This was an action for breach of warranty of a contract under which the defendants were to supply shovels to the plaintiffs bearing the brand 'Spatenmann'. The shovels actually supplied were of another brand. The learned magistrate holding that there was a breach of warranty assessed damages for the plaintiffs on the basis of the difference between the market value of the goods supplied and the market value of the goods ordered, both values being those as on the date of delivery of the goods. This decision was reversed in the High Court on the finding that the evidence disclosed no breach of warranty. On appeal,

Held: there was a breach of warranty and that the damages were correctly assessed by the learned magistrate. Per Thomson CJ: 'There is no corresponding subsection in s 59 of our Sale of Goods Ordinance (to s 53(3) of the Sale of Goods Act 1893 on the measure of damages in such cases). The law on the subject in this country is the general law relating to compensation for loss caused of contract. This is set out in s 74 of the Contracts (Malay States) Ordinance which is the same as s 73 of the Indian Contract Act which was held by the Privy Council in Jamal v Dawood 43 IA 6, to be merely declaratory of the English common law relating to damages.'

Lee Heng & Co v C Melchers & Co [1963] MLJ 47 Court of Appeal, Kuala Lumpur (Thomson CJ, Hill and Good JJA).

The respondent had drawn a cheque on the partnership account with the appellant bank. The partnership had been dissolved and under the terms of dissolution the respondent was given authority to wind up the partnership business and he continued to operate the partnership account. Subsequently, one of the former partners wrote to the bank asking the bank to stop withdrawals unless authorized by all three partners. When notified of this letter, the respondent objected to it. Subsequently, the respondent issued a cheque which was returned dishonoured with the answer 'signature of all partners required'. More than two years later the respondent issued a writ and on the pleadings based his claim on libel. The learned trial judge held that the action based on libel was statute-barred by virtue of the Sabah Limitation Ordinance (Cap 72). He, however, awarded a sum of $1,000 by way of damages for breach of contract. The appellants appealed.

Held, allowing the appeal: (1) the learned judge was clearly wrong when he concluded that the pleadings included a claim for breach of contract as well as a claim for libel; (2) as the trial judge had decided on an issue not raised on the pleadings, the judgment must be set aside and a new trial ordered. Observations on the right of a partner to sue for breach of contract with partnership. Per Raja Azlan Shah FJ: 'A wrongful dishonour of a cheque gives rise to two possible causes of action, one for breach of contract and the other in tort, and in a proper case the practice has been to combine the two claims in one action; rules of pleadings determine how those claims may be so combined.' Obiter: the agreement (in this case) was not merely that the bank should receive and hold money in a joint account which is a joint contract, but was also an agreement with each partner that it would honour cheques drawn by him individually unless there is written notice to the contrary which entails obligations to each of them severally. In the circumstances, it is not possible to accept as an unqualified proposition the contention advanced in this appeal on behalf of the bank that in an action for breach of contract made with several persons jointly, they should all join in such action.

Chartered Bank v Yong Chan [1974] 1 MLJ 157 Federal Court, Kota Kinabalu (Azmi LP, Ong Hock Sim and Raja Azlan Shah FJJ).

The plaintiffs were suppliers of ready-mixed concrete and the defendants were building contractors. In July 1990, the defendants were engaged by the Port of Singapore Authority (PSA) to build a service complex at Brani Terminal, Pulau Brani. Subsequently, in September 1990, the defendants entered into an agreement with the plaintiffs for the supply of ready-mixed concrete. Clause 13 of the agreement provided that the defendants were to provide a casting schedule for the whole project and that 24 hours' advance notice must be given for orders exceeding 50m3. In the event that the plaintiffs failed to supply despite due notice having been given, the defendants were to have the right to obtain its concrete requirement from an alternative supplier and the plaintiffs were to be liable for any costs difference. The casting schedule was never delivered to the plaintiffs. Between January and April 1991, the defendants made several complaints of short and irregular supplies, and non-delivery of concrete but nevertheless continued to order from the plaintiffs. On 6 May 1991, an order of 70m3 of concrete was made but the plaintiff failed to deliver. In a letter dated 7 May 1991, the defendants, in reliance on cl 13, gave notice of their intention to seek concrete from an alternative supplier. The alternative supplier to which the defendants turned was Rite-mix Pte Ltd (Rite-mix), a company in which the directors of the defendants had a substantial interest. The defendants had earlier entered into an agreement with Rite-mix on 18 April 1991 for the supply of ready-mixed concrete. The plaintiffs responded to the defendants' complaints on 9 May 1991. Further orders were made by the defendants on 8, 9 and 10 May 1991 and these orders were delivered. However, from 11 May 1991, the defendants ceased placing orders with the plaintiffs. In a letter dated 20 May 1991, the defendants contended that they had no choice but to purchase concrete from other sources and asserted their right to claim all differential costs from the plaintiffs. The plaintiffs replied by a letter dated 30 May 1991 and requested for the casting schedule and sought payment of all outstanding invoices within three days, failing which the agreement would be treated as if terminated by the defendants. In response, the defendants wrote on 6 June 1991 and again asserted their right under cl 13. However, prior to receipt of this letter, the plaintiffs wrote on 7 June 1991 stating that the failure of the defendants to provide the casting schedule and to make payment constituted a repudiation of the contract and that this repudiation was accepted by them. The defendants failed to pay for the sum demanded and the plaintiffs brought this action for the recovery of this sum and for damages for breach of contract. The defendants counterclaimed for the additional cost which they claimed that they had incurred in procuring supplies from Rite-mix. The plaintiffs obtained summary judgment for the demanded sum and the hearing in the High Court proceeded on the plaintiff's claim for loss of profits and on the defendant's counterclaim. The learned trial judge found that the defendants, by their conduct, had repudiated the contract. He further held that this repudiation was not accepted by the plaintiffs but, by their letter of 30 May 1991, had affirmed the contract. He also found that the plaintiffs had repudiated the contract by their letters of 30 May 1991 and 7 June 1991 and accordingly dismissed their claim. The learned trial judge also held that the plaintiffs were not liable for damages on the ground that the losses allegedly suffered by the defendants, if any, did not result from the plaintiff's wrongful repudiation of the contract. (See [1994] 2 SLR 552.) Both parties appealed.

Held, allowing the plaintiffs' appeal and dismissing the defendants': (1) the plaintiffs did not repudiate the contract either by their letter of 30 May or that of 7 June 1991. Instead, the evidence supported the conclusion that the defendants had evinced an intention not to be bound by the contract and that this repudiation was accepted by the plaintiffs in their letter of 7 June 1991; (2) the failure of the defendants to provide the casting schedule did not amount to a repudiation of the contract. As for payment of the demanded sum, mere failure or delay in making payment per se would not amount to a repudiation. However, the defendants here were not merely stalling for time to make payment to the plaintiffs, they did not intend to pay the plaintiffs at all and perform the contract; (3) the trial judge's assessment of the quantum of damages was correct and accordingly judgment was entered for the plaintiffs in the amount so assessed; (4) as the defendants themselves were in breach of contract, the counterclaim against the plaintiffs failed.

Brani Readymixed Pte Ltd v Yee Hong Pte Ltd and another appeal [1995] 1 SLR 205 Court of Appeal, Singapore (Karthigesu and LP Thean and Chao Hick Tin J).

This was an appeal from the decision of the Federal Court reported in [1979] 1 MLJ 233. The respondent had claimed commission for successfully putting through the sale of land to the appellant. The respondent applied for summary judgment but the appellant opposed it on the ground, inter alia, that the sale did not come about through the agency of the respondent, as the option given to the respondent by the owner of the land was invalid. The senior assistant registrar allowed the application of the respondent for summary judgment and this was confirmed by the High Court and the Federal Court. The appellant appealed.

Held: (1) the appellant had to show that there was an arguable issue before he could be given leave to defend and on this point the decisions of the Malaysian courts were right in holding that the appellant had not shown that there were arguable issues in this case; (2) the querying of the option by the vendor's representatives, even if it were fully justified, could in no way affect the legal rights of the respondent as against the appellant in respect of the commission payable on the sale.

Tong Lee Hua v Yong Kah Chin [1981] 2 MLJ 1 Privy Council Appeal from Malaysia (Lord Edmund-Davies, Lord Russell of Killowen, Lord Keith of Kinkel, Lord Bridge of Harwich and Sir John Megaw).

The respondent claimed brokerage commission for successfully putting through the sale of land to the appellant. The respondent applied for summary judgment but the appellant opposed it on the ground, inter alia, that the sale did not come about through the brokerage of the respondent. Both the senior assistant registrar and the judge on appeal considered that the appellant had shown no defence on merits and had not raised a triable issue. The appellant appealed.

Held, dismissing the appeal: on the facts the respondent was the broker who had brought about the sale and was entitled to the commission.

Tong Lee Hua v Yong Kah Chin [1979] 1 MLJ 233 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The plaintiffs claimed against the defendant contractor for late delivery or completion of the construction of their shophouses in Bau. The plaintiffs also claimed for pre-estimated liquidated damages under cl 22 of the agreement entered into between the plaintiffs and the defendant ('the Agreement') at the rate of RM200 per week for each shophouse totalling RM210,000. The plaintiffs asserted that the date of the defendant's possession of site was 15 December 1979 and under cl 21 of the Agreement, the shophouses were to be completed by 14 June 1981 but the shophouses were only completed on or about 29 May 1982. The defendant in turn pleaded that the date of possession of site was not 15 December 1979 as stated in the Agreement but was sometime after 10 March 1980 because the boundary pegs which were missing from the site had to be verified and re-established. Pursuant to the Agreement, the defendant was only required to construct the shophouses in accordance with designated plans and specifications but the defendant claimed that the delay was caused by the plaintiffs who wanted additional works to be done which were outside the scope of the Agreement. Furthermore, rocks were found on the site which had to be excavated before construction works could be done. The defendant introduced evidence to show the extra works which had to be done and the additional time taken: (1) piling work (105 days); (2) extra steel roller shutter for the doors of some shophouses to replace the original design (45 days); (3) time for plaintiffs to meet and arrive at a decision on whether to reduce the number of sliding/folding panels from eight pieces to seven pieces (35 days); (4) excavation of rocks from the site (21 days); (5) work stoppage as a result of exceptional inclement weather (111 days) and public holidays (19[1/2] days); (6) withholding of progress payments by the plaintiffs to the defendant although certificates were issued by the architect and sent to the plaintiffs (35 days); (7) delay in progress payments resulted in the defendant's inability to pay his workers promptly which in turn resulted in resignation of the workers (90 days).

Held, dismissing the plaintiffs' claim: (1) the defendant did not take possession of the site on 15 December 1979 as survey of the site had not been completed then; (2) as the delay was due to the plaintiffs handing over the site to the defendant late, the plaintiffs' contention that pre-estimated liquidated damages be paid to them pursuant to cl 22 of the Agreement cannot be sustained; (3) the court had to be satisfied that every sum of money payable by way of liquidated damages is reasonable before it can order the said sum to be paid as damages; (4) the plaintiffs have failed to prove the actual damages they had suffered; (5) the responsibility of the defendant was purely to construct two-storey shophouses in accordance with specifications and plans approved by council; (6) the defendant suffered substantial loss when all the plaintiffs, except one, purposely delayed and refused to pay progress payments to the defendant; (7) defendant's counterclaim was allowed at 7% interest per annum from the date the project was completed until the date of judgment.

Sim Hiang Kiaw & Ors v Lee Hoi Kim Construction Co Suit No KG 95 of 1984/(III) High Court, Sabah and Sarawak (Elizabeth Chapman JC).

The plaintiff purchased a piece of land from the first defendant, the developer, who contracted to build a house on it. It was agreed between the plaintiff and the first defendant that progress payments were to be made by the plaintiff at various stages of the building. At the material time, the plaintiff had paid to the first defendant more progress money than it was entitled to. The first defendant sought to repudiate the agreement on the ground that the plaintiff had no money to complete the purchase. The plaintiff filed an action for specific performance of the said agreement and various orders of injunction to prevent the registration of the transfer of the property to a third party. The Registrar of Titles was joined in as the second defendant. The plaintiff obtained an order for injunction against both the first and second defendants and further orders requiring the second defendant to lodge a registrar's caveat. The first defendant sought to set aside the said injunctions.

Held: (1) s 320(1)(a) of the National Land Code (Act 56/1965) empowers the Registrar of Titles to enter his caveat to prevent fraud and improper dealing, and if such a possible dealing is brought to the notice of the court and the registrar is before the court, the court can order him to do so; (2) the first defendant had no right to repudiate the agreement and rely on a cause (that the purchaser had no money to complete the purchase) which had not arisen; (3) damages would not be an effective remedy having regard to the tremendous increase in the value of land and the costs of construction and in the circumstances it would be prudent to preserve the status quo; (4) the respective orders for injunction and for registrar's caveat will stand and the first defendant will pay costs of the application to the plaintiff.

Seet Soh Ngoh v Venkateswara Sdn Bhd & Anor [1976] 1 MLJ 242 High Court, Kuala Lumpur (Chang Min Tat J).

Wong Poh Oi v Gertrude Guok & Anor 1965 High Court, Singapore (Buttrose J).

Ung Ah Moi & Ors v Hampshire [1887] 4 Ky 296 Court of Appeal, Straits Settlements (Ford CJ, Wood, Pellereau and Goldney JJ).

In this case, the respondent had booked a shophouse constructed by the appellant who was a housing developer for $49,500. He paid $1,000 as a booking fee and signed a booking proforma. The booking proforma contained no provisions entitling the appellant to increase the price unilaterally. However, the appellant informed the respondent by letter that the price had been increased to $85,000 and the respondent was requested to pay a sum of $7,500 in order to make up with the $1,000 booking fee a 10% of the new price and to sign a purchase agreement. The respondent did not agree to the price increase. His solicitors sent a cheque for $3,950 towards the payment of the 10% of the agreed purchase price. The appellant's solicitors returned the cheque for $3,950 and also sent a cheque for $1,000 being the refund of the booking fee. The respondent was offered the shophouse at a reduced price of $81,000 and was told that if he agreed he should send a cheque for $8,100. The respondent did not accept the offer but his solicitors cashed the $1,000 cheque which was sent by the appellant's solicitors as a refund of the booking fee. The respondent then changed solicitors and the new solicitors sent a cheque for $1,000 to replace the booking fee. The cheque was not accepted by the appellant. The respondent sued the appellant for specific performance or alternatively for damages for breach of contract. Yusoff Mohamed J gave judgment in favour of the respondent and the appellant appealed.

Held: (1) in this case, there was a repudiation of the contract by the appellant and his refusal to sell the shophouse at the agreed price constituted an anticipatory breach of contract; (2) the acceptance of the refund of the booking fee was neither a waiver of the respondent's right to performance nor an estoppel preventing him from suing the appellant for damages, but, if at all, could be construed as an acceptance of the appellant's repudiation of the contract, which in turn brought the contract to an end and at the same time entitled him to sue for damages; (3) the respondent was only entitled to a sum of money which would compensate him for the loss which naturally arose from the breach. In the case of breach of contract, assessment of damages has to be made on the date of the breach and in this case, the learned trial judge had correctly assessed the damages to be $35,500, ie the difference between the contract price and the price at which the shophouse was sold to the third party ($85,000). This was the amount the respondent had to find if he were to buy the house or another house as a substitute and that was the amount which could be regarded as naturally flowing from the breach; (4) the learned judge was correct in awarding the interest to commence from the date of the judgment until the date of satisfaction.

Cheng Chuan Development Sdn Bhd v Ng Ah Hock [1982] 2 MLJ 222 Federal Court, Kuala Lumpur (Suffian LP, Salleh Abas and Abdul Hamid FJJ).

The plaintiffs erected a bottling plant for the defendants under a written contract dated 27 July 1977. By a writ dated 10 November 1981, the plaintiffs claimed $21,836 from the defendants for work done under the contract or on a quantum meruit basis. The defendants applied by motion that all further proceedings in the action be stayed pursuant to cl 38 of the contract, the plaintiffs and the defendants having allegedly agreed to refer to arbitration the matters in respect of which this action is brought. The facts revealed that when the architect issued his final certificate on 1 December 1978, it showed that the final cost of the job was $336,722, and that the final balance due from the defendants to the plaintiffs was $35,025.75. The defendants, however, paid the plaintiffs B$13,189.75 leaving the balance of B$21,936 unpaid.

Held, dismissing the defendants' motion: (1) the English Arbitration Act 1950 applies in Brunei; (2) the architect was not an arbitrator. Hence, the provision for the architect to determine disputes between the parties was not an agreement to arbitrate, so that even if the architect had not determined the dispute as cl 38 provided, that would not afford the defendants any ground for a stay; (3) the court is only given power to stay an action in breach of an arbitration clause. The plaintiffs in this case had done nothing to put themselves in breach of cl 38; (4) only the plaintiffs could invoke arbitration and thus make arbitration available as an alternative to litigation. Resort to arbitration was plainly unilateral and there was simply no arbitration provision on which the defendants could rely. The right to arbitration rested exclusively in agreement.

Swee Pte Ltd v Lim Kian Chai & Anor [1983] 1 MLJ 353 High Court, Bandar Seri Begawan (Rhind J).

In this case, the appellants had purchased a two-storey link house to be constructed by the second respondent for $145,000. The appellants and the second respondent entered into a purchase agreement under which vacant possession of the house was to be given within 24 months from the date of payment of the booking fee. The house was not completed and no delivery had taken place. The second respondent was therefore liable to pay liquidated damages to the appellants. To finance the project, the appellants obtained a loan of $100,000 from the first respondent and assigned the benefits under the sale and purchase agreement to the first respondent as security for the loan. After taking the assignment, the first respondent gave an undertaking to the second respondent that it would pay any moneys due under the sale and purchase agreement. In this case, there was a balance of the purchase price unpaid. The appellants sued the first respondent for an injunction to restrain it from paying the second respondent the money due from the appellants to the second respondent on the ground that a greater sum was due from the second respondent to the appellants. Both sums arose out of the sale and purchase agreement, the first sum being the balance of the purchase price while the second was the amount of liquidated damages for late delivery of the vacant possession. The application of the appellants was refused in the High Court and the appellants appealed.

Held, allowing the appeal: (1) it is clear that the appellants assigned to the first respondent only the rights regarding the property and the appellants' rights under the sale and purchase agreement. The appellants are therefore still bound and continued to be bound to observe and perform all the duties and liabilities under the sale and purchase agreement, including the payment of the purchase price; (2) the payment of the purchase price, which is purportedly due from the appellants, is the liability of the appellants and is not the liability of the first respondent. Under no circumstances was the first respondent bound or even authorized to make such payment and indeed the position of the first respondent in the matter of disbursing the loan is in the capacity of an agent to the appellants. The first respondent is holding the loan sum on behalf of the appellants and is bound to release the money only when authorized to do so and this must be for the benefit of the appellants; (3) the appeal should therefore be allowed and the interim injunction prayed for by the appellants should be issued.

Hoo See Sen & Anor v Public Bank Bhd & Anor [1988] 2 MLJ 170 Supreme Court, Kuala Lumpur (Salleh Abas LP, Abdul Hamid CJ (Malaya).

In this case, the appellant company, a housing developer, signed a sale and purchase agreement on 5 May 1977 with one Yeo Tiang Chin, who purchased a house then under construction. The agreement provided that the appellant company must complete the house and deliver vacant possession not later than 18 months after the date of the contract, ie on or about 9 November 1978 and also that no assignment was 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. The assignment was consented to by the appellant company. There was a delay in the completion of the house and vacant possession was not delivered till 30 April 1980. The respondents sued the appellant company for compensation under the agreement. The action was dismissed by the learned magistrate but on appeal the High Court reversed the decision. The learned judge gave leave to appeal to the Supreme Court. It was argued by the appellant company that the 18 months period within which vacant possession must be given 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, there was therefore no delay and no compensation was payable. They submitted that the deed despite its description was not in law an assignment but a new contract (novation).

Held: the deed of assignment in this case was an assignment and therefore the appeal must be dismissed.

Lyl Hooker Sdn Bhd v Tevanaigam Savisthri & Anor [1987] 2 MLJ 52 Supreme Court, Kuala Lumpur (Salleh Abas LP, Syed Agil Barakbah and Wan Hamzah SCJJ).

In this case, the plaintiff sued for damages for breach of contract and for delivery of documents of title relating to land and house in Petaling Jaya. The plaintiff had agreed to purchase the property from the defendants and it was a term of the agreement that the building on the said property should be completed within a period of 18 months from the date of the agreement. The building was only completed some 23 months after that date. The defendants claimed that the non-fulfilment was caused by circumstances beyond their control. The issues in dispute between the parties were as follows: 1. Do the Housing Developers (Control & Licensing) Act 1966 (Act 118) and 1970 Rules apply to this case. If they do, can the defendants contract out of the Act and the Rules? 2. What is the position of the defendants under the common law? 3. Can the plaintiff set off the last payment of the purchase price against liquidated damages? 4. Was the plaintiff in breach for non-payment of the last instalment of the purchase price? 5. Is the plaintiff entitled to special damages at $2,400 per month being rental?

Held: (1) the Housing Developers (Control and Licensing) Rules 1970 apply in this case and the defendants was in breach of the statutory provisions of the Rules; (2) the Housing Developers (Control and Licensing) Act 1966 and the Rules were introduced for the public to regulate and control the business of housing developers and must be strictly followed; (3) the defendants could not contract out of the statutory provisions of the 1970 Rules; (4) the defendants have failed to prove that the delay in this case was due to circumstances beyond their control and therefore the plaintiff was entitled to damages as provided in the contract; (5) the plaintiff has a right to set-off the last payment of the purchase price against the liquidated damages; (6) the failure of the plaintiff to pay the balance of the purchase price did not amount to a repudiation of the contract; (7) the plaintiff had failed to prove her loss of use and occupation of the building by way of rental.

Lee Poh Choo v SEA Housing Corp Sdn Bhd [1982] 1 MLJ 324 High Court, Kuala Lumpur (Mohamed Dzaiddin JC).

This was an appeal from the decision of the learned trial judge in a civil suit in which the appellant, a building contractor, claimed the sum of $43,703.19 from the respondents, a housing development company for earth cutting, road levelling and drainage works. The learned trial judge awarded only a sum of $29,303.19 (after making a deduction for work not completed before the specified date) and allowed a counterclaim of $12,500 in respect of architectural fees. He dismissed a counterclaim of $81,152.33 in respect of bank interest incurred by the respondents.

Held: (1) in this case, as the defence was a denial of liability and no objection was made to the quality or quantity of the work done and as it was admitted that the appellant had carried out the earth cutting, road levelling and drainage works and had completed them, the full sum as claimed without deduction, should have been awarded; (2) the normal rule is that architectural fees are chargeable to the owner and there was no evidence in this case which would impose obligation on the appellant to pay the architect's fees for the abandoned work; (3) the payment made could not be recovered from the appellant under either s 70 or s 71 of the Contracts Act 1950 (Act 136); (4) the learned trial judge was correct in holding that the respondents could not succeed on the counterclaim as the delay in completion was initially caused by the failure of the respondents' architect to secure approval of the plans relating thereto.

How Loon Sim v Lipson Realty (Malaya) Sdn Bhd [1976] 2 MLJ 76 Federal Court, Kuala Lumpur (Gill CJ (Malaya).

The defendants had contracted with the plaintiff for the construction by the plaintiff of certain works in relation to an office building in Thomson Road, Kuching. The plaintiff claimed that in spite of repeated requests he had not received payment from the defendants and he commenced action by a specially indorsed writ against them for the sum of $106,918 the balance which he alleged to be due to him for the completion of the construction of the building. The defence and counterclaim of the defendants was founded on, inter alia, delay in the completion of the construction work by the plaintiff, failure on the part of the architect to remeasure the reinforced concrete work in the building upon completion and the validity of the alleged final certificate issued and accordingly claimed for loss of profits and damages for non-completion of works contracted for within the time specified in the contract.

Held: (1) there was ample evidence in this case on which the court could find that the delay was solely caused by the defendants' default in not taking action with regard to the specialists' works and that such failure led to delay in the progress of the main contract works; (2) as the architect in this case had issued his final certificate, thereby showing his satisfaction with the works carried out by the plaintiff, the plaintiff was entitled to the amount claimed; (3) the certificate issued by the architect in this case was conclusive; (4) on the evidence and the probabilities in this case the architect had remeasured the reinforced concrete works in the building and retaining wall and wharf on completion.

Shen Yuan Pai v Dato Wee Hood Teck & Ors [1976] 1 MLJ 16 High Court, Kuching (BTH Lee J).

The plaintiff and the defendant had entered into an agreement on 17 January 1962 whereby the plaintiff agreed to erect eight plank houses for the defendant on the latter's land. The payment was to be made by advances and instalments. On 2 August 1962, the plaintiff commenced an action in the sessions court in which he claimed the balance due to him including the instalments due up to the end of July 1962 and judgment was given in his favour. Subsequently the plaintiff brought an action in the High Court claiming payment of the balance of the monthly instalments totalling $5,000. The defendant raised the plea of res judicata.

Held: the claim for the balance of $5,000 could not be heard in the sessions court and was never before that court and there was no merit whatsoever in the plea of res judicata and therefore judgment must be given for the plaintiff.

Chua Wee Seng v Fazal Mohamed [1971] 1 MLJ 106 High Court, Malacca (Sharma J).

This was an appeal against the order of Harun J granting leave to the respondents to sign final judgment being the sum due under two contracts and duly certified by the engineer in respect of certain civil engineering works. The appellants had sought to set off and counterclaim against the respondents in respect of damage, losses and expenses suffered or incurred by the appellants.

Held, dismissing the appeal: a debt due under an interim certificate was a debt of a class which ought not to be allowed to be made the subject of a set off or counterclaim and therefore the order of the trial judge in this case must be affirmed.

Bandar Raya Developments Bhd v Woon Hoe Kan & Sons Sdn Bhd [1972] 1 MLJ 75 Federal Court, Kuala Lumpur (Azmi LP, Suffian and Ong Hock Sim FJJ).

This was an appeal from the decision of Wan Suleiman FJ. The action arose out of an agreement in writing whereby the appellants agreed to sell to the respondent a piece of land in Seremban and to build for her a house thereon. There was delay in the completion of the contract and the learned trial judge found that the parties had by their conduct allowed the date for completion to pass. However, the respondent had by letter dated 21 August 1970, given the appellants one month to carry out the contract. The learned trial judge held that this letter made time again the essence of the contract and as the respondent was not given possession of the house till 4 April 1975, he gave judgment for the respondent for damages at the rate of $100 a month from 21 September 1970 to 3 April 1975. The learned judge who allowed part of the appellants' counterclaim that is for $850 for extra work gave costs to them on the counterclaim. The appellants appealed and the respondent cross-appealed on the costs awarded on the counterclaim.

Held, dismissing the appeal and cross-appeal: (1) the learned trial judge was correct in giving judgment for damages for the respondent; (2) damages recoverable for breach of contract for delay in the completion of an ordinary dwelling house required for personal occupation include the reasonable cost of living accommodation or living elsewhere if such expenses were in fact incurred. In the present case, the respondent gave evidence which was not challenged that she paid rent at $100 for her living accommodation. The learned judge was therefore quite right in awarding her damages at $100 per mensem for the relevant period; (3) as the appellants were partially successful on the counterclaim, the court would not interfere with the learned judge's order as to costs on the counterclaim.

Bee Chuan Rubber Factory Sdn Bhd v Loo Sam Moi [1976] 2 MLJ 14 Federal Court, Kuala Lumpur (Gill CJ (Malaya).

The appellant appealed against the decision of the High Court which had given judgment against him on two suits for breach of contract. The appellant had undertaken to build some buildings for the respondent but did not complete on the completion date. There had been an arrangement for the respondent to supply certain building materials to the appellant, as he had found difficulty in getting them. Subsequently the supply was stopped but no adequate notice was given to the appellant.

Held: (1) in this case, the appellant was clearly induced to believe that certain essential materials would be supplied to him. The respondent promised to supply the materials to the appellant whenever the latter asked for them and a considerable amount of materials were so supplied. Relying on the promise or assurance, the appellant had altered his position and his responsibilities to supply those materials had been suspended or kept in abeyance. For the respondent to reimpose the contractual provision, adequate notice should be given; (2) as the learned judge himself had held that the notice given was not reasonable, it should have been held that the respondent was in breach in terminating the contract and judgment given in favour of the appellant.

Sim Siok Eng v Government of Malaysia [1978] 1 MLJ 15 Federal Court, Kuching (Lee Hun Hoe CJ (Borneo).

The claim arose out of certain remedial works which were to be carried out on the National Stadium in the first half of 1989 pursuant to a contract ('the main contract') which the defendant company had been awarded by the Singapore Sports Council ('SSC'). The plaintiff company were a sub-contractor employed by the defendants in relation to the project. The defendants had been contracted to arrest corrosion of certain steel bars in the columns supporting the stadium. They were also to strengthen the structure of the stadium. By virtue of the sub-contract the defendants were to use certain waterproofing material called 'Vibalastic Waterproofing Slurry/Vibacote TW'. The plaintiffs commenced work on the underside and topside of the galleries in February 1989. In May 1989, the defendants terminated the plaintiff's work on the top side on the basis that the materials supplied were not Vibalastic Waterproofing Slurry and Vibacote TW. The defendants did not, however, terminate the plaintiff's work on the underside although the material being used on the underside was, in the defendants' view not the material which had been contracted. In April the plaintiff commenced this suit whereby they claimed the sum of S$25,555,36 owing to them by the defendants in respect of the work on the underside, the sum of S$117,086.69 for the work which they had done on the topside prior to the termination and damages for wrongful termination. The defendants denied liability and counterclaimed for damages in respect of the plaintiff's failure to use the specified materials.

Held, dismissing the plaintiff's claim and allowing the counterclaim: (1) the plaintiff's obligation under the sub-contract was to provide and apply not just generic waterproofing but two coats of Vibalastic to the topside and one finishing coat of Vibacote; (2) on the evidence it was clear that there was a direct conflict of fact as to what the terms 'Vibalastic' and 'Vibacote' meant. The court found that the defendants' version was correct and that it was intended to refer to 'Vibalastic Art 45.35' and 'Vibacoat Art 20.42'. It was a term of the sub-contract that the coating material to be applied by the plaintiff to the topside of the stadium had to bond well to the concrete, be flexible, possess good waterproofing qualities and be non-skid; (3) the court found that the plaintiff's coatings on the topside of the stadium were defective and to a significant degree did not measure up to the contractual specifications. The plaintiff were required to give a ten year warranty for their materials. The specifications required a degree of durability and wear resistance which were not satisfied by the plaintiff's materials; (4) the fact that one party was contractually entitled to terminate the agreement in the event of a breach by the other party did not preclude that party from treating the agreement as discharged by reason of the other's repudiation or breach of condition, unless the agreement itself expressly or impliedly provided that it could only be terminated by exercise of the contractual right. The common law drew a distinction between those provisions of a contract which were regarded as conditions and those which were regarded as warranties. In the case of a breach of a warranty, the innocent party was restricted to a claim for damages whereas if there was a breach of condition the innocent party could, in addition to claiming damages, excuse himself from further performing the contract. In the present case, the ground on which the defendants terminated the plaintiff's work on the topside was discrepancies in materials. By this the defendants meant, and the plaintiff understood, that the plaintiff had not supplied and applied the Vibak materials contracted for. The defendants would only be justified in terminating on this ground if supply of the Vibak materials was a condition rather than a warranty; (5) the provision as to the supply and application of the Vibak materials was a condition. As the plaintiff well knew, the heart of the sub-contract lay in the materials which were to be supplied; (6) the defendants did not prejudice their rights by choosing to exercise it only in respect of the topside works. Once the plaintiff were in breach, the defendants had, in addition to their right to terminate the sub-contract in toto, also a duty to mitigate their damages. If the defendants had terminated the plaintiff's work on the underside as well, there would have been delays and expenses incurred in obtaining material and another contractor to complete the underside works; (7) the way in which to assess whether or not the defendants suffered any loss by reason of the fact that they had to coat the topside of the entire stadium was to calculate their cost of doing so on the basis of the documents which they produced in court in proof of the expenses incurred. The defendants were only able to produce three invoices from Vibak, and must be taken as having used only materials reflected in those invoices in their coating works. The total costs incurred was therefore S$298,324.84. If the plaintiff had done the work the defendants would have paid them S$378,556.66. The difference between the two figures was S$80,231.82 This is the amount which the defendants saved by coating the stadium themselves instead of employing the plaintiffs. The defendants have therefore suffered no loss by reason of the coating works. Thus no amount was recoverable as damages. The amount due to the defendants under the other heads under the counterclaim was S$61,363.50. Deducting from this the sum of S$25,555.36 due to the plaintiff there would be judgment for the defendants on their counterclaim for the sum of S$35,808.14.

Gunac Enterprises (Pte) Ltd v Utraco Pte Ltd Suit No 738 of 1990 High Court, Singapore (Judith Prakash JC).

In this case, the respondents had brought an action for breach of a building contract, alleging that inferior materials had been used in construction. The learned trial judge, who heard the witnesses and decided questions of fact based on the credibility of the witnesses, held in favour of the respondents. The appellants appealed.

Held: as in this case the findings of facts by the trial judge were based on the credibility of the witnesses, the appellate court could not interfere with his decision and the appeal must be dismissed.

Hii Soo Chiong v Board of Management Yee Ting Primary School [1973] 2 MLJ 204 Federal Court, Kuching (Azmi LP, Gill and Ali FJJ).

The respondent was the owner of a piece of land and she had entered into an agreement with the appellant whereby the major portion of the land was to be transferred to him and he was to develop the land. The appellant paid a sum of $20,000 'by way of deposit and in part payment of the agreed purchase price'. The appellant failed to carry out his part of the bargain and he did not apply for sub-division of the land. The respondent then applied for a declaration for rescission of the agreement and for an order that the deposit of $20,000 be forfeited to her. The learned trial judge gave judgment in favour of the respondent and the appellant appealed.

Held: in the circumstances, as the contract had failed by the default of the appellant, the respondent was entitled to retain the deposit.

Song Toh Chu v Chan Kiat Neo [1973] 2 MLJ 206 Federal Court, Kuching (Azmi LP, Gill and Ali FJJ).

The appellants had entered into a written agreement with the respondent, a building contractor, to construct and complete terrace houses on land belonging to the son of the first appellant and the second appellant. The first appellant held a power of attorney from his son. The respondent did not complete the construction of the terrace houses within the time stipulated and the appellants formally terminated the agreement. Subsequently the respondent served a writ on the appellants claiming $10,236 for work done and materials supplied or alternatively for damages for fraudulent misrepresentation and/or breach of contract. The appellants denied fraud and contended that the respondent knew that the first appellant was holding a power of attorney on behalf of his son. They counterclaimed for the sum of $11,500 which they claimed they had paid to prospective purchasers of the houses. The learned trial judge held that fraud was established but did not make a finding with regard to the alternative claim for work done and materials supplied. He dismissed the counterclaim as he found that the appellants had failed to prove the payment of the compensation. The appellants appealed.

Held, allowing the appeal: (1) in this case, the respondent had not shown that any personal considerations had entered into the contract making the fact that as alleged he was led to think that he was contracting with the owner when in point of fact he was contracting with the agent a material element in the contract; (2) therefore, on the facts, fraud had not been made out; (3) the learned trial judge was wrong in holding that there had been a breach of contract by the appellants before they purported to terminate the agreement; (4) the respondent could not claim on a quantum meruit as the facts showed that he was at fault and had broken the contract; (5) the learned trial judge was right in holding that the counterclaim had not been proved.

Lau Kee Ko & Anor v Paw Ngi Siu [1974] 1 MLJ 21 Federal Court, Kuching (Azmi LP, Ismail Khan CJ (Borneo).

The plaintiff supplied tiles to and did the tiling in respect of the defendant's house which was being built by the third party, a contractor. The defendant himself selected the tiles and agreed to the rates quoted. He also guaranteed that he would make payment while the work was in progress. On the defendant failing to pay after the tiling was completed, the plaintiff sued him. The defendant brought in the third party against whom he sought to be indemnified.

Held: (1) notwithstanding that the third party was an independent contractor in respect of the contract for the whole building, he was acting as the defendant's agent in respect of the tiling job; (2) there was no obligation on the part of the plaintiff to demand payment while work was in progress, and therefore the defendant was also liable as guarantor.

China Engineers Ltd v RM Samy & Thee Keng Choon [1963] MLJ 66 High Court, Kuala Lumpur (Ong J).

The plaintiff was the sub-contractor for certain roadworks. The defendant was the main contractor who sub-contracted the work to the plaintiff. The consideration for the defendant sub-contracting the works to the plaintiff was 2% of all payment received for value of work carried out by the plaintiff, with the plaintiff taking 98% of the same. Thereafter the defendant wrote to the plaintiff and terminated the contract between them. The main complaint of the defendant was that the work was not done diligently and regularly. The plaintiff, inter alia, sought a Mareva injunction.

Held: (1) the conditions necessary for a Mareva injunction were satisfied in the present case. There was no ground at all for sending the said notice of termination in the first place, and even if there was some ground for it, it was unreasonable in the circumstances. The defendant was in any event itself in breach of contract for failure to pay over to the plaintiff 98% of each of the several progress payments. There was also solid evidence that the probity of the defendant could not be relied on. The court had also considered the evidence of both sides; (2) the Mareva injunction was therefore granted.

Petowa Jaya Sdn Bhd v Binaan Nasional Sdn Bhd [1988] 2 MLJ 261 High Court, Ipoh (Peh Swee Chin J).

In this case, the respondent was a building contractor who was employed by the appellant to build six units of three storeyed shophouses at the agreed cost of $223,000. Payment for the construction was by progress payments dependent on the completion of the several stages of construction. The contractor completed five of the six shophouses. He put some work on the sixth shophouse but was unable to complete because of a claim by the occupier of the land to ground tenancy rights. The respondent claimed the balance of the contract price less the amount paid to him under the progress payments and also for extra work and materials supplied. The learned trial judge awarded the respondent $5,540 on a quantum meruit and $6,500 assessed as the reasonable profit which the contractor could expect to make on the one house. The appellant appealed.

Held: (1) by his failure to give effective possession of the lot for the sixth house, the appellant had broken his covenant and the respondent could rescind the contract; (2) in this case, the respondent had rescinded the contract when he served the writ and the statement of claim on the appellant; (3) the claim for quantum meruit for work done and for cost of extras must succeed but the claim for loss of profits could not succeed.

Tan Hock Chan v Kho Teck Seng [1980] 1 MLJ 308 Federal Court, Kuching (Chang Min Tat FJ, Salleh Abas FJ and Charles Ho J).

In this case, the appellants were the registered owners of a piece of land which they decided to develop into housing lots. They entered into two separate agreements with the respondents for the sale of a portion of the land to be developed. In the first agreement, the appellants agreed to sell and the respondents agreed to buy 60 terrace houses and at the request of the respondents the appellants also agreed to appoint themselves or a third party as licensed developer with whom the respondents could execute a building contract for the construction of the terrace houses. The respondents have paid the sum of $720,000 to the appellants consisting of $300,000 as land price and $420,000 as development price. In the second agreement, the appellants agreed to sell and the respondents agreed to buy 25 sub-divided lots, 15 semi-detached lots and 11 bungalow lots. The respondents have paid $426,300 for these lots comprising of $172,000 as land price and $254,300 as development price. Out of the 85 lots sold, the appellants have transferred to the respondents only one terrace lot under the first agreement and one semi-detached lot under the second agreement. Ten of the bungalow lots under the second agreement were found to be commercially useless as it would cost about $13 million to level the land. The learned trial judge held that the first agreement was a sale of land with houses and therefore caught by the housing developers legislation. He found that the appellants were in breach of both the written agreements for their failure to transfer the various lots to the respondents. In respect of the first agreement, he ordered specific performance for the transfer of the remaining 59 terrace-lots to the respondents and he also awarded compensation for consequential loss which included, inter alia, damages for additional costs in constructing the 60 terraced houses and $187,200 as indemnity under the Housing Developers Rules 1970. In regard to the second agreement, he ordered specific performances for the transfer of the remaining 13 semi-detached lots and one bungalow lot. For the ten useless bungalow lots, the appellants were ordered to refund the contract price of $203,000 with interest. In addition to specific performance, the learned judge also ordered damages for increased cost of construction Ð $117,000 for nine semi-detached houses and $148,500 for 11 bungalows. The appellants appealed against the finding of liability for breach of contract on their part as well as against the reliefs granted, particularly the decree ordering specific performance of part of the contract as well as awarding damages. There was also a cross-appeal by the respondents on quantum and the refusal by the learned judge to award them certain ancillary reliefs.

Held: (1) the learned judge did not err in law or in fact when he concluded that the first agreement to sell land with houses was binding on the parties and was not dependent on the execution of another building contract. The first agreement should, therefore, in law be construed as a contract of sale and purchase of land with houses. Moreover the agreement constituted a statutorily binding 'housing development' contract and the appellants were a housing developer within the meaning of s 3 of the Housing Developers (Control and Licensing) Act 1966 (Act 118); (2) in the absence of any certificate by the Controller waiving or modifying the date of delivery of vacant possession under r 12(2) of the Housing Developers Rules, the appellants have committed a breach of contract by failing to deliver vacant possession by 24 May 1978; (3) the refusal of the respondents to sign a building contract with the appellants under cl 3 of the agreement was justified in view of the two offending clauses objected to by them. Accordingly the defence raised by the appellants that they were prevented from constructing the houses as a result of the respondents' failure to enter into the building contract cannot be sustained; (4) in regard to the second agreement, the learned judge was right when he found the appellants to be in breach of contract by transferring to the respondents only one of the 25 building lots; (5) in this case, there is a part of the first agreement, viz the transfer of the terrace lots which taken by itself could and ought to be specifically performed and this part stood on a separate and independent footing from the other part of the contract, viz the construction part which clearly could not and should not be specifically performed as it would involve the court with lengthy and laborious supervision as to its performance; (6) s 14 of the Specific Relief Act 1950 (Act 137) does not apply to the second agreement although it concerns only the sale of vacant land. It can therefore be specifically enforced under s 11 of the Act and in addition damages can be awarded under s 18(3); (7) in respect of the ten useless bungalow lots, the learned judge has exercised his discretion judicially by not ordering specific performance but instead ordering the appellants to refund the contractual price and also awarding consequential damages arising from the breach of contract; (8) the ground of appeal that the respondents were not entitled to specific performance as well as compensation for damages must therefore fail; (9) there was no reason to interfere with the amount awarded by the trial judge as damages and the appeal against quantum by the appellants must fail; (10) as regards the cross-appeal of the respondents, the learned judge was justified in assessing the indemnity for 18 months in accordance with the housing development Rules; (11) under s 18(4) of the Specific Relief Act the method of assessing damages is left to the discretion of the trial judge. Since the method has not been shown to be wrong in principle, his award must stand.

City Investment Sdn Bhd v Koperasi Serbaguna Cuepacs Tanggungan Bhd [1985] 1 MLJ 285 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

The appellants were housing developers. By a standard form of agreement they sold one of the houses to the respondent. When the house was ready for occupation the respondent refused to accept the keys on the ground that the municipal authorities had not yet granted the appellants a certificate of fitness for occupation. She then sued the appellants in the magistrate's court for damages for delay and succeeded. The appellants appealed.

Held: the respondent's contention that the house must not only be completed in the sense that it was fit for human habitation but must also be equipped with a certificate of fitness for occupation was unreasonable. The court would refuse to import a further term into the agreement.

South East Asia Brickworks Sdn Bhd v Maria Antonette [1979] 1 MLJ 46 High Court, Kuala Lumpur (Abdul Hamid J).

This appeal concerned the non-payment of moneys due and owing under a series of building contracts entered into between the appellant, a building contractor, and the government of Malaysia. In the court below, the respondent pleaded s 2 of the Public Authorities Protection Ordinance 1948. In the result, the learned trial judge merely referred to s 38 of the Government Proceedings Ordinance 1956 (Ord 58/1956) as importing the special period of limitation to the proceedings before him. He accordingly held that the appellant's claim was barred to the extent of $10,749.25. The building contractor appealed. Counsel for the respondent contended that as the contract for the building of schools was entered into in the performance of a public duty or was incidental thereto, s 2 of the Public Authorities Protection Ordinance 1948 applied, so that the action should have been brought within 12 months next after the act, neglect, or default complained of in relation to that contract.

Held, allowing the appeal: (1) the non-payment of moneys was not in pursuance of a public duty. Consequently, it could not have come within the provisions of s 2 of the Public Authorities Protection Ordinance 1948. It is immaterial that the contract may have been entered into for the purpose of performing a statutory duty. If the act complained of is the breach of a contract, the statutory protection of the ordinance cannot be invoked on the ground that the contract was entered into for the purpose of carrying out duties imposed by the statute; (2) therefore, judgment must be entered for the appellant in the total sum of $14,589.75 with interest at 6% per annum.

Lee Hock Ning v Government of Malaysia [1972] 2 MLJ 12 Federal Court, Ipoh (Ong CJ (Malaya).

