JUDGMENT

Gopal Sri Ram JCA:

This is a tolerably plain case. We were prepared to deliver our decision at the close of arguments on 12 January. However, in deference to the careful arguments advanced by Mr Vinayak Pradhan of counsel for the appellant we reserved judgment to today. The factual matrix relevant to this appeal is as follows.

The appellant entered into two even dated agreements with the respondent. Both agreements contain the same terms. Under each of these agreements the respondent purchased land from the appellant and undertook the further obligation to construct buildings on them in accordance with the plans prepared and provided by the appellant. The appellant's aim was to have a sea front project in Johor Baru for aesthetic improvement of that city. The purchase price for the land was to be paid by instalments. As to what would happen in the event of a justified termination of the agreements by the appellant is provided for in two clauses in the agreements. They are cls. 8.2(b) and 16.2. They are important. And this is what they say:.

8.2 Consequences of termination of Agreement

Upon the termination of this Agreement under Section 8 1(B) hereof and without prejudice to any other remedies which the Vendor is entitled under this Agreement:.

(a) .

(b) All instalments previously paid by the Purchaser to the Vendor including the First Payment and any interest thereon paid as at the date of termination shall be forfeited to the Vendor absolutely, except where the termination occurs within four (4) months from the date of this Agreement, in which event an amount equal to ten per centum (10%) of the Purchase Price shall be forfeited to the Vendor absolutely, and all instalments previously paid by the Purchaser to the Vendor including the First Payment after deducting the amount forfeited shall be returned to the Purchaser, without interest;.

16.2 Reasonable Compensation

Both parties hereby unconditionally and irrevocably acknowledge that the sums stipulated in this Agreement to be payable by the defaulting party would constitute reasonable compensation to the non-defaulting party and each party hereto hereby waives any objection it may now or hereafter have that those sums would be otherwise than fair and reasonable compensation.

It is common ground that the respondent made an initial payment of 12 % and then made subsequent payments amounting in total to about 50% of the purchase price under both agreements and then made default. The appellant held the respondent in breach of the agreements and forfeited all the monies paid. The respondent commenced proceedings by originating summons and sought to recover all the money it had paid the appellant. The learned judicial commissioner who heard the summons held that the respondent was entitled to recover the whole sum paid by it and granted the appropriate relief. The appellant has appealed to us against that order.

There are two issues before us. First, whether the 12% paid by the respondent is a true deposit. This turns upon the true construction of the agreements. Second, whether the appellant may keep for itself the whole of the 50% it was paid without proof of actual damage. This is a point of law which in our view is covered by high authority.

Before we deal with the first issue we must observe that the agreements in question are unhappily drafted. They contain clauses that conflict with each other or are tautologous. There are also ambiguities. For example, cl.e 2.2 of the agreements makes their validity dependent upon the respondent making what is described as "the First Payment" within three months from the date of the agreements. "First Payment" is described in item 5 of the First Schedule as RM918,000 which works out to 12% of the purchase price. However, item 1 of the Second Schedule appears to require the first payment to be made immediately upon the execution of the agreements. In these circumstances, we are driven to do the best we can to interpret them.

Now,