has wholly failed or failed at all but maintained that they have made an attempt to start work on the site and also maintained that the width of the proposed buildings was not more than the width of the said land on which the buildings were to have been erected. They counterclaimed that they were entitled to forfeit the deposit and for the payment of $4,472.72 or alternatively claimed for money variously spent and described in the counter-claim.

According to the learned trial Judge, as apparent from his own notes at the trial and in his own judgment, both Counsel consented or agreed that the Court tried the matter upon the following issues:

(1)as on the agreement dated 10 February 1965 whether there was any failure of consideration.

(2)whether as on the said agreement there was an impossibility of performance of the contract i.e., whether there was a frustration of the contract on the date when the agreement was signed.

(3)if there was impossibility of performance of the contract was any party to blame.

In his judgment the learned Judge decided the three issues set out by him as follows:

As to the first issue he pointed out that the consideration in the agreement was to construct two two-storied shop houses on the site for the sum of $26,000 and that the defendants were ever ready and willing to build these houses right from the date of the agreement and in order to carry out their part of the bargain proceeded to construct a bridge and a storehouse at the site but were unable to commence the construction of the houses because of the discovery of the encroachment on to the building site from a house on the neighbouring land. He thereupon concluded that on the first issue there was no failure of consider