The respondent had claimed payment of moneys due under a series of building contracts entered into between him and the appellants, the government of Malaysia for the building of primary schools. At the trial the appellants had pleaded s 2 of the Public Authorities Protection Ordinance 1948. The trial judge held that the respondent's claim was barred but on appeal the Federal Court ([1972] 2 MLJ 12) held that the contractual obligation in this case was not in pursuance of a public duty and therefore did not come within the provisions of s 2 of the Public Authorities Protection Ordinance. The appellants appealed to the Privy Council.

Held: in this case the right of the respondent was correlated not with a statutory right or duty which was the provision of education but with the obligations entered into by the appellants in their contract with the respondent and accordingly the respondent's claim was not barred by the Public Authorities Protection Ordinance.

Government of Malaysia v Lee Hock Ning [1973] 2 MLJ 51 Privy Council Appeal from Malaysia (Lord Wilberforce, Lord Hodson, Lord Kilbrandon, Lord Salmon and Sir Seymour Karminski).

P was an employee of D2, who were scaffolding sub-contractors for a building owned by D1. The main contractors were S. P was injured by a falling brick during the building operations. He obtained judgment against D2, which was not satisfied when the case against D1 was heard. The trial judge dismissed P's action. P appealed to the Court of Appeal.

Held, dismissing the appeal: (1) the fact that D1 had employed an engineer and an architect to supervise the works did not mean that they were in possession of the building site in law or in fact. The main contractors, S, were in possession at the material time; (2) even if they had been in occupation, D1 could not be held responsible for any negligence arising from the building operations as they were not unusually dangerous or hazardous. The appeal was accordingly dismissed.

Mohd Sainudin bin Ahmad v Consolidated Hotels Ltd & Anor [1990] SLR 154 Court of Appeal, Singapore (Lai Kew Chai, Chan Sek Keong and Rajah J).

In this case, the appellant, a contractor, successfully tendered for the erection of a kiln for a cement factory. He was required to do extra work and he claimed the sum of $325,000 for such extra work. Part of the claim was for clinker coolers, ID, exhaust fans etc and the essential difference between the parties was whether the labour supplied should be paid for by tonnage or by labour charges. The learned trial judge rejected the evidence of the record books which suggested that the payment was to be on a work-rate basis. The learned trial judge also gave interest from the date of judgment and rejected the contention that interest should run from the date of completion of the contract. He also gave the appellant costs on the lower scale without regard to the amounts of the claim and the counterclaim but gave no reasons for the award.

Held: (1) the appellant had discharged the burden on him to prove on a balance of probabilities that the work was to be paid for on a work-rate basis. The burden then shifted to the respondents and as they had not discharged this burden, the award under the head should be increased to $196,766.25; (2) the learned trial judge should have accepted the documentary proof in this case as they were records ordinarily kept for a claim on a work-rate basis and were shown and duly certified by a representative of the respondents; (3) on the facts the respondents had deliberately obstructed the Japanese engineer, who it was claimed required the supply of the extra labour and could testify to the correctness of the entries in the work books, from giving evidence and the tactics of the respondents' called for the application of the presumption under s 114(g) of the Evidence Act 1950, which presumption proved the truthfulness of the work books; (4) interest in this case should have been awarded from the date of the completion of the contract; (5) under the Rules of the Supreme Court, costs should have been awarded on the higher scale.

Wong Chong Chow v Pan-Malaysian Cement Works Bhd [1980] 2 MLJ 75 Federal Court, Kuala Lumpur (Chang Min Tat, Syed Othman and Salleh Abas FJJ).

The plaintiffs are plumbing, sewerage and sanitary contractors. The defendants are paint manufacturers and suppliers as well as painting contractors. In this action the plaintiffs' main claim against the defendants is for a sum of S$94,940, being the balance due under a sub-contract between them for the supply of labour, transport and material to carry out plumbing and sanitary works at the Changi Hospital, Singapore ('the Changi project'). The defendants were the main contractors of the Public Works Department (PWD) in relation to the project. The plaintiffs allege that the sub-contract was entered into with the defendants through the latter's agent, one T. In the alternative, the plaintiffs claim that the defendants had held the plaintiffs out as their sub-contractors or had by their conduct ratified the sub-contract with the plaintiffs. In the further alternative, the plaintiffs claim on the basis of quantum meruit. The defendants deny that they had engaged the services of the plaintiffs. They aver that they had entered into a contract with CLC Pte Ltd appointing the latter as the defendant's sub-contractor for the project. Under the sub-contract, CLC was to undertake all the works of the project. The defendants also deny that T was their agent; nor did they have any contractual relationship with T. Instead they allege that T was a general contractor engaged by CLC as the sub-contractor of the project. It is not disputed that the plaintiffs did complete the plumbing and sanitary works in relation to the Changi project. The question is really whom the plaintiffs entered into a contractual relationship with.

Held, dismissing the action: (1) the plaintiffs can only succeed if they show that there was a contractual relationship with the defendants. This, in turn, would also depend, inter alia, on the authority, actual or ostensible, of T; (2) on the facts, there is no contractual nexus between the plaintiffs and the defendants on the Changi project. The plaintiffs have not proven that they had any contractual relationship with the defendants or that they were the sub-contractors of the defendants. On the contrary, the objective evidence shows that they were the sub-contractors of T; (3) reverting to the allegation that T was the agent of the defendants and as such agent T procured the plaintiffs to enter into a contract with the defendants to carry out the plumbing works, there is simply no reliable evidence to support that allegation; (4) the defendants had CLC to look to to ensure that everything was done according to specifications. The defendants had paid CLC for all the works done on the project. Accordingly, the claim of the plaintiffs against the defendants on the basis of quantum meruit must also fail.

Henderick Engineering v Kansai Paint Singapore Pte Ltd Suit No 3325 of 1989 High Court, Singapore (Chao Hick Tin J).

Ryoden (M) Sdn Bhd v Sykt Pembenaan Yeoh Tiong Lay Sdn Bhd [1992] 1 MLJ 33 High Court, Kuala Lumpur (Lim Beng Choon J).

This was an appeal from the judgment of Raja Azlan Shah J ([1966] 2 MLJ 286). The appellant, a building contractor, claimed the sum of $90,585 against the respondents. The particulars of the claim were (a) amount due on account of appellant's materials used and damaged by the respondent company while erecting machinery in factory...$13,800; (b) alteration to original construction of office and two stores on lots Nos 249, 250 and 979 at $13,595 each...$40,785; (c) fifth progress payment recommended by architect etc...$36,000. The respondents denied owing the amount claimed and counterclaimed for damages for breach of contract. In the court below, the learned trial judge held that the appellant was entitled to $79,355 in respect of his claim on the above items with interest thereon at 6% per annum from 24 December 1964 to 22 June 1966 and the respondents were entitled to damages for breach of contract in the sum of $105,135.75 with costs of the claim and counterclaim. The learned judge then purporting to act on the authority of Hanvale v Green [1958] 2 WLR 775 dismissed the appellant's claim and entered judgment for the respondents for $25,780.75 and costs. On appeal,

Held: (1) as the parties were aware at the trial that the claim for $13,800 under item (a) included the claim for costs of levelling, and documentary evidence in support thereof was admitted without objection, the finding of the trial judge allowing the full amount claimed under that item should stand; (2) the decision of the trial judge to allow the appellant's claim for $13,595 in respect of one of the stores (store A) was in accordance with the evidence but the reason behind his decision to allow $7,980 each in respect of the other two stores was incomprehensible and the claim in respect of the said two stores should be disallowed; (3) however, the learned judge was right in allowing the full amount of $36,000 under item (c) because of s 40, 65 and 66 of the Contracts (Malay States) Ordinance; (4) as the contracts were lump sum or entire contracts the appellant was not entitled to progress payment under item (c);the judgment of the trial judge should be set aside and judgment entered for the appellant for $63,395 with interest at 6% per annum from 24 December 1964 to the date of realization and costs of the suit. There will be judgment for the respondents on the counterclaim for delay and loss of use of two stores for $5,001 and costs. Discussions on points taken first time on appeal.

Yong Mok Hin v United Malay States Sugar Industries Ltd [1967] 2 MLJ 9 Federal Court, Kuala Lumpur (Barakbah LP, Azmi CJ (Malaya).

This was an appeal from the decision of Mohamed Azmi J ([1980] 1 MLJ 172). The respondent had claimed payment of the security deposit which had been given in the form of a security guarantee by the appellant bank, to secure the due performance of a building contract. The contractor had defaulted in performing the building contract. The principal argument at the appeal was that the security guarantee was inoperative until the full extent of the liability of the principal debtor had been ascertained.

Held: on a proper construction of the security guarantee, the appellant had promised to pay the security deposit which the contractor was required to pay as a condition precedent in the event of his default to perform the contract. When the contract was determined in accordance with its terms due to the default of the contractor, the security deposit required became payable.

Public Bank Bhd v Perbadanan Kemajuan Negeri Selangor [1980] 1 MLJ 214 Federal Court, Kuala Lumpur (Raja Azlan Shah Ag LP, Chang Min Tat and Syed Othman FJJ).

By an agreement dated 11 July 1988 ('the agreement') made between the plaintiff and the defendant, the plaintiff agreed at its own cost and expense to construct and complete for the defendant nine units of three-storey terrace houses, and in consideration therefore, the defendant agreed on completion of construction of the terrace houses and issue of the temporary occupation licence thereof to convey to the plaintiffs three-and-a-half units of the terrace houses. Pursuant to the agreement, the plaintiff procured the issue of a performance bond of $120,000. Under the agreement, the plaintiff was to complete construction within 14 months and to secure issue of the temporary occupation licence thereof within 17 months from the date of the permit to commence or carry out building works issued to the defendant by the Building Control Division. Disputes arose between the plaintiff and the defendant. The plaintiff complained that the defendant had delayed some of the payments under interim certificates and such delay had put a severe strain on the plaintiff's cash flow and hampered the progress of the works, thereby resulting in delay in the works. The defendant, on the other hand, complained that the plaintiff had been guilty of delay in the construction of the houses within the time agreed upon. The defendant had extended the time for completing the construction but reserved its right to impose liquidated damages. On 1 May 1990, the defendant, by notice in writing, terminated the agreement and requested the plaintiff to vacate the defendant's land and premises. The plaintiff thereupon instituted this action against the defendant and obtained ex parte injunctions to restrain the defendant from calling on the performance bond and from evicting the plaintiff from the defendant's land and premises. The defendant applied by notice of motion for a discharge of the two injunctions and also for an order that the plaintiff vacate the land and premises of the defendant.

Held, discharging the second injunction only: (1) the court, in determining the defendant's entitlement to call on the performance bond, is concerned with the relationship between the parties under the main or underlying contract they have made and the dispute arising from such relationship and not whether the bond is binding on the bank or insurance company that issued it. In such a case, there is no reason why the court should be inhibited from exercising its equitable jurisdiction and restraining the defendant from calling on the bond, if the facts warrant it, merely because the bond is like a letter of credit; (2) that on that ground the defendant was entitled to call on the bond, and that bond is like a letter of credit, and not to consider whether or not the defendant should be restrained from calling on the bond. All the relevant facts of the case must be considered; (3) taking into account the fact that a considerable sum of money is still in the hands of the defendant, which, if the plaintiff is found ultimately liable to pay damages to the defendant for breach of contract, can be applied by the defendant to set off such damages payable, and that the director of the plaintiff had issued a personal guarantee to the defendant in the sum of S$1m, it would be wrong merely to accept the assertion of the defendant that the plaintiff was in breach of contract;the joint venture had been terminated and the plaintiff should not be permitted to remain in possession of the site and the defendant should be at liberty to engage other contractors to continue with the construction of the houses. Even if the termination was wrongful, the plaintiff would still have to vacate the defendant's land and premises and deliver possession thereof to the defendant. The plaintiff may proceed with its claim against the defendant for damages. The balance of convenience was clearly in favour of a discharge of the injunction.

Royal Design Studio Pte Ltd v Chang Development Pte Ltd [1990] SLR 1116 High Court, Singapore (Thean J).

The plaintiffs/contractor claimed against the defendants/employer the sum of $572,729.91 being money due on a payment certificate stated to be a 'Penultimate Certificate of Payment' dated 6 December 1983 issued by the employer's architects pursuant to a building contract dated 27 January 1979, made between the contractor and the employer. Under the said building contract, the employer agreed in consideration of the contractor erecting and completing a shopping centre, inter alia, to pay to the contractor within 30 days from the date of the certificates issued by the employer's architects thereunder such sums as should be certified as being due to the contractor thereon. Under cl 30 of the contract the architects had to issue monthly an interim certificate of payment and the employer must pay the amount certified within 30 days and when the requirements of cl 30(6) had been complied with the architects had to issue the final certificate. There was no express provision for the issue of a 'penultimate' certificate of payment. The crucial question in this appeal was whether or not the certificate issued by the architects dated 1983 was an interim certificate within the meaning of cl 30 of the contract.

Held, allowing the appeal: (1) a payment certificate cannot be a final certificate unless the architect intends it to be a final certificate; (2) the term 'penultimate' used by the architects in the certificate of payment means the last but one certificate under the contract; (3) in the present case the certificate was an interim payment certificate governed by cl 30(1) of the building contract.

Hiap Hong & Co Pte Ltd v Hong Huat Co (Pte) Ltd 1984 High Court, Singapore (Wee Chong Jin CJ).

On 11 May 1983, the plaintiffs and the defendants entered into a contract whereby the plaintiffs agreed to carry out and complete the construction of 20 units of condominium housing for a sum of $1,550,000, on and subject to the terms therein contained and to the conditions annexed thereto. Pursuant to the contract, the defendants sought the payment to them of a certain sum of money which was supposed to be paid under an architect's certificate of final payment. In furtherance of their claim, the plaintiffs took out an O 14 summons for final judgment. The learned deputy registrar dismissed the defendants' application for a stay. The defendants appealed against the registrar's decision. Thean J, who heard the appeal, set aside the order of the learned deputy registrar and stayed all proceedings pending arbitration. The plaintiffs appealed to the Court of Appeal. In the process of the appeal, two affidavits were allowed to be admitted on behalf of the plaintiffs. The points for decision in the present appeal were: (1) whether in the circumstances of the instant case, the certificate of final payment was a final certificate within the meaning of cl 30(6); and (2) whether even if the said certificate of final payment was found to be a final certificate under cl 30(6), it was not conclusive at least in one aspect, there being defects falling within exception (b) to cl 30(7).

Held, allowing the appeal: (1) on the first point the court was of the view that had these affidavits, particularly that of the architect, been before the learned appeal judge, he would not have set aside the learned deputy registrar's order; (2) on the second point the court accepted the submission that the defects relied on were those which the purchasers of the units had raised with the developer and these were not the defects contemplated by this provision. One must look at the contract between the developer and the contractor and not at any contract between the developer and the purchasers of the units.

Chew Sin Leng Construction Co v Cosy Housing Development Pte Ltd [1987] SLR 160 Court of Appeal, Singapore (Sinnathuray, Chua and Rajah JJ).

Tan Kim Chua Realty (M) Sdn Bhd (first appellants) were the owners of a multi-storey complex, the Merlin Tower Johore. Subsequently they sold the complex to Faber Merlin (M) Sdn Bhd (second appellants). The first appellants had earlier sold a parcel in the complex No 212 on the second floor to the respondents. Under the agreement, certain parts of the complex were stated as 'common property'. The first appellants subsequently built a mezzanine floor and converted a portion of the ground floor passage way into a hotel lobby. They sold the basement car parks, the mezzanine floor and the hotel lobby to the second appellants, who in turn transferred them to the third and fourth appellants. The third appellants then applied for separate titles for the car park, mezzanine floor, the hotel lobby and the roof garden. The respondents asserted that these places were 'common property' under the agreement and they asked for a declaration to that effect. They also sought to apply for an injunction to restrain the third appellants from applying for the issue of separate titles and for further amendments to the building plans. They also sought for a declaration that the third appellants should render accounts showing how the service charges for the respondents' parcel as well as those for other parcels in the complex are determined. The learned trial judge found in favour of the respondents and made an order in terms of their prayers in the originating summons. The appellants appealed.

Held: (1) (b) the remainder of the complex itself minus (i) the individual parcels of business and office premises and (ii) the basement car parks; (2) the first appellants were within their right under the agreement in carrying out those amendments to the building plan resulting in the construction of the hotel lobby, the mezzanine floor and the roof garden; (3) service charges are governed only by the terms of the agreement. There is no reason to justify the making of a declaration as sought by the respondents; (4) given its simple grammatical construction common property according to the agreement is (a) the portion or portions of the lot on which the multi-storey complex stands;in any case since what was sought was an equitable remedy, there was evidence of laches, acquiescence and delay on the part of the respondents so that discretion should not be exercised in their favour.

Faber Merlin (M) Sdn Bhd & Ors v Lye Thai Sang & Anor; Tan Kim Chua Realty (M) Sdn Bhd v Lye Thai Sang & Anor [1985] 2 MLJ 380 Supreme Court, Johore Bahru (Abdul Hamid CJ (Malaya).

The appellants had undertaken the development of a large housing estate. The development included the construction of septic tanks and the requisite sewerage mains to serve the estate and also of roads. The respondents agreed to buy 33 lots in the estate. The points in issue were (a) who should construct the sewerage mains necessary to convey the sewerage from eight houses in the estate to the septic tank; and (b) the standard to which the roads on the estate should be constructed. The trial judge held that it was the duty of the appellants to construct the sewerage mains and that the roads should be so constructed as to enable them to be taken over as public roads. At the trial the respondents asked for a declaration that the appellants should indemnify the respondents in respect of any loss resulting from future claims of damages by the purchasers of the houses because of the appellant's failure to construct the roads to the necessary standard and to provide the sewerage mains. The trial judge refused to make this declaration. On appeal,

Held: (1) on the construction of the agreement between the parties the trial judge was right in holding that it was the duty of the appellants to construct the sewerage mains and to construct the roads to the required standard to enable them to be taken over as public roads; (2) as no claims had been made against the respondents by the purchasers of the houses the application for a declaration for indemnity against damages arising from such possible claims should be reserved with liberty to apply.

Eastern Oceanic Corp Ltd v Orchard Furnishing House Building Co [1966] 1 MLJ 15 Federal Court, Singapore (Barakbah CJ (Malaya).

The plaintiffs were the mechanical subcontractor for Marina Centre. The defendants were the main contractor. Payments were to be made by the plaintiffs under certificates of payment issued by the architect. The architect certified a sum of some S$1.6 million as being due to the plaintiffs which, after the allowable deduction, came to S$924,711. Owing to delays in the completion of the project, the owners declined to make any payment to the defendants, the main contractor, holding the money due to be set-off against liquidated damages to be paid for the delay. The defendants in turn declined to pay the sum of S$924,711 certified as payable to the plaintiffs. The plaintiffs sued the defendants for this sum and applied for summary judgment. The defendants applied for a stay of proceedings pending arbitration. The defendants also relied upon cl 11(b) of the subcontract, which provided that 'within five days of the receipt by the contractor of the sum included in any certificate of the architect the contractor (the defendants) shall notify and pay to the subcontractor (the plaintiffs) the total value certified therein...'. It was the defendants' contention that as they had not received any money from the owner they were not liable to pay anything to the subcontractor. The assistant registrar ordered the proceedings to be stayed pending the arbitration and made no order on the plaintiffs' application for summary judgment. The plaintiffs appealed.

Held, dismissing the appeal: prima facie, cl 11(b) contemplated the actual receipt by the main contractor of the sum included in the certificate and that until the defendants received from the owner the sum claimed by the plaintiffs they were not obliged to pay it to the plaintiffs. In this case, there was no actual receipt by the defendants of the amount certified by the architect. This view of the construction of cl 11(b) was only a provisional one.

Brightside Mechanical & Electrical Services Group Ltd & Anor v Hyundai Engineering & Construction Co Ltd [1988] SLR 186 High Court, Singapore (Thean J).

This is an appeal against the decision of the High Court ([1979] 1 MLJ 108) on a special case stated pursuant to s 28 of the Arbitration Act (Cap 16, 1970 Ed). The dispute in this case arose out of a written agreement dated 8 April 1974 between the parties. Under the said agreement, the respondents agreed to carry out and complete certain building works under the supervision and to the satisfaction of the appellants' architect. By a supplemental agreement of 23 March 1976 made between the parties, the appellants were 'at liberty to determine the employment of the respondents under the main contract forthwith by notice in writing' upon the recommendation of the architect in writing should he be of the opinion that the respondents had failed to maintain the progress of works as specified in the schedule to the agreement. On 1 March 1977 the architect, pursuant to the said provisions by a letter to the appellants recommended the determination of employment of the respondents under the main contract. The respondents were not, in his opinion, carrying out the works expeditiously and with every diligence. By a letter of 1 March 1977 the appellants determined the respondents' employment under the main contract forthwith. Disputes having arisen between the parties, the matter was referred to arbitration before a sole arbitrator. Subsequently the parties agreed that the arbitrator should state certain points of law for the opinion of the High Court. The learned judge held, inter alia, that the arbitrator could review or revise an opinion of the architect under the supplemental agreement pursuant to the powers conferred upon him by the main contract. Article V cl 6 of the supplemental agreement provides that in the event of a determination of the respondents' employment the firm of Pakatan International Suckling McDonald shall assess the works completed and the valuation of the said quantity surveyor shall be binding on the parties and shall be final. The respondents claimed that the said quantity surveyor's valuation was too low and sought for a revaluation by the arbitrator under cl 34(3). The appellants appealed.

Held, allowing the appeal: (1) on a careful consideration of the terms of the supplemental agreement, the intention of the parties to it was that the appellants could determine the respondents' employment under the main contract if, inter alia, the architect was of the bona fide opinion that the progress of the works specified in the third schedule annexed to the supplemental agreement was unsatisfactory and the architect recommended in writing to the appellants to determine the employment; (2) however stringent such a term may be, when it comes to be enforced, the courts have declared that their duty is in such cases to ascertain and give effect to the intention of the parties as evidenced by the agreement and if a term is clear and unambiguous the court is bound to give effect to it without stopping to consider how far it may be oppressive or not; (3) the powers of the arbitrator under cl 34(3) are limited to opening up, reviewing or revising any opinion or decision of the architect and the arbitrator is given no power under that clause to open up a valuation by a third party as a result of a separate contract between the parties in which they have expressly agreed that the valuation shall be final and binding on them.

United Overseas Land Ltd v Loke Hong Kee (S) Pte Ltd 1978 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Chua JJ).

By an agreement and schedule of conditions of a building contract made on 4 March 1987 between the defendant and the plaintiff, the defendant appointed the plaintiff to be the main contractor for the construction of a project. Under the agreement, the plaintiff was to be paid on a progressive scale in respect of works done on the project. The plaintiff claimed that the project was completed on or about 25 June 1989 and was handed over to the defendant. The plaintiff contended that it had been agreed by all parties that the final contract sum would be RM3,035,280.25 but that, as at 31 December 1988, the defendant had only made payments totalling RM2,562,800 and accordingly, the plaintiff made a claim for the balance of RM467,480.25 which was still due and outstanding. The defendant denied being indebted to the plaintiff in the sum claimed. It contended that: (i) various payments had been made direct to the plaintiff's sub-contractors with the plaintiff's consent and approval; (ii) the plaintiff was in breach of the contract in failing to carry out plastering works to the project, whereupon the defendant had to engage its own contractors to carry out the works, that it had notified the plaintiff of the breach and that accordingly, it was entitled to deduct all sums paid to its contractors from the final contract sum; and (iii) the plaintiff had failed to deliver the housing units to the defendant on time with the result that the defendant had suffered damages. There were two appeals in the present proceedings. The first appeal was filed by the plaintiff against the decision of the senior assistant registrar that execution be stayed pending the outcome of the defendant's appeal. The second appeal was filed by the defendant against the decision of the senior assistant registrar granting leave to the plaintiff to enter summary judgment against the defendant.

Held, allowing the plaintiff's appeal and dismissing the defendant's appeal: (1) it is not legitimate to use as an aid in the construction of a contract anything which the parties said or did after it was made. Thus, the defendant should not be allowed on subsequent meeting to vary the terms of the original agreement and schedule conditions of the building contract. Under the terms of the contract, all payments were to be made to the plaintiff. Accordingly, by paying the sub-contractors direct, the defendant had done so at its own peril. Under the contract, the defendant was still liable to the plaintiff; (2) the contract provided that before the defendant could engage its own contractor to carry out the plastering work, the project architect had to give the plaintiff a written notice requiring compliance with its instructions to carry out the work. There was no evidence that such notice had been given to the plaintiff; (3) in respect of the plaintiff's claim for progressive payment, the defendant had no right to withhold payment; (4) the defendant had no defence to the plaintiff's claim. It had not raised a triable issue. Furthermore, the counterclaim was not plausible and was frivolous. Accordingly, it was not reasonably possible for the defendant to succeed on the counterclaim at the trial.

Perwik Sdn Bhd v Lee Yen Kee (M) Sdn Bhd [1996] 1 MLJ 857 High Court, Kuala Lumpur (Zakaria Yatim J).

In this case, the respondent had entered into an agreement with the appellants, a housing developer, for the purchase of a house to be completed within 18 months from the date of the signing of the agreement, ie by 2 May 1980. The house was not completed by that date. A second agreement was entered into by the parties on 11 July 1981 which provided that the house should be completed within six months from the date of the signing of the agreement and that the purchase price of the house be increased by $3,595. However, the house was again not completed by that date. The respondent brought an action against the appellants and the learned trial judge granted an order for specific performance and an order for statutory indemnity awarded under the Housing Developers (Control and Licensing) Rules 1970. The appellants appealed. On the appeal it was argued: (1) that the learned judge was wrong in holding that the second agreement was void and of no effect; (2) that the learned judge was wrong in awarding indemnity at 12% per annum on the full agreed purchase price and not merely on the actual amount already paid by the respondent; and (3) the learned judge was wrong in awarding interest on the purchase price on a day to day basis as damages.

Held: (1) the second agreement was clearly in violation of the letter and spirit of the Housing Developers (Control and Licensing) Rules 1970. It was clearly an agreement whose admitted aim was to defeat the objects of a statute and therefore should not be allowed to stand; (2) under the Housing Developers (Control and Licensing) Rules 1970, the indemnity should be calculated at a rate of not less than 8% per annum of the agreed purchase price and the learned judge was therefore right in awarding indemnity at 12% per annum on the full agreed purchase price; (3) the learned trial judge in this case imposed interest at the rate of 12% per annum and never imposed interest on a day to day basis. It is unjustified to read r 12(1)(r) of the rules to require interest to be paid on a daily rest basis.

MK Retnam Holdings Sdn Bhd v Bhagat Singh [1985] 2 MLJ 212 Supreme Court, Kuala Lumpur (Hashim Yeop A Sani, Syed Agil Barakbah and Wan Hamzah SCJJ).

Syarikat Tan Kim Beng & Rakan-Rakan v Pulai Jaya Sdn Bhd 1992 High Court, Ipoh (Peh Swee Chin J).

There is no practice or custom among building contractors of borrowing and lending money.

X v Comptroller of Income Tax [1958] MLJ 55 High Court, Singapore (Chua J).

The plaintiffs were building contractors who entered into a building contract with the first defendant to erect a house on the first defendant's property. The second defendants were an insurance company who, at the request of the plaintiffs, issued a performance guarantee to the first defendant which was payable unconditionally on demand. The first defendant alleged that there were several defects in the construction of the house and that the water tank which the plaintiffs installed failed to meet with PUB's requirements. They consequently made a demand on the second defendants to pay the guaranteed sum. The plaintiffs obtained an injunction to restrain the second defendants from paying the sum and to restrain the first defendant from receiving it. The plaintiffs claimed that they had substantially completed the works as contracted and as subsequently varied by the parties and that the first defendant had unlawfully and oppressively prevented the architect from issuing the necessary certificate of payment. The plaintiffs conceded that they had, despite obstacles put up by the first defendant, repaired some defects and that certain minor repairs were still outstanding. These minor repairs could have been dealt with during the defects liability period but, owing to the obduracy of the first defendant, even these minor items were not put right. The first defendant applied for an order that the injunction be discharged and that judgment be entered against the plaintiffs for the damages sustained.

Held, dismissing the first defendant's application: (1) evidence was strongly suggestive that the conduct of the first defendant from first to last was most unfair and it was against the court's conscience to have allowed him to insist on his pound of flesh; (2) there were strong evidence that the first defendant would postpone meeting his financial commitments by tactics of all sorts; (3) although the temporary occupation permit had been issued and he and his family had been in occupation since May last year, he claimed it was not in a 'liveable condition'; (4) he interfered with the work of the architect who had no choice but to discontinue his services. He even pressurised the architect to withdraw his 8th certificate; (5) the unacceptable tank by PUB had nothing to do with the plaintiffs who built it in accordance with the drawings; (6) the building defects would have been attended to by the plaintiffs during the defects liability period but for the obduracy of the first defendant; (7) the claims of the first defendant for liquidated damages and for defects and uncompleted items appear to be wholly dispropriate, looking at the contractual sum and all the extraordinary circumstances of this project where the owner/employer indulged in a number of preventive tactics to delay payments when they fall due.

Raymond Construction Pte Ltd v Low Yang Tong & Anor Suit No 1715 of 1995 High Court, Singapore (Lai Kew Chai J).

Yeoh Swee Inn v Cheang Jen Boon and another action (No 1) Suit Nos 1820 and 109 of 1993 High Court, Singapore (Lai Siu Chiu J).

Where a builder contracts to erect a building in a certain manner, but neglects to do so, he is not entitled to recover the price of such work on the contract, nor yet on a quantum meruit, even though the owner takes possession and has the use of the work so done, as no implied promise arises from the fact that the owner has so taken possession, as he but makes use of his own land and all that is affixed thereto.

Rungasamy v Isaac Aaron Pillay [1867] 1 Ky 168 High Court, Straits Settlements (Maxwell R).

Dr Yeoh (the plaintiff in S1820/93 and defendant in S109/93) had appointed building contractors KS (the plaintiffs in S109/93) for certain renovation works to her house. On the advice of Tey (KS's managing director), she appointed Cheang (the defendant in S1820/93) as a professional engineer to be the qualified person needed to liaise with and to submit plans for approval to the relevant authorities. KS commenced work on the renovations before the approval of the Building Control Division (BCD) was obtained. After renovations were completed, Yeoh refused to pay up the remaining sums due to KS on the grounds, inter alia, that the works carried out were therefore illegal and that KS had used materials of unsatisfactory quality in his renovations. She was fined by BCD for the failure to obtain approval. KS then started S1820/93 to claim damages. Yeoh denied liability and counterclaimed instead for, inter alia, amounts spent in rectification works done by another company, PBS, on the renovations completed by KS. Yeoh initiated S1820/93 against Cheang alleging that he had failed to use reasonable skill, care and diligence in carrying out his obligations and that he was negligent in failing to obtain approval and permission from BCD to commence works and to ensure that KS did not commence work until such permits were obtained. Cheang denied liability on the ground that it was Yeoh who authorised the works done by KS without Cheang's knowledge.

Held: (1) the purpose of the Building Control Act was only to regulate the performance of building contracts in so far as the BCD and other departments required the owner to obtain certain approvals from or comply with certain regulations of various authorities. As such this was not a case where the contract was ex facie illegal; (2) Tey had not intended to carry out the renovations without a permit as he fully expected Cheang to obtain it for Yeoh and he was unaware that there was no permit; (3) given that BCD was still prepared to overlook her Yeoh's transgression of the law and regularise KS's works retrospectively, Yeoh's defence of illegality could not succeed; (4) the position at law on lump sum or fixed price contracts like the one with KS was that for the agreed sum the contractor had to carry out and complete the work described in the specifications even if it turned out to be more costly than originally estimated. The purpose of the retention sum was to enable the employer to withhold an agreed amount for a certain period until the contractor had attended to the owners' complaints; (5) further, any obligation of the contractor after practical or substantial completion to put right defects free of charge was limited to defects due to the contractor's breach of contract. While the law did impose on KS the implied obligations to construct in a workmanlike manner, to use materials of good quality and to ensure that the workmanship and materials be merchantable, the court had to take into consideration the low prices in KS's quotations to determine the standard of workmanship to be expected; (6) in this case, Yeoh had not given KS an opportunity to attend to her complaints and she had also not acted reasonably to minimise the cost of rectification. The only set-off allowed on her counterclaim would be for the amount recommended by KS's quantity surveyor; (7) as for the second suit, the evidence indicated that Cheang was not expected to supervise the non-structural aspects of the renovations or to certify progress payments to KS. Cheang was, however, fully aware that the renovations (including structural works) had been commenced without a permit. He was in breach of his duty to inspect and supervise the structural works and he was responsible for the delay in submitting plans for the permit which otherwise could have been issued much earlier. Cheang had also exacerbated the situation by withdrawing his submissions when he resigned as QP. Yeoh therefore was entitled to all items of her claim which were consequent upon his breach of duty. She was, however partly responsible for what went wrong and would not be indemnified for the losses she suffered in respect of the first suit.

Yeoh Swee Inn v Cheang Jen Boon and another action (No 1) Suit Nos 1820 and 109 of 1993 High Court, Singapore (Lai Siu Chiu J).

In this case, the plaintiff claimed the sum of $145,456.19 being the money due on a certificate issued by the architect on a building contract. The defendant did not dispute the amount claimed but stated that as there was delay in completion, it was entitled to damages. It was not disputed in this case that the written agreement was signed three months after the purported date of completion and that the defendant had delayed in making payments resulting in the plaintiff threatening to stop work.

Held, allowing the application: on the facts and on the authorities cited, time was no longer of the essence to the contract, and the defendant was not entitled to liquidated and ascertained damages as the court was not in a position to ascertain when the claim for damages should commence.

Syarikat Soo Brothers Construction v Gazfin Sdn Bhd [1989] 1 MLJ 64 High Court, Ipoh (Abdul Malek J).

Under a contract ('the contract') dated 2 March 1990 incorporating the standard conditions and made between the plaintiff ('the contractor') and the government the contractor for the execution of certain engineering and construction works ('the works'), the date for possession was 19 March 1990 and the date for completion was 18 December 1991. Liquidated and ascertained damages ('LAD') were payable at the rate of S$3,000 per day for delay in completion. The Director of the Environmental Engineering Division of the Ministry of the Environment ('the Director') had issued two letters both dated 4 January 1992 for the purpose of: (a) issuing of certificate under cl 32(a) extending the time of completion of the works by five days to 23 December 1991, for the period March 1990 to November 1991; (b) issuing a certificate under cl 31(a) imposing LAD for the period the works remained uncompleted. The certificate under cl 31(a) was subsequently held to be invalid in Engineering Construction v AG [1993] 1 SLR 390. On 30 April 1992 the contractor accepted the government's wrongful termination of the contract as a repudiatory breach and thereupon the contractor was discharged from further performance and the government was liable to the contractor in damages for breach of contract. At the time the contractor accepted the wrongful termination as a repudiatory breach, the works were not completed. Meanwhile, disputes between the parties, including the extent to which the delay could be attributed to the contractor, were referred to the superintending officer by letter dated 15 April 1992, and to the Director by letter dated 24 August 1992 and finally to arbitration (under cl 40). Subsequently, on 29 September 1992, the Director issued two further certificates: (a) under cl 32(a) ('the second extension of time certificate'), which extended the time of completion by ten days to 28 December 1991 for the period March 1990 to December 1991; (b) under cl 31(a) ('the second LAD certificate'), which imposed LAD for failure to complete the works by 28 December 1991. The question posed in this originating summons was this: whether the government was entitled to deduct or recover LAD (under the second LAD certificate) in respect of any period during which the contractor was held by the arbitrator to be in delay prior to 30 April 1992. Counsel for the contractor submitted that the issue of certificates by the Director under cll 31(a) and 32(a) was an act of performance of the primary obligations of the contract and these obligations had been discharged upon the contractor's acceptance of the government's repudiation on 30 April 1992.

Held, ruling that the government was not entitled to liquidated damages: (1) if the contractor failed to complete the works by the completion date or within the extended time, LAD would become payable by it provided that two conditions were satisfied. First the Director had to issue an extension of time certificate under cl 32(a) to fix the completion time. Then he had to issue an LAD certificate under cl 31(a). Unless these further acts were performed the liability for LAD could not be brought into existence; (2) on 30 April 1992 the contract came to an end when the contractor elected to treat the government's breach as repudiation. The primary obligations of the government included the obligation of the Director acting on its behalf to issue an extension of time certificate under cl 32(a). This came to an end as well as its right to perform them on that date. Its right in the Director to issue the LAD certificate under cl 31(a) similarly came to an end since the exercise of this right depended upon the issue of an extension of time certificate under cl 32(a); (3) the right to LAD was not merely postponed to a future date or contingent upon some event not involving further performance of the contract. Notwithstanding that the contractor had overrun the date for completion and the extension of time under the first extension of time certificate the right to LAD had not come into existence at the time the contract came to an end before completion of the works; (4) the issue of the certificates under cll 31(a) and 32(a) is not incidental to or concerned with the resolution of disputes or the determination of the consequences of the contract coming to an end before completion of the works. In a sense it is antecedent to the resolution of disputes under the contract. If the contractor is dissatisfied with the certificates it can refer the matter to the Director under cl 40. The reference to the Director and his determination and decision (or failure to give a decision for 14 days after a written request to do so) are conditions precedent to a reference to arbitration. The Director's power to determine any dispute and to give a decision would not be affected by the 'determination, abandonment, or breach of the Contract' and would survive the contract coming to an end before completion of the works but the issue of certificates under cll 31(a) and 32(a) stands in a different category; (5) further, the matters in difference between the parties are before the arbitrator and one of these matters is the question whether and to what extent delay in the completion of the works can be attributed to the contractor. Under cl 40 the arbitrator has power to review and revise any certificate including the extension of time certificate dated 4 January 1992 and the second extension of time certificate and second LAD certificate both dated 29 September 1992 if they have been validly issued. Any finding on this question must touch on the matters referred to in cl 32(a) and the arbitrator will have to review these certificates. The matters in difference having been referred to arbitration the Director is functus officio the issuing of any extension of time certificate under cl 32(a) or any LAD certificate under cl 31(a); (6) the question posed by the originating summons is therefore answered in the negative; (7) (obiter) cl 32(a) enjoins the Director to grant an extension of time if in his opinion the works are delayed by the happening of the events specified. One notable omission from the list of events is default by the government. Under cl 32(b) in the event of such default Ð by the government Ð the question what compensation or allowance ought to be paid or made to the contractor is determined by the government whose decision is final. Whatever else may be said of this provision the government cannot wrongfully terminate the contract and thereafter purport to exercise the power to determine what allowance ought to be made to the contractor for delay occasioned by its own default. That would be taking advantage of its own wrong.

Engineering Construction Pte Ltd v Attorney General [1994] 1 SLR 687 High Court, Singapore (Lim Teong Qwee JC).

In this case, the respondent had sued the appellants for damages for breach of contract and for delivery of documents of title relating to land and house in Petaling Jaya. The respondent had agreed to purchase the property from the appellants and it was a term of the agreement that the building on the said property should be completed within a period of 18 months from the date of the agreement. The building was only completed some 23 months after that date. The appellants claimed that they were protected by cl 32 in the agreement which exempted the appellants if the non-fulfilment of any terms and conditions of the agreement was caused by circumstances beyond their control. The issues in dispute between the parties at the trial were as follows: 1. Do the Housing Developers (Control and Licensing) Act 1966 and 1970 rules apply to this case. If they do, can the defendants contract out of the Act and the rules? 2. What is the position of the defendants under the common law? 3. Can the plaintiff set off the last payment of the purchase price against liquidated damages? 4. Was the plaintiff in breach for non-payment of the last instalment of the purchase price? 5. Is the plaintiff entitled to special damages at $2,400 per month being rental? The learned Judicial Commissioner ([1982] 1 MLJ 324)

Held: (1) the Housing Developers (Control and Licensing) Rules 1970 apply in this case and the defendants were in breach of the statutory provision of the rules; (2) the Housing Developers (Control and Licensing) Act 1966 and the rules were introduced for the public to regulate and control the business of housing developers and must be strictly followed; (3) the defendants could not contract out of the statutory provisions of the 1970 rules; (4) the defendants have failed to prove that the delay in this case was due to circumstances beyond their control and therefore the plaintiff was entitled to damages as provided in the contract; (5) the plaintiff has a right to set off the last payment of the purchase price against the liquidated damages; (6) the failure of the plaintiff to pay the balance of the purchase price did not amount to a repudiation of the contract; (7) the plaintiff had failed to prove her loss of use and occupation of the building by way of rental. The appellants appealed and the three issues which arose in the appeal were: 1. Is cl 32 of the agreement valid? 2. If so, was the Judicial Commissioner right in holding that the acute shortage of cement etc did not come within cl 32 such that the appellants are not liable for the delay? and 3. Did the respondent in withholding the payment of the last instalment due commit breach of the agreement? The respondent cross-appealed against the dismissal of her claim for loss of rent. Held: (1) it is clear that only terms and conditions designed to comply with the requirements of the Housing Developers (Control and Licensing) Rules 1970 may be inserted in the contract of sale of land that is governed by the Housing Developers (Control and Licensing) Act 1966 and the rules and that the contrary terms and conditions which purport to get round the Act and the rules so as to remove the protection of home buyers may not be so inserted; (2) cl 32 of the agreement being inconsistent with r 12 of the rules and not designed to comply with the requirements of the rules is void; (3) it was open to the developer to try and persuade the Controller of Housing to modify the rigours of paras (o) and (r) of r 12(1) but in the absence of waiver or modification by the Controller, cl 32 is void and therefore the developer is liable in damages for the delay in completion; (4) the respondent in this case did not breach the agreement when she withheld payment of the amount demanded by the appellants. The respondent's cross-claim and the appellants' claim arose out of the same transaction and are closely connected with each other. The respondent's cross-claim was so closely connected with the appellants' demand that it would be manifestly unjust to allow the appellants to enforce payment without taking into account the respondent's cross-claim; (5) the learned Judicial Commissioner was right in dismissing the respondent's claim for loss of rent as there was insufficient evidence to justify the claim.

SEA Housing Corporation Sdn Bhd v Lee Poh Choo [1982] 2 MLJ 31 Federal Court, Kuala Lumpur (Suffian LP, Syed Othman and Abdul Hamid FJJ).

The Ceylon Sports Club, the second respondents, entered into a contract on 25 November 1952 in writing with the British Construction Company for the construction of a club house at Balestier Road, Singapore. The club engaged Lee, the first respondent, as their architect. There was delay in completing the construction and Lee gave notice to the British Construction Co to cease work on the contract. The appellant claimed that there was a novation of the contract with the consent of the Ceylon Sports Club and the British Construction Co; that thereby the British Construction Co was to be discharged from further liability under the contract and the appellant was to be substituted for them. It was also claimed that the first respondent had agreed to make all payments due to the appellant on the default of the second respondents. The defence denied the alleged novation and the agreement to make the payments due and alleged that when the British Construction Co ceased work under their contract, various contractors and workmen were engaged to complete the work which was outstanding, and that the appellant was engaged by the first respondent to do certain work for which he was paid in full. The trial judge held that there was no novation and dismissed the claim. The appellant appealed. The main ground of appeal was that the trial judge was wrong in holding that there had been no novation. Two questions of procedure were also raised on the appeal. It was alleged that the trial judge had erred in law in allowing the amendment of the defence after commencement of the trial and in admitting a document not disclosed in the affidavit of documents, especially when an application for an adjournment to consider, evaluate and challenge such evidence was refused.

Held: (1) on the facts there was no novation of the contract; (2) in this case the appellate court saw no reason to interfere with the discretion of the judge in allowing the late amendment of the statement of defence and in refusing to grant an application for adjournment after an undisclosed document was produced and admitted in court.

Goh Seng Thiam v Lee & Ceylon Sports Club [1965] 1 MLJ 206 Federal Court, Singapore (Barakbah CJ (Malaya).

Syarikat Chang Cheng (M) Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd [1996] 1 MLJ 799 High Court, Kuala Lumpur (KC Vohrah J).

By an agreement dated 9 September 1981, the defendant agreed to sell to the plaintiff a shop house. Clause 17 of the agreement provided for the delivery of vacant possession of the shop house within 24 months from the date of the agreement, failing which agreed damages would be payable 'from such aforesaid date [ie the date of the agreement] to the date of actual completion and delivery of possession of the said building to the purchaser'. This deviated materially from r 12(1)(o) of the Housing Developers (Control and Licensing) Rules 1970 ('the Rules') which provides for delivery not later than 18 months from the date of the signing of the contract of sale. Rule 12(1)(r) provides for the payment of indemnity for any delay in the delivery to be calculated from day to day 'commencing immediately after the date of delivery of vacant possession as specified in the contract of sale'. Work on the project had stopped on 7 May 1982 on the local authority's direction. On 1 March 1983, the defendant was allowed to resume work but the construction site was found to contain hard granite which made it impossible to build blocks thereon. The defendant alleged that the performance of the agreement was rendered impossible and thus it failed to deliver within the stipulated time. The plaintiff sought 'liquidated damages' pursuant to cl 17 of the agreement. The Senior Assistant Registrar dismissed the plaintiff's application under O 14 of the Rules of the High Court 1980 and the plaintiff appealed to the High Court. The defendant's contention was that, although vacant possession had not been delivered after 15 years, the plaintiff's cause of action was premature in view of the Privy Council case of Loh Wai Lian v SEA Housing Corp Sdn Bhd [1987] 2 MLJ l. Thus, the issue was whether the plaintiff's cause of action had accrued.

