Judicial Analysis Court Copy Headnote Facts Arguments Court observation

Judgement Key Points

The ratio of the case is that when a party fails to perform a fundamental obligation within the stipulated time, especially when time is expressly made of the essence in the contract, it constitutes a fundamental breach. This breach entitles the non-breaching party to rescind the contract under the relevant statutory provisions, regardless of whether the contract explicitly provides for termination. The court emphasizes that such a breach fundamentally deprives the innocent party of the main benefit of the agreement, thereby justifying rescission and the recovery of damages. Additionally, even if the contract does not explicitly specify a right to terminate, the statutory provisions allow the innocent party to do so when a fundamental breach occurs, particularly where the breach relates to the timely delivery of vacant possession in a property sale agreement.

JUDGMENT

Zaleha Zahari & Raus Sharif JJCA:

[1] This is an appeal by the defendant against the decision of the learned High Court judge, Kuala Lumpur, given on 6 May 2004. We heard and unanimously dismissed the appeal with costs. We now give our reasons. But first the facts.

[2] On 24 August 1995, the plaintiff and the defendant entered into a sale and purchase agreement ("agreement") in respect of a property known as parcel No. 07-63 Commercial Shop Lot Berjaya Star City and now known as Berjaya Times Square ("property"). The plaintiff was the purchaser and defendant was the seller.

[3] The purchase price of the property was RM1,149,971 ("purchase price"). The plaintiff paid RM1,034,793.90 being 90% of the total purchase price to the defendant ("monies paid"), part of which was financed by a loan from AmBank Berhad.

[4] Under cl. 22(1) of the agreement, the completion date for the property was 36 months from the date of agreement (completion date). Under the same clause, there was an automatic extension of three months from the expiry of the completion date. The completion date of 36 months expired on 23 August 1998. The extended period of three months expired on 23 November 19

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