JUDGMENT

Salleh Abas LP:

This appeal originated from the decision of Magistrate, Kuala Lumpur, which Harun J reversed. He then gave leave to appeal to us. Neither the Magistrate who has since left the service nor the Judge has given any grounds for their decisions.

The facts are straight forward. The appellant company are a housing developer. On 10 May 1977 they signed a sale and purchase agreement with one Yeo Tiang Chin who purchased a unit of double-storey link house, then under construction. Clause 6 of the agreement stipulates that the appellant company must complete the house and deliver vacant possession not later than 18 months thereafter, i.e. on or about 9 November 1978, and under Clause 22 no assignment is permitted without the consent of the appellant company.

On 29 November 1978 Yeo Tiang Chin executed a deed of assignment transferring all his "rights title interest and liabilities" under the sale and purchase agreement to the respondents for a consideration of RM12,200. The assignment was consented to by the appellant company. At the time of the execution of the deed the house was still under construction and it was not until on or about 30 April 1980 that it was completed and vacant possession delivered. Because of this delay the respondents sued the appellant company for compensation under cl. 6 of the agreement.

Throughout the proceedings before the Courts below and before us the appellant company maintained that the 18 month period within which vacant possession should be delivered to the respondents should commence not from the date of the sale and purchase agreement but from the date of assignment (29 November 1978) and that since vacant possession was delivered on 30 April 1980 which is well within the 18 month period, there was therefore no delay as such no compensation under Clause 6 is payable. Counsel for the appellant company submitted that the deed despite its description is not in law an assignment but a new contract (novation). Two reasons were advanced for this proposition. First, because the appellant company consented to the assignment the assignment therefore became a novation. Secondly, as at law assignment is not permissible to the transfer of liability, the deed must therefore be a novation.

As regards the first objection, consent was required in this case because Clause 22 of the sale and purchase agreement insists that for an assignment to be valid consent of the appellant company is required. In our view, that consent does not render the deed any less than an assignment which is what the parties intended. Consent operates no more than a legal recognition by the appellant company of the validity of the transfer of rights from the assignor (Yeo Tiang Chin) to the respondents and that consent binds them.

Referring to the second objection, there seems to be a confused thinking here. What was transferred from the assignor to the respondents in so far as the matter in issue is concerned, was not liability but a right to have vacant possession of the house delivered within eighteen months from the date of the sale and purchase agreement. The appellant company's liability to deliver vacant possession within that period remained with the appellant company and was not transferred to any one else, though in the discharge of this obligation it has to deliver it to the respondents instead of to the assignor (the original purchaser). This is what the assignment is all about. Moreover, for the deed to amount to a novation, the appellant company must show that there was consideration moving between them and the respondents. Hence they fail to do so.

Novation is a new contract. It extinguishes rights and obligations under the old contract for which the new contract is made. Being a new contract, there must be consent by all parties and there must be consideration, and rights and obligations under it are not those transferred from the old contract which is already extinguished. (see Chitty on Contract, Vo