Held, dismissing the appeal with costs: (1) the agreement was governed by the Housing Developers (Control and Licensing) Act 1966 ('the Act') and the Rules. Terms and conditions which purport to get round the Act and Rules so as to remove the protection of home buyers may not be inserted. Thus, it seemed clear that the provision for delivery of vacant possession within 24 months was void; (2) the contract should be construed in the light of the statutory provisions to which it was designed to give effect. Rule 12(1)(r) of the Rules imposed on the developer the obligation to indemnify the purchaser for any delay in delivery of possession, and provided a formula by which the amount of indemnity was to be calculated. The calculation of the amount of the indemnity is based on a day-to-day calculation of a rate of interest starting from the contractual completion date; (3) however, r 12(1)(r) could not be construed as debarring damages for delay as a result of a clearly ascertainable inability to deliver a house; (4) if there is a clearly ascertainable inability by the defendant to deliver the property by a certain time, and that such a date had been ascertained and therefore the damages could be calculated, the plaintiff is entitled to the damages; (5) in the instant case, the construction of the shop house was abandoned and accordingly, the date of the defendant's inability to perform could be ascertained. It was then necessary to ascertain the date from which compensation should be paid. For that purpose, 18 months from the date of the agreement would give 9 March 1983 as the starting point. However, work was ordered to stop on 7 May 1982 and was allowed to resume on 1 March 1983. It was arguable whether the starting period of 18 months provided for by r 12(1)(o) to the defendant to deliver vacant possession had to be adjusted to take into account the period of the stoppage of work on the direction of the local authority. That question could not be answered and the appeal would accordingly be dismissed.

Syarikat Chang Cheng (M) Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd [1996] 1 MLJ 799 High Court, Kuala Lumpur (KC Vohrah J).

The respondent ('the purchaser') entered into a sale and purchase agreement ('the agreement') on 12 December 1984 with the appellant ('the developer') to purchase a single-storey dwelling house ('the house') to be erected by the developer. The agreement was exactly in the form prescribed in Schedule E to the Housing Developers (Control and Licensing) Regulations 1982 ('the 1982 Regulations'). By cl 18 of the agreement, it was provided that the developer should deliver vacant possession of the house to the purchaser within 24 calendar months from the date of this agreement, failing which the developer should pay immediately to the purchaser liquidated damages to be calculated from day to day at the rate of 10% per annum of the purchase price ('the liquidated damages'). It was common ground that the house was not completed and available for delivery until 25 March 1994, and that there had thus been a delay from 12 December 1986 until 25 March 1994 on the part of the developer. The purchaser commenced proceedings by way of originating summons, issued on 31 July 1993, for declarations as to entitlement to the liquidated damages from 12 December 1986 to the date of delivery of possession of the house for breach of contract, or alternatively, under the Housing Developers (Control & Licensing) Act 1966 and the 1982 Regulations. The developer's defence was that the purchaser's claim was founded upon a breach of cl 18 of the agreement, and therefore, his cause of action accrued on the day after the time limited under cl 18 for the delivery of vacant possession, which was on 12 December 1986. On this view, the purchaser had commenced the proceedings more than seven months out of time, and his claim was therefore barred by s 6(1) of the Limitation Act 1953 ('the Act'). The trial judge decided in favour of the purchaser. The developer appealed. The crucial question before the court was having regard to cl 18 of the agreement, when did the purchaser's right to sue for the agreed liquidated damages for the delay accrue?

Held, allowing the appeal: (1) it is clear law that in the absence of express contractual provision, the purchaser's right to sue for damages would accrue on the date of the breach of contract; (2) however, the parties to a contract are free to regulate or modify their rights in the event of breach thereof in such a manner as to postpone the date of accrual of their right to sue for damages; (3) the agreement, by cl 18(2), provided for a formula for the calculation of liquidated damages which defined the terminus a quo (the opening date) but not the terminus ad quem (the closing date). Hence, the general rule applied. It followed that the purchaser's right of action for damages for breach of contract, accrued on the date of the breach which, in this case, was the day after the time limited under cl 18(2) for the delivery of vacant possession, that is to say, on 12 December 1986. Accordingly, the purchaser, having commenced proceedings only on 31 July 1993, was more than seven months out of time. The purchaser's claim was, therefore, statute-barred under s 6(1) of the Act.

Insun Development Sdn Bhd v Azali bin Bakar [1996] 2 MLJ 188 Federal Court, Kuala Lumpur (Lamin PCA, Edgar Joseph Jr and Mohd Dzaiddin FCJJ).

Syarikat Tan Kim Beng & Rakan-Rakan v Pulai Jaya Sdn Bhd [1992] 1 MLJ 42 High Court, Ipoh (Peh Swee Chin J).

The appellants were the administratrices of the estate of the deceased. The respondent was a housing developer. By a sale and purchase agreement (`the agreement') dated 4 April 1981, the deceased purchased from the respondent a house in Ampang (`the house'). By cl 18 of the agreement, the respondent agreed to deliver vacant possession of the house to the deceased not later than 3 October 1982. The appellants alleged that the respondent delivered the keys to the house on 25 July 1984, but there was no supply of water and electricity until January 1985. The appellants therefore claimed liquidated damages for late delivery calculated from 4 October 1982 to 25 January 1985. The respondent contended that the house was delivered to the appellants on 31 March 1983 and that under cl 18 of the agreement, the appellants were only entitled to claim for damages for delay in delivery of vacant possession, and therefore the appellants could not claim damages for any delay caused by the relevant authorities to supply water and electricity to the house. The respondent alleged that the internal electricity and water mains were connected to the external mains on 31 March 1983. The sessions judge held that damages for late delivery was to be calculated from 3 October 1982 to 31 March 1983 and this was confirmed by the High Court. The appellants appealed.

Held, dismissing the appeal: (1) rule 12(1)(l) of the Housing Developers (Control and Licensing) Rules 1970 (`the rule') speaks of connection of the electrical and water mains and that the respondent's obligation was only to connect the electricity and water mains to the internal electricity and water mains and not to supply the flow of water and electricity. The supply of water and electricity were the responsibility of the relevant authorities; (2) Clause 18 of the agreement was consistent with the rule and it explicitly provided that the respondent should not be responsible or liable for any delay on the part of the relevant authorities to supply water and electricity. Vacant possession was therefore, delivered to the appellants on 31 March 1983.

Salmah bte Sulaiman & Anor (Administratrices of the estate of Ahmad bin Ibrahim, deceased) v Metroplex Development Sdn Bhd [1997] 1 MLJ 369 Court of Appeal, Kuala Lumpur (Zakaria Yatim, NH Chan and Mahadev Shankar JJCA).

Aoki Corp v Lippoland (Singapore) Pte Ltd [1995] 2 SLR 609 High Court, Singapore (Warren LH Khoo J).

In this casem it was

Held: the plaintiffs were entitled to succeed on quantum meruit since, in the first place, they did not abandon the work, and, in the second place, they were not claiming under a lump sum or entire contract. An entire contract is one in which the entire completion of the work by the contractor is a condition precedent to payment. A contract in respect of which progress payments are made from time to time is not an entire or lump sum contract.

Ming & Co v Leong Ping Ching [1964] MLJ 312 High Court, Kuala Lumpur (Gill J).

The plaintiff, a building contractor, claimed various sums in respect of a progress payment on a building contract and building materials supplied. The defendant company in their defence pleaded that the work was done under a contract, that the work was not completed on the agreed date and that the plaintiff had abandoned the work and they therefore counterclaimed for damages for breach of contract.

Held: (1) the contract in this case was not an entire contract and the plaintiff was therefore entitled to payment for work completed by him; (2) the plaintiff was not entitled to treat the contract as repudiated for mere non-payment of the instalment and that in the circumstances, the plaintiff had repudiated the contract by abandoning it; (3) as the defendant company had opted to accept repudiation and sue for damages for incomplete and defective work the measure of damages would be the difference between the reasonable costs of completing the works as varied and the amount that would have been due to the plaintiff had he completed the work as varied.

Yong Mok Hin v United Malay States Sugar Industries Ltd [1966] 2 MLJ 286 High Court, Kuala Lumpur (Raja Azlan Shah J).

Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd [1989] SLR 610 High Court, Singapore (Thean J).

The plaintiffs (the contractors) and the defendants (the employers) were parties to a building contract in the standard Singapore Institute of Architects (SIA) form. Clause 23.2 of the SIA conditions of contract made it a 'condition precedent' that the contractor notified the employers' architect of any event, direction or instruction which the contractor considered entitled him to an extension of the completion time of the contract, which would in turn require the architect to tell the contractor in writing, within a period of one month, whether or not he considered that such notified event 'in principle' entitled him to an extension (without specifying how long), if he was prepared to give any. Then, under cl 23.3, as soon as possible after the delay event had ceased to operate and it was possible to decide the length of the extension, he was required to decide the length of the extension, and inform the contractor of the same. Clause 24.1 of the SIA conditions of contract required the architect, in the event that the contractor failed to complete the contract by the original or extended completion date, to issue a delay certificate 'as soon as the latest date' for such completion had passed, after which, the employer would be entitled, pursuant to cl 24.2, to deduct liquidated damages from moneys due to the contractor. At various dates, mostly in 1992, the contractors wrote to the architect letters notifying him of possible delays. The architect failed to indicate in writing whether or not the contractors were 'in principle' entitled to an extension as required by cl 23.2. Eventually, however, the architect gave his decision refusing extension in all the instances, except one, in which case he granted an extension of 15 days. Even then, this was done without, at any time before that, indicating whether, in principle, the contractors were entitled to such extension. The contractors subsequently sued on two interim payment certificates for sums totalling S$992,413.80. The employers then pleaded, by way of set-off and counterclaim, a sum of S$1,080,581.29 for liquidated damages by reason of delay in the completion of the works. The senior assistant registrar gave the contractors judgment in the sum claimed by them, but ordered a stay of the employers' counterclaim for liquidated damages pending arbitration. The employers appealed. The contractors contended before the court that, by reason of the architect's failure to deal with that particular notification of the contractors within the one-month period provided, his subsequent decision in regard to the extension of time of 15 days was invalid. The delay certificate (predicated as it was on a valid extension of time) was, therefore, also invalid, and the employers could not validly deduct liquidated damages. They contended that if there were any delays in the completion of the works entitling the employers to damages, the employers would have to claim these as general damages in an arbitration, and that such a claim could not be set up against the contractors in summary judgment proceedings on interim payment certificates. The contractors alleged that they had a good defence to the employer's claim for damages for delay as the architect had wrongfully failed to give them the extension of time to which they were entitled. The employers' claim, according to the contractors, should therefore be stayed, while summary judgment should be given for the contractors' claim on the interim payment certificates. Alternatively, the contractors contended that the delay certificate was invalid because it had not been issued as soon as the latest date for completion had passed, as required by cl 24.1. The delay certificate was only issued in March 1993, three months after the extended date for completion, December 1992. The architect explained to the court that, between July 1992 and March 1993, there were disputes between the contractors and the architect concerning the contractors' entitlement to extension of time for a host of alleged causes of delay. Hence, it was not possible for him to come to a conclusion regarding the issue of the certificate until these matters had been fully considered and resolved. There was also a complaint by the contractors that the architect had failed to issue a termination of delay certificate under cl 24.3 although, after the issuance of the delay certificate on 15 March 1993, the architect had, on 17 March 1993, issued two further instructions relating to the works which affected the progress of the works and the contractors had, on 23 March 1993, given written notice to the architect of delay to the completion of the works occasioned by these instructions. The architect did not act on this notice, and also did not issue a termination of delay ce rtificate under cl 24.3.

Held, allowing the defendants' appeals: (1) on a plain reading of cl 23.2, an in-principle intimation by the architect within the one-month period was not a condition precedent for the validity of the determination of the extension period. It was of some significance that while notification by the contractor of a delay event within 28 days of its occurrence was expressly made a condition precedent to an extension of time, the architect's in-principle intimation was not expressed to be a condition precedent to the validity of his decision on the extension; (2) there was good reason for making the timely notification by the contractor of a delay event a condition precedent to extension of time as this was necessary to enable the employer or the architect to verify the claim for extension and to monitor the event and its impact on the progress of the works. In the case of the in-principle intimation by the architect, however, it could be difficult for an architect to commit himself to a view that 'in principle' the contractor was entitled to an extension without evaluating the effect of the delay event; (3) the in-principle intimation requirement was peculiar to the SIA conditions of contract and it appeared to serve the purpose of forcing the architect to take a stand so as to enable the contractor to decide what he should do, in particular, whether he should bring in more men and equipment to speed up the work and sue for damages for the extra cost incurred. Since the in-principle intimation (within one month) was not a condition precedent, the failure to observe this requirement would give rise to a claim for damages, if any, resulting from any initial uncertainty due to the architect's unjustified omission to act, rather than destroy the validity of the architect's eventual decision on the extension of time; (4) there was no rule that delay in the issue of the delay certificate after the date for completion or the latest extended date for completion per se renders the delay certificate invalid. All the circumstances of a particular case as well as the full terms and effect of cl 24.1 must be considered. In the instant case, it had not been suggested that the delay certificate was issued in anything but the regular course of duty of the architect. The only complaint made was that there was a delay of three months after the latest date for completion. Under cl 24.1 a delay certificate need not be issued until the architect was satisfied that there were no other matters entitling the contractors to an extension of time and no complaint has been made in this respect. The architect's explanation why it could not be issued earlier had not been disputed, so the delay certificate could not be held invalid on the ground of the delay in issuing it; (5) the object of cll 31.11 and 37.3 of the SIA conditions of contract was that certificates issued in the ordinary course by the architect were to be honoured, while any challenge in relation to them should be referred for arbitration. In the case at hand, there was nothing to show that the delay certificate was not issued in the ordinary course, and in accordance with the terms of the contract. It followed, therefore, that it should be honoured, just as the interim certificates were to be honoured; (6) the interim certificates as well as the delay certificate could still be challenged in an arbitration, and the arbitrator could make his decisions on the subject matter of these certificates without being bound by these certificates. Equally, if the contractors were dissatisfied with the 15-day extension or with the refusal of the architect to grant extensions on the other alleged delay events, they were not precluded from reopening these matters before the arbitrator. However, in the meantime, the interim certificates and the delay certificate must be given effect in the absence of any vitiating factors; (7) on the last issue raised by the contractors, it was not necessary for the court to deal with it or the rather involved provisions of cl 24.3, as a refusal to issue a certificate was reviewable by the arbitrator in accordance with cl 37.3. It was, therefore, a matter for the arbitrator and not for the court in summary proceedings; (8) the employers were as entitled to deduct the amount of the liquidated damages consequent on the delay in the completion of the works as the contractors were entitled to summary judgment for the amounts certified in the interim certificates. There was no reason why the employers' claim for the liquidated damages should be stayed; they would be allowed unconditional leave to defend the action, (9) (per curiam) progress payments were the lifeline of a building contractor's business and the object of giving interim payment certificates temporary finality was to enable the contractor to be paid during the progress of the works so as to minimize cash flow problems. His entitlement to be paid was not to be resisted on the ground of any cross-claims by the employer. No such cross-claims would be allowed unless they were certified by the architect in accordance with the contract. Needless to say, the architect must exercise his function as the certifier in good faith and to the best of his uninfluenced professional judgment, even though he was usually appointed by the employer. Otherwise, the object of the provisions for temporary finality could be defeated. From this point of view, the court in summary judgment proceedings on interim certificates would always, when invited to do so, try as far as possible to see whether a certificate which had the effect of derogating from the contractor's entitlement to be paid had been properly issued.

Aoki Corp v Lippoland (Singapore) Pte Ltd [1995] 2 SLR 609 High Court, Singapore (Warren LH Khoo J).

P, building contractors, contracted to build an additional storey on D's house. The contract incorporated the Singapore Institute of Architects Conditions of Contract 1979. Completion of the works was scheduled for 28 February 1989. On 3 February 1989 A, the architect, certified practical completion and the defects liability period began to run, to expire on 31 July 1989. A prepared a list of defects to be rectified by P. D however disagreed with the list and prepared his own list. Notwithstanding the disagreement, A issued the final certificate on 12 June 1989, before the expiry of the defects liability period. As full payment had not been received, P commenced action to recover the unpaid amounts under the final certificate and two interim certificates. P applied for summary judgment. The deputy registrar granted summary judgment on part of the claim and gave unconditional leave to D to defend the rest of the claim. P and D both appealed.

Held, allowing P's appeal and dismissing D's appeal: (1) the fact that the final certificate was issued before the defects liability period had expired did not invalidate it. The final certificate issued by A was therefore valid and conclusive; (2) if not all the defects were listed by A, that was a matter between D and A. D could not withold payment to P; (3) the submission that P was entitled to set off damages for defective work and consequential losses was rejected on the facts; (4) accordingly, P's appeal was allowed and judgment for the balance due was entered with interest at 6% from the date of the writ.

James Png Construction Pte Ltd v Tsu Chin Kwan Peter [1990] SLR 1132 High Court, Singapore (Karthigesu J).

P claimed a sum of approximately S$36,000 as the balance due and payable by D for fabrication and installation of transfer beams. D's defence was that the welding work was defective, necessitating expenses to rectify the defects.

Held, granting partial judgment to P: It was found that the works were defective. D was entitled to deduct from the sum due the costs of rectification. Judgment was granted to P for S$199,445.50 with costs and interest at 8% from the date of summons.

Nakano Singapore (Pte) Ltd v Ramco Engineering Pte Ltd District Court Appeal No 58 of 1988 District Court, Singapore (Liew Thiam Leng, District Judge).

In this case, the appellant alleged that the respondent had orally agreed to sell and transfer to the appellant a double-storey terrace house which the respondent undertook to build. There was a dispute as to the area of the land and the balance of the purchase price and it was alleged that the appellant refused to pay the final balance of $5,298. The respondent claimed that the agreement had been repudiated on the ground of the refusal to settle the balance of the agreement, damages and other ancillary relief. The learned trial judge rejected the appellant's claim on the extra land and he accepted the respondent's evidence that the purchase price was $30,000 comprising $28,500 the original cost of the property and $1,500 as the cost of extra works requested by the purchaser. The learned judge also found that the amount actually due and payable to the respondent was only $2,808 and not $5,928 as claimed. He therefore held that the purported repudiation by the respondent was improper and not valid. On the alternative defence that the oral agreement was not valid under r 12(1) of the Housing Developers Rules 1970, the learned trial judge held that since only the method or mode of entering into the agreement was in contravention of the law, the verbal agreement was valid and enforceable. However, the learned judge dismissed the appellant's claim as he held that he would not be entitled to vacant possession or transfer until the balance with interest was settled. The appellant appealed.

Held: (1) although the oral agreement did not comply with the provision of r 12(1) of the Housing Developers (Control and Licensing) Rules 1970, the appellant-purchaser clearly belongs to a class for whose protection the statutory prohibition is imposed and as such the appellant can enforce his right for specific performance of the oral contract of sale provided he is a bona fide purchaser; (2) in the circumstances of this case, the appellant could not be said to be a mala fide purchaser. He cannot be deprived of the protection given by the housing developers legislation nor is there justification in holding that the appellant had used the housing developers legislation as an engine of fraud. The appellant has not perpetrated any fraud, legal or equitable, and his claim for specific performance should have been granted; (3) in this case, the delay in the delivery of vacant possession of the housing accommodation must be attributed entirely to the appellant's own conduct in agreeing to perform his obligation under the contract only in accordance with his own erroneous interpretation of it pertaining to the extra land. There was no delay by the respondent in the completion of the building although the vendor committed a breach of contract by refusing to accept payment and to transfer the property. The appellant should therefore not be entitled to any indemnity under r 12(1)(r) of the Housing Developers (Control and Licensing) Rules. The proper discretion to be exercised in this case is to grant the appellant specific performance of the contract of sale without any compensation under s 18 of the Specific Relief Act 1950.

Rasiah Munusamy v Lim Tan & Sons Sdn Bhd [1985] 2 MLJ 291 Supreme Court, Kuala Lumpur (Wan Suleiman, Mohamed Azmi and Hashim Yeop A Sani SCJJ).

In this case, the appellants had undertaken to construct two buildings on land belonging to the respondent. The sum of $5,000 was paid by the respondent to the appellants as earnest money. It was found that owing to the encroachment of a neighbour's house into the lot it was not possible to construct the buildings according to the plans. In his action the respondent claimed the return of the sum of $5,000 as money paid for a consideration which had failed. The learned trial judge found that there had been no failure of consideration but that in the circumstances it was impossible ab initio to perform the contract. He held that the respondent was entitled to the balance of the deposit of $5,000 after deduction of all reasonable expenses incurred by the appellants. On appeal,

Held: (1) as the appellants had at the trial abandoned their claim for a declaration that they were entitled to forfeit the deposit, they were precluded from raising the matter on appeal; (2) in this case the court will not interfere with the learned trial judge's findings of fact as to what were the reasonable expenses incurred by the appellants.

Goh Yew Chew & Anor v Soh Kian Tee [1970] 1 MLJ 138 Federal Court, Kuala Lumpur (Azmi LP, Suffian and Ali FJJ).

Aoki Corp v Lippoland (Singapore) Pte Ltd [1995] 2 SLR 609 High Court, Singapore (Warren LH Khoo J).

Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd [1989] SLR 610 High Court, Singapore (LP Thean J).

The applicant was the registered proprietress of Lots 1077, 1078 and 1079. By a written agreement made between the parties to this action in November 1965, the respondent, a building contractor, was to construct and complete a one-storey terrace house on Lot 1077 within a stated time, and the consideration therefor was the transfer to him of Lots 1078 and 1079. Under cl 5 of the agreement it was provided that if the respondent failed to complete the building after the expiration of six calendar months, 'raining days and public holidays not included', the respondent was to pay the applicant liquidated damages in the sum of $120 per month. By cl 6, if the building was not completed within 15 months after the date of signing, 'raining days and public holidays expressly excluded', the applicant was at liberty to revoke and cancel the agreement. The house on Lot 1077 was not finished within six months nor within 15 months, the 15 months agreed having expired on 2 February 1967. On 9 February 1967, the respondent had lodged a caveat in respect of all three lots of land. On 11 March 1967, the applicant extended the period to 2 May 1967 in order to cover 'raining days and public holidays'. The respondent was expressly warned that failure to complete the building in question would result in the exercise by her of her right under cl 6. The respondent asked for an extension of four months but this was refused. It was alleged that as the respondent failed to complete the building by 2 May 1967, and in purported exercise of her power under the agreement the transaction was 'revoked and cancelled'. Relief was then claimed upon the footing that by virtue of such cancellation the respondent could not claim to be entitled to be beneficially interested in the land and therefore the caveat ought to be removed. The respondent alleged that the applicant failed to allow sufficient grace for raining days and public holidays, and claimed that he had an interest in Lots 1078 and 1079.

Held, granting the application: (1) the language of s 174(1) of the Land Code was sufficiently wide in scope to include claims for specific performance requiring the transfer of land under an agreement: the mere fact that a contract contained a stipulation that in the event of non-performance a certain sum of money should be paid was not in itself decisive in considering whether or not specific performance should be granted; (2) as far as Sarawak was concerned caveats were divisible; (3) in this connection it appeared that it was the applicant who was in 'breach' of the agreement; (4) the term 'raining days' was ambiguous: it appeared that the intention of the parties was to cover delay caused by rain, delay which might not necessarily extend to a full working day. The burden lay upon the applicant, but in this case she failed to discharge that burden;when there is a breach of this kind there are two remedies open to the other party: he may treat the renunciation as a breach of the contract and bring an action there and then, or he may refuse to treat the contract as discharged. In this case, the respondent refused to accept the applicant's repudiation of the contract and continued to build. As on his own admission there were only about 150 raining days and 20 public holidays, his period of grace expired after a total of 170 days after 2 February 1967. The building should have been completed, therefore, by 22 July 1967. It was admitted that it was not ready until the beginning of September; therefore, the respondent himself was in default of this agreement and could not seek a remedy thereon. As he could not succeed in an action for specific performance he could have no 'beneficial interest' in Lots 1078 and 1079 and thus the caveat should be removed from all three lots.

Chua Ngah Chin v Ng Kie En [1968] 1 MLJ 267 High Court, Kuching (Williams J).

The defendants were the owners and developers of Clementi Park Phase 3C condominium building project. The defendants appointed Building & Engineering Enterprises Pte Ltd (the main contractor) as the main contractor for the project. The plaintiffs were the nominated sub-contractors for the project. The plaintiffs claimed as an assignee of the sum of S$167,254 held by the defendants. The plaintiffs completed all the work as subcontractors and this was certified by the defendants' consulting engineers on 26 September 1988. On or about 12 October 1989, the defendants received a notice from the Inland Revenue Department (IRD) under s 57 of the Income Tax Act (Cap 134) whereby the defendants were declared to be the agent of the main contractor and another notice dated 7 May 1990 requiring the defendants as agent of the main contractor to pay the IRD all moneys held by the defendants for the main contractor or due to the main contractor to the extent of S$227,698.52. Consequently, the defendants' quantity surveyors and engineers informed the plaintiffs that the defendants had released the moneys due to the main contractor to the IRD. The plaintiffs argued that the moneys had been assigned to the plaintiffs, who were the beneficiaries under a trust created by cll 30(4)(a) of the main contract and 54(b) of the sub-contract, or in the alternative, the moneys were not `due' to the main contractor under s 57 of the Income Tax Act.

Held, allowing the plaintiffs' claim: (1) the sum of S$167,254 held by the defendants was not `due' to the main contractor. The moment the sub-contract was entered into between the main contractor and the plaintiffs as sub-contractors, the main contractor no longer had a beneficial interest in the sub-contractors' due proportion of the retentions. The combined effect of cll 54(b) of the sub-contract and 30(4)(a) of the main contract was that the employer held a due proportion of the retention moneys on trust for the main contractor as trustee for the sub-contractor; (2) (per curiam) the interest of the main contractor in the retention moneys as trustee for the sub-contractor for the latter's due proportion could only be defeated by a legitimate claim of the employer against the contractor under the main contract. In the present case, the defendants (as the employer) had no claims whatsoever against the main contractor.

Nam Fang Electrical Co Pte Ltd v City Developments Ltd [1997] 1 SLR 586 High Court, Singapore (Lai Kew Chai J).

The appellant ('the main contractor') undertook under a lump sum contract to execute, complete and maintain for the Housing and Development Board ('the employer') a major land reclamation project at the south-eastern foreshores of Singapore known as the East Coast Reclamation Scheme, Phase V (Telok Ayer Basin) Contract No 4/22/74. The land reclamation required the erection of extensive granite bunds, which included the laying of filter cloth. By a sub-contract dated 13 July 1974, the main contractor engaged the respondent ('the sub-contractor') to supply and place the required quantity of granite stones of the type as specified, to place the filter cloth supplied by the main contractor and to build some temporary drainage works. The sub-contractor's letter of 7 February 1974 formed a part of the sub-contract. Paragraph (i) of the said letter was in these terms: 'As your offer to HDB is on an alternative design, our measurement for class A & B stones shall be measured on pontoon before discharged by machine. Measurement for rip-rap shall be on constructed areas'. It was common ground that the sub-contract was in the nature of a 'measure and value' contract. This appeal brought by the main contractor concerned the correct method of measuring for payment the quantity of granite stones used and the quantity of filter cloth laid. The arbitrator, by consent of both parties, referred the following three questions of law for determination by the High Court: (1) whether on a proper construction of the sub-contract, the price for supplying and placing class A & B stones should be based on pontoon load measurement as the sub-contractor contended, or on design volume measurement (ie measurement of the work done and materials supplied in accordance with the contract drawings and specifications) as the main contractor contended; (2) Whether on a proper construction of the sub-contract, the price for laying the filter cloth should be based on the actual quantity of filter cloth supplied by the main contractor to the sub-contractor as the sub-contractor contended or on design area as the main contractor contended; and (3) whether on a proper construction of Part V cl 1 (iii)(b) of the sub-contract the sub-contractor had to pay for the cost of the filter cloth used in excess of 20% over the 'designed area'. All three questions involved the construction of the sub-contract. The High Court answered in favour of the sub-contractor all the three questions and the main contractor was ordered to pay the sub-contractor the aggregate sum of $2,068,272.06 and costs. The appeal was brought against those answers. No breach of contract had been suggested against the sub-contractor.

Held, dismissing the appeal: (1) having regard to the 'measure and value' nature of the sub-contract, the context of the various conditions of the sub-contract, the inevitable and unavoidable losses or wastage of stones owing to the underwater nature of the dumping works, the court were of the view that para (i) of the sub-contractor's letter of 7 February 1974 was clearly intended to and did entitle the sub-contractor to be paid on the basis of measuring the class A and class B stones on the pontoons before their discharge into the areas designated for the building of the bunds. The main contractor therefore failed on this part of the appeal; (2) the sub-contractor should be paid on the volume of cloth laid according to 'shop drawings' issued by the main contractor to the sub-contractor. The High Court's decision on the second question was affirmed; (3) accepting the submissions on behalf of the sub-contractor in respect of a clause ('the funny clause') of the sub-contract that there had been 'very minimal accidental loss' of the filter cloth and that the 'designated area' must mean the area to be laid in the event and as provided for by the 'shop drawings', the court would also answer the third question in favour of the sub-contractor.

Ohbayashi-Gumi Ltd v Kian Hong Holdings Pte Ltd [1987] SLR 94 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Thean JJ).

Sapiahtoon v Lim Siew Hui [1963] MLJ 305 High Court, Singapore (Buttrose J).

The plaintiffs claimed from the defendant a sum of $4,803 being the amount of the purchase money which remained unpaid in respect of a house which the plaintiffs built for the defendant pursuant to an agreement whereby the defendant agreed to buy a plot of land together with the house to be erected thereon for a lump sum of $21,492. The defendant went into occupation of the house but refused to pay the balance of the purchase price on the ground that it was not built according to specification and much of the work was defective and of inferior quality. She therefore denied liability for the sum claimed and furthermore counterclaimed for the sum of $12,063 which she said must be expended on the house to make it correspond with the specification.

Held: in an action on a contract to build a dwelling house in accordance with the specification and plans in the contract for a lump sum payable on completion, the defendant cannot refute the liability on the ground that the work, though substantially performed, is in some respects not in accordance with the specification and plans forming part of the building contract, and therefore the defendant in this case was liable for the balance sued for, less a deduction based on the costs of making good the defects and omissions proved.

Building & Estates Ltd v AM Connor [1958] MLJ 173 High Court, Singapore (Whyatt CJ).

P was a nominated sub-contractor to supply and instal lifts and escalators in a building being developed by D. P supplied 17 escalators, of which ten were installed but not in operation when D went into liquidation. The liquidators of D sold the escalators and declined to accept P's contention that the escalators still belonged to them. P accordingly sued for the proceeds of sale of the escalators.

Held, allowing the claim: (1) there was no specific provision in the main contract or the sub-contract governing the passing of title in the escalators. However, it was the clear intention of the parties that property in the goods should not pass to D except upon payment; (2) this was not a contract for purchase of goods but for the making up and fixing of materials, and under such a contract property in the goods would not pass until they have been fixed; (3) as property had not passed to D, P were entitled to claim the proceeds of sale of the escalators as money had and received.

Schindler Lifts (Singapore) Pte Ltd v People's Park Chinatown Development Pte Ltd [1990] SLR 604 High Court, Singapore (Lai Kew Chai J).

The plaintiffs were in the business of supplying ready-mixed concrete. The defendants were building contractors engaged by the owners as the main contractors for the construction of the Gateway project ('the project') along Beach Road. By a letter dated 22 July 1983, the defendants advised the plaintiffs that it was the defendants' intention to award the latter a contract for the supply of ready-mix concrete for the project. The letter of intent stipulated the terms and conditions of such award, and included, inter alia, the following terms and conditions: (1) the plaintiffs shall bear the full cost of establishing an on-site batch plant; (2) the plaintiffs shall provide a performance bond; (3) the total quantity of concrete to be supplied is estimated to be 75,000 m3, plus or minus 10%; (4) the contract period shall be from 1 August 1983 to 31 December 1985, and may be extended by the mutual agreement of both parties. On 25 July 1983, the plaintiffs accepted the defendants' offer. Following the said acceptance, the defendants issued the plaintiffs their purchase order dated 4 August 1983. The purchase order incorporated all the terms and conditions stipulated in the letter of intent and some other pre-contractual correspondence (cl 1) Clause 9 provided that changes to the purchase order would be binding only if in writing and signed by an authorized representative of the defendants. The plaintiffs accepted the purchase order on 29 October 1983. The plaintiffs then provided the defendants with a performance bond of S$1.8m, with the bond amount reducing by effluxion of time and according to the quantity of concrete supplied. The bond contained a detailed schedule which indicated the quantity of concrete to be supplied between various time intervals. The plaintiffs further erected a batching plant on site at their expense and started delivering the ready-mix concrete from it. The supplies continued without interruption until 17 December 1984. The total amount of concrete supplied up to 17 December 1984 was 40,368 m3 at a total cost of S$1,878,311.93. After 17 December 1984, disputes arose between the defendants and the owners of the project. By a letter dated 11 December 1984, the defendants informed the plaintiffs that the owners had repudiated the main agreement by the latter's failure to make certain payments. The defendants followed up with a letter to the plaintiffs dated 15 December 1984 informing them that work on the project was to be suspended as of 17 December 1984. After several exchanges of correspondence between the plaintiffs (through their solicitors) and the defendants, the defendants eventually settled the outstanding sum of S$1,878,311.93 on 20 December 1985. In regard the balance of the concrete to be supplied Ð the subject of the present suit Ð there was an impasse. The plaintiffs issued writ on 22 February 1986 for S$1,679,319.12 being the loss and damage they suffered as a result of the defendant's failure to order the balance of the ready-mix concrete as agreed. The defendants raised three arguments in defence: (1) the defendants were not contractually obliged to take delivery of and pay for 75,000 m3, plus or minus 10%, which amount was only an estimate or indicator; (2) alternatively, the present contract was predicated upon the subsistence and continuance of the main contract between the defendants and the owners of the project; (3) the present contract was frustrated by the premature determination of the main contract by the defendants on account of the owners' breaches. At the trial, counsels (by agreement) invited the judge to determine only the issue of liability, leaving the quantum of damages to be decided at a later stage.

Held, allowing the plaintiffs' claim: (1) the defendants' contention that the purchase order (which expressly incorporated the letter of intent and the performance bond) was not a legally binding document but just a statement of moral obligations intended only to indicate the source of supply of the material and the quantity expected to be ordered, is inherently defective and substantially unmeritorious. The performance bond and the schedule thereto make it abundantly clear that the total quantity of ready-mix concrete to be supplied under the agreement was 75,000 m3, with deviation of plus or minus 10% either way; (2) the defendants' contention that a non-binding supply arrangement was a norm in the building industry was unsupported by any evidence proving such practice or custom; (3) although court rules of practice and procedure permit parties to raise inconsistent pleas in the alternative, the court would examine the manner in which the parties had acted, pleaded and conducted their case in order to ascertain the parties' original stand. The defendants had meticulously negotiated every detail of the contract and extracted a performance bond, which would have been enforced against the plaintiffs had the latter defaulted, and therefore the circumstances do not justify the court in implying a term that the continued existence of the main contract was fundamental to the performance of the present contract between the parties. In any event, the defendants cannot be heard to say in one breath that the present agreement was procedural and not intended to be acted upon, and in the next breath, invite the court to imply a term in the agreement; (4) the plaintiffs had no contractual relationship with the owners, nor did the supply contract make any reference to the main contract. The project had not ceased but the contract between the defendants and the owners was terminated by the defendants for some alleged breaches by the owners. In the circumstances, termination of the main contract could not in law be held to constitute frustration of the supply contract.

Pioneer Concrete (S) Pte Ltd v Turner (East Asia) Pte Ltd Suit No 2011 of 1986 High Court, Singapore (Rubin JC).

This was an appeal against the judgment of a district judge who gave judgment for the respondent in the sum of $62.22. The facts were shortly as follows: On or about 4 February 1955 the respondent signed an agreement with the appellants whereby the appellants agreed to sell to the respondent a piece of land and to erect thereon for the respondent a house on the terms and conditions set out in the agreement. At the same time the respondent signed a form (referred to by the appellants as a 'special agreement') consenting to a suggestion that the appellants should apply to the City Council for the water and electricity mains to be connected to the house and should pay to the City Council on the respondent's behalf the fees for such connection. On 11 March 1955 at the request of the appellants the respondent deposited with them the sum of $150 to meet the fees payable for the connection to the City Council mains. Subsequently when the respondent received a letter dated 15 July 1955 from the appellants she observed that the sum of $62.22 was shown as having been appropriated to the fee for connection to the City Council water mains. The respondent brought an action in the district court claiming the return of the $62.22 from the appellants contending that by the agreement of 4 February 1955 the fee for connection to the City Council water mains was to be borne by the appellants and that the payment to the appellants had been made under a mistake of fact. The appellants contended before the district court that (a) the agreement did not provide for the connection of the sanitary fittings of the house to the City Council mains; (b) the money was paid under a mistake of law; (c) alternatively the money was paid as a result of a special agreement between the parties. The learned district judge held that on the true construction of the agreement the liability for the connection fee lay with the appellants and further held that the money paid by the respondent was paid under a mistake of fact and rejected the defence that the money had been paid under the special agreement. Several points were taken by the appellants in this appeal. The two main points were that (1) the true construction of the agreement is that it is the respondent who should pay the water connection fees and (2) that the money was paid under a mistake of law and is not recoverable.

Held: (1) when a document containing contractual terms is signed, then in the absence of fraud or misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not; (2) in this case as the respondent has signed the agreement knowing full well that it was a contract for the building of the house the respondent cannot be heard to say that she did not know the terms of the agreement; (3) the money was paid by the respondent under the belief that it was due under the agreement and it was therefore paid under a mistake of law.

Serangoon Garden Estate Ltd v Marian Chye [1959] MLJ 113 High Court, Singapore (Chua J).

Money paid with a full knowledge of all the facts if paid under a mistake of law on the part of both parties cannot, generally speaking, be recovered back; but the court has power to relieve against mistakes in law as well as against mistakes in fact if there is any equitable ground which makes it in the particular facts of the case inequitable that the party who received the money should retain it. The plaintiff (a building contractor) paid the defendants (the architects for certain building works) the sum of $500 which the defendants demanded for a copy of certain reinforced concrete plans without which the work could not be carried out by the plaintiff. The defendants had no justification for demanding any such sum, the supplying of plans being covered by architects' general fee paid by their employers.

Held: as the defendants had improperly taken advantage of the plaintiff's ignorance, the court would grant relief to the plaintiff and would order the defendants to repay the $500 to the plaintiff.

Seck v Wong & Lee [1940] MLJ 182 High Court, Straits Settlements (Terrell Ag CJ).

Joo Yee Construction Pte Ltd v Diethelm Industries Pte Ltd & Ors [1990] SLR 278 High Court, Singapore (LP Thean J).

P were building contractors who contracted to build a condominium development ('the project') under a contract in the standard SIA form. The date of completion was 14 May 1984. P could not complete the project by the completion date and applied for an extension of time to 15 April 1985. On 6 March the architects gave final extensions to 31 December 1984 for completing the main building works and to 18 February 1985 for completing the swimming pool and external works. The certificate of practical completion was issued on 1 July 1985. The architects had issued 28 sequentially-numbered interim certificates. Twelve remained unpaid. After discussions to resolve the dispute failed, P sued for payment. They applied for summary judgment. D sought a stay pending arbitration. Before the senior assistant registrar heard the applications, the architects wrote to P stating that they had determined that the contract completion date be extended by only 17 days to 31 May 1984. They further stated that the extensions of time granted earlier were 'null and void'. They then certified that P were in default in not having completed the works by 31 May 1984. The architects thereupon issued 17 revised certificates (Nos 12A to 28A) to replace the original interim certificates. These revised certificates reduced the sums payable to P by deducting the liquidated damages due to D on P's alleged default. The architects also issued one further interim certificate, No 29. Subsequently, the architects issued certificates empowering D to deduct from the sums due to P the cost of rectification works and a payment made by D to the sub-contractors upon P's failure to do so. The senior assistant registrar dismissed P's application for summary judgment and granted D's application for a stay pending arbitration. P appealed.

Held, allowing the appeal: (1) under the terms of the contract, the contractor was to be paid amounts expressed to be payable in the interim certificates, and it was intended that if no payment was made, he would be able to obtain summary judgment in the absence of fraud, improper pressure or interference. Subject to any deduction or set-off as provided expressly in the contract, the amounts certified in the interim certificates were due and payable to P; (2) under cl 24(2), D were only entitled to deduct liquidated damages for delay in completion upon receipt of a delay certificate issued by the architects under cl 24(1). The architects did not issue a delay certificate until after the period to which the interim certificates related. The architects erred in revising the interim certificates to retrospectively take into account the liquidated damages allegedly payable to D on P's default. The revised interim certificates were invalid; (3) interim certificate No 29 was invalid as it was issued long after the completion of the works under the contract, did not show any date of valuation and improperly provided for deduction of liquidated damages; (4) the architects' decision that the previous extensions of time were 'null and void' was unsustainable. Having given the extensions even though they were not bound to do so, they could not avoid them after a lapse of more than two and a half years; (5) since the delay certificate was issued on the basis that the completion date had been extended only to 31 May 1984, it was flawed. Furthermore, it had not been issued as soon as the latest date for completion of the works pursuant to the contract had passed, as was required by the contract; (6) the issue of a valid delay certificate was necessary to found a claim for liquidated damages by reason of cl 24(2). As the delay certificate was invalid, D's claim for liquidated damages failed; (7) the claims for the cost of rectification and payment to sub-contractors were arguable claims that should be referred to arbitration; (8) the appeal was allowed and summary judgment was given to P for the sums claimed on the 12 interim certificates, less the amount to be referred to arbitration.

Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd [1989] SLR 610 High Court, Singapore (Thean J).

P were the main contractors for a project developed by D. The contract incorporated the standard terms of the Revised Standard Form of the Singapore Institute of Architects. P claimed summary judgment for sums due under 12 interim certificates issued by the project architects together with interest. D applied for a stay of proceedings pending arbitration. The assistant registrar dismissed P's application for summary judgment and granted D the stay pending arbitration. On appeal, the appellate judge granted P judgment for the sum claimed less S$591,284, which was ordered to go to arbitration (see [1989] 3 MLJ 216). This disputed sum consisted of two parts: S$381,791 which D claimed to have spent on recti-fication of defects and S$137,493 that they allegedly paid to nominated sub-contractors. D appealed against the order but later withdrew the appeal. P sought to vary the order. The hearing before the Court of Appeal dealt with P's application to vary the judge's order.

Held, varying the order in part: (1) the scheme of the SIA conditions of contract is that the contractor is entitled to payment if sums are certified due to him by the architect. The employer is equally protected in that he can deduct sums certified by the architect from the sums due under interim certificates. The common law defence of set-off or counterclaim therefore does not apply; (2) in the instant case, the terms of the contract provided that the architect must issue a 'Certificate of Cost of Other Contractor's Work' before a deduction could be made from the sum due to the contractor under interim certificates. The certificate issued by the architect in this case was invalid because it did not certify that work had been done or the cost of the work; (3) accordingly, the judge was wrong to have excluded the sum claimed for cost of rectification when he granted summary judgment on P's claim. The judgment was varied to allow summary judgment without deduction for this sum; (4) as for the sum claimed by D as payments to nominated sub-contractors, this had been validly certified. Thus, the judge was correct in not giving judgment in favour of P for this sum; (5) as for P's claim for interest, the judge had correctly exercised his discretion in ordering interest to run only from the date of the commencement of the action, and the Court of Appeal was not inclined to interfere with this part of the order.

Lojan Properties Pte Ltd v Tropicon Contractors Pte Ltd [1991] 2 MLJ 70 Court of Appeal, Singapore (Yong Pung How CJ, Chua and Karthigesu JJ).

The issue which arose for decision was whether an employer under a building contract was under an obligation to pay upon being served with the penultimate progress payment certificate when it had made cross-claims for liquidated and non-liquidated damages against the builder arising from its performance of the contract. The appellant ('the builder') agreed to construct a private hospital to be named 'Dr Leela Medical Centre' for the respondent ('the employer'). Clause 30(1) of the contract provided that the architect would issue an interim progress payment certificate to the builder to be presented to the employer who would then make the payment within 21 days from the date of presentation. On 3 August 1992, the architect issued the penultimate progress payment certificate ('the certificate') for a sum of RM433,288.97. The employer failed to make the payment and filed a cross-claim for damages against the builder for defective work and over-valuation The builder sued the employer and sought summary judgment under O 14 of the Rules of the High Court 1980 ('the RHC') alleging that the employer was under an obligation to pay at once the sum appearing in the certificate issued by the architect regardless of pending disputes. The builder contended that on a proper construction of the contract, it was not open to the employer to rely on its cross-claims as a defence to the application for summary judgment. On the other hand, the employer submitted that it was entitled to set off its claim for damages against the builder's claim and that it was entitled to challenge the correctness of the certificate by referring the dispute to arbitration as provided in cl 34(1) of the contract. However, the High Court judge held in favour of the employer, giving it unconditional leave to defend, on the ground that the affidavit evidence had disclosed triable issues which required determination at a trial. The builder has appealed.

Held, allowing the appeal: (1) as the employer did not refer the dispute concerning the certificate to arbitration and, having entered appearance and filed a defence to the action, it was precluded from taking advantage of the remedy of arbitration provided for in cl 34(1); (2) under the terms of cl 30(1), the period for honouring interim certificates was 21 days from the date of presentation to the employer. The seriousness of the requirement in the contract for the due honouring of an interim certificate was emphasized by cl 26(1)(a), which allowed the builder to determine the contract or to suspend works if the employer did not pay the certified sum, and by cl 30(6)(b), which allowed for adjustments in the final certificate; (3) there was no provision in the contract requiring the builder to execute the works to the satisfaction of the employer but only an obligation to comply with the instructions of the architect. As the architect had not directed the builder to execute rectification works, arising from the complaints of the employer of defective works, materials and/or over-valuation, the builder was under no contractual obligation to comply with those complaints unless supported by written instructions issued by the architect; (4) [1835Ð42] All ER Rep 511; (5) the express enumeration of permitted set-offs in the contract could imply that the employer was limited to making deductions which fell strictly within the scope of the permitted set-offs on the basis of the expressio unius principle. In this case, although there were seven express provisions in the contract whereby the employer had the right of set-off, none of them were relevant to the set-off which was contended. Having regard to these provisions of the contract, and applying the expressio unius principle, the common law right of set-off had been extinguished, not expressly but by clear implication; (6) (obiter) when the employer is under no obligation to pay upon being served with a progress payment certificate due to pending disputes, allegations of defects or claims for delay without reasonable details and quantification are unlikely to result in the dismissal of an application for summary judgment under O 14 and leave to defend being given; (7) the issue whether the right of set-off or counterclaim can be raised in answer to interim certificates depends in each case upon the particular wording of the contract. The court did not agree with the opinion of Lord Denning in Dawnaysv FG Minter [1971] 2 All ER 1389; [1971] 1 WLR 1205 that an interim certificate is to be regarded virtually as cash, like a bill of exchange. There is no special rule of construction operating in building contract cases which negatives the ordinary common law right of set-off enunciated in Mondel v Steel (1841) 8 M & W 858;the employer was at liberty to litigate its cross-claims, should it so wish.

Pembenaan Leow Tuck Chui & Sons Sdn Bhd v Dr Leela's Medical Centre Sdn Bhd [1995] 2 MLJ 57 Supreme Court, Kuala Lumpur (Eusoff Chin CJ, Edgar Joseph Jr and Mohamed Dzaiddin FCJJ).

Tan Ah Chim & Sons Sdn Bhd v Ooi Bee Tat & Anor [1993] 3 MLJ 663 High Court, Penang (Edgar Joseph Jr J).

The appellant ('Teknik') was the main contractor for Wisma Goldhill, Jalan Raja Chulan, Kuala Lumpur and had engaged a company called Lightweight Concrete Sdn Bhd ('Lightweight') as its sub-contractor for the design, manufacture, supply and delivery of concrete panels ('the contract'). Lightweight obtained a performance bond for RM422,000 from Public Bank Bhd ('PBB') in favour of Teknik to guarantee the proper performance of the sub-contract works. Subsequently, Teknik issued two letters purportedly calling for payment of the bond from PBB, stating that 'we wish to make a claim for the full amount against the abovesaid performance bond'. PBB immediately paid Teknik the RM422,000 and then uplifted a fixed deposit of RM42,000 given by Lightweight as security for the performance bond and demanded payment of the difference. Lightweight, however, contended that PBB had no claim against it and demanded that PBB reinstate the fixed deposit account as the call on the bond was invalid, not being an 'on demand bond' but a 'conditional bond'. Lightweight issued a writ against PBB seeking, inter alia, a declaration that the call on the bond was invalid and an order for reinstatement of the RM42,000 with interest. PBB then issued a third party notice and statement of claim against Teknik for a declaration that the call on the bond was invalid and an order that the sum of RM422,000 be repaid by Teknik to PBB. The trial judge held that Teknik's notices of demand were bad in law as they did not state that Lightweight had breached or failed to execute the sub-contract, and granted both Lightweight's and PBB's applications. Teknik appealed vis-ë-vis PBB. The issue for determination in this appeal was whether the performance bond was an 'on demand' bond or a 'conditional bond'.

Held, dismissing the appeal: (1) (per Shaik Daud JCA) from the very wording of the performance bond itself, it was clear and unequivocal that what would trigger off the guarantee was Lightweight's breach or failure to execute the contract. Only then would PBB's liability arise. Therefore giving the words in the performance bond its plain meaning, it was a conditional bond; (2) (per Shaik Daud JCA) as the performance bond was a conditional bond, the letters of demand calling for payment of the bond had to assert the basis of the claim, ie that Lightweight had breached or failed to perform the sub-contract. Since Teknik had failed to do so in its letters, the letters of demand were invalid. Consequently any payment made thereunder by PBB was also invalid and ought to be returned; (3) (per Siti Norma Yaakob JCA) cl 1 of the performance bond specified the circumstances under which a demand could be made. Thus, it required more than a mere demand to trigger payment. The demand had also to assert the basis why the claim was made, though not necessarily the very nature of the wrong done or omitted to be done by Lightweight. To that end, Teknik's notices were bad in law for non-compliance with cl 1.

Teknik Cekap Sdn Bhd v Public Bank Bhd [1995] 3 MLJ 449 Court of Appeal, Kuala Lumpur (Shaik Daud, NH Chan and Siti Norma Yaakob JJCA).

The defendants were the main contractors in a construction project and the plaintiffs were one of their sub-contractors. The plaintiffs provided the defendants with a performance bond under the terms of the contract through an insurance company (the guarantor). A dispute having arisen between the plaintiffs and the defendants, the contract was terminated and the defendants made a claim against the guarantor. The plaintiffs applied for an injunction to restrain the defendants from receiving the said moneys, claiming inter alia that the bond was not 'on-demand' but was a guarantee, and that the guarantor's duty to pay only arose upon the plaintiffs failing to fulfil any terms and conditions of the contract. In their further arguments, it was also alleged that the circumstances were such that it was unconscionable to allow the defendants to receive the said sum as they could not believe that they were entitled to make the demand under the bond.

Held, dismissing the plaintiffs' application: (1) the bond was provided in consideration of the defendants not insisting that the plaintiffs pay them the guaranteed sum as a security deposit. This read in conjunction with cl 2 of the bond indicated that the bond was meant to operate akin to a cash deposit with the defendants for the amount of the guaranteed sum. There was no cause for the doctrine of contra preferentes to be applied. The bond was an 'on-demand' bond; (2) even if the bond was only a guarantee and not an 'on-demand' bond, it was the guarantor rather than the plaintiffs who could use this ground for relief as a defence against the defendants. This was because the rights of the beneficiary under a bond were exercisable only against the issuer of the bond. Similarly if the terms of the bond provided a defence to the beneficiary's claim, it was the issuer who must raise it. The party on whose behalf the bond was issued had no locus standi to raise it; (3) fraud or unconscionability was the sole consideration in applications for injunctions restraining payment or calls on bonds or guarantees to be granted. The party seeking the injunction would be required to establish a clear case of fraud or unconscionability in interlocutory proceedings. Mere allegations were insufficient. In the circumstances, the plaintiffs had not established a clear case of unconscionability.

San International Pte Ltd v Keppel Engineering Pte Ltd Suit No 411 of 1996 High Court, Singapore (CR Rajah JC).

The defendants were the main contractors in the building of a hotel, 'The Oriental'. The plaintiffs were a sub-contractor of the defendants. By cl D of the sub-contract the plaintiffs contracted to provide a performance bond for the duration of the sub-contract and at their own expense. In pursuance of this clause a letter of guarantee from Bank of America NT and SA ('the bank') dated 9 January 1984 was issued in favour of the defendants for the sum of $411,718.48. That guarantee was subsequently renewed on several occasions the last being on 6 April 1987 when the plaintiffs caused the same to be renewed and to expire on 15 May 1987. By a telex dated 21 April 1987 the defendants informed the plaintiffs that the defendants would be prepared to accept a renewal of the guarantee up to 31 August 1987 on condition that the plaintiffs agree to a further extension after that date, if requested by the defendants and they required the plaintiffs' confirmation by 24 April 1987 that they would renew the guarantee. The condition stipulated in the telex was not acceptable to the plaintiffs who maintained that 'it would mean that the guarantee would be enforceable as long as the defendants required it'. The plaintiffs claimed that the further renewal of the guarantee on the condition stipulated in the defendants' telex was not justified on several grounds. On 13 May 1987 the plaintiffs initiated the present proceedings against the defendants claiming for a declaration that on a true construction of the sub-contract the defendants were not entitled to enforce the guarantee as extended to 15 May 1987, or to require a renewal of the same and for the necessary injunction. On the same day they took out an application ex parte for, and were granted an interim injunction, restraining the defendants from enforcing the guarantee against the bank. The defendants applied for the injunction to be discharged. The following facts were, inter alia, brought to the attention of the present court: (i) cl D of the sub-contract provided that a performance bond issued under that clause 'shall be current for the duration of the sub-contract and shall be renewed if sub-contract completion is delayed'; (ii) the architect had not issued a certificate of practical completion for the whole of the works; (iii) under cl 9(a) of the conditions of the sub-contract, the plaintiffs were under an obligation to make good all defects in the sub-contract works which the defendants, as the main contractor, shall be liable to make good under the main contract.

Held: having considered all the said provisions the balance of convenience was clearly in favour of discharging the injunction. The injunction should be discharged.

Hong Kong Teakwood Ltd v Hyundai Engineering & Construction Co Ltd [1987] SLR 354 High Court, Singapore (Thean J).

D2 were the main contractors of a development. S was sub-contractor for part of the development. S had a duty to provide a performance bond which they did through D1 in the form of a bankers' guarantee. Later, P1 replaced S as sub-contractors. A new performance guarantee was issued by D1 in favour of D2. After its initial expiry, the guarantee was extended for ten further periods of varying durations. The first five extensions were made without dispute between the parties. When D2 requested the sixth extension, P1 objected on the ground that the subcontract works for which they were responsible would have been substantially completed by the end of the fifth extension. D2 were of the view that P1 had contractual obligations to perform even after the date of practical completion, namely, a duty to remedy defects during the defects liability period. After D2 threatened legal action, P1 extended the guarantee. Further extensions were later made. Finally, when an eleventh extension was requested, P1 took a firm stand and refused to do so. D2 made a demand on D1 for payment under the performance guarantee. P1 rejected this and started the present proceedings and claimed against D2, inter alia, a declaration that P1 were under no obligation to provide extensions of the performance guarantees and a declaration that any demand made by D2 on D1 on the ground of P1's failure to extend the guarantee was unjustified. P1 argued that their obligation to provide the performance guarantee ceased before the last extension, and that the last extension was void as it was procured under duress or under a mistake or procured without consideration. It was also claimed that the demand made by D2 was void because the extension of the guarantee itself was void, and the demand itself was fraudulent. P applied for a continuation of an ex parte interim injunction to restrain D1 from paying D2 the sum that they had demanded under the performance guarantee.

Held, dismissing the application: (1) on a construction of the words of the subcontract, it appeared that the performance guarantee only had to be provided up to the completion of the subcontract works and not during the defects liability period. If the parties wanted to cover this latter period, a reduction in the amount of the security to be provided would be expected. There was some doubt therefore as to the extent of the plaintiffs' obligations to provide the performance guarantee; (2) P1 had not produced sufficient evidence to persuade the court that D2 would not be in a position to repay the sum in dispute if P1 were succeed at the trial. P1's plea was one of hardship and injustice. But on the authorities, the test is not mere hardship to P1 but irreparable harm to them; (3) P1 had submitted that they would encounter difficulty in claiming the return of the security as D2 were a South Korean company subject to a system of law which is totally different from the local system. However, P1 could not now complain about this fact as the performance guarantee itself specifically provided that any sum payable thereunder would be paid to D2's account at such bank in the Republic of Korea as D2 might stipulate. The balance of convenience therefore lay in favour of D2; (4) the other party should have been given an opportunity to answer the allegation and to have failed to provide any or any adequate answer where, in the circumstances, one could properly be expected; (5) the lawful pursuit of what one believes to be one's rights cannot be fraudulent; (6) it was not necessary for P1 to obtain an injunction to stop payment on the guarantee as if D2 paid wrongly, they would not be entitled to debit the account of P1 with the amount paid; (7) as to the standard of proof of fraud sufficient to obtain an injunction against payment on the performance guarantee, the law is that the evidence of fraud must be clear, both as to the fact of fraud and as to the bank's knowledge. The court would require strong corroborative evidence of the allegation, usually in the form of contemporary documents;P1 had failed to show that it was seriously arguable that fraud has occurred. The fact that D2 had repeatedly demanded extensions of the performance guarantee could not be evidence of fraud;although P1 had raised an arguable issue on the validity of D2's demand notice, on a balance of convenience they were not entitled to a continuation of the ex parte interlocutory injunction obtained against D1 or a fresh injunction against D2.

Brightside Mechanical and Electrical Services Group Ltd & Ors v Standard Chartered Bank & Anor Motion in Suit No 373 of 1988 High Court, Singapore (Chan Sek Keong J).

Joo Yee Construction Pte Ltd v Diethelm Industries Pte Ltd & Ors [1990] SLR 278 High Court, Singapore (Thean J).

D were the main contractors under a building contract dated 21 September 1979 made between them and one YSL for the construction of a house for a lump sum of S$312,500. It was a term of the contract that the house was to be completed by 2 May 1980. P was the subcontractor of D under a subcontract dated 27 September 1979 under which P undertook to carry out the construction of the house for a lump sum of S$260,000 less a commission of 5% payable to D. It was a term of the subcontract that progress payments be made to P every month, and such payment would be based on the 'assessment' by the architect ('the architect') in charge of the project on the actual work done at the site less the 5% commission payable to D. Progress payments were made to P for the first eight months but a sum of S$10,000 was deducted by D and paid to the architect. After the eighth progress payment, D did not make any further progress payment to P but instead on diverse dates, paid to P various amounts. On 5 August 1980, D, pursuant to an alleged supplemental agreement, gave notice of termination of the subcontract to P on the ground that P was tardy in proceeding with construction of the house, as a result of which D was in breach of the main contract with YSL. P brought an action claiming S$250,952 being balance of the amount due for work done and materials supplied, or alternatively, an amount on a quantum meruit basis. D counterclaimed the sum of S$35,088.35 being the amount overpaid under mistake of fact and the sum of S$6,960 by way of indemnity for the payment of liquidated damages they made to YSL.

Held, awarding P S$55,902.40: (1) it was only after that date that the state of progress worsened; (2) it has not been established that the signature on the supplemental agreement was forged; (3) P was still there and was involved in the construction works; (4) the S$10,000 deduction from the progress payments were made with P's consent and therefore cannot be recovered; (5) on the evidence, it is not possible to pinpoint what part of the delay was caused or attributable to P. The counterclaim for an indemnity in respect of the payment of liquidated damages therefore fails; (6) there is no evidence of tardiness on the part of P for the first six months;the evidence that D on 8 August 1980 terminated the subcontract and ejected P from the work site is not accepted;D has also not adduced evidence of any mistake in respect of any payment made by them to P.

Goh Kian Swee v Keng Seng Builders (Pte) Ltd Suit No 9126 of 1984 High Court, Singapore (LP Thean J).

Perwik Sdn Bhd v Lee Yen Kee (M) Sdn Bhd [1996] 1 MLJ 857 High Court, Kuala Lumpur (Zakaria Yatim J).

The plaintiffs were a firm of registered architects and civil structural engineers. The defendants were a family-owned investment company in which the principal shareholders and directors were Tan Geok Tee ('Tan') and his wife, Ching Mun Fong ('Mdm Ching'). In 1972 the plaintiffs were commissioned by the defendants to carry out some works on an existing bungalow at 69 Belmont Road. Unfortunately, planning permission was denied for the works. In 1984 the plaintiffs were reappointed, and by the letter of engagement, the professional services were to include architectural and building, civil structural, mechanical and electrical works. The second plaintiff completed the designing of the building which was to be a two-storey bungalow with a squash court and swimming pool. The professional charges were to be 7.25% of the total cost of the project. On 4 February 1985, the building plans were approved by the Building Control Division ('the BCD'). The plaintiffs then rendered an interim bill for S$43,500. The defendants paid a sum of S$30,000, which the plaintiffs accepted. Following this, the defendants issued new instructions to the plaintiffs for alterations to the building plans, notwithstanding that the plans had already been approved by the BCD. These fresh instructions continued well past the date when building operations were to have commenced, ie 1 May 1985. The plaintiffs obtained an extension of the validity of the planning approval to 1 July 1988. The result was that the commencement date of building operations was extended to 18 July 1987. The defendants, however, continued to ignore the plaintiffs' urgings to indorse the plans. Instead, they continued to communicate new instructions to the plaintiffs to change the plans. Eventually, the BCD withdrew the planning permission on 6 January 1987 for non-compliance with the planning conditions. On 23 June 1987 the plaintiffs gave the defendants notice that unless they were further instructed within 21 days and the balance of their interim bill was paid, they would terminate their professional services and present the defendants with their final account of outstanding professional fees and disbursements. Receiving no response, the plaintiffs rendered a final bill for S$49,787.05 (S$79,787.05 less the S$30,000 already paid). The defendants contended that the plaintiffs had wrongfully withdrawn their services and refused to pay the plaintiffs anything They also demanded the refund of the S$30,000 paid to account. The plaintiffs then took legal advice and revised their claim to S$94,961.80 (S$124,961.80 less S$30,000). The revision was due to the revising of the estimated cost of the development of the project from S$1.9m to S$2,420,153.84. The defendants then wrote to the plaintiffs copying the letter to the Registrar, Board of Architects, alleging that the plaintiffs had exaggerated the development costs, accused the plaintiffs of unprofessional conduct, alleging that the plaintiffs failed to inform them of the renewal of the building plans. The plaintiffs then sued the defendants for their professional fees and for libel.

Held, allowing the claims: (1) on the balance of probabilities, the Singapore Institute of Architects ('SIA') Conditions applied to the engagement of the plaintiffs; (2) as the SIA Conditions applied and since no instructions were given by the defendants to the request made by the plaintiffs by their letter dated 23 June 1987, the defendants must be deemed to have abandoned the project. The plaintiffs had validly and lawfully terminated their services. The plaintiffs were therefore entitled to be paid for their services up to the stage of work reached in accordance with the SIA conditions; (3) the proper estimated construction cost of the project was S$2.9m. Therefore the S$2.4m used by the plaintiffs for the computation of their fees was perfectly proper; (4) the words of the defendants' letter of 24 May 1988 were the plainest words of defamation of professional men. The words of the letter clearly accused the plaintiffs of fraudulent tactics in the conduct of their professional practice and of professional conduct and malpractice. The letter was copied to the Board of Architects clearly to bring pressure on the plaintiffs to reduce or forgo their professional charges. There was clearly malice.

Chung Meng Soon & Ors v Lee Kai Investment (Pte) Ltd Suit Nos 1273 and 1355 of 1988 High Court, Singapore (Karthigesu J).

This was a claim on a building contract. The plaintiffs were employed as contractors to build a house for the defendant. As a result of information given by the defendant to the plaintiffs' representative the house was built so as partly to encroach an adjoining land. When this was found the representative of the architect requested the plaintiffs to proceed slowly with the work pending a settlement with the owner of the encroached land. The plaintiffs thereupon asked that they be paid for the work already done and asked for a certificate. The certificate was not given and the solicitors for the plaintiffs thereupon wrote stating that they had still not received the certificate, that this was an obvious breach of the contract and therefore the plaintiffs had stopped work and were issuing a writ. In the meantime, the architect's representative wrote to the contractors stating that the work was not proceeding with due diligence and giving 24 hours' notice in which to proceed with the work in an efficient and expeditious manner failing which he would request the employer to take action under cl 18 of the agreement.

Held: (1) in the circumstances of this case the defendant is precluded from raising the point that the architect's certificate is a condition precedent to payment; (2) there should in this case be implied a contract by the defendant to pay for the work done and therefore the plaintiffs are entitled to recover the full amount due for the work and labour and materials supplied and together with additional days as they have suffered by reason of the slowing down and stoppage of the work.

Smith Construction Co Ltd v Phit Kirivatna [1955] MLJ 8 High Court, Penang (Spenser Wilkinson J).

The plaintiff (the judgment creditor) had obtained judgment for a certain sum against the defendant (the judgment debtor) for work done. The judgment debtor was at all material times a contractor of his employer, the garnishee in the present proceedings. An order of garnishee to show cause, which was obtained ex parte by the judgment creditor against the garnishee, was served on the garnishee. Due to certain breaches of the building contract, the garnishee terminated the contract between them and the defendant and had appointed another contractor to carry on the work. The question in the present case was whether the retention money held in the hands of the employer (the garnishee) is attachable at the instance of a judgment creditor or the judgment debtor. The learned registrar gave judgment for the judgment creditor. The garnishee appealed. The garnishee first contended that the retention money was not due and payable to the judgment debtor because the contract between the garnishee and the judgment debtor had been terminated by notice for breach of conditions on the part of the judgment debtor. The garnishee was entitled to damages. It was next contended that by virtue of cl 30 of the contract, if at all the retention money was payable to the judgment debtor, the architect had not issued the 'certificate of practical completion', or 'the certificate of completion of making good defects'. The garnishee contended, thirdly, to the effect that cl 30(4)(a) allowed the garnishee to have recourse to the retention sum for payment of money to which it was entitled under the provisions of the contract. Due to the claim for damages by the garnishee for breach of contract and for loss in having to engage other contractors to carry on and complete the work, such claim being consequent to the notice of termination, and also pursuant to cl 25(3)(a) and (d), it had recourse to such retention sum and also had priority over the judgment creditor.

Held, dismissing the appeal: (1) garnishee proceedings are also execution proceedings except that instead of chattels, debts are attached. It cannot be disputed that a debt is only attachable when it is an existing debt or a debt that has already accrued; (2) such an existing and accrued debt is still attachable even though payment of it is either deferred or to be made in future; (3) the retention money concerned here was declared by cl 30(4) as being money held by the garnishee on trust for the judgment debtor. The implication would be inevitable that the retention money would belong beneficially to the judgment debtor; (4) the retention sum in this case is an existing debt and in fact an existing indebted sum that involves the payment, notionally and irresistibly pursuant to an interim certificate issued by the architect, by the garnishee to the judgment debtor and the latter's payment in turn back to the garnishee for retention, with the garnishee holding the money as trustee for the judgment debtor. A debt in respect of such money began to exist in the circumstances and still does exist, and to contend otherwise would be to defy common sense and logic; (5) if the building contract was terminated only after the order to the garnishee to show cause was served on the garnishee, as in the present case, such notice of termination would not affect the right of the judgment creditor who should therefore have priority over the garnishee; (6) although cl 30(4)(b) and (c) provided for even two certificates of the architect to be issued before the retention sum would be refunded to the judgment debtor, such retention sum could still be attached before the issue of such certificates, for they provided for deferred payment only as security for making good any defective work, in no way impairing the nature of the retention sum as an existing debt with deferred payment; (7) the appeal was dismissed and the garnishee order absolute was confirmed.

Lee Kam Chun v Syarikat Kukuh Maju Sdn Bhd; Syarikat Perumahan Pegawai Kerajaan Sdn Bhd (Garnishee) [1988] 1 MLJ 444 High Court, Ipoh (Peh Swee Chin J).

The first defendant ('D1') entered into a joint-venture agreement ('the agreement') with a third party ('Tan'), whereby D1 agreed to purchase and Tan agreed to sell some land in Penang ('the land') for the construction of dwelling houses. Clause 22 of the agreement provided that 'this agreement shall be binding on the heirs, personal representatives, successors-in-title and assigns of the respective parties hereto'. It was contended that there were two implied terms of the agreement, that: (i) D1 would carry out his work in a proper and workmanlike manner using materials of good quality and reasonably fit for their purpose; and (ii) Tan relied on the skill and judgment of D1 as a building contractor and upon his financial ability to carry out the works. Fifteen months after the agreement was entered into, Tan sold the land to the plaintiff, his (Tan's) family company, subject to the rights and obligations under the agreement and D1 consented to the sale, on condition that all the rights and obligations of the parties under the agreement were to be assumed by the plaintiff and D1. Subsequently, D1 purported to assign ('the assignment') all his rights, title and interest under the agreement to the second defendant ('D2'), which was D1's family company. However, the plaintiff challenged the validity of the assignment and refused to have any dealings with D2, alleging that the relationship between the plaintiff and D2 had never been amicable and that the plaintiff had no confidence in D2 as a building contractor. D1 had begun the construction work, but was unable to complete it, and the plaintiff alleged that: (i) under the agreement, D1 was liable to pay compensation at the rate of RM10 per day in respect of each of 15 uncompleted houses from January 1979; (ii) the construction work carried out by D1 was seriously defective and, as D1 had not carried out the required remedial works, he was in breach of contract; (iii) D1 did not have the financial ability to carry out his obligations under the agreement which was, in consequence, frustrated; (iv) the purported assignment was not valid, and even if it was valid in law, it had been lawfully rescinded by the plaintiff, and D2 was thus liable to the plaintiff; and (v) it had lost the benefit of the agreement, ie the profits it would have received from the rental or sale of the houses. The plaintiff claimed: (a) a declaration that, on its true construction, the agreement was rescinded; (b) a declaration that, on the true construction of the agreement, D1 was not entitled to assign his right, title or interest under the agreement to D2 without the plaintiff's consent; and (c) damages, interest, and costs. D1's defences were that: (i) the plaintiff had failed to give vacant possession of the whole of the land until 3 April 1981, with the result that the 18-month construction period was to run from that date; (ii) the dispute had been compromised by a settlement agreement ('the settlement agreement') on terms that, on payment of RM250,000, the plaintiff had agreed to discharge D1 of all liabilities existing prior to 20 July 1982, the time for completion would be extended by two years from that date, and the suit herein discontinued; (iii) the plaintiff had no reasonable cause to terminate the agreement or, alternatively, the plaintiff was estopped by its conduct in entering into the settlement agreement and had thereby waived any alleged breach of the agreement by D1; and (iv) the assignment to D2 was valid, and thus the plaintiff had no cause of action against him. Alternatively, D1 said that the assignment was null, void and of no effect for total failure of consideration and had been rescinded. Two months after the settlement agreement was entered into, the receivers and managers of D2 obtained a court order ('the court order') whereby D2 was authorized to continue with the construction work. By his counterclaim, D1 claimed: (i) damages for the lost chance of deriving a profit from the construction of the project, together with other damages, interest and costs; and (ii) specific performance of the agreement. In its defence, D2: (i) denied the alleged implied terms in the agreement; (ii) contended that the assignment by D1 was valid and that the plaintiff had been informed of it but had wrongfully prevented D2 from continuing with the construction work; (iii) said that the plaintiff had failed to deliver vacant possession of the land in accordance with the agreement; (iv) denied the plaintiff's allegations about lack of confidence and asserted that, as from January 1979, it had assumed all responsibilities for the project without objection from the plaintiff; and (v) said that the plaintiff had been aware that, as D2 was D1's family company, it was D2 which would be carrying out the building scheme under the agreement. D2 alleged that it had substantially performed its obligations and counterclaimed for specific performance of the agreement; an injunction restraining the plaintiff from preventing or interfering with the construction works; damages; interest; and costs. In the action between the plaintiff and D2, the key issues before the court were: (i) whether the assignment from D1 to D2 was valid; and (ii) if so, whether it was the plaintiff or D2 who was in breach of the agreement.

Held, dismissing both the plaintiff's claim and D1's counterclaim and allowing D2's counterclaim: (1) it was obviously the intention of the parties, judged purely from the words appearing in cl 22, that both the parties to the agreement were to be at liberty to assign their right, title and interest under it without the need for consent by the other party. As the words of cl 22 were unmistakably clear and unambiguous, any attempt to introduce extrinsic or oral evidence in contradiction of cl 22 would be inadmissible under ss 91 and 92 of the Evidence Act 1950. Therefore, the testimony of the solicitor who prepared the joint-venture agreement, as to the interpretation of cl 22, must be disregarded; (2) on the evidence, it was clear that Tan knew D1's modus operandi when entering into joint-venture agreements was to engage D2 to carry out the construction works and to raise the necessary finance. Furthermore, the parties' conduct following execution of the agreement reinforced the view that it was their intention that their right, title and interest thereunder were to be freely assignable; (3) even if, upon a proper construction of the agreement, the parties were not at liberty to assign their rights thereunder without the express consent of the other party, by their conduct, Tan, and therefore the plaintiff, had waived the condition against assignment or, alternatively, by their conduct, had acquiesced to D2 stepping into D1's shoes; (4) the assignment was made for valuable consideration as the receipts for the consideration which had been paid to D1 in respect of the assignment were signed by D1's attorney ('DW2'), under a general power of attorney which had not been effectively revoked. By virtue of cl 26 of the power of attorney, consistently with s 161 of the Contracts Act 1950, for the notice of revocation to be effective, it has to be received by DW2. As DW2 had not received the notice of revocation, he was authorized to sign the receipts on behalf of D1 and D1 had no right to rescind the assignment; (5) although the plaintiff attempted to allege fraud, misrepresentation and manipulation of accounts against D2 by way of cross-examination of DW2, neither fraud nor misrepresentation had ever been alleged by the plaintiff in their pleadings. It is settled law that where it is sought to rely upon a plea based thereon, the allegations relating thereto must be pleaded and particularized, in which case, the onus lies upon the party making the allegations to prove the same beyond reasonable doubt. Therefore, the allegations made by way of cross-examination by counsel for the plaintiff should be dismissed; (6) the settlement agreement had been overridden by the court order whereby D2 had been authorized to carry on the construction work. As an officer of the court, D1's counsel (who was also the plaintiff's solicitor in the matter of the settlement agreement) was under a duty to inform the plaintiff of the court order. Although the plaintiff did not know of the court order at the material time, the knowledge of their solicitor must be imputed to the plaintiff. As the plaintiff and D1 continued to deal with each other with a view to D1 carrying out the construction works notwithstanding the court order, a prima facie case of contempt of court was made out; (7) as was admitted on behalf of the plaintiff, vacant possession was never given by the plaintiff as required under the agreement. It was perfectly obvious, therefore, that the plaintiff was in breach of contract from beginning to end and was wholly to blame for causing the construction work to grind to a halt. Moreover, by commencing work before vacant possession of the site was given, D1 had not intended to waive or release Tan and his successor-in-title, the plaintiff, from the obligation to provide vacant possession of the lands concerned within the time limited under the agreement. There was no waiver as contended for on behalf of the plaintiff because D1 never intended to release or not assert his right; (8) the so-called admission contained in the settlement agreement, that D1 was in breach of the agreement for which the RM250,000 was to be paid by way of damages, was in no way binding upon D2 who was not a party to the settlement agreement; (9) s 42 of the Contract Act 1950, which provides that 'when the promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor' applied in favour of D1. The plaintiff's claims against D1 and D2 were, therefore, dismissed with costs. Similarly, D1's counterclaim against the plaintiff had no legal basis and was alsodismissed but with no order as to costs; (10) the evidence disclosed that D2 had put in a tremendous amount of work and labour and also expended considerable sums of money in discharge of its obligations under the agreement. There was, therefore, considerable justification for invoking the doctrine of substantial performance in favour of D2; (11) and an injunction restraining the plaintiff from preventing or interfering with the construction work to be continued by D2, were allowed; (12) the material date at which damages fell to be assessed was the date of the hearing, and D2 was entitled to actual damages of RM896,107.32 and consequential damages of RM4,868,027.14. Pursuant to s 11 of the Civil Law Act 1956, D2 was entitled to recover interest on the damages aforesaid at the rate of 8%pa from 1 January 1981 (the date on which the project would probably have been completed had vacant possession been given by the plaintiff in accordance with the agreement, with no interruption of work) to the date of judgment and, pursuant to O 42 r 12 of the Rules of the High Court 1980, further interest thereon at the aforesaid rate from the date of judgment to the date of payment; (13) it may be implied from conduct which is inconsistent with the continuation of the right. A person who is entitled to the benefit of a stipulation in a contract may waive it, and allow the contract or transaction to proceed as though the stipulation or provision did not exist. Waiver in this sense, depends upon consent and the fact that the other party had acted upon it is sufficient consideration; (2) the court has a discretion to order specific performance and decree damages in favour of a party, as land is always deemed to have a special value of loss which may not be adequately compensated by damages. In this case, an order for specific performance requiring the plaintiff to carry out the terms and conditions of the agreement and to permit D2, as assignee of D1, to carry out its obligations thereunder;counsel for the plaintiff's request that an enquiry as to damages be held, could not be allowed as the request had been made only after the draft judgment of the court had been read out. To have granted the request would have led to an unnecessary prolongation of a lengthy trial, with an increase in costs and would have meant giving the plaintiff a second opportunity to prove a point which it had failed to do at the trial. Furthermore, if the plaintiff were to be permitted to make further investigations and to call further evidence after the court had pronounced judgment on all issues before it, then the rules of procedure would become nugatory. Per curiam: (1) 'waiver' is the abandonment of a right and is either express or implied;by definition, 'acquiescence' is used in two senses. Strictly, it implies that a person abstains from interfering while a violation of his rights is in progress or that he refrains from seeking redress when a violation of his rights, of which he did not know at the time, is brought to his notice.

Tan Ah Chim & Sons Sdn Bhd v Ooi Bee Tat & Anor [1993] 3 MLJ 633 High Court, Penang (Edgar Joseph Jr SCJ).

The parties in this case had entered into two agreements, one an agreement for the sale of a piece of land and the other a building agreement under which the appellant company agreed to build a dwelling house on the said piece of land. The respondent had paid all the instalments on the sale agreement and all the instalments but two on the building agreement. The appellant company was unable owing to difficulties with its building contractor to complete the building. The respondent applied for specific performance of the agreement for sale. On an application for summary judgment, the learned trial judge made an order in terms of the statement of claim as he took the view that the two agreements were distinct and severable and he declined to accept the appellant's contention that there was a triable issue or that there was a difficult question of construction involved. On appeal it was contended that the appellant had a good defence to the action on the merits. It was argued that the learned trial judge was wrong in holding that the two agreements were distinct and severable and that the appellant was entitled to show that the agreement for sale could not be completed independently of the building agreement.

Held (Ali FJ dissenting), dismissing the appeal: on the admitted facts there was no triable issue and the learned trial judge was right in holding that the agreements were distinct and severable and in granting the plaintiff/respondent leave to sign final judgment.

Peninsular Land Development Sdn Bhd v K Ahmad [1970] 1 MLJ 149 Federal Court, Penang (Azmi LP, Suffian and Ali FJJ).

The plaintiff had undertaken sub-contract works for the defendant and claimed a sum of RM952,972.43 for work done. The plaintiff applied for judgment under O 14 of the Rules of the High Court 1980 and based his claim on various certificates of payment issued by the defendant, contending that according to their agreement, the certificates were to be honoured within 30 days of their issue by the defendant. The defendant, while admitting that the sum of RM952,972.43 was unpaid under the certificates, disputed its liability to pay on the basis that they were only interim certificates and payment was subject to final measurements and valuation. In its defence, the defendant claimed a set-off of RM4,158.89 for plant and machinery hired by the plaintiff and RM615,000 as the estimated cost of rectifying defects discovered after the certificates of payment were issued. The plaintiff argued that there could not be any set-off or cross-claim when an amount was due under an interim certificate of payment.

Held, dismissing the plaintiff's application for summary judgment and granting the defendant conditional leave to defend: (1) the general rule that there cannot be any set-off or cross-claim when an amount is due under an interim certificate of payment does not apply between contractor and sub-contractor but only applies to employer and contractor where the RIBA form of contract is used; (2) in the present case, there were no formal sub-contracts but only letters of award. The RIBA form of contract was not used and the certificates were not certificates under RIBA. As the defendant's claims related directly to the sub-contract works, it could dispute the amount in the certificates of payment and put up a defence of set-off. Furthermore, the claim for rectification works was a triable issue which should be argued at a full trial; (3) however, the court had some reservations about the veracity of the defendant's cross-claim pertaining to remedial works because the claim was raised only after the suit was filed and after third parties had gone into the site. Accordingly, the defendant was given leave to defend on condition that it paid the sum of RM465,034.12 (RM952,972.43) minus RM487,938.31 (the minimum sum that the defendant was prepared to dispute)) into court within 14 days, in default of which the plaintiff would be entitled to judgment for that sum.

Ooi Boon Teong (trading as Mitsu-Da Construction) v MBf Construction Sdn Bhd [1994] 3 MLJ 413 High Court, Shah Alam (Ranita Hussein JC).

The plaintiffs were the sub-contractors in a building project in which the defendants were the main contractors. The defendants alleged that the employers had deducted, from moneys due to the defendants, the sum ofS S$680,000 as liquidated damages for delay in the completion of the main contract works. They further alleged that the delay in completing the contract works was due to the plaintiffs' delay in completing the sub-contract work and that they had a right to set off from the amounts payable to the plaintiffs that part of the claim attributable to delay by the plaintiffs. Consequently, the defendants withheld a total of S$224,560.16 from amounts due to the plaintiffs. The plaintiffs commenced proceedings for the recovery of this sum, and applied for summary judgment, arguing that the defendants had no right to set off moneys under the terms of the sub-contract. The assistant registrar dismissed the plaintiff's application. The plaintiffs appealed.

Held, allowing the plaintiff's appeal: (1) the defendants' claim for damages, if bona fide, would give them a right of set-off. This right, however, could be excluded by contract, so the issue in this case was whether there was such an exclusion in the contract between the parties; (2) it would suffice if there was in the contract clear words that excluded the right to set off, either expressly or by necessary implication; (3) cl 9(a) of the sub-contract stipulated that before the defendant was permitted to make a claim for damages for late completion, he would have to have an architect's certificate. This clause had varied the defendants' common law right of set-off in that the right could be exercised only upon the issue of the stipulated certificate from the architect. As the defendants had deducted their claim for damages without the required architect's certificate, the defendants had made the deductions in breach of the express provisions of cl 9 of the sub-contract.

Kum Leng General Contractor v Hytech Builders Pte Ltd [1996] 1 SLR 751 High Court, Singapore (S Rajendran J).

This case called for an examination of a sub-contractor's right to certified progress payments and the main contractor's right to make set-offs against the certified sums under the Singapore Institute of Architects' forms of main contract and sub-contract. The plaintiffs were the nominated sub-contractor for sanitary and plumbing works for the Leonie Gardens Condominium. The defendants were the main contractor for the project. The plaintiffs' claim against the defendants fell mainly under two heads: firstly, for S$225,392.60 being the total amount certified by payment by the project architect in four interim certificates and secondly, for S$597,609.33 for accelerated work carried out by them. The parties agreed that the architect had certified S$225,392.60 for payment. The defendants refused to make payment under the certificates on the ground that they have two claims against the plaintiffs in the sum of S$368,129.70 which they purported to set off against the certified amount. Against this background, the plaintiffs took out this action against the defendants and applied for summary judgment for the certified amount and the defendants responded by applying to stay the action pending arbitration. If the defendants have a claim against the plaintiffs, there is nothing in the main contract or the sub-contract that would prevent them from prosecuting it. The question to be determined in these proceedings is whether they can set off their claim against the certified payments before the claim is proved. Clause 30(1)(b) of the main contract states clearly that the architect 'may (but shall not be obliged to)' take into account any dispute, claim, set off, defence or counterclaim of the contractor when issuing an interim certificate under cl 30(1)(a). If he takes it into account, the certificate he issues shall state any sum deducted taken into account, allowed or disallowed. However, the architect's discretion is not unfettered. He is not allowed to take into account any claim by the contractor unless it 'shall also be in principle recoverable by the Contractor from the Employer or by the Employer for the Contractor under or by virtue of any provision of this Contract'. In this case, the architect did not take the defendants' claims into account because he regarded the claims as 'purely domestic'. When the two applications were argued before the assistant registrar, he granted the defendants' application to stay the proceedings and made no order on the plaintiffs' application for summary judgment. The matters came before me on the plaintiffs' appeals against the assistant registrar's orders.

Held, varying the order: (1) a party to a contract is entitled to defend a claim or dispute liability on the basis of his right of set-off unless the contract expressly stipulates that this right of set-off is excluded or ousted. The right of set-off may be excluded by necessary implication as well as by express provision. Whether that right is excluded in any given contract is a matter that is to be decided on the terms of that contract; (2) from the terms of the contract between the plaintiffs and the defendants, the certification of the architect on the amounts payable is binding until final judgment or award in any dispute between the parties. The four amounts certified by the architect in favour of the plaintiffs would be payable since the architect did not take the defendants' claims into account when issuing the certificates; (3) in this situation, the defendants must pay the certified amounts first and pursue their claims against the plaintiffs separately. Having come to that conclusion, it followed that the defendants' application to stay the proceedings must fail in respect of the claim for the certified payments. As the second claim had not been certified for payment, the claim should be referred to arbitration under the terms of the contract.

Aurum Building Services (Pte) Ltd v Greatearth Construction Pte Ltd [1994] 3 SLR 330 High Court, Singapore (Kan Ting Chiu J).

Pembenaan Leow Tuck Chui & Sons Sdn Bhd v Dr Leela's Medical Centre Sdn Bhd [1995] 2 MLJ 57 Supreme Court, Kuala Lumpur (Eusoff Chin CJ, Edgar Joseph Jr and Mohamed Dzaiddin FCJ).

Ryoden (M) Sdn Bhd v Sykt Pembenaan Yeoh Tiong Lay Sdn Bhd [1992] 1 MLJ 33 High Court, Kuala Lumpur (Lim Beng Choon J).

D, a housing developer, entered into an agreement with P whereby the latter agreed to erect houses for the former ('the agreement'). 'The agreement' incorporated the 'PAM Standard Form of Building Contract Conditions (1979 Ed)'. P claimed from D a sum of M$365,744.88 for work done as certified by the architect. D resisted P's claim and also made a counterclaim. D firstly argued that P's work was defective and D consequently had to incur expenses in carrying out remedial works at a cost of M$9,268.90. D secondly alleged that P was late in completing the work and D was accordingly entitled to liquidated damages amounting to M$250,000 under 'the agreement'. D lastly contended that P had wrongfully detained keys to the houses already built by P and this had caused D to be liable to the house purchasers in damages for late delivery.

Held, allowing P's claim; allowing also D's counterclaim to the extent of M$2,533.90 only: (1) under 'the agreement' upon certificates issued by the architect being presented to D, payment must be made by D within 14 days of presentation; (2) on the balance of probabilities, D's counterclaim for defects in P's work had only been proved to the extent of M$2,533.90; (3) P's delay in completing the work was excused by the architect who granted P an extension of time pursuant to 'the agreement'. Although the architect was nominated by D and paid by D, undoubtedly the architect had to act professionally in accordance with 'the agreement'; (4) there was no evidence as to when the delay in completing the work was reasonably apparent to P. In any event the architect ordered additional work for D's benefit and in pursuance of 'the agreement'. The architect must therefore have had the knowledge of the apparentness of such delay brought about by himself. Accordingly the court had to reject D's argument that 'the architect's extension of time was invalid because P's notice of delay sent to the architect was invalid on the ground that the notice was not sent as soon as the delay had become reasonably apparent'; (5) even if assuming that early notice of delay to the architect from P was mandatory under 'the agreement', it would be placing too harsh a burden on the architect to require him to extend the time immediately at the time when he ordered additional work or at the time when he was requested by P to extend time. Everybody should wait until the additional work was completed or until the cause of delay had ceased to operate. Moreover under 'the agreement' the architect's opinion could be formed after the delay had occurred or after the delay had ceased, more workably the latter; (6) there was no evidence that D had paid compensation for late delivery or on account of the keys to the houses being wrongfully withheld by P. Any such claim remained at best a potential one in a future action and was therefore premature and could not be entertained.

Syarikat Tan Kim Beng & Rakan-Rakan v Pulai Jaya Sdn Bhd [1992] 1 MLJ 42 High Court, Ipoh (Peh Swee Chin J).

The plaintiffs and defendants had agreed to bid for steel and metal sub-contract work for an extension to the Brunei International Airport, upon the basis that the defendants would be the nominal sub-contractors, while the work should be done by or on behalf of the plaintiffs. The defendants were to receive a commission of 12% of the cost of the work. The defendants were appointed as sub-contractors. There was no formal sub-contract document and no provision was made permitting variations without vitiation of the contract or for the valuation of extra work. The basic obligation of the sub-contractor was to carry out the works specified and priced in the bill of quantities prepared by the main contractor, at the rates stated, subject to final measurement. The defendants invited the plaintiffs to perform the work, by a letter which is identical in terms to the letter they had received from the main contractor. This letter was accepted by the plaintiffs subject to a variation which provided that the plaintiffs would pay the defendants 12% commission based on an amount not exceeding the estimated bill of quantities ('BQ') figures. Further, 'additional work amount exceeding estimated BQ quotation shall be paid a commission of 10% only'. The plaintiffs in turn sub-contracted the work to another contractor. The dispute between the parties centred on the final account as between them. The plaintiffs claim, inter alia, for unauthorized payments that had been made by the defendants to the sub-contractor who had actually done the work, and damages measured by 10% of the cost of the additional work, arising from the defendants' failure to inform them of requests for such work, under the agreement.

Held, dismissing the defendants' appeal: (1) the defendants had agreed to the final account with the main contractor without any reference at all to the plaintiffs, despite the relationship between them. This was because much of the final account dealt with additional work which had been concealed from the plaintiffs; (2) the appellate court was satisfied that the lower court was correct in its finding that no authorization had been given by the plaintiffs to the defendants for payments to be made to the sub-contractor engaged by the plaintiffs to do the work. The trial judge had seen and heard the witnesses and had rejected the evidence of the defendants, in view of the circumstances surrounding these payments; (3) the sub-contractor's obligation was to execute the works described and priced in the extracts from the BQ. The quantities for such works and the contract price, were only estimates. They would fluctuate with additions and omissions arising from the differences between estimated and actual final quantities. This obligation is in addition to that imposed upon the plaintiffs to pay '12% of the total cost of this contract'. This means the total cost of the actual work as measured, not the total cost of the contract price; (4) extra or additional works were in the contemplation of the parties at the time of the agreement. The BQs also indicated that additional work was necessary. This additional work could only have been done by the plaintiffs, at the time of the contract; (5) the court found, from the circumstances, that 'additional work' meant that the parties' intention was to pass on from the defendants to the plaintiffs the whole sub-contract function including the performance of the additional works. Part of the obligation under the contract was that extra works invited by the main contractor would be tendered for, and undertaken by the plaintiffs at the best rate they could negotiate with the main contractor, out of which they would pay the defendants 10%. Part of the consideration for this payment was that the defendant would pass on to the plaintiffs all such requests for extra work; (6) the only basis for the award of damages is 10%, as, if the contract had been properly handled, the plaintiffs were entitled to 10% for the additional works carried out.

Hanshim Corp Sdn Bhd v New York Plastic Co Pte Ltd [1990] 1 MLJ 345 Court of Appeal, Brunei (D Cons Ag President, Hunter and Bokhary, Commissioners).

P agreed to do sub-contract works for D, the main contractor. P instituted a claim for M$48,618.40 from D on 18 February 1987 for work done and certified by the architect, X. Subsequently X issued two certificates for a further sum of M$173,659.25. On 15 July 1987, by the parties' consent, P amended its statement of claim to claim the further sum of M$173,659.25. P applied for summary judgment and this was allowed by the senior assistant registrar. D appealed to the High Court. P firstly argued that it was entitled to claim for the M$173,659.25 because the certificates in respect of that sum were in respect of work completed as early as November 1986.

Held, allowing the appeal: (1) it is an accepted rule that where an amendment of the statement of claim will still leave the plaintiff without any title to sue at the date of the writ, the amendment would be worthless. Pursuant to this rule, despite the fact that D had consented to P's amendment of its statement of claim, D had every right to question whether P was entitled to claim for the M$173,659.25 at the time of issue of the writ; (2) applying the principle of 'relating back', P was not entitled to claim for the M$173,659.25 which became payable to P only after the date of the issue of the writ and statement of claim; (3) the sub-contract provided D the right to claim for losses in respect of P's defective work. The right of a main contractor to withhold a certain sum to satisfy the main contractor's claim against the sub-contractor is also acknowledged under the common law; (4) D had succeeded in raising triable issues as to whether D could claim from P for losses due to P's defective work. These issues could only be resolved at trial. Accordingly P was also not entitled to summary judgment for the sum of M$48,618.

Simetech (M) Sdn Bhd v Yeoh Cheng Liam Construction Sdn Bhd [1992] 1 MLJ 11 High Court, Kuala Lumpur (Lim Beng Choon J).

D entered into a contract with X whereby D was employed as the main contractor for the contruction of apartments ('the main contract'). By sub-contract agreements between P and D, the latter appointed the former to supply and install air-conditioning systems and lift services for the apartments. P sued D for the latter's refusal to pay under the sub-contract agreements for work done by P as certified by the authorized architect. P applied for summary judgment against D. The senior assistant registrar allowed P's application and D appealed to the High Court. There was a clause in 'the main contract' stating, inter alia, that payment for work done under the sub-contract agreements should only be made after receipt by D of the payment from X ('clause 27'). D firstly argued that 'clause 27' had been intended by P and D to be imported into the sub-contracts. D accordingly alleged that since X had not paid D, D was thus not liable to P under 'clause 27'. D further argued that it was entitled to be indemnified by P in respect of loss or damage arising from P's late completion of the sub-contracts and also P's defective work. Hence D claimed that it was entitled to a set-off against P's claim. A provision in the sub-contracts stated, inter alia, that D could only claim in respect of P's delay in completing the sub-contracts upon the issue of an architect's certificate stating as such ('clause 8').

Held, dismissing the appeal: (1) the general rule under the common law is that there is no privity of contract between the employer and the sub-contractor. This proposition is subject to the terms and conditions in the sub-contract which may expressly or implicitly make it subject to the conditions of the main contract; (2) P was therefore entitled to be paid under the sub-contracts regardless of 'clause 27'; (4) D would be entitled to claim in respect of P's delay if and only if its cross-claim came within 'clause 8'. There was no evidence that the architect had issued any certificate under 'clause 8' and it was therefore futile for D to assert any delay in P's completion of the sub-contracts; (5) there was no privity of contract between P and X and reading the sub-contracts as a whole, 'clause 27' could not be incorporated into and form part of the sub-contracts. On the contrary, a clause in the sub-contracts required P to observe all the provisions of 'the main contract' so far as they were applicable to the sub-contracts and were not repugnant to or inconsistent with the express provisions of the sub-contracts. Moreover the importation of 'clause 27' would also be repugnant to another clause of the sub-contracts which, inter alia, required D to pay P upon receipt of the architect's certificate;there was not a single document in the exhibits annexed to the affidavits of P or D, to show that P had failed to rectify the defective works within the defects liability period.

Ryoden (M) Sdn Bhd v Sykt Pembenaan Yeoh Tiong Lay Sdn Bhd [1992] 1 MLJ 33 High Court, Kuala Lumpur (Lim Beng Choon J).

The plaintiffs had contracted to execute and complete the developments of the defendants' land at Sungei Berang in accordance with the specifications, conditions, etc attached to the contract. The plaintiffs commenced work in April 1966 but abandoned it in March 1967 before completion. The defendants gave notice calling upon the plaintiffs to continue the work and the plaintiffs failing to comply with it, the defendants duly terminated the contract. The matter went to arbitration and the plaintiffs claimed damages. They specified five items which they alleged amounted to breaches of contract by the defendants entitling them to abandon the contract before completion. The defendants denied the claim and all the allegations. The plaintiffs brought this application to set aside an award made by the arbitrator on the ground that the award, when compared with the issues raised in the plaintiffs' points of claim and the respondents' points of defence, was bad on the face of it in that the arbitrator had erred in point of law, gave wrongful inferences of fact and finally that the award was uncertain.

Held, dismissing the motion: (1) in this case, no question of law was referred. What was submitted to the arbitrator was a question of law which incidentally and necessarily arose in applying ascertained facts. The reference involved both composite questions of law and fact. The court could therefore review the award if there was error apparent on the face of the award; (2) the award in this case was sufficiently certain when read in conjunction with the issues raised in the statement of claim and defence. The motion therefore must be dismissed.

Sharikat Pemborong Pertanian & Perumahan v Federal Land Development Authority [1971] 2 MLJ 210 High Court, Kuala Lumpur (Raja Azlan Shah J).

By a contract in writing entered between the Government of Singapore and the plaintiffs on 2 March 1990, the plaintiffs undertook to execute the reconstruction of Jalan Ahmad Ibrahim culvert and Jurong tidegate('the works') for the sum of S$12,070,282.08. The date of possession was 19 March 1990 and the date of completion was 18 December 1991. Liquidated and ascertained damages('LAD') were payable for delay beyond the completion date at the rate of S$3,000 per day. The works were not completed and on 25 April the contract was terminated. The Superintending Officer was the second defendants. Under the contract, if the plaintiffs failed to complete the works by 18 December 1991, and if the second defendants certified in writing that in his opinion the works ought reasonably so to have been completed, the plaintiffs would have been liable to pay LAD. By an originating summons issued on 9 June 1992, the plaintiffs claimed against the first defendants a declaration that the government's purported notice of termination of the contract was null and void, and consequential reliefs. This was not disputed by the first defendant and a consent order was made on the first declaration. The plaintiffs also claimed a declaration that the second defendants were not entitled to deduct LAD from the amounts due to the plaintiffs. This was opposed. The first defendant's case was, firstly, that the claim for the second declaration was not pleaded and, secondly, that on the merits the government was entitled to claim and deduct LAD.

Held, allowing the declaration: (1) in an action by originating summons, what is required is that the summons itself must state the relief and sufficient particulars to identify the cause of action. In the instant case, the relief claimed was indorsed on the summons itself. There were sufficient details in the relief claimed to identify the cause of action; (2) the right of the second defendants to deduct LAD only arose if the plaintiffs failed to complete the works on time and the second defendants certified in writing that the works ought reasonably to have been completed. The contract was terminated prior to the completion of the works so it appeared that the first condition had be satisfied. But there was no evidence that the second defendants had certified in writing that the works ought reasonably have been completed; (3) the government had exhibited two letters which the government had written to the plaintiffs, firstly, informing them that the contract date had been extended to 23 December 1992, and then informing them that the due to their failure to complete the works by 23 December 1992, the plaintiffs were liable to pay LAD. Both these letters were written by an officer on behalf of the Director, Environmental Engineering Division, Ministry of Environment ('the Director'). It was clear from the provisions of the contract that the right to certify that the works ought reasonably to have been completed within the extended time and to deduct LAD were actions which were to be taken by the second defendants on behalf of the government, and the right to take such action was reserved to the Director; (4) it could not be said that the letters exhibited by the government or any part of them was an expression in writing certifying that the works should have completed by 23 December 1992. There was no hint of any certifying process or of any opinion that was certified or what that opinion was.

Engineering Construction Pte Ltd v Attorney General & Anor [1993] 1 SLR 390 High Court, Singapore (Lim Teong Qwee JC).

In this case, the appellant had entered into a contract with the respondent whereby the respondent agreed to construct shop houses for the appellant. The appellant terminated the contract. At the material time, the shop houses were not fully completed and two progress payments for the works as certified by the architect had not been paid. It appeared that the appellant was not satisfied as to the correctness of the valuation made by the architect and he had obtained a valuation report from a firm of valuers. The respondent claimed the sums certified by the architect. The learned trial judge found that the termination of the contract by the appellant was bad in law and that the appellant had himself committed a breach of the agreement in that he failed to honour the architect's certificates. He also found that there was no proof that the respondent had used inferior materials, goods or workmanship as alleged and he rejected the report of the valuers and accepted the valuation given by the architect. The appellant appealed.

Held: the questions the learned judge had to decide were essentially questions of fact and the appeal court would not normally interfere with such findings. In this case, the learned judge had rightly arrived at the decision he did.

Haji Abu Kassim v Tegap Construction Sdn Bhd [1981] 2 MLJ 149 Federal Court, Johore Bahru (Wan Suleiman, Salleh Abas and Abdul Hamid FJJ).

The plaintiffs and the defendant had entered into a joint-venture agreement whereby subject to the terms and conditions therein in consideration of the defendant transferring the defendant's three-quarters undivided share of the land in question to the plaintiffs as in the proposed subdivision plan (P1), the plaintiffs would construct and transfer to the defendant on the joint-venture land nine units of two-storey semi-detached houses and two units of two-storey detached houses. The third subdivision plan (P3) submitted was accepted by the Labuan Municipal Council. Subsequently, the defendant requested the plaintiffs to amend P3 as the defendant's co-owner was not happy with P3 as the road reserve shown therein encroached on the co-owner's quarter share of the land. In P4, four semi-detached house lots were deleted and replaced by a detached house lot, contrary to the joint-venture agreement. The defendant and the plaintiffs negotiated on the basis of P4 and agreed to make some changes to the joint-venture agreement. The defendant agreed to sign P4 after a variation agreement had been drawn and signed. The plaintiffs' solicitor drew up the variation agreement and asked the defendant to sign it but the defendant was not happy with some of the provisions. The solicitor agreed to make the amendments and come back shortly but he never returned. The plaintiffs had commenced construction works in 1982 but suspended work in November 1984 after 24 units of houses had been constructed up to about 70%. The plaintiffs had not resumed work since. By a letter dated 24 February 1990, the defendant, through his solicitors, expressed concern over the inaction on the part of the plaintiff in resuming work to complete the housing estate and requested the plaintiffs to let his solicitors know within seven days when they would resume work and further intimated that if the solicitors did not hear from the plaintiffs, the defendant would assume that the plaintiffs had decided to abandon the joint-venture project. The plaintiffs, by a letter dated 16 March 1990 to the defendant's solicitors, said that they would get in touch with the defendant to discuss and negotiate with regard to the joint-venture agreement and that they would resume the construction of the project in the near future. The plaintiffs never contacted the defendant. As regards the construction work, the plaintiffs merely engaged someone to cut the grass. They took no other action to show their sincerity in resuming the construction work nor did they contact the defendant or his solicitors. In the circumstances, the defendant gave notice by a letter dated 1 August 1990 to the plaintiffs that the joint-venture agreement was treated as terminated by the repudiation on the plaintiffs' part.

Held: (1) the defendant had lawfully terminated the joint-venture agreement. The plaintiffs had been silent for about five months. The impasse situation had lasted for some five years; (2) as regards the benefit, if any, received by the defendant as a result of the part construction work on the land by the plaintiffs, the defendant was to pay the plaintiffs damages, the value of the abandoned part construction work to be assessed. In the present case, specific performance was not the best remedy. It was noted that at the arrival of such an impasse situation, the plaintiffs should have stopped work and the defendant and the plaintiffs try to resolve the situation. As it turned out the dispute was not resolved but escalated, with the plaintiffs continuing with the construction work.

HB Enterprise Sdn Bhd v Poh Geok Sing Civil Suit No K 275 of 1992 High Court, Kota Kinabalu (Suleiman Hashim J).

The appellants had entered into a building contract with the respondents, a firm of building contractors for the construction of a housing scheme. The contract provided for progress payments to be made based on interim certificates to be issued by the appellants' architect who was Hajjas Kasturi Associates Sdn Bhd. The contract also contained the usual arbitration clause. The work proceeded and interim certificates were issued for work done. These were signed by a graduate architect who had not been registered. The appellants refused to honour the certificates and the respondents terminated the contract and filed a writ against the appellants. The appellants applied to have the writ struck out on the ground that under the agreement the parties have agreed to go to arbitration in the event of 'any dispute or difference'. This application was heard and dismissed. The respondents then applied for summary judgment on the sums due on the interim certificates. The appellants applied for a stay of the respondents' application for summary judgment pending the outcome of their appeal against the dismissal of the application to strike out the respondents' writ. The learned judge gave judgment in favour of the respondents and the appellants appealed. On the appeal it was argued that (1) his was not a proper case for summary judgment and (2) if not, the matter should go to arbitration.

Held: (1) there appears to be a plenitude of triable issues in this case. It is trite law that leave to defend must be given unless it is clear that there is no real substantial question to be tried or unless there is no dispute as to the facts or law which raises a reasonable doubt that the plaintiff is entitled to judgment; (2) the appeal is allowed and by consent the parties will submit their dispute to arbitration.

Gunung Bayu Sdn Bhd v Syarikat Pembinaan Perlis Sdn Bhd [1987] 2 MLJ 332 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

D had been contracted by P to build shophouses on P's land. Exclusive possession of P's land had been given to D. Subsequently the architect wrote to D regarding D's 'abnormally slow' progress and giving notice of P's right to determine the contract if D's slowness persisted. D replied admitting that they were behind schedule. P subsequently terminated the contract by letter and filed a suit against D. P also obtained an interlocutory injunction, inter alia, restraining D from entering P's land and from obstructing P's endeavours to develop the land. D applied, inter alia, to strike out P's suit and to set aside the injunction with damages for D to be assessed. The contract provided for disputes to be referred to arbitration. D argued that the injunction made it difficult to assess the actual work completed by D and D's equipment could not be removed overnight. D also contended that the matter should go for arbitration. P conceded that the suit should be stayed pending arbitration.

Held, dismissing D's application to set aside the suit and the injunction but the suit would be stayed pending arbitration: (1) the injunction should remain because P could not be compelled to re-employ a slow contractor who has his own remedy in damages. It is also virtually impossible for the court to supervise a building contract. If D was allowed to continue development, it might lead to a possible stalemate and an ultimate abandonment of the housing scheme; (2) an arbitration agreement does not oust the court's jurisdiction but the court has a discretion to stay P's suit pending arbitration.

Kong Wah Housing Development Sdn Bhd v Desplan Construction Trading Sdn Bhd [1991] 3 MLJ 269 High Court, Ipoh (Abdul Malek J).

Kokomewah Sdn Bhd v Desa Hatchery Sdn Bhd [1995] 1 MLJ 214 High Court, Kota Kinabalu (Charles Ho J).

In this case, the respondents had commenced proceedings to recover the balance due for work done and materials supplied under a building contract. The building contract was in a standard form and contained an arbitration clause, which had, however, blanks where the name of the arbitrator should have been filled in. The appellants sought to have the proceedings set aside on the ground that what was involved was a dispute in connection with the agreement and was therefore subject to the arbitration clause in the agreement. At the trial McGilligan J held that the action related to a dispute in connection with the agreement but that the arbitration clause was void for uncertainty and he dismissed the application. The appellants appealed.

Held: (1) it was clear from the arbitration clause that it was the intention of the parties that any dispute that might arise should be settled by arbitration and in such circumstances in the absence of an appointment of an arbitrator by the parties, s 6 of the Sabah Arbitration Ordinance clearly gave a right to either party to ask for an appointment by the court; (2) the action in this case related to a dispute in connection with the agreement to which the arbitration clause applied and therefore the proceedings should be stayed.

Lim Su Sang v Teck Guan Construction & Development Co Ltd [1966] 2 MLJ 29 Federal Court, Jesselton (Thomson LP, Pike CJ (Borneo).

The defendant applied for stay of proceedings in an action by the plaintiff, a building contractor, pursuant to s 5 of the Arbitration Ordinance. One of the grounds of opposition to the application was that the provisions of the building contract requiring the arbitrator to give a written decision on disputes or differences had not been complied with.

Held: (1) the arbitration clauses in this case were wide enough to give jurisdiction to the arbitrator to go into the disputes which had arisen and to supply the deficiency that has occurred, ie the non-fulfilment of a condition precedent by the architect in that he had failed to give a written decision in the dispute; (2) the plaintiff had failed to show sufficient reason why the disputes should not be referred to arbitration and therefore the application for stay of proceedings will be allowed.

Lian Seng Construction Co v Yuzin [1970] 1 MLJ 108 High Court, Kuala Lumpur (Syed Agil Barakbah J).

This was an appeal from the decision of the Federal Court (reported in [1976] 2 MLJ 12) which had dismissed an appeal from the High Court and held that the appellant society was liable to pay for the cost of laying water mains and of laying electrical wires along the roads leading to the various houses bought by the society from the respondents. A clause in the building agreement provided that all costs of making water and electricity connections 'inclusive of the cost of laying water mains and of electric supply and metering thereof' were to be borne and paid by purchaser.

Held, dismissing the appeal: (1) even if the clause had not contained the words 'inclusive of the cost of laying water mains and of electric supply' the conclusion would none the less be inescapable that the cost of doing so was part of the cost of making those connections. The fact that those words were in the clause removed any doubt if room for doubt there be, that the clause provided that the appellants should pay all the costs of laying mains and cables to the houses; (2) the respondents were therefore entitled to recover from the appellants the cost of laying water mains and cables on the estates to connect their houses with the mains and cables of the suppliers of water and electricity.

Malayan Armed Forces Co-operative Housing Society Ltd v Nanyang Development (1966) Sdn Bhd [1979] 2 MLJ 147 Privy Council Appeal from Malaysia (Lord Wilberforce, Viscount Dilhorne, Lord Hailsham of Saint Marylebone, Lord Keith of Kinkel and Lord Scarman).

This was an appeal from the decision of the High Court which had decided that the appellant society was liable to pay for the cost of laying water mains and of laying electricity wires along the roads leading to the various houses bought by the society from the respondents. An article in the building agreement provided that all costs of making water and electricity connections 'inclusive of the cost of laying water mains and of electric supply and metering thereof' were to be borne and paid by the purchaser.

Held, dismissing the appeal: although it is acknowledged that when a person buys a house on a housing estate it is for the developer to pay for the cost of laying water mains and electric wires along the roads in the estate, here it had been agreed that the purchaser should pay for the cost of laying water mains and of electric supply and the metering thereof and therefore the learned trial judge was right in holding that it was the appellant society's responsibility to pay for them.

Malaysian Armed Forces Co-operative Housing Society Ltd v Nanyang Development (1966) Sdn Bhd [1976] 2 MLJ 12 Federal Court, Kuala Lumpur (Suffian LP, Lee Hun Hoe CJ (Borneo).

The appellant had sub-contracted to build steel frames for the respondent in fulfilment of the respondent's much larger contract with FAMA. The dispute was related to the question whether payment for the construction was to be by the net weight of the structural frames only or was to be by the gross weight of the steel used including bolts, washers and connecting plates. The terms of the sub-contract between the parties were clear and provided for payment not only for the steel girders or frames but also for ancillary steel used in the erection of the girders. The main contract between the respondent and FAMA, however, provided for payment for the net quantities of steel work only. The respondent alleged that the main contract was shown to the appellant. The learned trial judge held in effect that payment was to be only for the net weight of the steel used. The appellant appealed.

Held, allowing the appeal: (1) the meaning of the sub-contract was clear and the clear intention was that the sub-contractor should be paid for the gross weight. Evidence of the main contract was not admissible, as it refers to a method of payment on which the sub-contract was not silent and which was inconsistent with the terms of the sub-contract; (2) as the meaning of the sub-contract was perfectly clear there could be no resort to other documents to give another meaning to it. Where the draftsmen had purposely left out any condition which he could without difficulty have put in, then the contra proferentem rule applied so that the inevitable conclusion was that the clause of the main agreement did not form part of the agreement between the parties and that the payment was to include the weight of steel other than the girders.

Union Workshop (Construction) Co v Ng Chew Ho Construction Co Sdn Bhd [1978] 2 MLJ 22 Federal Court, Alor Star (Ong Hock Sim, Raja Azlan Shah and Chang Min Tat FJJ).

The plaintiff, a contractor, sued the defendant on a building contract for $5,876.62 being the sum of $7,000 stated in the architect's certificate less $1,563.38 for mosaic and wall tiles supplied (as admitted) and for $440 being certain other works carried out which were additional to the agreement. The defendant did not dispute the issue of the architect's certificate but averred that there were breaches of the agreement by the plaintiff and counterclaimed for building materials supplied and $878.08 for window grilles and gates and damages for breach of the agreement. At the hearing, it was contended on behalf of the plaintiff that the agreement should be read together with a document in Chinese which it was contended was executed at the same time as the agreement.

Held, dismissing the claim: (1) it is extremely doubtful that it was correct to use the document in Chinese to construe the building agreement. To use the said document (which was executed some 11 days earlier than the building agreement) as contended would be to use it to vary and subtract from the terms of the building agreement and that was not permitted by the provisions of s 92 of the Evidence Ordinance; (2) as the defendant had proved that he had supplied goods to the plaintiff to the value of $5,856.14, the said sum should be set off against the claim; (3) in this case, having regard to the fact that the defendant could have at the appropriate moment prevented the use of materials other than those specified but failed to do so, the measure of damages would be the amount by which the value of the house had depreciated by reason of the use of inferior materials, without calculating the cost of replacing the materials used with the materials specified. As no expert evidence was called, taking into consideration all circumstances, the sum of $2,500 would be sufficient compensation to the defendant.

Woo Kam Seng v Vong Tak Kong [1968] 2 MLJ 244 High Court, Ipoh (Chang Min Tat J).

The appellants had entered into a contract with the respondents for the construction of a wharf and river wall in Sarawak. It was agreed that payment for the work actually carried out would be made monthly against the certificate of the engineer. During the progress of the work, three interim certificates had been issued by the engineers and paid by the respondents. The dispute in this case related to the fourth interim certificate. The appellants had asked the engineers for a fourth interim certificate for $35,415.89 but the engineers issued a certificate for the sum of $18,161.61 only. The appellants after some correspondence brought an action against the defendants for the balance of $17,254.27. It was alleged, inter alia, in the statement of claim that the engineers had not acted impartially and independently between the parties and had wrongly certified that only $18,161.61 was due. The learned trial judge dismissed the action and the appellants appealed.

Held: as the trial judge had found that there was no fraud or collusion between the respondents and the engineers and that the respondents had not interfered with or obstructed the engineers in issuing the certificate nor had they given instructions which impeded the engineers in the issue of the certificate, the appellants had failed to show that they could proceed in the action without a certificate.

Ling Heng Toh Co v Borneo Development Corp Sdn Bhd [1973] 1 MLJ 23 Federal Court, Kuching (Azmi LP, Ismail Khan CJ (Borneo).

In this case, the appellant, a housing developer, undertook to deliver houses to be erected by him for the respondent within six months in the case of two units of double-storey detached houses and twelve months in the case of two units of terrace houses from the date of approval of the plans. It was stipulated that time should be of the essence of the contract. The agreement contained no provision for extension of the delivery period nor any provision as to alterations and additional works. The appellant was unable to deliver the houses in time and there was a delay in the delivery. During the course of constructing the houses at the request of the respondent the appellant carried out extra work at a total cost of $5,008 and also incurred certain expenses amounting to $881 on behalf of the respondent. The appellant sued for the price of the extra work and expenses. The respondent denied liability and counterclaimed a sum of $28,800 as liquidated damages and also general damages for the failure of the appellant to deliver the houses in accordance with the stipulated periods. The appellant's reply to the respondent's counterclaim was that the respondent was not entitled to the damages claimed because there had been a waiver and estoppel on the part of the respondent. The trial judge Seah J allowed a sum of $4,424 on the appellant's claim for extra work and a further sum of $651.50 for additional expenses, making a total of $5,075.50. The learned trial judge upheld the respondent's counterclaim and assessed the liquidated damages under the contract at $28,176. He also allowed a further sum of $2,400 as general damages for the failure to construct a temporary house for the respondent to live in whilst the old house was being demolished and the new houses were being constructed. The appellant appealed against the decision of the learned trial judge on the counterclaim while the respondent cross-appealed against the decision because the trial judge had not ordered interest on the damages nor costs in favour of the respondent.

Held: (1) in this case, as time was provided to be of the essence of the agreement, the stipulated periods within which the houses had to be delivered to the respondent became an essential condition of the agreement. Failure by the appellant to fulfil this condition entitled the respondent to have an option of treating the agreement either (a) as having been repudiated and dismissing the appellant or (b) as still continuing; (2) in this case, the respondent did not choose to treat the contract as having been repudiated. By allowing the delivery dates to pass by and by acquiescing in the work continuing under the agreement and indeed by ordering extra work to be done for each of the houses, for which the agreement made no provision, the respondent must be held to have waived his right to rescind the agreement on account of repudiation and also the right to treat himself as discharged therefrom. He must be deemed to have elected the agreement as still continuing; (3) the stipulation as to time in the agreement ceased to be of the essence of the agreement, not because of the omission by the respondent to invoke cl 23 of the agreement, but because of his acquiescence in and allowing the work to continue under the agreement; (4) in cases where an agreement contains no clause for extension of time for completion, the acts of prevention by the employer whether authorized by the contract or whether in breach of it or whether the prevention is a cause of part or of the whole of the delay invalidate the liquidated damages clause because by such acts time becomes at large and consequently there is no date from which damages could run and therefore no damages could be claimed; (5) in this case, the respondent could not succeed in his counterclaim for damages under cll 20 and 21 of the contract as he was responsible for the delay in ordering extra work and for late delivery of the site; (6) although the respondent failed in enforcing cll 20 and 21 because of the late delivery of the site to enable the appellant to commence construction work immediately and also by the extra work ordered by the respondent, such failure did not prevent him from claiming unliquidated damages and the learned judge was right in awarding $2,400 as unliquidated damages against the appellant; (7) interest is a matter of discretion for the learned trial judge and in this case there was no reason to interfere with his discretion.

Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151 Federal Court, Kuching (Suffian LP, Lee Hun Hoe CJ (Borneo).

A contract to build a 'suitable house' is too vague and uncertain, and cannot be specifically enforced by this court, nor can damages be awarded.

Ahmed Meah & Anor v Nacodah Merican [1890] 4 Ky 583 High Court, Straits Settlements (Pellereau J).

In this action the plaintiffs claimed (a) the sum of S$200,020 which was due and owing to them being the unpaid balance of the sum of S$480,020; (b) interest on the sum of S$200,020; and (c) costs. The plaintiffs applied for summary judgment. The defendants applied for a stay of proceedings pursuant to s 7 of the Arbitration Act (Cap 10) on the ground that the conditions of contract contained an agreement to arbitrate the matters in respect of which the action was brought. The two applications were heard by the assistant registrar on 29 March 1993 and he decided that the defendants should be given unconditional leave to defend and that these proceedings should be stayed pending arbitration. Against this order the plaintiffs appealed. The parties agreed that the outcome of the appeal on the stay of proceedings should be determined by the outcome of the appeal on the plaintiffs' application for summary judgment.

Held, allowing the plaintiffs' appeals: (1) the plaintiffs' cause of action is based on the contract made between the parties. Clause 31(1) of the conditions of contract clearly states that the plaintiffs are entitled to payment of the sum named in the certificate within the period set out in the appendix to the contract; (2) the conditions of contract as its very name suggests is a revised version of the former Singapore Institute of Architects Conditions of Contract and differs in many essential respects from it and from the RIBA and JCT forms of contract on which the former Singapore Institute of Architects Conditions of Contract was modelled. The unique features of the Conditions of Contract are that the contractor is assured of regular periodic payments during the period the contract works are in progress based on a retrospective revaluation of all work carried out under the contract (see cl 31(1) and (2)) and subject to the exceptions mentioned in cl 31(11) the contractor is put in a position to enforce payment if payment is not made on the due date by action in the courts; (3) the defendants are not entitled to deduct liquidated damages from the moneys due to the plaintiffs after the architect issued the 'delay certificate' on 4 November 1992. By the agreement made between the parties on 16 October 1992, it was agreed that the plaintiffs would be paid the sum of S$480,020 within two weeks of the release of interim certificate No 23A. On 16 October 1992, the parties knew that the architect had on 31 July 1992 issued a certificate stating that the works were practically completed on 1 July 1992. The plaintiffs would be liable to pay liquidated damages under the terms of the contract if no extension of time was granted by the architect for the completion of the works. On that date the architect had not granted any extension of time. Yet the defendants agreed to pay the amount of S$480,020 due to the plaintiffs in consideration of the plaintiffs agreeing to waive the contractual interest due to the plaintiffs for the late payment of the sum then owed by the defendants and there was therefore an implied undertaking by the defendants not to invoke their right under cl 24(2) in respect of the sum of S$480,020 that was then due to the plaintiffs; (4) the grant of an extension of time is conditional upon the plaintiffs notifying the architect within 28 days of the occurrence of a particular event which the plaintiffs rely upon as the basis for an extension of time unless the architect has already informed the plaintiffs of his willingness to grant extension of time. Upon receipt of such notification, the architect must inform the plaintiffs for his decision in writing within one month of his receipt of such notification. When the architect informs the plaintiffs of his willingness to grant an extension of time, he is required by cl 23(3) to notify the plaintiffs the length of the period of extension beyond the Contract Completion Date 'as soon as any delaying factor in respect of which an extension of time is permitted by the Contract has ceased to operate and it is possible to decide the length of the period of extension beyond the Contract Completion Date (or any previous extension thereof) in respect of such matter'. Where two or more such factors are operating concurrently the architect need not so notify the plaintiffs until the last of such matters has ceased to operate; (5) in the present case, there were requests for extension of time made by the plaintiffs for variations or additional works ordered by the architect. The architect's failure to comply with the procedural requirements in cl 23(2) would mean that the purported exercise of the power conferred upon him by cl 23 on 4 November 1992 was invalid as it was not exercised within the period fixed by cl 23(2). As such, there is no date from which liquidated damages could be computed and no liquidated damages is therefore recoverable in the present case; (6) the principle enunciated in the Amalgamated Investment & Property Co (In Liquidation) v Texas Commerce International Bank Ltd [1982] 1 QB 84 does not apply to the present case where the defendants are seeking to claim liquidated damages from the plaintiffs for late completion. It would be unfair to make the plaintiffs pay liquidated damages when there is non-compliance of the terms of the contract made between the parties in so far as the grant of extension of time is concerned; (7) judgment was entered for the plaintiffs for the sum of S$200,020 with interest at 8% pa from the date of the writ to date of judgment and grant of a stay of proceedings was refused.

Assoland Construction Pte Ltd v Malayan Credit Properties Pte Ltd [1993] 3 SLR 470 High Court, Singapore (Goh Phai Cheng JC).

By a written agreement ('the agreement'), the respondent ('the defendant') had contracted with the appellant ('the plaintiff') to provide labour for certain construction work of 90 units of dwelling houses in Johore Bahru. The houses were to be completed within 10 months from the date of the agreement. The plaintiff alleged that the defendant had failed to deliver the 90 units of houses on the completion date, and had therefore filed a claim for liquidated damages of RM50 per day per house under cl 27 of the agreement. The plaintiff based the calculation of late delivery on the architect's certificate of completion and claimed for a total of RM2,461,750. The High Court judge allowed the plaintiff's claim for RM804,800 with interest and costs, after making deductions for the delay caused by plaintiff in pecking boundary stones, delay caused by rainy days, and the fact that the delay in issuance of architect's certificate might be due to the fault of other parties. The judge had also entered judgment on the defendant's counterclaim for RM63,375 being a sum detained by the plaintiff for the works completed under the agreement together with interest. The defendant appealed against the part of judgment which was in the plaintiff's favour. At the commencement of the appeal, the defendant moved the court for leave to adduce further evidence on the issue of the capacity in which the defendant had been sued. The defendant went on to attack the judge's findings which was made in the plaintiff's favour, on the ground that the judge had overlooked the fact that the plaintiff had requested the defendant to undertake additional works on the project in question, all of which caused the delay in the completion of the houses on the stipulated date. The defendant alleged that time ceased to be of the essence under the building contract when additional works were ordered and undertaken, and the plaintiff was accordingly, not entitled to receive any liquidated damages under the agreement ('the defendant's proposition'). Meanwhile, counsel for the plaintiff contended that the operation of the principle in the defendant's proposition had been excluded, on the grounds that: (i) there was an express provision for the calculation of the damages that were to be paid for the period of delay in the agreement; (ii) the extra work spoken of by the plaintiff were quite separate from the works contracted for, and that payment for these works was separately made; and (iii) it was not part of the defendant's case that the delay had been occasioned by the extra works as there was absence of any suggestion during the cross-examination of the plaintiff's witness to the effect that the delay had been caused by such work.

Held, dismissing the appeal: (1) this court refused leave to adduce further evidence on two main grounds. First, the issue of capacity was one which never arose for determination in the court below as it was not pleaded anywhere in the defence. It was therefore entirely irrelevant and inadmissible. Secondly, the evidence in question was not put in although it was available at the trial. It followed that one of the vital conditions upon which was dependent the exercise of discretion by an appellate court to permit fresh evidence was absent. Thus, the evidence, even if relevant (which was not the case), was not, on the basis of the exercise of discretionary power, admissible; (2) for the reasons advanced by counsel for the plaintiff, the court was of the opinion that there was no merit in the argument advanced by counsel for the defendants; (3) the trial judge was entirely right in ignoring the point that the delay had been caused by the so-called extra works because it was not pursued under cross-examination of the plaintiff's witness. The judge was thus entitled to proceed upon the basis that the defendant was no longer advancing this as a reason for the delay; (4) at the end of the day, this was a case which turned upon the findings of primary fact made by a judge based upon the credibility of witnesses whom he had seen and heard and upon the undisputed material presented to him. Indeed, this court found that there was abundant evidence on record to support those findings. In these circumstances, this court must defer to the views expressed by the trial judge.

Teo Hock Guan & Anor (t/a Teo Meng Huah Construction) v Johore Builders & Investments Sdn Bhd [1996] 2 MLJ 596 Court of Appeal, Kuala Lumpur (Gopal Sri Ram, Siti Norma Yaakob JJCA and Mokhtar Sidin J).

Although an unincorporated association cannot, as an association, become parties to contracts, the liability for work and labour done for the benefit of such associations is determined according to the rules of law in regard to agency, and the parties who gave the orders for the work to be done are the persons liable upon the contract. The appellant is a building contractor and the respondent is the superintendent of a Chinese temple known as Tet Shen Tong Vegetarian Temple at Jalan Bendahara, Ipoh. At some date prior to the issue of the writ in this action the respondent became the registered proprietor of a piece of land on which the temple now stands. It would appear that some time in 1953 the Teochew community of Ipoh decided to put up a temple for public worship with moneys to be contributed by its devout members, and a temple committee was set up, with one CSK as chairman and one KMK as vice-chairman and treasurer. The respondent was not on this committee, although she was in some way interested in the plans for the building as early as 10 December 1953. On or about 27 February 1954, a building contract drawn by an architect in standard form was signed by the appellant as contractor and by the said CSK and KMK representing the Tet Shen Tong Vegetarian Temple, therein described as 'the owner'. The contract was for the construction within eight months of an outer shrine and out-buildings of a temple on the 'lot of the owner' according to plans approved by the Kinta Town Board and to the additional specifications attached to the said contract, at the total cost of $77,000. The appellant alleged that he duly completed the said works and was paid the sum of $77,000. He further alleged what formed the subject matter of his action, namely, that: 'Apart from the above works and at the same time from March to October 1954, the plaintiff at the request and order of the defendant carried out additional constructional works not provided for in the original plan No TBK (B) 186/47 costing $47,350.93 inclusive of labour and materials', and claimed this amount ($47,350.93) as being the cost of extra work done on the temple building which he alleged he had carried out at the respondent's request. There was no evidence whatsoever on the record that the respondent became the registered proprietor of the land before all the additional works on the temple had been completed. The learned trial judge held that in this case the wrong party had been sued, and on appeal, the Court of Appeal agreed with the reasoning of the trial judge. The Court of Appeal also

Held: as no architect's certificate had been proved in respect of any of the extras for which the claim was made, apart from the question of liability on the part of any person or persons under the contract, the appellant had entirely failed to prove his claims, and the trial judge was right in dismissing the action with costs.

Tan Eng Hoe v Liang Hooi Kiang [1961] MLJ 119 Court of Appeal, Kuala Lumpur (Thomson CJ, Hill JA and Ong J).

On 13 March 1976, the HDB awarded to the respondents, a firm of building contractors, a contract to build eight blocks of single storey workshops, an electrical substation and two transformer rooms at Jalan Eunos. The respondents agreed to complete the project by 8 February 1977 unless extensions were granted by the HDB. On 15 April 1976, the appellants, a company carrying on business as importers of glass sheets and engaged as glazing contractors, wrote to the respondents a letter offering to supply and install glass for the project. The respondents on the same day notified their confirmation and acceptance of the offer on the letter itself. The present appeal arose from a claim by the appellants for the sum of $11,835.01 for work done and glass materials supplied to the respondents. The respondents counterclaimed for the sum of $9,011 for the additional costs paid to another contractor to complete the works and the sum of $104,370 being liquidated damages paid by the respondents to the HDB. The trial judge gave judgment for the respondents against the appellants for the sum of $73,479.89 and costs. The appellants appealed on the ground, inter alia, that the learned judge had wrongly held that the letter had created a binding contract between the parties when on the evidence he should have found that the letter was an invitation to treat.

Held, dismissing the appeal: (1) the general rule relating to the creation of a binding agreement is that 'for the parties to be bound they must have finished reaching an agreement, so that it is possible to infer an intention on the part of both of them to be bound immediately'. In this case by the letter, the appellants and the respondents had finished reaching an agreement, and it was against the weight of the evidence that the appellants were not in breach of it; (2) the learned trial judge had taken into account the fact that the appellants were not the contractors for the project and their contract was merely to supply the glass after substantial completion of the project by the respondents. There was therefore no reason to interfere with the assessment of damages made by the learned judge.

Kwong Kum Sun (S) Pte Ltd v Lian Soon Siew & Ors 1984 Court of Appeal, Singapore (Wee Chong Jin CJ, Sinnathuray and Rajah JJ).

Where a builder contracts to erect a building in a certain manner, but neglects to do so, he is not entitled to recover the price of such work on the contract, nor yet on a quantum meruit, even though the owner take possession and has the use of the work so done, as no implied promise arises from the fact that the owner has so taken possession, as he but makes use of his own land and all that is affixed thereto.

Rungasamy v Isaac Aaron Pillay [1867] 1 Ky 168 Court of Judicature of Prince of Wales' Island, Malacca and Singapore (Maxwell R).

Syed Noor & Anor v Green [1862] SLR Leic 196 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Sir PB Maxwell R).

Engineering Construction (Pte) Ltd v Ohbayashi-Gumi Ltd 1984 High Court, Singapore (Lai Kew Chai J).

A promissory note payable on demand was made by a man, a deceased, and given to a woman for his neglect to maintain her for 20 years. The payee claimed to be the man's second wife; whereas the executors of the deceased alleged that the payee was only a mistress and the note had been given for maintenance in consideration of past cohabitation which was an immoral consideration.

Held: the note is void. Even if the payee was the lawful second wife of the deceased, the note is void, inasmuch as husband and wife cannot contract with each other.

Cheah Boon Ean v Cheah Chong Beng & Anor [1885] 4 Ky 6 High Court, Straits Settlements (Sidgreaves CJ).

This was an appeal against the decision of the High Court on a claim by the respondents/plaintiffs against the appellant/defendant for possession of a piece of land, and damages for trespass. The appellant admitted occupation of the land but stated that she occupied it by virtue of a written agreement signed by them and their mother, now deceased, on 12 April 1948. The agreement concerned the loan of money on the security of the land in question. The appellant counterclaimed for an order that the land be transferred to her in pursuance of the aforesaid agreement. The respondents denied ever executing the agreement, or in the alternative, if they had executed the agreement, they were infants at the time of the execution and that they had not ratified it. They alleged that the counterclaim was barred by limitation. The respondents elected not to give evidence at the trial. The learned trial judge found that on the date when the agreement was executed, the first and second respondents had reached the age of majority, but not the third and fourth respondents. He came to this view by applying the provisions of the Kedah Enactment No 62 (Majority).

Held, dismissing the appeal: (1) the law to be applied in regard to a contract entered into by an infant at the material time, in Kedah, was the common law of England as qualified by the English Infants Relief Act 1874. As the agreement in the present case was nothing more than a contract for repayment of money lent, it was absolutely void as regards the infant respondents. Therefore, the appellant's counterclaim against the third and fourth respondents must fail; (2) the appellant was not given possession of the land as a purchaser but as a creditor in order to give her security for the loan and also to enable her to collect the profit from the land in place of interest for the loan. Since her claim for transfer of the land had been filed on 5 October 1965, the appellant was out of time both under the Kedah Enactment No 60 (Limitation) and under the Limitation Ordinance 1953.

Halijah v Morad & Ors [1972] 2 MLJ 166 Federal Court, Alor Star (Azmi LP, Gill and Ali FJJ).

The appellants are a bank. In 1986 they granted facilities to the company, S Pritam Singh Co Pte Ltd ('the company'), which were secured, inter alia, by an instrument called the Letter of Set-off and Appropriation ('the letter of set-off') executed by the two respondents abovenamed. The letter of set-off allowed the appellants to consolidate all or any of the respondents' accounts with the appellants in order to set off any moneys due to the appellants arising from the provision of any advances or banking facilities to the company. The letter of set-off was signed by both of them on 26 March 1986, and on that date both of them were above 18 but below 21 years of age. On 14 August 1986, a fixed deposit account was opened by the respondents in their joint names with the appellants' branch at Richmond Town, Bangalore, and a sum of US$533,963.58 was paid into that account. On 11 March 1991, the appellants wrote to the two respondents giving notice of appropriation of the stated deposits towards outstanding dues of the company. On 18 December 1991, the respondents commenced an action against the appellants seeking to recover the sum of US$533,963.58. The respondents' claim was that the letter of set-off was void and unenforceable as against them by reference to the English Infants Relief Act 1874 on the basis that that Act was applicable by reason of s 5(1) of the Civil Law Act (Cap 43), as at the date of its execution both of them were under the age of 21 years. The learned judge allowed the appeal of the respondents on an O 14 application and entered judgment against the appellants. Against his decision, this appeal was brought. The learned trial judge had framed the first issue as whether the respondents were minors when they executed the letter of set-off, and held that that issue was simply a question of their legal status and their legal capacity to enter into a valid and binding agreement with the appellants. The question whether the respondents were minors or of full age was not an issue with respect to any banking law or mercantile law and did not fall within the purview of s 5(1). There was no local statute which fixed the age of majority and in his judgment that question was governed by common law as permanently received in Singapore by the Second Charter of Justice 1826, and at common law the age of majority is 21 years. Accordingly, the respondents were minors when they executed the letter of set-off. Against this part of the judgment, there was no appeal. The appellants primarily directed the appeal on the application of s 5(1) in relation to the determination of the second issue, addressed by the judge, namely, whether the letter of set-off being executed by minors was void or voidable.

Held, dismissing the appeal: (1) and (c) if the answer to the second question is in the negative, then what is the law with respect to that issue which is administered in England in the like case at the corresponding period, if the same issue had arisen or had to be decided in England; (3) as to (a), the court adopted the definition of Barrett-Lennard J in Seng Djit Hin v Nagurdas Purshotumdas [1923] AC 444: mercantile law is that department of jurisprudence which normally regulates the rights and obligations of persons engaged in business adventures. It is traceable to the customs of merchants which have now been largely crystallized in the form of statutes and judicial decisions; (4) the letter of set-off was manifestly a commercial document and was used in a commercial transaction. However, it does not necessarily follow that because of the commercial nature of the transaction, the issue in question is with respect to mercantile law; (5) in this case, the issue whether the contract is void or voidable goes beyond the capacity to enter into a contract and into the realm of legal consequences of that contract. However that legal consequence of the contract alone does not render the issue as one with respect to mercantile law. The issue is one concerning the rights and obligations of the parties to the contract, and on the basis of the definition of mercantile law by Barrett-Lennard J, it is an issue with respect to mercantile law. If the transaction in this case were made by adults, mercantile law would undoubtedly apply in determining their rights and obligations thereunder, and the issue whether the transaction is void or voidable would be clearly one with respect to mercantile law. It does not cease to be an issue with respect to mercantile law merely because the transaction was entered into by minors; (6) as to (b), the proviso to s 5(1) bars a consideration of English law, if there is a provision of local law governing the determination of the issue. The difficulty in applying the proviso centres on the words 'any law having force in Singapore' and in particular the meaning of 'any law'. Having regard to the legislative history of s 5 and the rationale for certain amendments to it, the court held that the term 'any law' means 'any written law' and does not include common law; (7) as to (c), the words 'with respect to those matters' refer to 'all questions or issues' at the commencement of s 5(1). Since the issue is one with respect to mercantile law it is the relevant English mercantile law that would be administered in England in the like case which applies in the determination of this issue; (8) in considering the application of s 5(1) there are three questions which have to be resolved: (a) whether the issue is one with respect to mercantile law generally; (b) if the answer to this question is in the affirmative, whether there is 'other provision' made by 'any law having force in Singapore' which governs the determination of the issue, ie whether the concluding part of s 5(1), namely, 'unless in any case other provision is or shall be made by any law having force in Singapore' ('the proviso') applies;the question therefore is what is the mercantile law in England with respect to this issue which would be administered in the like case at the corresponding period. The issue which is to be determined is whether a mercantile transaction entered into by minors on 26 March 1986 is void or voidable. The law which would be administered in determining this issue at that time would be the Infants Relief Act 1874. Although the Infants Relief Act 1874 on the face of it is not a mercantile statute, yet the provisions thereof impinge on mercantile transactions entered into by minors. In this respect and to that extent, these provisions are mercantile law. Accordingly, the Infants Relief Act 1874 is applicable in the determination of this issue and under the Act, the letter of set-off is absolutely void.

Bank of India v Rai Bahadur Singh & Anor [1994] 1 SLR 328 Court of Appeal, Singapore (LP Thean JA, Rajendran and Warren LH Khoo JJ).

The plaintiffs pledged fixed deposits supported by a letter of set-off and appropriation in favour of a bank in consideration of the banking facilities extended by the bank to a company of which the plaintiffs were shareholders. The bank purported to appropriate the fixed deposits towards the outstanding dues of the company. The plaintiffs were minors when the letter of set-off was executed. They, therefore, commenced this action, claiming a declaration that the letter of set-off and appropriation is void and/or unenforceable.

Held, allowing the claim: (1) it is the law with respect to the enumerated departments of the law as spelt out in s 5 of the Civil Law Act (Cap 43) and to mercantile law generally that is administered in England at the corresponding period that is to be administered in Singapore to decide all questions or issues that arise with respect to the enumerated departments of the law and mercantile law generally; (2) the intention of the legislature was not to import English law but to provide a legal basis for deciding issues of mercantile law when they arose in our courts by reference to English law; (3) the issue whether the plaintiffs were minors or were of full age is simply a question or issue of their legal status, ie their legal capacity to enter into a valid and binding agreement with the bank. It is not part of banking law or mercantile law. It is not an issue which falls within the purview of s 5 of the Civil Law Act; (4) even if it did, the court was not prepared to hold that the English Family Law Reform Act 1969, which reduced the age of majority in England from the common law age of majority of 21 to 18, was a law with respect to the enumerated departments of law or mercantile law generally such that reference could be made to it to decide what the age of majority is in Singapore; (5) whether the letter of set-off is void or not is a question of mercantile law as it goes beyond the capacity to enter into a contract and into the realm of the legal consequences of that contract. The question had to be decided with reference to the English Infants Relief Act 1874 by which all contracts entered into by a minor except for necessaries were rendered void; (6) the letter of set-off was therefore void as against the plaintiffs. The fact that the plaintiffs renewed the fixed deposit after they had attained majority did not help as the renewal could not be in terms of a void document or in terms similar to a void document.

Rai Bahadur Singh & Anor v Bank of India [1993] 1 SLR 634 High Court, Singapore (Karthigesu J).

[Annotation: Affirmed on appeal. See [1989] 1 SLR 328.]

On 15 November 1961 the appellant registered himself and one Yong, a minor, under the Registration of Businesses Ordinance as trading in partnership as general merchants under the name of Chan & Yong Trading. At about the same time the appellant and Yong wrote to the Bangkok Bank in Kuala Lumpur applying to open a current account in their names and stating they were partners of a firm and cheques of the account would be signed by both of them. Before doing any business with the respondent company, the appellant and Yong met a representative of the respondent company in a coffee shop at which the appellant held himself out to be a partner with Yong in a hardware business. On this representation business between the parties commenced. Between 20 December 1961 and 3 June 1962 goods were supplied to Yong. The respondents sued for the price and obtained judgment against the appellant and Yong (see [1964] MLJ 105). On appeal by the appellant,

Held: (1) irrespective of whether Yong was the appellant's partner, the appellant had held out Yong as his agent who had authority to do things on his behalf for whose acts the appellant was liable; (2) any person, irrespective of his competency to contract, may become an agent, for whose acts the principal may be liable to third parties.

Chan Yin Tee v William Jacks & Co (Malaya) Ltd [1964] MLJ 290 Federal Court, Kuala Lumpur (Thomson LP, Barakbah CJ (Malaya).

P1 and P2 were the committee of the estate of P3, having been appointed by orders of court under the Mental Disorders and Treatment Act (Cap 178). The present action taken by P1 and P2 sought a declaration that a deed of mortgage of a certain property allegedly executed by P3 in favour of D3, a foreign bank, be declared null and void. It was alleged that P3 was of unsound mind and incapable of managing himself and his affairs at the time of execution of the mortgage deed. The mortgage was executed as part security for banking facilities granted by D3 to D1, a company in which P2 and D2 (the older brothers of P3) had an interest. D2 and P3 were tenants in common in equal shares of the property.

Held, granting the declaration: (1) P3 had testified before the court, and having heard the way he gave evidence the court concluded that he did not understand the deed; (2) the test to be applied is whether there was understanding on the part of P3 of the transaction. The very concept of a mortgage as security for banking facilities to be granted by the bank to the company in which his other two brothers had an interest is not a simple matter which P3 was able to understand. It was very telling that he did not even know that he was a co-owner of the property; (3) the question here was whether it was voidable against the bank who was said to be an innocent party; (4) a plea of unsoundness of mind to avoid a contract was only permissible if it could be shown that the other party to the contract knew of the insanity. The issue that arose was whether the bank knew or ought to have known that P3 was mentally disordered and had no contractual capacity; (5) from the evidence, the court found that there was no actual knowledge on the part of any officers of the bank regarding P3's mental incapacity; (6) however, the way in which the bank went about obtaining the mortgage as security showed that it made P2 its agent to secure the mortgage. It was through P2 that the title deeds of the property were forwarded to the bank. At no time did the bank deal directly with the owners of the property. By dealing with the owners of the property through P2 rather than directly, the bank had made P2 its agent and the bank must be imputed to have the knowledge which P2 had of the mental incapacity of P3; (7) even if this view was wrong, constructive knowledge of the bank could still be inferred from the circumstances surrounding the execution of the deed by P3, including the way in which the bank dealt with the owners of the property. It would be different if the solicitor who witnessed the execution by P3 had clearly explained the full purport of the deed, but this was not done. The solicitor should have at least explained to P3 the nature and effect of the deed and made sure he understood it before asking him to put his thumb-print to it; (8) the relationship of P2 and P3 as brothers does not per se give rise to a presumption of undue influence, but on the evidence, there can be no doubt that P2 did in fact exercise undue influence over P3 in securing the execution by P3 of the deed; (9) the general rule is that a deed executed by a person who has no mental capacity to do so is voidable;the influence of P2 over P3 persisted through the execution of the deed. The transaction was totally to the disadvantage of P3, yet neither the bank nor its solicitors saw it fit to advise P3 to take independent legal advice; the bank must be held to be affected by the undue influence exercised by P2 over P3. The deed should also be set aside on this ground.

Che Som Bte Yip & Ors v Maha Pte Ltd & Ors [1989] SLR 721 High Court, Singapore (Chao Hick Tin JC).

The plaintiff sought a declaration from the court that the deceased was not competent to contract with the defendant to transfer certain land to her in September 1973 and that the transfers were therefore null and void. The plaintiff was the son of the deceased and sued in the capacity of administrator to her estate. The defendant denied the deceased was of unsound mind at the time of the transfer and said that in any event, she was a bona fide purchaser for value without notice. It was not disputed that the deceased had a history of mental disease and that she was under medication for mental problems at the time of the transfer and that she had been committed under the Lunatics Ordinance in 1970.

Held, dismissing the claim: (1) since the contract was entered before the Contracts Act 1950 came into force in Sabah the applicable law was common law: the Act was not intended to have retrospective effect where, as in the case at hand, acquired rights were affected; (2) under the common law, a contract entered into by a person of unsound mind is voidable not void; (3) to avoid a contract entered into by a person of unsound mind, it is necessary under the common law to not only prove that the person was of unsound mind when he entered into the contract but that the other party knew of the person's unsoundness of mind; (4) further, where general lunacy is proved and a person aware of it alleges a contract, it is for that person to prove not only the cessation of violent symptoms but that the insane person was lucid enough to enable him to judge what he was doing when he was entering into the contract; (5) on the evidence, the deceased was of habitual insanity between 1970 until the time of her death. Although she had lucid intervals, it was unlikely that she could have had the capacity to understand the general nature of the transactions that she had entered into as she was under heavy medication at the time to control her insanity; (6) there was nothing, however, in the evidence to suggest that the defendant knew that the deceased had been insane, especially as the medication would have inhibited all obvious signs of lunacy, so the transfers could not be vitiated.

Sim Kon Sang Peter (administrator of the estate of Chong Yu Tai, decd) v Datin Shim Tok Keng Civil 1994 High Court, Tawau (Ian Chin J).

There is nothing in the Bankruptcy Enactment (Cap 55) which would preclude a creditor from maintaining an action on a contract entered into by him with the debtor after the debtor has been adjudged bankrupt.

Gan Hong Hoe v Gan Kim Hee [1939] MLJ 295 Court of Appeal, Federated Malay States (Poyser CJ, McElwaine CJ (SS).

The appellant alleged that by a written agreement made on 21 March 1973 the respondent in consideration of the payment of $2,000 by the appellant granted to him an option to purchase part of the respondent's land. The option was exercisable within two months from the date of the agreement and was renewable for a further period of two months on payment of a further sum of $2,000. The appellant paid the sum of $2,000 being consideration for the grant of the option on 27 March 1973. The respondent purported to repudiate the agreement on 9 April 1973 and returned the $2,000 but the appellant refused to accept the repudiation. On 18 May 1973, he paid to the respondent a further sum of $2,000 to extend the option for two months from 20 May 1973. On 12 July 1973, the appellant entered into an agreement with one Teh Seng Kian whereby they agreed to enter into a partnership. On 18 July 1973, solicitors for the appellant informed the solicitors for the respondent that the appellant was ready to exercise the option and on 19 July 1973 the deposit of $616,000 was paid. Since the respondent refused to sell the land to the appellant, the appellant brought an action for specific performance in his personal capacity. The defence was that the prosecution of the action in furtherance of a partnership agreement and to implement a champertous agreement constituted an abuse of the process of the court and should be dismissed on the ground that it was against public policy. The preliminary issues raised in the statement of defence was heard and the action was dismissed in the High Court. The appellant appealed.

Held: (1) the partnership agreement was a champertous agreement and the respondent was entitled to rely on this as a defence; (2) quite apart from the question of champerty, the appellant in this case by entering into the partnership had divested himself of his right to sue in his personal capacity.

Khan Kam Chee v Loke Wan Yat Realty Sdn Bhd [1985] 1 MLJ 42 Federal Court, Kuala Lumpur (Abdul Hamid CJ (Malaya).

This is an application by the chargor to set aside an order for sale of certain land comprised in QT No HS(D) 19, Lot No 40(2), s 14, Bandar Georgetown, Penang, NED Penang ('the land') pursuant to the provisions of s 256 of the National Land Code 1065 (Act 56/1965) ('the code'). The ground upon which the chargor relies in support of their claim for a declaration is that the charge is void in that it was created on 11 February 1983 and registered in interest indorsed on the issue document of title to the land under s 120 of the code, prohibiting, inter alia, the charging thereof without the written sanction of the state authority. The same was not approved until 11 April 1988. It was submitted on behalf of the chargor that, inter alia, the chargee's title or interest in the land was thus defeasible because the registration thereof was obtained by means of an insufficient or void instrument. The chargee's counsel contended that since the chargor did not avail themselves of the remedy of appeal within the time prescribed in s 418 of the code, it was not now open to them to impugn the order for sale by the present proceedings.

Held, allowing the application: (1) the submission of the chargee's counsel relying on s 418 of the code fails. Where an order is a nullity, an appeal is somewhat useless as despite any decision on appeal, such an order can be attacked in collateral proceedings before any court or tribunal, and in collateral proceedings, the court may declare an act that purports to bind to be non-existent. The party affected by the decision may appeal but he is not bound to do so because he is at liberty to treat the act as void; (2) in these circumstances, the charge having been registered in breach of an explicit statutory prohibition imposed on the title to the charged land pursuant to the provisions of s 120 of the code, the title or interest of the chargee is defeasible since registration thereof had been obtained by means of an insufficient or void instrument (s 340(2)(b)) and also because the Registrar of Titles, in registering the charge, had acted ultra vires the powers conferred upon him by s 340(2)(c). The defence of estoppel, accordingly, fails since there cannot be an estoppel to evade the plain provisions of a statute. In the result, the chargor is entitled to the declaration prayed for, namely, that the order for sale aforesaid, in so far as it relates to the land, be set aside. In consequence, the order of the senior assistant registrar dated 17 December 1987 made pursuant to the summons to proceed with the order of sale under O 31 r 2(2) is also set aside; (3) the learned judge made no order as to costs having regard to the inequitable behaviour of the chargor in commencing the present proceedings at this late stage no doubt to avoid liability to pay money he had undoubtedly received; (4) the learned judge was satisfied that s 66 of the Contracts Act 1950 (Act 136) does not apply because, although the charge as a security was void within the meaning of s 2(g) of the Act, as having been executed in breach of the restriction in interest imposed under s 120 of the code, the contract of loan relating thereto was perfectly valid and enforceable. The chargee is, therefore, free to commence proceedings to recover the money lent or advanced to the chargor and interest thereon at the contractual rate.

United Malayan Banking Corp Bhd v Syarikat Perumahan Luas Sdn Bhd (No 2) [1988] 3 MLJ 352 High Court, Penang (Edgar Joseph Jr J).

P applied for summary judgment against D. P's claim was based on a memorandum signed by D1 at the written request of one of the partners of P. The memorandum contained an admission of a debt. The amount acknowledged was stated as being owing in the future. P's application was dismissed by the senior assistant registrar. P appealed to the High Court. The learned judge reversed the decision of the registrar but allowed further arguments on the matter in open court. This matter was heard together with the application of D to strike out the statement of claim as disclosing no reasonable cause of action and on other grounds under O 18 r 19 of the Rules of the High Court 1980 and under the inherent jurisdiction of the court. D's counsel argued that the statement of claim did not disclose a cause of action since it did not arise either from a real account stated or a real agreed account.

Held, dismissing both applications: (1) it is fairly well established that an account stated in the sense of an admission or new promise without new consideration may be sued upon as a separate cause of action. In the instant case, although the statement of claim did not disclose the antecedents of the debts which was acknowledged to be due, it was sufficient to constitute a distinct cause of action. However, such accounts stated may not be conclusive and can be rebutted unlike real accounts stated or real agreed accounts which are fairly conclusive and can only be reopened on very limited grounds. D's application to strike out the statement of claim was, accordingly, dismissed by the court; (2) in the instant case, D disputed the existence of the debt acknowledged. D contended that the memorandum was signed by D1 merely for it to be shown to financial institutions for the purpose of obtaining credit facilities for P. As D had succeeded in raising issues of fact and law which need to be considered at the trial, the court granted D leave to defend. In the circumstances, the court reversed the decision given in chambers and dismissed the O 14 application.

Syarikat M Mohamed v Mahindapal Singh s/o Joginder Singh & Ors Suit No 22-23-88 High Court, Kangar (KC Vohrah J).

The plaintiff claimed the sum of $46,000, the balance of moneys lent by the plaintiff to the defendant between September 1981 and September 1986. Alternatively she claimed repayment of $46,000 from the defendant as drawer of two cheques for the total of $46,000. The defendant claimed that she had made payments of interest and that the plaintiff was a moneylender.

Held, allowing the application: (1) although in this case on the evidence, interest was charged on the loan, this was the only occasion on which a loan had been made by the plaintiff and therefore the plaintiff was not, at the relevant times, a moneylender within the meaning of the Moneylenders Act; (2) judgment should be given for the sum of $46,000 to the plaintiff. In the alternative, the defendant is ordered to pay the sum of $46,000 which was due under the two cheques which were presented to the banks of the plaintiff and dishonoured.

Lee Tian Hua v Chan Moi Hiong [1988] 3 MLJ 406 High Court, Bandar Seri Begawan (Roberts CJ).

The defendants executed an acknowledgment of debt in which the defendants acknowledged that the plaintiffs advanced S$325,000 to them by way of a friendly loan and that they undertook to repay the amount on a certain date. Subsequently, the first defendant paid the first plaintiff a total sum of S$160,000 in four payments. However, despite demands by the plaintiffs, the balance of S$165,000 remained due and owing. The plaintiffs then sued the defendants for this amount owing. The defendants' case was that the sum of S$325,000 represented a capital investment by the first plaintiff for a business venture between the first plaintiff and the first defendant in Bravo Builders (a construction firm) and that the acknowlegment of debt was executed merely to lend assurance to the plaintiffs that the defendants would recoup their capital which the first defendant would hand over to them at a later date. The defendants also pleaded a set-off and a counterclaim in respect of this business venture. The plaintiffs' case was based on the balance of a loan recoverable as a simple contract debt, the plaintiffs not being moneylenders. They contended that the first defendant's allegations of his right to set-off and counterclaim was totally contradictory to the wordings of the acknowledgment of debt.

Held, allowing the claim: (1) both defendants, by signing the acknowledgment of debt, agreed to the taking of the S$325,000 as a loan and admittedly with full understanding took it as such, undertaking at the same time to repay the same; (2) the first defendant had in essence expressly treated the loan as a separate and distinct transaction from the subsequent investment and joint venture, if any, undertaken by the first and second plaintiffs in Bravo Builders; (3) no extrinsic evidence of any weight or value to vary or qualify the terms of the acknowledgment of debt was adduced by the first defendant except his frail allegations; (4) the court upheld the plaintiffs' submission that the first defendant's allegation of his right to set-off and counterclaim was totally contradictory to the wordings of the acknowledgement of debt and had no bearing on the second plaintiff's claim against both defendants; (5) whilst a plea of set-off could be used by way of a defence to the plaintiff's action, claims could not be the subject of a set-off unless they existed between the same parties and in the same right. Here the claim sought to be specifically set off all related to Bravo Builders in which the first defendant claimed a 30% interest. The parties as well as the rights were different.

K Sathiamurthy & Anor v Rabit Chandra s/o T Durai Samy & Anor Suit No 1279 of 1996—High Court, Singapore (Amarjeet Singh JC).

The plaintiffs were carrying out work in Labuan at the methanol and power plants. The defendants agreed by an agreement, which both parties said in evidence was entirely oral, to supply labour at rates agreed with the plaintiffs for use by the latter at the methanol and power plants. During the progress of the agreement, the plaintiffs made certain payments to the defendants. Thereafter, the Inland Revenue Department of Malaysia sought to recover from the plaintiffs 20% of the sums which the plaintiffs had paid to the defendants for the supply of labour. This sum was paid by the plaintiffs to the Inland Revenue Department. In the present case, the plaintiffs sought, inter alia, to recover this sum from the defendants. The defendants also made a counterclaim. The plaintiffs asserted that under s 107A of the Malaysian Income Tax Act (Act 53), they are obliged to pay to the Inland Revenue Department 20% of all payments made to any non-resident and that it was only when the latter certified the defendants as non-resident that the plaintiffs were obliged to pay.

Held: (1) the plaintiffs must fail in their claim because they were attempting to enforce in Brunei Darussalam the revenue laws of another country; (2) the defendants were entitled to the counterclaim.

DSD Dillinger Stahlbau GMBH v Annie Chong & Anor [1988] 2 MLJ 293 High Court, Bandar Seri Begawan (Roberts CJ).

The plaintiffs by specially indorsed writ brought this action for $860,165.17 for work done and for $239,189.30 being interest for overdue payments. Relying on the terms of two contracts, the plaintiffs applied for leave to sign final judgment.

Held: (1) there was no triable issue to refuse leave to sign final judgment in respect of the claim for $860,165.17; (2) there was a triable issue with regard to the claim for interest; (3) the plaintiffs were therefore entitled to leave to sign final judgment in the sum of $860,165.17 and the defendants were entitled to unconditional leave to defend the claim in respect of interest.

Woon Hoe Kan & Sons Sdn Bhd v Bandar Raya Development Bhd [1971] 2 MLJ 213 High Court, Kuala Lumpur (Harun J).

The respondents were purchasers of certain houses to be constructed by the appellants. Each of the respondents had signed a sale and purchase agreement to purchase a house at $29,500. The present dispute related to the payment of an additional sum of $4,000 by each respondent to the appellants. The magistrate had found that the payment of $4,000 was not voluntary but made under a threat by the appellants to cancel the respondents' bookings for their houses. The main ground of appeal by the appellants was that the $4,000 was paid voluntarily and not under any coercion. The respondents, however, claimed a refund of the additional sums paid.

Held, dismissing the appeal: (1) the definition of the word 'coercion' in s 15 of the Contracts Act 1950 (Act 136) does not apply to s 73. The word 'coercion' in the context of s 73 of the Act should be given its ordinary and general meaning since there is nothing under s 15 which says that the word 'coercion' should apply throughout the Act. The definition of 'coercion' in s 15 should only apply for the purpose contained in s 14 as s 14 of the Act specifically says so; (2) the amount paid by the respondents must be refunded to them under s 73 of the Contracts Act 1950.

Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & Ors [1988] 2 MLJ 117 High Court, Muar (Eusoff Chin J).

Teck Guan Trading Sdn Bhd ('the plaintiff') agreed to sell round bars to Hydrotek Engineering (S) Sdn Bhd ('the first defendant'), the payment for which was guaranteed by John Fong Nyuk Foh ('the second defendant') and Christine Voo Heng Choong ('the third defendant'). The dispute here mainly concerned the price of the round bars. The defendants contend that the price was stated as RM1,180 in a document dated 27 July 1990. However, the plaintiff alleged that there was a typing error as the actual price should be RM1,244. The plaintiff produced a letter dated 18ÊSeptember 1990 by the first defendant agreeing to pay RM1,244 for the round bars. The first defendant stated that they initially resisted the demand but later agreed as the plaintiff persistently refused to supply; they required the bar to produce the concrete they had committed themselves to supplying; and there was no time to look for any other source of supply. The round bars were delivered on 19ÊSeptember 1990 and the first defendant accepted delivery. Due to the failure of the defendants to pay for the balance of payment for the bars sold, the plaintiff sent a notice of demand to the second and third defendants at the address of the first defendant. As there was no reply from the defendants, the plaintiff commenced action and on 18 February 1992 took out an application for summary judgment and striking out of the defendants' counterclaim which was granted by the senior assistant registrar. The defendants appealed against the decision as they alleged that on the facts of the case there was an inference of undue influence and/or coercion with reference to 'economic blackmail'. The second and third defendants also contended that they did not receive the letter of demand as it was not sent to the address expressly set out in the guarantee.

Held, dismissing the appeal: (1) there are two ways of committing 'coercion' as defined by s 15 of the Contracts Act 1950 ('the Act'), one of which is the threatening of an act forbidden by the Penal Code (FMS Cap 45) ('the Code'), while the other is the unlawful detention or the threatening of such to the prejudice of any person, with the intention of causing any person to enter into an agreement. The party contending that there was coercion must say what offence had been committed under the Code before the court could decide whether such an offence had been committed. However, this was not done here and, on the facts of the case, no offence under the Code had been revealed. Further, the refusal of the plaintiff to supply the round bars at RM1,180 did not amount to unlawful detention of property as the plaintiff was exercising its legal right over its own property. Therefore, there was no question of coercion being committed by the plaintiff on the first defendant; (2) the contention of 'economic blackmail' has been variedly termed under the English law as 'commercial pressure', 'economic duress' and 'unfair use of a dominant bargaining position'. However, the parties here were dealing with each other at arms' length and in fact the first defendant had before agreeing to the new price, threatened legal action. Given their pugilistic stance before the agreement, the plaintiff could not be said to be in a position to dominate the will of the defendants within the ambit of s 16 of the Act. The transaction in this case was a transaction in the ordinary course of business; (3) in cases of late delivery, the failure of a party to give notice of their intention to claim compensation as required under s 56(3) of the Act, would be regarded as waiver of that right; (4) it is a matter of interpretation of a particular clause when attempting to ascertain its meaning. The wordings of the clause of the guarantee in the present case deeming service made it clear that the receipt of the demand was deemed to have taken place notwithstanding that the second and third defendants (the guarantors) may not have received them and this was abundantly clear from the words 'despite evidence to the contrary' in the clause. The words of the clause allowed the plaintiff to choose between sending to the specific address mentioned in the guarantee or to the 'last known address' of the second and third defendants. Therefore, considering that at the relevant time the second and third defendants were the chairman and the general manager respectively of the first defendant, the demand here had been properly served on the second and third defendants when sent to the address of the first defendant.

Teck Guan Trading Sdn Bhd v Hydrotek Engineering (S) Sdn Bhd & Ors [1996] 4 MLJ 331 High Court, Kota Kinabalu (Ian Chin J).

In this case, on the facts found by the learned trial judge, the appellants had orally agreed to allow the respondents to occupy the premises for as long as they wished on payment of $14,000 as tea money. Two written agreements of tenancy were later executed but they did not refer to the appellants' promise. A dispute arose as to payment of rent and the appellants eventually sued for vacant possession, arrears of rent, mesne profits and damages. In their defence, the respondents claimed that under the oral agreement they were entitled to stay in the premises as long as they wished and so long as they paid the rent regularly. The learned trial judge dismissed the appellants' claim and ordered the appellants to register a lease in favour of the respondents for 28 years. He assessed the rent at $293.40 per month in the light of the increase of assessment. The appellants appealed and the question that arose was whether the evidence of the oral promise could be given in view of ss 91 and 92 of the Evidence Act 1950 (Act 56).

Held: (1) an oral promise, given at the time of contracting which induces a party to enter into a contract overrides any inconsistent written agreement. The device of collateral contract does not offend the extrinsic evidence rule because the oral promise is not imported into the main agreement. Instead it constitutes a separate contract which exists side by side with the main agreement; (2) in this case the learned trial judge was correct in giving effect to the oral agreement and in interpreting it to give the respondents a lease of 28 years from the date of the agreement.

Tan Swee Hoe Co Ltd v Ali Hussain Bros [1980] 2 MLJ 16 Federal Court, Johore Bahru (Raja Azlan Shah CJ (Malaya).

Industrial & Agricultural Distribution Sdn Bhd v Golden Sands Construction Sdn Bhd [1993] 3 MLJ 433 High Court, Kuala Lumpur (Visu Sinnadurai J).

The first plaintiff was the registered proprietor of a piece of land ('the property') which it had charged to the first defendant as security for a bridging loan of RM3.5m. A syndicated end finance of RM26m, out of which RM5m was to be provided by the first defendant, was also promised to the first plaintiff. These finances were required by the first plaintiff for the proposed development of the property into a housing estate comprising of 489 units of houses. The bridging loan of RM3.5m was fully disbursed to the first plaintiff but the syndicated end finance promised was never provided, as a result of which, the first plaintiff was unable to meet the interest payments due under the bridging loan. The first defendant then instituted foreclosure proceedings against the first plaintiff and sued its guarantors including the second plaintiff. An order for sale in respect of the property0was obtained, and, after four abortive attempts to auction off the property in which the reserve price was sequentially reduced from RM5m to RM3.5m, the property was finally sold to the second defendant which is a wholly owned subsidiary of the first defendant at RM3.2m. The plaintiffs then brought an action against the defendants claiming: (i) that their inability to meet the interest payments due under the bridging loan and to complete the development of the housing estate was due to the first defendant's failure to secure and provide the syndicated end finance as promised. It was alleged that the first defendant was negligent in representing that it could and would secure and provide the syndicated end finance of RM26m, or alternatively, that the said representations constituted a collateral warranty which the first defendant had breached. For this, the plain-tiffs claimed damages in terms of the profits that they would otherwise have made out of the sale of the houses in the housing estate; and (ii) that the defendants were negligent, if not fraudulent, in the conduct of the sale of the property by public auction. For this, the plaintiffs claimed damages in terms of the difference between the initial reserve price of RM5m and the outstanding amount due to the first defendant under the bridging loan.

Held, dismissing the plaintiffs' claims: (1) although the representations allegedly made by the first defendant were not pleaded in the plaintiff's statement of claim, the plaintiffs' evidence on the said representations was admissible in court because at that stage of the proceedings when the said evidence was tendered, no objection was raised by the defendants as to its admissibility; (2) there was no doubt that the first defendant did make representations to the first plaintiff to the effect that it could and would secure and provide the syndicated end finance of RM26m; (3) the essence of the tort of misrepresentation is the negligent manner in which representations are made. A duty of care may arise if, the representations made concerned a business or professional transaction, the maker of the representations realised or ought to have realised that the representations were likely to be the basis upon which the recipient intended to act, and it was reasonable for the recipient to act upon the representations. In the instant case, all these elements that may give rise to a duty of care were present; (4) the plaintiffs had also succeeded in establishing that the representations constituted a collateral warranty, and that it was breached by the first defendant when it failed to secure and provide the syndicated end finance as promised; (5) to establish the existence of a collateral contract, it is necessary to show that a representation was made and that it was intended to be relied upon by the recipient, that the representation induced the recipient into signing the main contract, and that the representation itself amounted to a warranty which was collateral to the main contract and which existed side by side with it; (6) there are strong authorities for the proposition that an oral promise given at the time of a contract, which induces a party to enter into the contract, overrides any inconsistent written agreement. However, there is no requirement in law that the oral promise must have been made, and relied upon, at the very time the contract was entered into. A collateral contract can also exist side by side with the main contract which it contradicts; (7) the plaintiffs failed on their second claim as there was no evidence to show that the first defendant was negligent in the conduct of the sale by public auction, or to warrant the conclusion that the sale of the property to the second defendant was made fraudulently; (8) despite having succeeded in establishing their first claim on negligent misrepresentation and breach of collateral warranty, the plaintiffs' action was dismissed by reason of res judicata or issue estoppel in its broader application; (9) the plea of res judicata is founded on the basis that since a decision has been made on a case or matter, there should a finality to that decision, and the parties affected or their privies should be estopped from litigating the same cause or matter in subsequent proceedings before the same or another forum; (10) the position of the law on the plea res judicata and issue estoppel, after the recent decision of the Supreme Court in Kandiah Peter v Public Bank, appears to be that res judicata is not applicable to foreclosure proceedings as an order for sale is not a judgment or decree.

Kluang Wood Products Sdn Bhd & Anor v Hong Leong Finance Bhd & Anor Civil Suit No D2-22-150-88 High Court, Kuala Lumpur (Siti Norma Yaakob J).

The plaintiff claimed compensation for services rendered to the defendant in respect of the sub-division of the defendant's undivided share in a piece of land. The plaintiff was entitled to the balance of the share in the land. The plaintiff's husband became interested to develop the plaintiff's land and by an agreement the plaintiff and the defendant agreed to have the whole land surveyed and sub-divided. No provision was made for payment of expenses in the agreement. The whole land was eventually sub-divided into 38 lots, each with a separate title. Thirteen of the lots were registered in the plaintiff's name, 24 in the defendant's name while one lot was surrendered to the state government as road reserve. Subsequently, the plaintiff was induced by her husband to bring the claim for compensation against the defendant.

Held: (1) although the plaintiff's act in this case was lawful and was such that the defendant enjoyed the benefit of it, the evidence showed that it was not done for the defendant. The dominant and sole motive of the plaintiff's husband in this case was to benefit himself and his wife in the housing project; (2) the evidence showed that it was the intention of the plaintiff to carry out the sub-division of the land gratuitously; (3) in the circumstances, as the plaintiff had failed to satisfy the conditions of s 71 of the Contracts (Malay States) Ordinance 1950, her claim must be dismissed.

Murthi v Annapoorani [1973] 1 MLJ 45 High Court, Kuala Lumpur (Mohamed Azmi J).

The appellant made discoveries of a few hundred acres of land which gave promise of bearing iron ore. In November 1959 he obtained a prospectors licence and a mining lease was granted to him in September 1961. He then formed a company called the Kota Mining Co Ltd (hereinafter called 'Kota') and transferred all the benefits and burdens vested in him to the company. By an agreement dated 19 September 1960, Kota transferred its right under the earlier agreements to the first respondents in consideration of $40,000 and a further $40,000 was to be paid at a later stage (which was never paid) with a tribute of $2 for every ton raised. Thus by a train of sub-contracts the first respondents became entitled as a matter of substance to the benefit of the prospectors licence and a right to a mining sublease of the mineral land. The first respondents then as commercial owners of the mining rights constructed a road eight or nine miles long leading to the mineral land. But despite that the first respondents never started to mine the land as it appeared that Kota did not carry out their part of the contract. The first respondents then sued Kota for specific performance of the agreement dated 19 September 1960 and they joined the appellant as a defendant against whom they made a claim for specific performance of an alleged oral agreement. When the case came up before Azmi J, as he then was, counsel for the first respondents announced that the action between his client and Kota had been settled so that the action proceeded between the first respondents and the appellant, and Azmi J held that there was no oral agreement as alleged and dismissed the action. The first respondents then appealed to the Federal Court who found against the first respondents upon the alleged oral agreement but in their favour under s 71 of the Contracts (Malay States) Ordinance 1950 and directed an inquiry as to the sum to which the first respondents were thereby entitled ([1965] 2 MLJ 45). On appeal to the Privy Council, the sole question before their Lordships was whether the Federal Court were right in holding that the first respondents had a valid claim against the appellant under s 71 of the said ordinance in respect of their expenditure upon the road.

Held: four conditions must be satisfied to establish a claim under s 71 of the Contracts (Malay States) Ordinance 1950. The doing of the act or the delivery of the thing referred to in the section: (1) must be lawful, (2) must be done for another person, (3) must not be intended to be done gratuitously, (4) must be such that the other person enjoys the benefit of the act or the delivery. These matters must be answered at the time that the act is done or the thing delivered and thus is of fundamental importance. As to the first condition it was clearly in the contemplation of both parties that the first respondent should do this work. As to the second condition the act in this case was not done 'for another person'; the road was built by the first respondents for their own benefit, for under the chain of contracts they were the body who were going to exploit the land. That was decisive of this case in favour of the appellant. The respondents also failed to satisfy the third condition because, at the time it (ie the building of the road) was done, the respondents did not intend to look to another for reimbursement of their expenditure. As to the fourth condition the appellant had benefited from the building of the road. Accordingly, as only one of the four conditions of the said section was satisfied the appeal should be allowed. Per curiam: The doing of the act does not mean that, although one may do the act for one's own benefit yet if in the end ex post facto one does not obtain that benefit but another does, one could then claim against that other under s 71 of the Contracts (Malay States) Ordinance as an act done for him.

Siow Wong Fatt v Susur Rotan Mining Ltd & Anor [1967] 2 MLJ 118 Privy Council Appeal from Malaysia (Lord Hodson, Lord Guest and Lord Upjohn).

The defendants/appellants had entered into an agreement with the plaintiff/respondent for the sale of a piece of land held under an approved application. The area of the land was not stated in the agreement, but the option for sale signed by the appellants was for nine acres and the approval of his application for the land was to the extent of nine acres. The price was calculated at $2,200 an acre and the consideration for the sale was stated to be $16,300. When the document of title was eventually issued, it was found that the area of land was only 5.281 acres. The respondent thereupon applied for rescission of the contract and for the refund of $6,794.20 from the appellants. The learned trial judge dismissed the application for rescission as he found that there had been no misrepresentation by the appellants. He held however that as the respondent had paid for nine acres it would not be fair that he should have only five acres without any compensation and he therefore ordered the refund of $6,794.20 to the respondent, acting on the provisions of the Specific Relief (Malay States) Ordinance 1950. The defendants appealed.

Held, allowing the appeal: the court can only award compensation under s 18 of the Specific Relief (Malay States) Ordinance 1950 in a case where the plaintiff asks for specific performance and as in this case the respondent did not ask for specific performance, the learned trial judge was wrong in ordering the payment of compensation.

Lee Hoy & Anor v Chen Chi [1971] 1 MLJ 76 Federal Court, Kuala Lumpur (Azmi LP, Gill and Ali FJJ).

The respondents were executors and trustees of the will of their late mother (the deceased). Under the deceased's will, she gave and bequeathed all her assets including a property known as Nos 1 and 1A Tong Watt Road (the property) to the respondents upon trust to sell, call in and convert the same into moneys and to divide the moneys into equal shares for distribution to nine beneficiaries. The appellant and the respondents were among these nine beneficiaries. The appellant had occupied No 1A Tong Watt Road and used it for the purpose of his business. In January 1993, a majority of the beneficiaries decided that the property should be sold by public tender. The highest tender received was S$4m. The respondents were advised that this was a good offer, but some of the beneficiaries, including the appellant, rejected it as being too low. The appellant later offered to purchase the property himself at S$4.5m. The respondents granted him an option to purchase the property in March 1993. At the same time, the appellant gave to the respondents a written notice that he would quit and deliver vacant possession of the property upon completion of the sale and purchase of the property. The appellant duly exercised the option and entered into a sale and purchase agreement, with completion to take place on 7 September 1993. The appellant eventually re-sold the property to a third party for S$4.78m. A dispute arose between the appellant and the respondents shortly after the option was granted. The appellant alleged that the first respondent had made an offer to the appellant to the effect that should he (the first appellant) succeed in securing a buyer for the property at a price in excess of S$4m, the first respondent would agree to the appellant retaining the excess. The first respondent reneged on this offer despite the appellant having found a buyer for the property at S$4.5m. A compromise was agreed upon between them whereby the first respondent agreed to pay the appellant a sum of S$300,000 as commission and the appellant agreed to pay out of the sum half of the estate duty payable on the deceased's estate. The first respondent alleged, however, that he agreed to this payment only if all the other beneficiaries agreed. However, the other beneficiaries did not signify their consent to the arrangement. The appellant commenced this action seeking to recover the sum of S$300,000 as commission for the sale or as compensation for vacating the premises, or alternatively the sum of S$500,000. The respondents denied liability, contending that the appellant was not a tenant of the property and that there was no agreement to pay him S$500,000 as commission. They averred that in any case, the compromise agreement for S$300,000 was subject to the consent of all the beneficiaries being obtained. The High Court dismissed the appellant's claims. Although the judge found that the first respondent did make an offer to enable the appellant to retain any excess of the sale price above S$4m, she held that the offer was not binding on the estate since the first respondent did not have the beneficiaries' consent or authority to make the offer. The judge also held that the appellant was not a tenant but only a licensee, as he had paid no rent to the deceased while in occupation of the property. On appeal, the main issue was whether there was a valid compromise or arrangement between the parties, and the precise terms of such compromise or arrangement.

Held, dismissing the appeal: (1) it was highly probable that the first respondent agreed to the compromise payment of S$300,000 only if all the beneficiaries consented to it. He could not possibly have agreed on his own to pay such a huge amount of commission without obtaining the beneficiaries' consent; (2) even in respect of the original agreement for the payment of the S$500,000 to the appellant, the first respondent had made it clear that it was subject to the consent of all the beneficiaries. Such a payment would be an extraordinary item of expenses in the administration of the estate, and it had to have been clear to the parties that the consent of all the beneficiaries would have to be obtained; (3) the first respondent's evidence on this point was wholly consistent with his conduct. Soon after the compromise was reached with the appellant, he instructed his solicitor to prepare a letter of consent to be signed by each of the beneficiaries. It was only natural that he had to protect himself from claims by the other beneficiaries; (4) as the condition requiring the consent of all the other beneficiaries was not fulfilled, the compromise was not enforceable and the appellant's claim thereunder failed; (5) the appellant was not a tenant but only a licensee. The notice to quit was not given by the appellant subject to any payment. There was no agreement made between him and the respondents for payment of any compensation for vacating the property, and he was not entitled to any payment in respect thereof.

Cheng Kwee Siong v Cheng Kwee & Anor [1997] 1 SLR 593 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

The appellants contracted to purchase a quantity of prime deformed steel reinforcing bars (the goods) from the respondents, which the latter knew prior to the contractual date, were to be sold by the appellants to a third party (Sintra). The date of delivery of the goods was latest by 1 December 1992. The appellants were to open a letter of credit in favour of the respondents by 31 October 1992. However, the letter of credit was only issued on 2 November, dated 3 November 1992, and was delivered to the respondents on 5 November. The respondents subsequently informed the appellants that they could not deliver the goods specified on time and asked the appellants whether Sintra were willing to accept goods of an alternative description. Sintra refused. The respondents, with the appellants' approval, continued to try to obtain the goods as specified but to no avail. On 20 January 1993, Sintra put the appellants on notice of their claim for damages and the appellants in turn similarly put the respondents on notice of their claim. Sintra then commenced an action against the appellants for damages for breach of contract and the appellants in turn instituted third party proceedings against the respondents. The appellants then settled Sintra's claim for the sum of US$150,000. At the trial, the appellants claimed a sum of US$55,000 for loss of profits on the sub-sale to Sintra, currency exchange losses arising therefrom, and a sum of S$235,715 (the equivalent of US$150,000) which they had paid Sintra. The respondents' defence was twofold. First the appellant had breached the agreement by failing to open the letter of credit by 31 October 1992. To this defence, the appellants' response was that the respondents had given them an extension of five days to open the letter of credit. The second defence of the respondents was that the letter of credit was defective as it was not in conformity with the agreement, and the appellants were in repudiatory breach. The appellants' response to this defence was that the respondents had waived their rights and were estopped from asserting that the letter of credit was not in conformity with the contract. The trial judge found that the respondents had agreed to grant an extension of five days for the appellants to open the letter of credit. Although there were deficiencies in the letter of credit, and thus the appellants were in repudiatory breach, nevertheless the respondents had waived their right to terminate the contract and, having full cognisance of the terms of the credit, had represented to the appellants that they were endeavouring to fulfil their part of the bargain. The appellants were awarded the sum of US$55,000 as their loss of profits. As for the currency exchange losses, the trial judge decided to award interest to the appellants at the rate of 8% pa on the US$55,000. The trial judge disallowed the appellants' claim for the sum of S$235,715 (the equivalent of US$150,000) which they had paid Sintra. Both the appellants and the respondents appealed.

Held, allowing the appellants' appeal and dismissing the respondents' appeal: (1) the opening of a letter of credit was a condition precedent to the respondents' obligation to deliver the goods. The appellants were in repudiatory breach as they failed to open a letter of credit in conformity with the terms of the contract in material respects. However, the repudiatory breach by the appellants did not automatically terminate the contract, as the respondents had to elect whether or not to accept the repudiation; (2) the respondents had not by any act intimated to the appellants that they accepted the latter's repudiation of contract. Instead, the respondents continued to keep the contract alive by attempting to procure the goods for the appellants, and failed to object to the discrepancies when the letter of credit was issued, and thus led the appellants to believe that the respondents had accepted the letter of credit with the terms therein; (3) the respondents knew, prior to entering into the contract, that the appellants were buying the goods for resale. It was within the respondents' contemplation that if they failed to deliver the goods contracted for, the appellants would lose their profit on the resale and would also be liable to the sub-purchaser in damages. Where there was no available market for the goods, and the seller knew that the buyer was likely to resell the goods to someone else, the measure of damages in the event of non-delivery of the goods by the seller was the buyer's loss of profit on the resale as well as the damages he was liable to his sub-buyer for non-delivery; (4) in reaching a settlement with Sintra, the appellants were advised by their solicitors and there was nothing to suggest that their solicitors' advice was patently wrong or that there was anything suspicious. The settlement arrived at was reasonable and the amount which the appellants paid to Sintra should have been allowed.

Brown Noel Trading Pte Ltd v Donald & McArthy Pte Ltd [1997] 1 SLR 1 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

In this case, the respondent who had been given a surat akuan applied for a surat putus kechil. She was granted this but the surat putus kechil was subsequently cancelled for non-payment of quit rent and the land reverted to the state. The respondent subsequently reapplied for the land. Soon after that, she agreed to sell the land to the appellant, making it clear in the agreement that she was not its owner but had applied to the state for the land and promising to complete the deal after she obtained title from the state. The appellant paid $300 towards the purchase price and went into occupation of the land. After the respondent obtained the necessary document of title, the appellant asked her to complete the sale but she refused to do so. The appellant thereupon applied for specific performance. This was refused in the High Court on the ground that as the land had reverted to the state the agreement offended against s 195 of the Kedah Land Enactment relating to unlawful occupation of state land. The appellant appealed.

Held , allowing the appeal: the appellant's claim should have been allowed as this was not an outright sale but a conditional sale to be completed when the vendor's application was approved by the state. The contract in this case was clearly enforceable in law.

Halimah bte Abdul Rahman v Fatimah bte Abdullah [1976] 2 MLJ 64 Federal Court, Alor Star (Suffian LP, Ali and Wan Suleiman FJJ).

In this case, the first and second respondents, as the administrators of the estate of a deceased person, had agreed to sell land belonging to the estate to the appellants. The sale was subject to obtaining leave of the court. The administrators delayed in applying for leave, but in the meantime, the appellants were allowed vacant possession of the land. The appellants subsequently obtained an order from the High Court ordering the administrators to apply to the court for leave to sell and transfer the land. The administrators therefore filed an application to court for leave. The beneficiaries were cited as respondents and the appellants applied to be added as interveners. The application was dismissed by the learned judge as the beneficiaries opposed the application on the grounds, inter alia, that the agreed purchase price was grossly below the market value. The appellants appealed.

Held: (1) the appellants as the proposed purchasers under a conditional contract were perfectly well aware that their contract had to be approved by the court before it could be carried into effect and they had taken the risk of losing their bargain if the court refused to grant such approval; (2) the duty of the court is to protect the rights of the beneficiaries and not to consider the interests of the proposed purchasers. In exercising its discretion, the court will have to look into the facts and surrounding circumstances of the case, that is whether the proposed sale was favourable to the beneficiaries and whether the administrators had acted with proper prudence in exercising their overriding duty to obtain the best possible price. The court is concerned that the price is a reasonable one not at the time the offer was made but at the time of the hearing of the application for approval of the proposed sale; (3) in this case, the purchase consideration was manifestly low in the light of the valuation of the land at the material time and the learned judge was correct in dismissing the applications; (4) in this case, the appellants had delayed in their application to court for relief and there was no reasonable excuse for them to have been inactive for such a long period without seeking relief.

Yap Yoke Luan & Ors v Ong Wee Tok & Ors [1984] 1 MLJ 23 Federal Court, Kuala Lumpur (Salleh Abas CJ, George Seah and Syed Agil Barakbah FJJ).

In this case, the plaintiffs obtained judgment against Kean Toh Amang Factory Sdn Bhd (first defendant) in the sum of $46,000 which with interest stood at $48,507 unpaid. The plaintiffs caused a writ of seizure and sale to issue and the bailiff seized a number of movable goods at Amang factory. Later on, one Lee Kwee Hong (claimant) filed an O 17 r 2 notice claiming all the goods seized as his own. He relied on a written sale and purchase agreement of an earlier date. According to their agreement, the defendant had agreed to sell the land and factory with movables for $280,000 to the claimant. The land could not be sold without the consent of Mentri Besar. The agreement provided that in case the consent is not forthcoming, the agreement would be treated as null and void. The judgment creditor contended that on the date of seizure the Mentri Besar's consent had not been obtained, therefore property in the movables was still with the judgment debtor. He also contended that the sale was not bona fide as the two shareholders of the defendant company were the sister and sister's daughter of the claimant. The claimant told the court that he was not aware of any judgment debt against the defendants.

Held: (1) property in the movables did not pass to the purchaser on 19 December when they were seized by the bailiff; (2) the agreement was a conditional agreement subject to the consent of Mentri Besar and the consent had not been given on the date of seizure of movables.

Harper Gilfillan (1980) Sdn Bhd v Kean Toh Amang Factory Sdn Bhd; Lee Kwee Hong (Claimant) [1986] 1 MLJ 249 High Court, Kuala Lumpur (George J).

The appellant appealed against the decision of the magistrate's court to dismiss its application to strike out the respondent's claim on two main grounds. The first ground was that the respondent had no locus standi to proceed with the claim without joining one Pang ('Pang') as a party to the action since the sale and purchase agreement ('the agreement') was entered into between the respondent and Pang on one part and with the appellant on the other. Secondly, it was alleged that the purchase price was not due and owing as the condition precedent had not been fulfilled. The respondent and Pang had agreed in writing to sell all their shares in Ascent Sdn Bhd ('Ascent') to the appellant for RM60,000 ('the purchase price') on such terms and conditions as set out in the agreement. The agreement provided that the down payment of RM30,000 ('the down payment') shall be made subject to the condition that the conversion of a certain land could be successfully converted to a 60-year lease. The appellant's case was that the condition precedent as stipulated in the agreement was never waived although a further sum of the purchase price amounting to RM16,000 was subsequently paid to the respondent. The defendant averred that the balance sum of RM14,000 ('the balance sum') would only be disbursed to the respondent on fulfillment of the condition precedent. The respondent then filed a claim before the magistrate's court and sought for the payment of the balance sum together with interest and costs. The respondent deposed that the appellant had issued three cheques to the respondent in order to make good the balance sum but subsequently advised the bank to stop payment of the cheques. Attempts were made by the owner of the land to convert its status from temporary occupational licence to leasehold but the attempts were fruitless. The issues before the court were: (i) whether there was a condition precedent by making the down payment and the second payment of RM16,000; (ii) whether there was a need to join Pang as a co-plaintiff or as a defendant, and if there was such a need, the duty to do so would rest on the respondent and the issue must be adressed in the light of locus standi on the part of the respondent.

Held, remitting the case to the magistrate's court: (1) the intention of the parties was clearly to enter into a conditional contract as both parties knew that if the land could not be converted into a 60-year lease, the sale of the shares in Ascent could not be effected; (2) though the appellant had initially waived the condition precedent, they had by their conduct in stopping payment of the cheques made it very plain that they sought to insist on their strict legal rights as to the condition precedent. The appellant had by such conduct revived the condition precedent in the agreement; (3) Pang was a party to the agreement and it was a non-joinder on the part of the respondent in not citing him as a plaintiff or, if he disagrees, as a defendant; (4) the rule in O 8 r 6(1) of the Subordinate Courts Rules 1980 (which provides that no cause or matter shall be defeated by reason of the misjoinder or non-joinder of any party) does not alter the legal principles in regard to action. It is still necessary to have before the court the proper parties necessary for adjudicating the point at issue. From the facts, the respondent was a party to the agreement and he had the necessary standing to institute his claim. This was a clear cut case of non-joinder of Pang as a plaintiff and it would certainly not cut down nor cripple the respondent's standing. An order that the respondent should take the necessary steps to cite Pang as a plaintiff, and upon his refusal, as a defendant to the action was made.

HSG Sdn Bhd v Ng Cheng Chiew Civil Appeal No 11-15-94 High Court, Johor Bahru (Abdul Malik Ishak J).

The plaintiffs entered into a sale and purchase agreement to purchase a house belonging to one Quah Hong Guan (Quah). Quah had mortgaged his property in favour of the defendants. The sale and purchase agreement was subject to (1) the plaintiff obtaining an extension of the written planning approval for the development of the land; and (2) Quah settling his dispute with a previous purchaser. Both conditions were not fulfilled. As to the first condition, the plaintiff had informed Quah incorrectly that permission had been obtained and had forwarded the engrossed transfer to Quah requesting for completion. The defendants exercised their power of sale and sold the house before completion. There was surplus proceeds in the defendants' hands after the sale and the plaintiffs requested the defendants to hold the balance pending the settlement of their suit against Quah. The defendants refused, and returned the surplus proceeds to Quah. Quah was made a bankrupt on 31 March 1989. The plaintiffs commenced this action for a declaration that the defendants were the trustees of the balance of the sale proceeds and that they were entitled to it.

Held, dismissing the plaintiffs' claim: (1) the plaintiffs were purchasers and not mortgagees. To be entitled to the residue, they had to be persons who 'appeared from the register to be entitled to the mortgaged property'. To be so, they must have become owners in equity under a contract of sale which was specifically enforceable; (2) the plaintiffs had commenced proceedings on 26 October 1987 in Suit 2794 of 1987 against Quah claiming the repayment of the deposit of $83,000 and damages for breach of contract. By so doing, they had elected to rescind the contract and were not entitled to specific performance thereafter; (3) as there was no specifically enforceable contract between Quah and the plaintiffs at the date when the defendants came into possession of the surplus funds on completion of the mortgagee sale, the plaintiffs were not persons who appeared 'from the land register to be entitled to the mortgaged property' under s 68(1) of the Act. Neither were they 'authorized to give receipts for the proceeds of the sale thereof' thereunder; (4) the purchaser's lien is not predicated solely upon the existence of one condition, ie recoverability of any part of his purchase moneys: another condition must also exist, ie the purchaser's right to specific performance'; (5) (per curiam) a conditional agreement may be specifically enforced if the condition was for the exclusive benefit of one part and that party decides to waive the condition.

Chip Thye Enterprises Pte Ltd v Development Bank of Singapore Ltd [1994] 1 SLR 164 High Court, Singapore (Goh Joon Seng J).

By this originating summons, the plaintiffs sought an order for specific performance of an agreement dated 16 January 1989 ('the 1989 agreement') made between Messrs Long Bee Enterprise Pte Ltd ('Long Bee') as the purchasers and the defendant, the administrator of the estate of Siah bte Mohamed also known as Tiah bte Mohamed (deceased) ('the intestate'), as the vendor for the sale of the intestate's one equal undivided one-fifth share of estate in fee simple in the property known as lot No 97-5 of mukim 3 ('the property') to Long Bee. The property comprised a piece of land having an area of 25,123 sq ft located off South Buona Vista Road and Pasir Panjang Road, approximately 9 km from the general post office. There were squatter huts and semi-permanent structures on the land. There was no right of way to the property from South Buona Vista Road. Messrs Knight Frank Cheong Hock Chye & Baillieu ('Knight Frank') estimated the value of the property on 7 April 1988 to be S$450,000 without vacant possession and any right of way to the property from South Buona Vista Road. The estate in fee simple in the property was vested in the intestate and other co-owners as tenants in common. The interest of the intestate in the property was sold to Long Bee subject to existing tenancies. The purchase price of the intestate's interest in the property was S$90,000. The plaintiffs had been nominated by Long Bee on 30 December 1992 to complete the purchase of the intestate's interest in the property under the 1989 agreement. The first plaintiff was a shareholder and director of Long Bee. He carried out the negotiations on behalf of Long Bee with the defendant for the purchase of the intestate's interest in the property. The 1989 agreement was a conditional contract. Clause (4), (5), (6) and (7) provided that the defendant was to obtain the sanction of the court for the sale; that agreement was subject to Long Bee obtaining unconditional legal access and all rights of way to the property and the necessary planning approval, and that the sale should be completed within the time provided. The agreement expressly provided that if Long Bee elected not to proceed with the purchase, the agreement would come to an end. Long Bee did not succeed in obtaining unconditional legal access to the property or obtain the necessary planning approval. Nevetheless, they elected to proceed with the purchase.

Held, dismissing the claim: (1) the conditions of contract in the present case were not exclusively for the benefit of Long Bee and the plaintiffs were not entitled to waive them; (2) the 1989 agreement was conditional upon Long Bee obtaining without condition the legal access and all rights of way to the property and the necessary planning approval from the competent authority for the development of the property, in conjunction with the owners of the other four-fifth shares in the property, for the erection thereon of residential or other houses. The fact that cl (7)(c) provided that the 1989 agreement would come to an end if the right of way was not obtained within three years from the date thereof and Long Bee did not elect to complete the sale and purchase clearly showed that this condition was not exclusively for the benefit of the plaintiffs; (3) cl (7)(c) of the 1989 agreement provided that it would come to an end if the plaintiffs elected not to proceed to complete the purchase when the right of way is not obtained within three years of the date of the agreement. It was clearly the intention of the parties that the agreement would come to an end if Long Bee failed to elect to proceed to complete the purchase. Since no time was stipulated in the 1989 agreement to make the election, Long Bee must make the election within a reasonable time, otherwise the agreement would come to an end; (4) when the notice was given, 11 months had lapsed since the expiry of the three-year period. Long Bee should not have waited for such a long time to elect to complete the purchase of the intestate's interest. In deciding what is a reasonable time for the exercise of the option to purchase the property, the court has to look at the nature of the transaction and the consideration paid to the defendant for the option given to the plaintiffs. The agreement effectively gave Long Bee an option to purchase the Intestate's interest in the property for a period of three years for a paltry sum of S$1,000. It would be unjust to the beneficiaries of the estate of the intestate if the court were to give Long Bee another 11 months after the expiry of the three-year period to elect to complete the purchase; (5) further, the remedy of specific performance is an equitable relief. Long Bee had taken unfair advantage of the defendant or was guilty of some form of sharp practice which would render the 1989 agreement an 'unconscionable bargain'. It would be unfair to the beneficiaries of the estate of the intestate for the court to grant the plaintiffs the relief sought by them. The court's discretion to grant specific performance is not exercised if the contract is not 'fair and equal'. Even though no fraud, duress or undue influence such as to justify rescission is shown, the court may still refuse to enforce the contract if it would be consistent with equity and good conscience not to do so.

Lee Thian Hua & Anor v Mohamed bin Othman Originating Summons No 246 of 1993 High Court, Singapore (Goh Phai Cheng JC).

In the 1947 case, the defendant claimed a lien of PRNN Firm's documents until full and complete payment of his salary owed to him by the said firm had been made to him. By a consent order dated 24 May 1948, made between PRNN Firm and the defendant, the defendant agreed to abandon his lien over the documents and in place thereof had agreed to accept a lien over the three parcels of land as security for his counterclaim (for payment of his salary). When the 1947 case finally came out for final disposal, judgment was given in favour of the defendant in his counterclaim. Consequently, he proceeded to enforce the judgment by filing an application to sell the three parcels of land given as security by the firm vide the consent order of 24 May 1948. The plaintiff sought for a declaration that the said consent order was no longer operative and the defendant had no right of lien over the three land titles. At the material time, the plaintiff was only acting as attorney for PRNN Firm and was never a party to the consent order. The plaintiff became the registered owner of the property only after 1 March 1949. When the titles were originally deposited with the defendant they were registered in the name of one Subramanian.

Held, dismissing the plaintiff's claim: (1) the plaintiff had no locus standi to initiate the present suit in his personal capacity; (2) although an order by consent is not a contract, it is sufficient evidence of the contract upon which it is based, and such contract is not less a contract and subject to the incidents of a contract because there is superadded the command of a judge. A judgment by consent is binding until set aside, and acts as an estoppel.

Kannappa Chettiar v Vellasamy Pillai [1977] 1 MLJ 255 High Court, Kuala Lumpur (Mohamed Azmi J).

P sued D for breach of a contract of carriage of goods. Before the action was heard, the parties managed to reach a settlement under which P agreed to accept the sum of S$20,000 in full and final settlement of their claim, the sum to be paid by instalments. The terms of the settlement were to be recorded in a consent judgment. However, when the matter came before the court, D reneged on the agreement and refused to consent to judgment. P then instituted the present action based on the compromise of the earlier action. The deputy registrar granted summary judgment to P on their claim. D appealed on the ground that there had been no consideration for the agreement to pay S$20,000 in full and final settlement of the claim.

Held, dismissing the appeal: there were no merits to the appeal at all. By compromising the earlier action, P had agreed to forego part of their claim and that was valuable consideration. The appeal was therefore dismissed.

Wearnes Technology Pte Ltd v Tan Yew Kang Summons in Chambers No 4658 of 1990 in DC Suit No 1627 of 1990 High Court, Singapore (Thean J).

The plaintiff was the registered owner of a parcel of land held under Country Lease No 165062420 situate in the District of Tenom ('the land') which was charged to the defendant as security for a loan of RM150,000 granted to Messrs Yin Cheong. Upon default by Messrs Yin Cheong in the repayment of the loan, the defendant commenced foreclosure proceedings against the land. By a letter dated 15 November 1986 ('ABD 7') the plaintiff proposed to the defendant that he would settle the loan due from Messrs Yin Cheong to the defendant by selling six acres of the said land at RM40,000 per acre. The sum due from Messrs Yin Cheong to the defendant at the material time was RM156,537.37. The defendant, by its letter dated 19 January 1987 ('ABD 9') accepted the plaintiff's proposal subject to the sale transaction being handled by the defendant's solicitors and the proceeds of the sale to be paid directly to the defendant's solicitors. On 17 March 1988, the defendant auctioned the land at RM175,000. The plaintiff claimed that ABD 7 and ABD 9 concluded a contract as between the parties and the defendant breached the contract by auctioning the land and the plaintiff suffered a loss as a result thereof. Counsel for plaintiff submitted that: (1) pursuant to ABD 7 and ABD 9, the plaintiff engaged surveyors to survey the land for the purpose of sub-division, submitted the application for sub-division to the relevant authorities, procured six purchasers for the six lots, instructed solicitors to prepare the sale and purchase agreements and signed a sale and purchase agreement with one purchaser and received a total deposit of RM10,000; (2) ABD 7 and ABD 9 constituted a contract of forbearance; (3) the contract was repudiated by the defendant when it proceeded to foreclose the land and caused 'ABD 19' to be published in the Daily Express on 30 July 1987; (4) the defendant did not give the plaintiff any written or oral notice of the defendant's intention to repudiate the contract; (5) the proposed sale by the plaintiff of the six lots could not proceed further as the purchasers became aware of the foreclosure proceedings by the defendant and the defendant had, by its own action obstructed the plaintiff from performance of the contract; (6) by reason of the defendant's failure to give any notice of their intention to repudiate the said contract, the repudiation was wrongful and judgment on liability ought to be entered against the defendant; (7) if the alleged termination or repudiation was for any breach on the part of the plaintiff, it is incumbent on the defendant to give specific and unambiguous notice to the plaintiff of the allegations which must be sufficiently particularised to enable the plaintiff to admit or deny them. The defendant admitted that the plaintiff's proposal was accepted pursuant to ABD 9 but submitted that the acceptance was further subject to an implied condition that the sale transactions were to be completed within a reasonable time. Alternatively, the defendant claimed that there was no agreement as between the parties because the plaintiff's proposal was made without consideration from the plaintiff and is therefore void and unenforceable. Counsel for the defendant further submitted that: (1) although the plaintiff informed the defendant on 15 November 1986 that he has found three prospective purchasers, and is in the process of securing three other purchasers, as at 11 July 1987, only one purchaser has executed the sale and purchase agreement with the plaintiff; (2) the defendant has enquired on numerous occasions on the progress of the private treaty sale but the plaintiff failed to procure any purchasers for the lots; (3) the defendant gave due notice to the plaintiff of the defendant's intention to proceed with the foreclosure of the land and the defendant further served a copy of Schedule J under rr 8(3) and 14(2) of the Land Rules to inform the plaintiff that application has been made by the defendant for an order for the sale of the said land and notice was given to the defendant to appear before the Assistant Collector of Land Revenue.

Held, dismissing the plaintiff's claim: (1) ABD 7 and ABD 9 constituted a contract of forbearance. It cannot be said that ABD 7 and ABD 9 were made without consideration as these two documents must be read conjunctively with and as an extension of the mode of payment towards the banking facilities granted by the defendant to Messrs Yin Cheong and it would be inequitable to allow the defendant to resile from the terms agreed upon in ABD 7 and ABD 9; (2) in repudiating the contract of forbearance, the defendant was not required to give specific and unambiguous notice to the plaintiff of sufficiently particularised allegations to enable the plaintiff to admit or deny them; (3) the nature of notice which the defendant was required to give to the plaintiff to repudiate the contract of forbearance was reasonable notice; (4) adverse inference against the testimony of the plaintiff can be drawn as no reason has been given and no evidence has been adduced by the plaintiff as to why the other five potential purchasers were not called to give evidence for the plaintiff; (5) the defendant did give the plaintiff reasonable notice before the defendant reimposed its legal right to foreclose the land but even though notice was given to the plaintiff, he did not pursue the matter further.

Voo Tet Kiong v Standard Chartered Bank Civil Suit No K 03 of 1990 High Court, Sabah and Sarawak (Suleiman Hashim J).

In this case, the appellant had agreed to sell a house to the respondent for $26,000. The respondent obtained an order of specific performance of the agreement and the appellant appealed. At the appeal, counsel for the appellant submitted that there was no consideration for the offer to sell and the agreement was void as being without consideration.

Held: it is clear from illustration (a) to s 24 of the Contracts Act 1950 (Act 136) that consideration can consist of mutual promises and the contention that there was no consideration in this case was entirely unfounded.

K Murugesu v Nadarajah [1980] 2 MLJ 82 Federal Court, Kuala Lumpur (Raja Azlan Shah CJ (Malaya).

This was an appeal against the decision of the High Court ([1972] 1 MLJ 35). The issue before the High Court was purely a question of fact, ie whether there was any consideration for the deed of arrangement to support the respondent's promise. The same issue fell to be determined by the Federal Court.

Held, allowing the appeal: (1) the material facts were wholly overlooked. The estates were never the appellants' customers but were the respondent's own, and they settled accounts at all times with him. They never held the respondent out as their agent; (2) whereas the respondent paid for the goods, of which he had taken delivery with his own personal cheques, there was no evidence at all that he did so otherwise than as the appellants' customer. The appellants could not have sued any of the estates for any quantity of the goods sold and delivered because there was no proof of delivery to anybody but the respondent. Thus, once the evidence established that the respondent was a customer of the appellants, there was no need to explore the law as to consideration for a contract. Therefore, judgment must be entered for the appellants in the amount claimed, with interest and costs.

Guthrie Waugh Bhd v Malaiappan Muthuchumaru [1972] 2 MLJ 62 Federal Court, Kuala Lumpur (Ong CJ (Malaya).

On 25 September 1991, the plaintiffs Leowood Industries (S) Pte Ltd took out a writ against Annho Pte Ltd to recover the sum of S$102,105.32, the balance of the price of sawn timber sold and delivered to Annho and bundling, transport and storage charges. On 27 January 1992, the plaintiffs were given partial final judgment in the sum of S$82,402.01. On 3 February 1992, a writ of seizure and sale was issued. On 10 February, timber identified as that which had been sold to Annho was seized at two timber yards and certain office equipment was seized at the offices of Annho at Carlton Building. Thereafter, three claimants laid claim to the goods seized. They are Mr Tan Swee Heng trading as TSH Timber Trading, Aeonic International Trade Pte Ltd, and Kim Soon Huat Timber Trading. In due course, the Sheriff took out interpleader summonses. Affidavits were filed by the plaintiffs and the claimants. The claimants all claim that the goods subject of their claim had been sold to them to offset pre-existing trading debts which Annho owed each of them. The plaintiffs' submission is that, firstly, the purported sales were not true sales within the meaning of the law of sale of goods, and secondly, the transactions were not bona fide but were intended to defeat the execution process; they were not good against the sheriff. The plaintiffs also submit that the purported sale being intended to discharge a debt which had accrued previously, the consideration was a past consideration and there was no contract. Kim Soon Huat's claim is to 34 tons of dark red meranti which Annho had bought from the plaintiffs. It was seized at the Sin Nam Huat Sawmill, who were Annho's contractors. Kim Soon Huat's claim is supported by an affidavit filed by Tan Chuan San, who describes himself as a person responsible for its marketing department. It is also supported by an affidavit of Stephen Teo, the then executive director of Annho. They both also gave evidence in court. TSH Timber Trading's claim is to certain items of office equipment of Annho's in their offices in Carlton Building. It consists of photocopiers, typewriters, computers and furniture. Mr Tan Swee Heng, the proprietor of the claimants, said that he had sold timber to Annho on 20 November 1990 for a price of S$25,105.54. Annho paid S$15,000 on 4 January 1991, leaving a balance of S$10,105.54. In late December 1991, Stephen Teo approached him with an offer to sell some office equipment to him to offset the outstanding debt. Annho's estimate of the price of the equipment was S$27,923.50, but Teo agreed to a discount of 70% because the equipment was old. He said the negotiations were concluded on 29 January 1992. A document purporting to be an invoice dated 29 January 1992 was produced to support the alleged sale. Aeonic International Trade Pte Ltd claims 65 tons of timber seized by the sheriff at Ceetee Bundling Yard.

Held, dismissing the claim: (1) the usefulness of a determination whether a transaction is a sale or not lies in the consequences that follow from such a distinction; (2) a debt, although incurred in the past, is still an existing debt. If there was in fact a debt at the date when the purported sale was contracted, there was a present existing liability. A discharge or diminution of that liability must surely be a present consideration; (3) the judgment of the court in this case was a monetary judgment. Although the judgment resulted from a dispute over the timber sold by the plaintiffs to Annho, the judgment created a mere judgment debt. It was not a judgment in rem against the timber subject of the dispute between the plaintiffs and Annho. It did not have the effect of impressing the timber with a trust. Neither did it have the effect of turning the plaintiffs into secured creditors having a security interest in the timber; (4) under the original contract of sale of the timber from the plaintiffs to Annho, the property in the goods had at some point of time passed to Annho. It follows from the passing of the property that Annho had the right to deal with the timber in any way they pleased as owners. They could certainly sell it or contract to sell it, or transfer it in exchange for the extinction of a debt, or otherwise dispose of it. In the absence of any vitiating factors, title would in the normal course pass to a third party, and if that took place, the effect would be to place the goods beyond the reach of Annho's creditors or the sheriff. A disposition of property for good consideration is not void merely because it was made with the intention of defeating the expected execution of a judgment creditor; (5) except in a case of insolvency, where special rules about undue preferences apply, the mere intention to prefer a particular creditor or to defeat an expected execution does not invalidate a disposition of property; (6) for such a disposition to be valid, it must be for valuable consideration and made in good faith; (7) whether the disposition was made in good faith is to be decided on a consideration of all the facts and circumstances of the case. The adequacy of the consideration, the relationship of the parties, the manner in which the transaction was affected are all relevant considerations. If the judgment debtor continues to be in possession after the purported disposition, when this is not in accordance with the tenor and object of the disposition, that is a strong indicator of fraud. However, this is a presumption that, like presumptions of fact generally, can be rebutted. In any event, a transaction that is a mere sham, which pretends to be what it is not, of course cannot qualify as a valid disposition; (8) he who asserts must prove; (9) on the facts, Kim Soon Huat have not discharged the burden of proving that there was a bona fide sale of the timber to them in return for the reduction of the debt outstanding between them and Annho; (10) there was no genuine sale of the office equipment to Tan. The court did not attach any weight to the alleged invoice purporting to show a sale of the equipment on 29 January 1992; (11) any person seeking to show the coming into being of a contrary state of things must bear the burden of proving it;the court also rejected Aeonic's claim because of the incredibility of, inter alia, the witness' evidence.

Leowood Industries (S) Pte Ltd v Annho Pte Ltd (Tan Swee Heng trading as TSH Timber Trading & Ors, Claimants) Suit No 2001 of 1991(WSS No 42 of 1992;Interpleader Summons Nos 2,3and4 of 1992) High Court, Singapore (Warren LH Khoo J).

Asia Polyurethane Mfg Pte Ltd v Woon Sow Liong [1990] 2 MLJ 463 High Court, Singapore (Chan Sek Keong J).

Eagle Express Pte Ltd ('Eagle') ran up a large debt with the respondents who had provided board and lodging to the tour groups brought in by the former. The Eagle's 39 days' credit was revoked by the respondents when the debt could not be settled. The parties subsequently met and new terms were arranged. The respondents agreed to provide board and lodging on 'cash on departure' terms and in consideration of Eagle reducing their outstanding debt. The appellant also signed a guarantee to repay the debts in consideration of the respondents providing board and lodging on 'credit'. After the meeting, business was resumed on a 'cash on departure' basis. The respondents sued on the guarantee when Eagle failed to pay up their debts. The appellants contended that 'credit' meant 30 days' credit. The respondents contended that it meant 'cash on departure' and also contended that they forbore to sue on the outstanding debt in further consideration of the guarantee. The trial judge found in favour of the respondents. The appellants appealed on the grounds that the decision was against the weight of evidence, that evidence of pre-contractual negotiations was inadmissible and that there was a total failure of consideration when the respondents demanded that Eagle pay cash on departure instead of giving 30 days' credit after departure.

Held, dismissing the appeal: (1) when a contract contains words which are capable of bearing more than one meaning and it is alleged that the parties have intended only one of the possible meanings, it is then permissible for the court to examine the extrinsic evidence to see whether the parties have in fact used the words in question in one sense only. The trial judge rightly admitted the extrinsic evidence on the discussion at the meeting to show what was agreed and meant by the term 'credit'; (2) the learned judge's finding that the defendant agreed to accept cash on departure as the form of credit to be given to Eagle in consideration of the guarantee was not against the weight of evidence; (3) extrinsic evidence is also admissible to prove that the true consideration was something more than that stated in the contract; (4) the respondents had given consideration for the guarantee as credit in the form of cash on departure was extended and there was forebearance to sue in respect of the outstanding debt by the respondents pursuant to the agreement between both parties.

Chew Tong Shing v Hotel Royal Ltd [1992] 2 SLR 787 Court of Appeal, Singapore (Yong Pung How CJ, LP Thean and Goh Joon Seng JJ).

P sued D on a guarantee purportedly made by him in respect of a term loan advanced by P to WSP, a company of which D was a director. WSP's original directors were C and Q. When applying for the loan from P, C and Q signed guarantees but D did not. Nevertheless, P disbursed the loan. It was only later that D signed a guarantee. In his evidence, he claimed that this later guarantee was for future advances and not for existing indebtedness and that he had signed it in blank.

Held, dismissing the claim: (1) P had not proven that it was a condition of the term loan that all three directors of WSP should sign guarantees. The court inferred that what had happened was that P was satisfied to proceed with disbursement of the loan to WSP with the support only of the core directors as guarantors, leaving it to a later opportunity to get guarantees from the other directors if possible; (2) the court accepted D's evidence that he signed the guarantee later in blank for future facilities. Since no further advances were made to WSP, there was no consideration for the guarantee signed by D.

Indian Overseas Bank v Lim Hug Hiong [1990] SLR 1273 High Court, Singapore (Yong Pung How CJ).

The plaintiffs in this case were bankers. They claimed against the four defendants jointly and severally for the sum of $1,455,960.73 with interest under a guarantee of 2 May 1974. In the said guarantee the defendants jointly and severally acknowledged that the debenture dated 2 May 1974 between Alfa Electronics Pte Ltd (the company) and the plaintiffs was subscribed for on condition and in part consideration that they would jointly and severally give the guarantee as appearing in the guarantee and accordingly they jointly and severally guaranteed to the plaintiffs, the registered debenture holder the due payment by the company of all principal moneys and interest falling under the debenture. The defendants also agreed to pay on demand if and whenever the company made default for more than seven days to the extent of $1,500,000. On 26 July 1976 the company was indebted to the plaintiffs in the sum of $1,455,960.73 which sum was due and payable by the company to the plaintiffs under the debenture. In spite of a written demand from the plaintiffs for the said sum, the defendants failed to pay. The first defendant admitted the signing of the guarantee but pleaded that the guarantee was 'a nudum pactum and void' for lack of consideration. The second, third and fourth defendants did not appear.

Held , allowing the plaintiffs' claim: the guarantee and the debenture must be read together. The consideration for the said guarantee was the plaintiffs being induced to sign the debenture.

First National Bank of Chicago v Lam Thoo Sang & Ors 1978 High Court, Singapore (Rajah J).

The plaintiffs appointed the first defendant as their del credere agent on 9 December 1982. In consideration of the said appointment, the second and third defendants had signed a letter of indemnity up to a limit of RM100,000 on 10 March 1986. The first defendant breached the agency agreement and the plaintiffs sent a letter of demand to the third defendant. The plaintiffs subsequently applied for summary judgment against the third defendant for the said amount, costs and other relief. The third defendant argued that the letter of indemnity was invalid for lack of, or for past consideration, as it was signed some three years and four months after the letter of appointment. He also raised the issue that he was no longer liable for the amount claimed by virtue of an agreement made between the plaintiffs and the first and second defendants.

Held, granting judgment to the plaintiffs: (1) the issue of the lack of consideration was totally devoid of merit as the relevant letter of indemnity certainly, clearly and conclusively, provided for both prospective and retrospective default by its wordings. Also, 'consideration itself accommodates past consideration so long as the ÒdesireÓ requirement is specified, that is the guarantee was given at the request of the indemnifier' (South East Asia Insurance v Nasir Ibrahim); (2) on the issue of the third defendant's liability, the said agreement only referred to the third defendant in cl 16, the closing words of which categorically denote that although all previous arrangements if any made between the parties were cancelled, it did not prejudice any rights which had already been accrued to either party. It therefore did not absolve the third defendant from the claim now made by the plaintiffs.

Malaysia British Assurance Bhd v Chan Ka Mooi & Ors Civil Suit No D5-22-1435-90 High Court, Kuala Lumpur (Abdul Malek J).

The present appeal arose from a judgment of D'Cotta J (see [1981] 1 MLJ 183) dismissing a claim by the appellants against the respondent for the sum of $2,520,198.91 with interest on a guarantee dated 18 April 1974 by the respondent in favour of the appellants. The respondent had been a land broker for 17Ð18 years since 1962. She contended that she did not know that the document which she signed was a guarantee for an unlimited amount otherwise she would never have signed it. Her plea of non est factum was accepted by the lower court who dismissed the bank's claim. The bank appealed on the ground that the learned trial judge erred in fact and in law in finding that the plea of non est factum had been successfully established by the respondent. The latter contended that the decision of the learned trial judge ought to be affirmed. In addition she submitted that there was no consideration moving from the bank to her for the said guarantee. She also pleaded that the appellants had been guilty of laches.

Held, allowing the appeal: (1) in this case regard should be had to the three documents before the court (letters dated 22 April 1974, 8 August 1974 and 10 August 1974); (2) if the attention of the learned trial judge had been specifically directed to the said documents, he would not have held, as he did, that, in his judgment, the respondent had successfully established the plea of non est factum; (3) having regard to the respondent's long experience as a land broker and other spheres of business Ð factors which the learned trial judge appeared to have not considered Ð her mere assertion that she thought the document she signed was one guaranteeing her a half share in the property was unbelievable; (4) there was good and sufficient consideration moving from the bank to the respondent. Although it is not necessary to record in a guarantee the consideration for which it is given (s 3, Mercantile Law Amendment Act 1856) a bank guarantee usually includes a clause describing why the guarantor has undertaken the liability. The present guarantee was no exception and contained the expressions 'continuing advances' and 'affording banking facilities' which were quite sufficient in themselves to meet the circumstances under which the guarantee was given; (5) where oral self-interested testimony is conflicting on a particular matter and there is contemporaneous or near contemporaneous documentary evidence relevant to the matter before the court, such evidence should be also given due consideration by the court, particularly if such documents came into existence long before the matter in question became one of dispute between the parties, before it makes a finding on the matter in issue;there is an implied term in the contract of guarantee whereby the bank, in whose favour the guarantee is given has a similar duty to the guarantor, as indeed it has to the mortgagor, whose property is being sold under its power of sale, to take reasonable care to obtain a proper market price. In this case there was no evidence that the property was sold at an undervalue.

First National Bank of Chicago v Tan Lai Wah 1980 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Rajah JJ).

The plaintiffs claimed that on 9 September 1983, the defendants each executed a guarantee to the plaintiffs whereby in consideration of the plaintiffs providing credit facilities to Worldwide Mercantile Development Private Limited ('the principal debtor'), the defendants guaranteed to the plaintiffs, inter alia, payment on demand of all moneys and liabilities due and payable by the principal debtor upon any account or in any manner whatsoever. As at 11 September 1984, an amount of $648,783.26 was due and owing by the principal debtor to the plaintiffs and as the principal debtor had failed to pay the amount, the plaintiffs claimed against the defendants as the guarantors. The plaintiffs applied for summary judgment under O 14 of the Rules of the Supreme Court. At the conclusion of the hearing, the learned deputy registrar gave the defendants leave to defend on condition that they furnished security by way of a banker's guarantee for an amount of $300,000 within 21 days. The defendants appealed. On appeal the defendants raised two defences: (a) the two guarantees were not executed and were never executed by the defendants in favour of the plaintiffs; and (b) if there were such guarantees executed by the defendants, they were given for past consideration. The appeal was dismissed by the learned judge. His Lordship found the bona fides of the defendants in relation to the first defence very dubious and that the first defence was shadowy. His Lordship also held that the second defence had no merits. The defendants made a further appeal to the Court of Appeal.

Held, dismissing the appeal: the learned judge was right in his view that the defence was shadowy and that there was no merit in the defence of past consideration.

Goh Swee Hoon & Anor v Ewings (Australia) Pty Ltd [1987] SLR 127 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Chua JJ).

R company sought loans from the plaintiff bank to finance an Urban Redevelopment Authority ('URA') project that the company had undertaken. The plaintiffs offered to issue two letters of guarantee in favour of URA and one of the terms of the offer was that a joint and several guarantee from the five directors of the company be obtained. The company accepted the offer and a guarantee ('the first guarantee') was accordingly executed by the five defendants. Following further discussions with R company, the plaintiffs offered in their letter of 22 February 1982 comprehensive banking facilities to the company totalling $31.5 million. As an interim measure, the plaintiffs on 23 February 1982, by a letter, offered to the company a temporary overdraft of up to $3 million pending the completion of the legal documentation for the facilities of $31.5 million. This offer was again made subject to the personal guarantee of the five directors and was subsequently accepted by the company. This guarantee ('the second guarantee') was later duly executed. On application by the plaintiffs, summary judgments were entered against the second and fourth defendants as guarantors of the banking facilities granted by the plaintiffs. The second and fourth defendants appealed to the High Court, contending that: (a) the second guarantee was not enforceable as not all the directors of the company signed the guarantee; (b) the scope of the second guarantee was unclear in that it was uncertain as to whether it covered the $3 million overdraft or the $31.5 million loan; (c) a material variation was made to the terms of the loan after the second guarantee was signed by the fourth defendant and as it was a material variation to which he had not given his consent, he was discharged from the obligations under the second guarantee; and (d) past consideration. The second defendant also alleged that as the plaintiffs left the execution of the guarantee to the care of the fourth defendant, the fourth defendant was acting as the agent of the plaintiffs when the fourth defendant made the representation to the second defendant that all the directors of the company would sign the guarantee.

Held, dismissing the appeal: (1) no objection was taken by any of the five directors that one or more of the directors had been left out of the guarantee and should be included. In the face of the plaintiffs' letter of offer dated 22 February 1982 expressly stating the requirement of a joint and several guarantee from the listed five directors, the resolution passed by the company accepting the offer and the conduct of the five directors, the first issue was without any foundation and was a sham. If the fourth and second defendants had failed to read the letter of offer and had assumed or thought that all directors would sign as guarantors, they were not thereby relieved from liability; (2) all the five directors had endorsed on a copy of the letter of offer of 23 February 1982 that they jointly and severally confirmed that the first guarantee 'shall extend to secure the abovementioned temporary OD facility of $3 million'. There could be no doubt that the $3 million overdraft facility was covered under the first guarantee. The second guarantee was for the main loan of $31.5 million to be granted to the company; (3) the alteration made to cl 2(I)(d) of the letter of offer dated 22 February 1982 did not increase the liability of each of the guarantors. It only removed a restriction on the purposes for which the loan could be put to use. In any case, even if that amounted to a material change, it came within cl 3 which stated that 'the bank shall be at liberty at any time...to...enlarge or vary any credit to the company'. The plaintiffs were by this clause given the liberty to make the alteration without the assent of the guarantors. By virtue of this saving clause, the fourth and the second defendants were accordingly not entitled to be discharged from their obligations under the guarantee; (4) there is no merit in the fourth contention as the guarantee was executed under seal; (5) the allegation that the plaintiffs left the execution of the guarantee in the hands of the fourth defendant was completely false.

Development Bank of Singapore Ltd v Yeap Teik Leong & Ors [1988] SLR 796 High Court, Singapore (Chao Hick Tin JC).

The plaintiffs had been granted a loan in order to start a housing enterprise. They executed a charge for the sum of $110,000 in favour of the defendant bank at a monthly interest of 9.6% per annum, giving by way of security a charge on certain lands belonging to them. Subsequently they executed another charge upon security of the land for the sum of $440,000 at the interest set out in the charge. They claimed a declaration that they were entitled to have released from the said charges by the defendant the lots of land under the said charges upon payment of $8,000 for each lot, a further declaration that the rate of interest chargeable by the defendant should be 9.6% per annum and calculated at monthly rests and an account of the interest overcharged by the defendant. The defendant bank alleged that the plaintiffs had agreed to pay or acquiesced in the payment of compound interest. The defendant also denied any agreement for partial releases of the land, and contended that even if there was such an agreement, it was unenforceable for lack of consideration.

Held: (1) the plaintiffs had never agreed to or acquiesced in the payment of compound interest and therefore the defendant bank was not entitled to charge such compound interest; (2) although there was no consideration for the agreement for partial releases of the land, the promise of the defendant to give such partial releases had in fact been acted upon by the plaintiffs and therefore was binding on the defendant; (3) in the circumstances there must be an inquiry to determine the amount of interest overcharged by the defendant bank.

Ong Tiaw Kok & Anor v Bian Chiang Bank Ltd [1972] 2 MLJ 134 High Court, Kuching (BTH Lee J).

On 29 May 1981, the appellant, acting on his own behalf and on behalf of three others, granted the respondents an option to purchase office properties at International Plaza. The option was to expire at 4pm on 5 June 1981. All four properties were to be sold jointly in a single transaction. On 30 May 1981, the respondents drew a cheque for S$20,000 in favour of the appellant who banked it in on the same day. On 1 June 1981 the appellant was informed by his bank that the cheque would be dishonoured as the respondents had stopped payment. The respondents claimed that they stopped payment because they came to know that one Wong Soo Chong had received an offer for sale in respect of the properties of which the respondents had earlier been granted the option. The agreement for the second option with Wong was dated 2 June 1981. On 4 June 1981 the respondents sent a fresh cheque for S$20,000 to the appellant's solicitors, seeking to proceed with the sale. On 5 June 1981 a cashier's order for S$195,367.63 was sent to the appellant, purporting to exercise the option. The appellant rejected both and, instead, sued on the dishonoured cheque. The appellant's claim was dismissed by the High Court and he appealed. He contended that there were two separate and distinct contracts in existence involving the different parties, namely, the cheque contract between the appellant and the respondents, and the option contract between the respondents and the four property owners. The appellant argued that he was entitled to judgment because he had given good consideration for the cheque contract by, inter alia, his warranty as to his ability to sell the properties. The respondent, however, claimed that there had been a total failure of consideration when the second option was granted and the respondents were entitled to stop payment on the cheque.

Held, allowing the appeal: (1) a bill of exchange evidences a contract separate and distinct from the original and underlying contract in pursuance of which the bill is executed. It did not depend for its enforcement on the performance of the original contract. A bill of exchange, once given, is to be treated as cash and is to be honoured unless there is some good reason to the contrary. This rule is restricted in its operation to contracts involving the sale of goods only; (2) the onus of proving lack of consideration in an action on a bill of exchange is on the adverse party since, unlike most simple contracts, for a bill of exchange contract it is not necessary to aver consideration for any engagement on the bill or to prove the existence of such consideration; (3) the cheque for S$20,000 was drawn in favour of the appellant alone as he acted for the other owners. The appellant's warranty to the respondents in accepting their cheque was that he was authorized to offer to sell them all four properties in question and to receive the cheque. That warranty was good consideration for the cheque; and the cheque contract being distinct from the underlying option contract, the warranty was not affected by the subsequent repudiation of the option contract. In any case, consideration need not be equal or appropriate to the value of the other promise.

Wong Fook Heng v Amixco Asia Pte Ltd [1992] 2 SLR 342 Court of Appeal, Singapore (Yong Pung How CJ, Lai Kew Chai and Warren LH Khoo JJ).

The plaintiffs claimed a sum of $123,050.61 and interest as due from the defendant who was alleged to have 'assumed responsibility' for such payment under a 'deed of arrangement' executed by him on 24 June 1970. The averment in para 2 of the statement of claim was that goods to the value of $123,050.61 were supplied by the plaintiffs 'to the estates' specified in the said paragraph. It did not say that the goods were supplied to the defendant. The defence was that the defendant was not liable for goods which had been supplied not to him but to the said estates and that the so called 'deed of arrangement' was void for want of consideration. The deed stipulated that goods were to be supplied by the plaintiffs 'to the estates named in the schedule' and all that the defendant appeared to have agreed to do was to assume responsibility for the payment of $123,050.61, being the amount due to the plaintiffs in respect of those supplies. Thus, the following two issues were to be determined by the court: (1) whether the statement of claim disclosed any cause of action; and (2) whether the deed of arrangement dated 24 June 1970, was void and of no legal effect as against the defendant. The former was tried as a preliminary issue.

Held: (1) as far as the defendant was concerned, the deed was executed by him neither for any past consideration, nor in respect of any forbearance to sue him for the supplies made to the estates, nor in consideration of any promise to supply him goods on credit in future. The deed was without consideration as understood in the light of the Contracts (Malay States) Ordinance 1950. All that the defendant could be said to have undertaken was a moral obligation; (2) as there was no consideration for the execution of the deed, it was unnecessary to say whether consideration could be proved by parol evidence; (3) therefore, in the light of the evidence and the authorities, judgment was in favour of the defendant on the preliminary issue that the statement of claim disclosed no cause of action. Observations on 'consideration' in the law of contract as well as the admissibility of parol evidence in the interpretation of a written document.

Guthrie Waugh Bhd v Malaippan Muthucumaru [1972] 1 MLJ 35 High Court, Seremban (Sharma J).

Citibank NA v Choong Kok Min; Abdul Ghafar Baba & Ors, Third Parties Civil Suit No D2-22-867-90 High Court, Kuala Lumpur (Siti Norma Yaakob J).

The appellant at the request of the respondent, gave a performance guarantee ('the guarantee') in favour of Perdana Sdn Bhd. The guarantee was executed by the appellant and was dated 9 August 1986. The respondent then executed an indemnity ('the indemnity') dated 19 December 1986 whereby the respondent undertook to indemnify the appellant against all claims against the appellant under the guarantee. The appellant claimed from the respondent under the indemnity. The respondent applied to strike out the appellant's writ and statement of claim on the ground that the indemnity was invalid because of past consideration. The senior assistant registrar dismissed the respondent's application and the respondent appealed to the High Court. On 8 April 1991 the judge allowed the respondent's appeal in chambers. On the same day the judge also dismissed the appellant's application for further arguments in open court. A certificate requiring no further arguments in open court was issued by the judge on 24 April 1991. The appellant filed a notice of appeal to the Supreme Court on 14 May 1991. The respondent argued that the notice of appeal was filed out of time because the one-month period to file the notice, commenced from 8 April 1991 when the appellant had notice that a certificate requiring no further arguments was to be issued. On this ground the respondent applied to the Supreme Court to strike out the appeal.

Held, dismissing the respondent's application and allowing the appeal: (1) the judge did not make an order on 8 April 1991 for the issue of a certificate requiring no further arguments. The judge accordingly could have changed his mind before actually ordering the issue of a certificate which was in fact not issued until 24 April 1991; (2) in any case even if the appellant was six days out of time in filing the appeal, the full court of the Supreme Court could and would grant leave for the appeal to be brought; (3) a relevant consideration to determine whether an instrument is a guarantee or an indemnity is that an indemnifier unlike a surety, is not discharged by the creditor giving time to the principal debtor; (4) in this case the indemnity would continue to remain in force notwithstanding any agreement to extend the period of liability of the appellant under the guarantee. The heading of the instrument in this case, namely, 'Third Party Indemnity', also indicated the parties' intention to sign a contract of indemnity. Accordingly the instrument in this case was a contract of indemnity and not a contract of guarantee; (5) in construing the consideration in a contract of indemnity, the court should be flexible and attempt to give business sense and efficacy to the contract; (6) the use of the words 'has done or abstained from doing' in s 2(d) of the Contracts Act 1950, shows that the 1950 Act recognizes past performance of a promisee as a valid consideration for the promise if the past performance is done at the request of the promisor; (7) in this case the appellant to its detriment, had given the guarantee at the request of the respondent. The detriment undertaken by the appellant was therefore sufficient consideration for the indemnity; (8) in deciding whether consideration is past, the court should not take a strictly chronological view. If the consideration and the promise are substantially one transaction, it should not matter in what order they are given.

South East Asia Insurance Bhd v Nasir Ibrahim [1992] 2 MLJ 355 Supreme Court, Malaysia (Abdul Hamid Omar LP, Gunn Chit Tuan and Edgar Joseph Jr SCJJ).

This is a claim by the plaintiff against the defendant for the sum of S$116,347 ('the sum'). This amount is said to represent a quarter share of the 1/2% commission amounting to S$465,388.26 received by the defendant as commission for effecting the sale of several properties in Goldhill Plaza and in Goldhill Centre ('the properties'). The sale was effected in May 1989 by a group of companies controlled by one William Goei ('Goei') to another group of companies controlled by an Indonesian, Lauw Siang Liong for about S$90m. The plaintiff claims to be entitled to the sum on the basis that there was an agreement between him, one Kang Lye Kim ('Kang'), Lena Wong Sook May ('Lena Wong') and the defendant, that the 1/2% commission was to be shared amongst them equally. The defendant has refused to pay the sum and the plaintiff commenced this action against the defendant for his alleged share of the commission. By his statement of claim, the plaintiff alleged that some time in April 1989, he was requested by Goei to seek a purchaser for the properties. At about the same time, Kang and Lena Wong had found a potential buyer in Lauw. Kang and Lena Wong were estate agents and were, at that time, associates. As they could not approach Goei directly, they therefore approached the defendant to seek his assistance in conducting the negotiations. The defendant was both an appraiser as well as an estate agent and is the sole proprietor of Phil Real Estate & Building Services. The plaintiff pleaded that the defendant was introduced to the seller by him and that there was an agreement that the commission for the sale was to be divided equally between the four of them. The sale was completed and the plaintiff claimed that he was entitled to the sum as commission. The 1/2% commission was only paid out to the defen-dant after he had commenced proceedings against the vendors and had successfully obtained summary judgment for S$465,388.26. The basic issue was simply whether there was an enforceable agreement whereby the plaintiff was to be entitled to a quarter share of the 1/2% commission recovered by the defendant. It is common ground that the plaintiff had introduced the defendant and Lauw to Goei.

Held, dismissing the plaintiff's claim: (1) the evidence clearly indicated that there cannot have been any prior agreement between the four persons to share the commission equally. At the outset, there was a prior agreement between Kang, Lena Wong and the defendant to share the commission. It was only after the plaintiff introduced the defendant and Lauw to Goei that he expressed his desire for a share of the commission to Lena Wong. The defendant's version of the events was rejected. The facts as contended by the defendant were inconceivable and the contention that there was a separate 'gentleman's agreement' was unlikely to be true. The three parties (Kang, Lena Wong and the defendant) were found to have eventually agreed to give the plaintiff an equal share of the commission in recognition of his assistance; (2) the relevant consideration for the agreement would have been the introduction of the defendant and Lauw to Goei by the plaintiff. However, the agreement was only formed after the acts of introduction and the consideration was therefore prima facie past. It was recognized in law that there was an exception to the general rule that past consideration was not good consideration. Consideration for a promise can be found from an act done before the giving of a promise to make a payment or to confer some benefit when the act must have been done at the promisor's request, the parties must have understood that the act was to be renumerated either by a payment or the conferment of some other benefit, and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance; (3) the plaintiff had initially considered the assistance he rendered as gratuitous and did not expect any reward for his efforts. The promise and consideration were therefore not part of one and the same transaction. As a result, the agreement was unenforceable by virtue of past consideration; (4) the court has the duty to take cognizance of the illegality of a contract when the contract is ex facie illegal or when it so appears from the evidence adduced before it, despite the absence of pleading. The requirement to plead illegality is only displaced when all the necessary facts are placed before the court; (5) the court clearly cannot assist in the enforcement of an illegal contract nor can it be enforced indirectly by claiming damages or compensation for the breach of it, or contribution from the persons making the profit realized from it. The agreement here is not alleged to be illegal but that it is tainted with illegality, being connected with some illegal conduct which renders it obnoxious. In considering this defence, the court had to look at the illegality relied on and the proximity of the illegal conduct to the claim maintained by the plaintiff, and then determine, first, whether there had been illegality of which the court should take notice and, second, whether in all the circumstances it would be an affront to the public conscience if, by affording him the relief sought, the court was seen to be indirectly assisting or encouraging the plaintiff in his criminal act; (6) the plaintiff was at the material time a CPIB officer. He was clearly in breach of the general prohibition in the instruction manual ('IM') against public servants engaging in any trade or business and was in fact dismissed because of this breach. However, the IM does not carry the force of law and are merely internal regulations concerning the conduct and behaviour of a public servant. Equally, the plaintiff was not guilty of an offence under s 168 of the Penal Code (Cap 224) as he was, in the circumstances, not legally bound not to engage in trade, in the sense under s 43 of the Penal Code. The agreement was therefore not tainted with illegality.

Sim Tony v Lim Ah Ghee (t/a Phil Real Estate & Building Services) [1994] 3 SLR 224 High Court, Singapore (Lai Siu Chiu J).

[Annotation: Affirmed on appeal. See [1995] 2 SLR 466.]

The appellant was an officer attached to the CPIB. One Goei, who wanted to sell some properties, asked the appellant to refer to him any prospective buyers. The appellant was later told by Lena Wong (Wong) that she and one Kang, both estate agents, had found a potential buyer. However, Wong could not deal directly with Goei as she had once given a bribe to one of Goei's employees. Wong and Kang thus used the respondent as their front. The appellant agreed to introduce the respondent to Goei. The first meeting between the appellant, the respondent and Goei took place on 15 May 1989, in which the respondent and Goei agreed to a 1/2% commission should the sale and purchase be completed. The appellant had considered his assistance at that stage as gratuitous. On 16 May they met again, this time with the prospective buyer. At this meeting, Goei asked the respondent to 'take care' of the appellant, to which the respondent replied 'don't worry, I will.' The appellant did not take part in the conversation. After the second meeting, Goei assured the appellant that it was alright to receive a share in the commission although he was a civil servant and told the appellant that he would speak to his superiors about it. However, Goei failed to do so. Shortly before completion of the transaction, the respondent, Kang and Wong agreed to give a quarter share in the commission to the appellant. Subsequently, the appellant faced disciplinary proceedings which led to his dismissal from service. The appellant then brought this action alleging that there was a contract to share the 1/2% commission among the Kang, Wong, the respondent and himself In the court below, the learned judge held that the agreement among the four of them was not binding because there was no consideration; the consideration was past. On this ground she dismissed the claim. (See [1994] 3 SLR 224.) The appellant appealed. Another issue before the Court of Appeal was (as alleged by the respondent) whether the contract was illegal because the appellant was a public officer and thereby prohibited by his conditions of service, set out in the Instructions Manual (IM), from engaging in any trade or business without the written approval of his Permanent Secretary. The respondents also contended that what the appellant did was an offence under s 168 of the Penal Code (Cap 224).

Held, dismissing the appeal: (1) up to the conclusion of the second meeting, there had been no agreement between the appellant, the respondent, Wong and Kang that the appellant was to obtain a share in the commission to be earned and neither had the appellant, as a public officer, expected any reward. The undertaking given by the respondent to Goei on 16 May could not constitute an agreement between the appellant and the respondent as it was merely an expression of wish on the part of Goei to which the appellant was not privy to. When the appellant subsequently requested for a share, to which the respondent, Wong and Kang agreed, that agreement rested on past consideration, which were the introductions that had been made on 15 and 16 May 1989. Since the appellant had not done anything else after 16 May 1989 to constitute fresh consideration, his claim failed; (2) (per curiam) s 168 of the Penal Code only came into operation if a public officer was 'legally bound' not to engage in trade, ie where there was some enactment or rule of law which imposed the legal prohibition. Since the IM had no force of law, there had been no contravention of the provision; (3) (per curiam) although an officer who engaged in a trade or business without prior consent from the Permanent Secretary was liable to be subject to disciplinary action, nevertheless an agreement entered into in breach of the provisions of the Instruction Manual was not illegal per se. Neither was it injurious per se to the public. There was also no suggestion of any corrupt element in the agreement. In the circumstances, the agreement was not rendered unenforceable on the ground of public policy merely because it was entered into in breach of a service condition.

Sim Tony v Lim Ah Ghee (t/a Phil Real Estate & Building Services) [1995] 2 SLR 466 Court of Appeal, Singapore (Karthigesu JA, Lai Kew Chai and Chao Hick Tin JJ).

Though payment of a smaller sum cannot be a good consideration for accord and satisfaction of a claim for a larger one, yet if there is anything which can be a new consideration and a new benefit to the person entitled to the larger sum, that would support accord and satisfaction. If a stranger pays a part of a debt in discharge of the whole, the debt is gone because it would be fraud on the stranger to proceed.

Jagat Singh v Arthur Heng [1963] MLJ 399 High Court, Singapore (Choor Singh J).

The plaintiff sought to recover the sum of $5,141.24 alleged to be due as maintenance under a deed of separation. The defendant pleaded, inter alia, that he had made an offer to be reconciled and to resume cohabitation with the wife and as she had refused it, she should be deemed to have deserted him and was therefore not entitled to maintenance.

Held: there was no evidene that the wife had any intention of repudiating the deed of separation or that the husband was putting an end to the deed and as the deed provided for the parties to live separately at all future times, the husband had in the circumstances failed to prove desertion on the part of the plaintiff.

Koh v Koh [1965] 1 MLJ 99 High Court, Singapore (Choor Singh J).

In this case the plaintiff claims repayment of the sum of $15,254.20 being the amount claimed to be due on a building contract under which the defendant, a building contractor, agreed to build houses for the plaintiff. The building contract was rescinded and it was agreed that the moneys paid (ie $21,895.70) be refunded. The defendant claimed that the plaintiff had agreed to accept $17,000 in full settlement of the defendant's debt to the plaintiff and that he gave the plaintiff a cash cheque for $3,000 and a post-dated cheque for $14,000. Subsequently at the request of the plaintiff the defendant produced $500 in cash, took back his cheque for $14,000 and gave a cheque for $13,500. Payment of this cheque was subsequently stopped by the defendant at the request of the plaintiff.

Held: as the plaintiff had received negotiable instruments in the form of the two cheques he had received something different from that to which he was entitled to and therefore there was consideration for his agreeing to take $17,000 in settlement of the debt due to him.

Ting Hock Seng v Kong Sing Ping [1964] MLJ 407 High Court, Singapore (McGilligan J).

SSAB Oxelosund AB v Xendral Trading Pte Ltd [1992] 1 SLR 600 High Court, Singapore (Lai Siu Chiu JC).

The appellants were the directors of two companies, Moveland Properties Sdn Bhd and Rotraco Sdn Bhd. In 1984 the respondent, a building contractor, entered into a contract with each of the two companies separately for the construction in each case of ten units of buildings. At the signing of the contract with Moveland Properties Sdn Bhd, the name 'Moveland Sdn Bhd' was used. In 1986, as the two companies were lagging behind in payment, the respondent filed two separate civil suits against the companies respectively. In one of the suits, 'Moveland Sdn Bhd' was cited as the defendant. In 1987, a search having been made by the respondent at the Registry of Companies, it was discovered that there was no company registered as Moveland Sdn Bhd. The respondent thought that both the appellants had deceived it and therefore lodged a report to the police. The police report was not produced by the respondent. A settlement was eventually reached, culminating in the signing of two documents. One was an agreement in the form of a letter addressed to both appellants signed by two directors of the respondent with an acknowledgment at the foot of the letter signed by the appellants as directors of the two companies, agreeing to abide by the contents of the letter ('the companies' agreement'). The other was a letter addressed to the respondent in which the appellants jointly and severally guaranteed the respondent that they would settle the liabilities in the companies' agreement. It was stated, inter alia, in the companies' agreement that 'We shall withdraw our charges against you as detailed in the police report dated 25 March 1987'. Only about RM140,000 was paid after the above documents were signed to account of RM1.9m undertaken by both defendants to be paid. The respondent sought to recover the balance of RM1.76m on the basis of the letter of guarantee. The appellants resisted the claim, alleging duress and that the letter of guarantee was void as being illegal as the consideration for it was illegal or against public policy. The trial judge gave judgment for the respondent. The appellants appealed.

Held, allowing the appeal: (1) the court agreed with the trial judge's finding that there was no evidence of duress; (2) the court disagreed with the learned trial judge's view that to sustain a defence as in illustration (h) of s 24 of the Contracts Act 1950 ('the Act'), there must at least be a threat of continuing a prosecution which a plaintiff had initiated; (3) no court will enforce an agreement to stifle prosecution if such agreement, if allowed to be enforced, could mean that the law of freedom to contract has been abused. Such contracts are unlawful because their consideration or object is against public policy and are caught by the second limb of s 24(e) of the Act; (4) for Malaysia, as in India, it is only when the stifling of prosecution relates to non-compoundable offences as specified in the Penal Code that such agreements are considered void under s 24 of the Act. When they refer to compoundable offences or offences which are compoundable with the leave of court, such contracts would not be void. The reliance by the learned trial judge on the fact that the offence of cheating need not be reported to the police under the Criminal Procedure Code would appear to be of no avail; (5) the court must inquire: 'Did one party to the transaction make his promise in exchange or part exchange of promise of the other not to prosecute or continue prosecuting?'. The promise need not be a sole promise or a substantial one. It is sufficient if it is merely a part of the promise or one of the promises of the promisee; (6) a pending prosecution need not be a prerequisite for impugning such an agreement to stifle prosecution; (7) the companies' agreement and the letter of guarantee would have to be read together. The consideration for supporting the letter of guarantee would obviously have to come from the companies' agreement otherwise the letter of guarantee would ex facie be without any consideration; (8) the consideration to 'withdraw our charges', among others, taints the whole of the companies' agreement; (9) the 'charges' referred to could be irresistibly those related to cheating. Cheating under the Penal Code is non-compoundable with no discretion to the court to grant leave to compound the same, and to stifle prosecution for cheating is a mischief which s 24 of the Act provides for also.

Ooi Kiah Inn Charles & Anor v Kukuh Maju Industries Sdn Bhd [1993] 2 MLJ 224 Supreme Court, Malaysia (Gunn Chit Tuan CJ (Malaya).

The appellant was one of the directors of Wealth Sdn Bhd ('the company') which owned three lots of agricultural land in Kajang ('the land'). As the company wanted to develop the land into a housing estate, it made an application to the land administrator for the district of Ulu Langat ('the land administrator') for conversion and sub-division of the land ('the application'). To expedite the matter, the appellant sought the assistance of the respondent who said that he knew the Menteri Besar of Selangor. The appellant agreed to pay a fee of RM268,888 ('the fee') for the respondent's services. On 28 January 1991, the respondent wrote a letter using the company's letterhead to the Menteri Besar, asking for assistance for an early approval of the application. The appellant later paid RM100,000 to the respondent when he produced the letter with the handwritten word 'Disokong' addressed to the land administrator and signed by the Menteri Besar. On 16 September 1992, the land administrator informed the company that its application had been approved. Subsequently, by a letter dated 17 December 1991, the respondent wrote to the appellant to confirm the agreement between them whereby he was to receive an additional fee of RM100,000 if he assisted in resolving the problem of access to the land through a piece of adjoining land. The required right of way was eventually obtained. The appellant, however, refused to pay the remaining fee of RM168,888 and the additional fee of RM100,000. The respondent brought summary proceedings against the appellant in the High Court for breach of contract. The appellant argued in his defence, inter alia, that: (i) there was no consideration for the alleged agreement; (ii) the respondent did nothing to earn his fee; and (iii) the agreement was void for illegality as the approval had already been granted at that point in time and the money was in fact a bribe. The judge rejected all the appellant's defences for not amounting to bona fide triable issues, entered judgment for the sum of RM168,888, and granted unconditional leave to the appellant to defend in respect of the additional fee of RM100,000. The appellant has appealed to the Court of Appeal.

Held, dismissing the appeal: (1) s 2(e) of the Contracts Act 1950 ('the Act') provides that every promise and set of promises, forming the consideration for each other, is an agreement. In this case, the respondent promised that he would assist in obtaining the approval for the application. In return, the appellant promised to pay the respondent RM268,888 for that service. That consideration, namely the exchange of mutual promises, although executory, was a good consideration. Thus there was a binding agreement between the parties; (2) the submission that the respondent did nothing to earn his fee was unmeritorious. The respondent had expended his exertions in securing the Menteri Besar's support for the company's application, and the application had in fact been approved. The respondent's actions came within the terms of s 2(d) of the Act which provides that when the promisee has done something at the desire of the promisor, such act is a consideration for the promise; (3) the appellant's allegation that he was deceived by the respondent into believing that the approval would be granted when in fact it had already been granted was not supported by evidence. From the facts of the case, it was the appellant who asked the respondent for help. The respondent had obtained the approval of the application as promised and should receive the payment which had been agreed upon from the appellant; (4) the charge of bribery is a serious allegation even in civil proceedings. It should not be lightly taken in the absence of convincing evidence and a solicitor who makes such a charge without foundation risks being disciplined for misconduct. In this case, the appellant had implied that the respondent was involved in bribing the chief executive of a state government, but there was no independent evidence to support this allegation; (5) (obiter) had the respondent filed a cross-appeal against the order of the judge granting unconditional leave to the appellant to defend in respect of the sum of RM100,000, the court may have entered final judgment for this sum. This was because the appellant had failed to make a prompt and vigorous reply to the respondent's letter dated 17 December 1991, to deny the agreement on the additional fee, as he should have.

Wong Hon Leong David v Noorazman bin Adnan [1995] 3 MLJ 283 Court of Appeal, Kuala Lumpur (Shaik Daud, Gopal Sri Ram and VC George JJCA).

P was a carpenter. D were building contractors who had entered into a contract with S to refurbish a block of flats. D engaged P to carry out the carpentry work on the flats, including the roof. The main contract contained a penalty clause. P faced financial difficulties because the sub-contract rate was too low for him to operate satisfactorily and at a profit. D became concerned that he would not complete the carpentry work on time. They offered him additional remuneration to do so. P never finished the work and D had to engage other carpenters to complete it. P sued D for remuneration unpaid. The trial judge held that D had not paid P in accordance with the contract and that he was entitled to stop work. He accordingly found for P. D appealed, inter alia, on the ground that they were not bound to pay the additional sum promised to P since there was no consideration for the promise.

Held, dismissing the appeal: (1) if a sub-contractor has agreed to undertake work at a fixed price and before he has completed the work declines to continue with it unless the contractor agrees to pay an increased price, the promise may be voidable because of economic duress; (2) however, if A has contracted with B to perform services and (in the absence of economic duress or fraud by A) B promises A an additional payment because he has reason to doubt A's ability to complete his side of the bargain on time, B's promise may be legally binding if as a result of the promise B obtains a benefit or avoids a disbenefit; (3) by promising the extra payment to P, D obtained a benefit in that they ensured that P continued work and avoided the expense of having to engage others to do the work instead of P. Accordingly, the promise to pay additional remuneration was valid.

Williams v Roffey Bros Nicholls (Contractors) Ltd [1990] 1 All ER 512 Court of Appeal, England (Purchas, Glidewell and Russell LJJ).

Where it was established that consideration was given for a promissory note, the inadequacy of the consideration afforded no relevant answer to a demand made upon it.

Adib el Hinnawi v Yacoub Fahmi Abu el Huda el Faruq [1936] MLJ 123 Privy Council Appeal from Palestine (Lord Atkin, Lord Alness and Lord Maugham).

The plaintiff sued on a promissory note the consideration for which was the cancellation of a promissory note in respect of a debt incurred by the defendant during his infancy plus a further advance of $50 made after he had attained his majority.

Held: subject to relief under the Usurious Loans Enactment (Cap 63), the further advance was good consideration for the whole amount payable under the promissory note.

AR PL Arunasalam Chetty v Aziz Khan [1941] MLJ 159 High Court, Federated Malay States (Murray-Aynsley J).

Tan Ah Chim & Sons Sdn Bhd v Ooi Bee Tat & Anor [1993] 3 MLJ 633 High Court, Penang (Edgar Joseph Jr J).

The defendant was the administrator of the estate of the deceased. The plaintiff prayed for a declaration that the plaintiff was the purchaser of a piece of land which was owned by the deceased and that the deceased held the land in trust for the plaintiff, and another consequential prayer for an order that the land be vested in the name of the plaintiff. The deceased had executed Form A prescribed under the Kedah Land Enactment ('the form') where the receipt of the purchase price was acknowledged in the said transfer form. The form was duly stamped but was refused registration when presented at the Land Office because a caveat had been lodged against the land by the younger brother of the deceased. There was uncontradicted evidence showing that the plaintiff was not the purchaser of the land and that the man who indeed paid the price of the land was one Syed Endut. There was clear evidence that Syed Endut took possession of and cleared and cultivated the land. The grandson of the deceased ('DW2') claimed that the plaintiff or Syed Endut was refunded the purchase price by the deceased. Syed Endut claimed that he was handed the title deed to the land but he surrendered it to one Syed Yusof as attorney for the deceased in order to remove the caveat on the land. Syed Endut later discovered that the land had been given to a moneylender ('PW2') by Syed Yusof to be used as security for a loan. Syed Endut subsequently settled with PW2 the judgment sum, and the moneylender assigned his rights and interest in the land to the plaintiff. Syed Endut was given the title deed to the said land. The defendant argued that the plaintiff had not made out a claim against the defendant at all as no consideration moved from the plaintiff to the deceased and that the whole consideration proceeded form Syed Endut. He also argued that the plaintiff's name appeared on the form as a matter of convenience only and that he was never a party to the contract of sale and purchase of the land and therefore, he did not have any right to the land. The plaintiff argued that the statutory form in this case was properly executed and it was the intention of the transferor, the deceased, to vest the land in the plaintiff. The plaintiff, therefore, had a registrable interest in the land.

Held, dismissing the application: (1) on the facts, the evidence of DW2 that the deceased had borrowed money from PW2 to refund PW2 the purchase price was rejected; (2) if Syed Endut was the plaintiff in this case, there would be no problem declaring him to be the beneficial owner of the land. He, having paid the purchase price in full, became the beneficial owner of the land and the vendor (the deceased), having received full payment, became bare trustee of the land for the beneficial owner; (3) the principle is that a stranger to a contract cannot sue to enforce the contract. The plaintiff was conferred a benefit by a contract to which he was not a party and the plaintiff could not enforce the contract; (4) on the facts of the case, though the plaintiff's name appeared in the instrument of transfer, no registrable interest was created in his favour because it was a benefit conferred by a contract to which he was not a party. He was not a purchaser of the land and no trust in the sense of Lysaght v Edwards was created in his favour.

Syed Mansor bin Syed Hassan v Official Administrator (sued as the Administrator of the Estate of Saud bin Haji Adam, deceased) Civil Suit No 139 of 1979 High Court, Alor Setar (KC Vohrah J).

P, an architect, was retained by D to draw up plans for a building that D wanted to erect on their land. The budget for the project was S$1.5m. After the plans were completed and tenders were called for, D found that the estimated cost would far exceed the budgeted sum. After an exchange of correspondence, D terminated P's services as architect. The building was eventually completed at just over the original budget. The building was in all material respects similar to the one that P had designed. A dispute arose regarding the amount of fees due to P. P sued D for his fees. D counterclaimed for the S$25,000 they had already paid to P on the ground of total failure of consideration in that the plans he drew up were not in conformity with instructions.

Held, allowing P's claim and dismissing the counterclaim: (1) it was not an implied term of the contract that P was to ensure that the cost of the building would not exceed the budget. It is not within the province of an architect to quantify the cost of a building with any accuracy and it is not practicable to expect an architect to ensure that the cost would not exceed the budgeted sum; (2) the building eventually erected was substantially based on P's plans. In the cricumstances there was no total failure of consideration; (3) the action could have been avoided if both parties had behaved sensibly. P was awarded only his costs.

Paul Tsakok & Associates v Engineering & Marine Services (Pte) Ltd [1990] SLR 942 High Court, Singapore (Thean J).

By an agreement dated 27 October 1992 and a supplemental agreement thereto dated 3 November 1992 (collectively referred to as 'the agreement') the defendant agreed to sell his entire shareholdings in the second plaintiffs to the first plaintiff for a consideration of S$1/2m which, under the supplemental agreement, was later ascertained and agreed to be the sum of $470,375. The price was the par value of the shares. By cl 5 of the agreement of 27 October 1992, to which only the first plaintiff and the defendant were the contracting parties, it was agreed that the defendant 'will not enter any competitive trade with Welmark International Ltd [ie the second plaintiffs] for a period of two years'. The second plaintiffs were not a party to the agreement. Both plaintiffs claimed that the defen-dant had entered into competitive trade against the second plaintiffs when he, after the agreement, dealt or traded with three named parties with whom the second plaintiffs had been conducting business. They therefore sought damages, an accounting of the profits and an injunction, among other reliefs. The defendant made an application to strike out the second plaintiffs' statement of claim against him on the triple grounds that it disclosed no reasonable cause of action, it was frivolous and vexatious and/or it was otherwise an abuse of the process of the court. The defendant also sought the dismissal of the action of the second plaintiffs and costs. The claims by the first plaintiff were not the subject of any application. The application was allowed and the second plaintiffs appealed.

Held, dismissing the appeal: (1) the fact (which was implicit from the statement of claim) that the second plaintiffs had not given any consideration to the defendant was fatal on any claim based on cl 5 of the agreement; (2) the defendant unarguably did not continue to be a director of the second plaintiff. It was clear beyond any peradventure that it was a condition of the first plaintiff's purchase of the shares of the defendant that his resignation as a director of the second plaintiffs was to take immediate effect upon the formation of the agreement; (3) in equity, the fiduciary duties of a former director cannot be too wide because ex-cessively extensive fiduciary duties would not only inhibit and impede free competition but could conceivably unfairly restrain trade or the pursuit of one's profession or the legitimate exercise of one's skills to earn a living; (4) a fiduciary's duty continues and he must not exploit any opportunity or confidential information he had learned during his relationship or association with his principal. Typically, former directors are not permitted to divert maturing business opportunities to themselves or their nominees. Nor can they be permitted to exploit confidential information acquired during their office as directors; (5) there must be some allegation that some unconscionable act or tactic was employed to lure away the customers; (6) the transactions of the defendant with the three named parties, with whom the second plaintiffs were dealing, had not in any way undercut or undermined the commercial interest of the second plaintiffs. Dealing with suppliers or customers of one's company per se must be distinguished from the unconscionable conduct referred to;to have allowed the claims of the second plaintiffs to go forward would be both vexatious and an abuse of the process of the court.

Poon Huat Seng & Anor v Goh Cheng Chua (1994) CSLR VI[885] High Court, Singapore (Lai Kew Chai J).

P paid S$9,240 as an advance payment for 300 cubic metres of railway sleepers ordered from D. The contract was an FOB contract. No goods were delivered to P. P sued for the return of their money.

Held, (allowing P's claim): (1) as this was an FOB contract, it was P's duty to nominate a ship before D's obligation to deliver arose. P was in breach of the contract because they failed to nominate a ship; (2) nevertheless, they were entitled to recover the advance payment in equity on the ground to a deposit; (3) the general rule is that in the absence of a forfeiture clause, the purchaser has a right to recover his money if there is a total failure of consideration. There was no forfeiture clause in the contract. It would be unconscionable for D to retain the money; (4) D could set off their claim for damages against the claim for the return of the advance payment. However, they had not proven that they had suffered damage from P's breach. A bare assertion by counsel during the course of the trial that D had paid the money to suppliers was not evidence that could be accepted. P's claim for the return of their money was allowed.

Hup Huat Timber Co (S) Pte Ltd v Teh Timber Agency (Pte) Ltd District Court Appeal No 56 of 1988 District Court, Singapore (Tan Siong Thye, District Judge).

The plaintiffs were the children of Low Yok Kay, the deceased (Yok Kay), and brought an action on his behalf in contract or alternatively in equity to recover several immovable properties (the properties) which they alleged that their uncles, the defendants, had orally agreed to transfer to the deceased in exchange for his agreeing to the final draft agreement of the proposed distribution of assets in the winding up of the family company (the distribution agreement). Yok Kay and the defendants were shareholders in the family company, together with their father and six other siblings. On 17 October 1983 a special resolution was passed to voluntarily wind up the company and a valuation report was prepared. In 1985, the defendants each executed a statement in writing, dated 30 April 1985, undertaking to transfer the properties to Yok Kay, subject to his consenting to the distribution agreement, expressed to be 'in consideration of my love and affection for my brother, Low Yok Kay É as a gift'. The written undertakings were handed to Yok Kay sometime between 30 April and 31 May 1985. The distribution agreement, dated 15 May 1985 was duly executed and the company's assets were accordingly distributed on 1 June 1985. It was the plaintiffs' case that two previous draft agreements were prepared before the final one, the distribution agreement, was agreed and approved by all the shareholders. The first draft had been objected to by an uncle as he felt that he was entitled to a larger share in the company's assets. A second draft was then prepared to take into account the proposed changes made by that uncle. This was approved by all the shareholders except Kim Tah, their father. As such it was suggested to Yok Kay that he should reduce his own share under the second draft to accommodate their father's wishes, in order to obtain the latter's approval. The final draft was drawn up but was unacceptable to Yok Kay as it reduced his share in the company's assets and in order to get Yok Kay to approve and sign the distribution agreement (which constituted the final draft) the defendants orally offered to transfer two semi-detached houses, one bungalow and two flats to him when they received them under the company distribution. The defendants alleged that the oral agreement never took place and that Yok Kay had signed the distribution agreement out of his own volition. They had executed the written undertakings as gifts motivated by their love and affection for their brother, which were not legally binding.

Held, dismissing the plaintiffs' claim: (1) on the evidence the plaintiffs had failed to show that there was an oral agreement to transfer the properties to Yok Kay in consideration of his signing the distribution agreement as there was no evidence to link the signing of the distribution agreement to the defendants' promises. The wording of the written undertakings connotated a gift rather than any binding agreement to convey the properties, and natural love and affection alone did not constitute sufficient consideration for the promise; (2) there was also no evidence to show that the deceased had signed the distribution agreement in reliance on the defendants' promises to transfer the properties to him and a claim in equity also failed.

Re Low Gim Har Janet [1996] 3 SLR 343 High Court, Singapore (Lai Kew Chai J).

The respondent was at all material times the honorary secretary of the Perak Amateur Athletic Association (an unincorporated association composed of private individuals and other unincorporated associations) and had purchased athletic trophies at various dates from the appellant company purportedly on behalf of the said association. The balance of the account not having been paid, the appellant company decided to sue the respondent averring that he was personally responsible for the amount due since he had no authority either expressly or by law to incur these debts on behalf of the association. The appellant company contended that the respondent had no authority from the association and was therefore liable in his personal capacity. On behalf of the respondent it was argued that the rules of the association were so drawn that they were wide enough to enable members of the committee to pledge the credit of the association; in particular r 9(d) (which gives the committee power to deal with any matter pertaining to athletics in the State of Perak) was so wide that it enabled the honorary secretary to enter into credit transactions on behalf of the association. Secondly, it was contended that the fact that the amount due to the appellant company had been shown in the balance sheets of the association each year implied that the members of the association have agreed to the secretary pledging the credit of the members of the association.

Held: (1) the rules of an association will not be construed as giving authority to pledge the credit of the members in the absence of a plain indication of intention to that effect. The rules of the Perak Amateur Athletic Association do not confer any authority, express or implied, enabling members of the committee to pledge the credit of the members of that association; (2) no ratification of the respondent's acts could be implied from the fact that the amount due to the appellant company had been shown in the balance sheets of the association each year; (3) accordingly the respondent had no authority to contract on behalf of the association as a whole and was liable to the appellant company for the amount due under s 188 of the Contracts (Malay States) Ordinance 1950.

SPH de Silva Ltd v Balwant Singh [1960] MLJ 175 High Court, Ipoh (Smith J).

In this case, an agreement was entered into between the government of Pahang and 30 persons whereby the persons were given a licence to extract timber produce over an area of 24,000 acres in Pahang. Amongst the terms of the licence was one forbidding the transfer of the rights in the licence. At the relevant time 6,000 acres had been exploited leaving an area of 18,000 with any commercial value. One Au Ah Wah claimed to have obtained all the rights to the remaining area. He agreed to transfer all these rights to the respondent, to whom he was introduced by the appellants. The agreement provided for the transfer of the licensees' interests rights and title in the land to a company to be formed by Au Ah Wah. The respondent was to make available a sum of $1,200,000 for paying off the licence. By another agreement, the respondent agreed to pay the appellants who had introduced him to Au Ah Wah the sum of $900,000. In the event, no company was formed as there were dissensions among the 30 licensees. Subsequently, the government of Pahang entered into an agreement with the 30 licensees for the termination of the agreement with them to enable the government to enter its separate agreements with three companies for the purpose of felling and logging the remaining 18,000 acres. Au Ah Wah acted as attesting witness in the legal documents necessary for the transfer. After the rights were transferred to the three companies, the respondent acquired the rights of two of the companies with the result that the benefits passed to the respondent and another through the instrumentality of Au Ah Wah. The appellants claimed the remuneration agreed to be paid to them. The High Court dismissed their claim and they appealed to the Federal Court.

Held, allowing the appeal: on the evidence, Au Ah Wah had performed his contract with the respondent and as provided for in the agreement the rights of the appellants had accrued on the performance of the said contract with Au Ah Wah. It is true that the negotiations with the original licensees had to negotiate a further channel, but that did not alter the fact that the respondent came to the picture through the introduction of the appellants nor that the hand of Au Ah Wah was seen throughout the weaving of the fabric.

Chew Teng Cheong & Anor v Pang Choon Kong [1981] 1 MLJ 298 Federal Court, Johore Bahru (Raja Azlan Shah CJ (Malaya).

D advertised a flat for sale in the newspapers. P responded to the advertisement. P offered to buy the flat for S$290,000. K, who was the managing director and a substantial shareholder in D, said that he would consider the offer. The following day K contacted P, who turned up at his office bringing a typewritten note. This note was signed by P and by K 'acting as managing director'. The note stated that P agreed to buy the flat for S$290,000 and that a deposit of S$5,000 was paid by cheque. The note also stated 'option to be clarified by both parties in 2 weeks'. D did not go through with the deal and P sought a determination by the court as to whether there was a binding contract between the parties.

Held, granting P's claim: (1) the court found as a fact that K had never intimated to P that the sale was subject to approval by D's directors and shareholders. The company was a family concern. The only other director apart from K was K's mother. She and K held the shares. It was held that in all probability she left the running of the business to K. The defence that the company had not approved the sale therefore failed; (2) in determining the proper construction to be placed on the note, the surrounding circumstances had to be taken into consideration. It was held on the evidence that the word 'option' in the agreement was understood by P, a layman, to refer to the legal documentation necessary to give effect to the agreement. There was a final agreement. What remained to be done was the mere technical formality of embodying the agreement in a formal document to be drawn up by the parties' lawyers; (3) and (d) the fact that the deposit was banked into D's account; (4) the following factors pointed to the conclusion that the parties had entered into a binding contract: (a) the demand and payment of the deposit; (b) the execution of the note by both parties; (c) the fact that the receipt issued by D stated that the deposit was for the purchase of the property;the absence of the company's stamp on the note was immaterial. K had purported to sign as managing director and was acting on behalf of D. P's claim was accordingly granted.

Koh Kia Hiong v Guo Enterprise Pte Ltd [1989] SLR 1166 High Court, Singapore (Chao Hick Tin JC).

This was an appeal against the decision of Ong J who gave judgment in favour of the respondent, a moneylender. The appellant was the registered proprietor of a piece of land in Negri Sembilan and in 1950 he executed a charge of the land in favour of the respondent. In 1962 the respondent commenced proceedings against the appellant but these were discontinued and a new memorandum of loan and charge was executed on 25 August 1964. The relevant documents were prepared by solicitors and it was originally arranged that they should be signed on 22 August 1964. The parties did not come on the appointed day but came instead on the next day and the documents were then signed. The documents had, however, been prepared on the assumption that they would be signed on 22 August 1964, and the dates had either been left blank or in the case of the memorandum had been shown as 22 August. When the documents were signed the solicitor entered the date '23rd August' in every place where the date had been left blank except on the borrower's authenticated copy of the memorandum and the borrower's copy of the agreement; but he omitted to alter the dates which were already shown as 22 August or 22 September. Subsequently he found the mistake and with the consent of the solicitors for the appellant, he altered the dates on the copies of the memorandum in his possession. The copies in the possession of the appellant were not however altered. The appellant in his defence alleged (a) that the transaction between himself and the moneylender was unlawful by reason of the name in which the moneylender carried out the transaction in that he did not disclose the names of all the partners of his firm in applying for the licence under the Moneylenders Ordinance 1951 (Ord 42/1951); (b) that the memorandum was insufficient because of the mistake made in the dates and because the memorandum did not set out all the terms of the contract of the loan and (c) the authenticated copy did not comply with the requirements of s 16 as it was not an exact copy of the memorandum.

Held: (1) as the respondent in this case had used the name under which he was authorized to carry on the business of moneylending, there was no contravention of any of the provisions of the Moneylenders Ordinance; (2) the memorandum in this case must be read with the charge and the agreement between the parties and so read it did set out all the terms of the contract of the loan including the previous transactions between the parties; (3) the alterations made on the memorandum were made simply to remove ambiguities arising from clerical errors and did not in any way alter the sense of the memorandum; (4) the authenticated copy must be read together with the other documents delivered to the borrower and so read the missing dates were clearly supplied and although the authenticated copy was not an exact copy of the memorandum this was not fatal, as the defects in the copy could be remedied by a consideration of the other documents.

Chai Sau Yin v Kok Seng Fatt [1966] 2 MLJ 54 Federal Court, Kuala Lumpur (Thomson LP, Pike CJ (Borneo).

In this case, the plaintiff, a retired rubber broker, claimed the sum of S$11,518.15 and costs against the defendants, who were gold bullion dealers and brokers. Gold dealings for prompt or future delivery on the Gold Exchange of Singapore Pte Ltd began in 1978 in units or lots of 100 ounces and in 1980 kilobar unit or lot was introduced. The plaintiff was advised by a director of the defendants that the best contract for the plaintiff would be a kilobar contract, the smaller contract. The contract in issue (1AB10) was drafted by the defendants but the words 'Singapore gold' appeared on the contract, instead of 'Singapore gold 100 oz' or 'Singapore gold kilobar'. The plaintiff was only interested in trading in kilobar lots.

Held: (1) the plaintiff was only interested in trading in kilobar lots and further as the defendants were responsible for the drafting of the contracts for the purchase of futures of gold, it was for them to spell out the contract in accordance with the new byelaws, the rules for commodity trading and the trading terms. If this had been done, then under the commodity column in 1 AB10 either the words 'Singapore gold 100 oz' or 'Singapore gold kilobar' would have appeared; (2) judgment for the plaintiff was given in the sum claimed ie S$11,518.15 and costs, plus interest at 8% per annum from date of writ up to date of judgment.

JS Hastings v Green & Collier Bullion Pte Ltd 1984 High Court, Singapore (Rajah J).

This case dealt with the construction of a standard form of agreement for sale used by a licensed housing developer in respect of a housing unit intended to be comprised in a strata title plan. This old form of agreement for sale was found under the since repealed Housing Developers Rules 1976. The relevant provisions of this old form and those in the standard form under the current 1985 Rules are different in material respects. The facts of this case are as follows. By an agreement dated 16 July 1983, the applicant ('the vendor') sold a housing unit to the respondent ('the purchaser'). On 9 July 1985, the purchaser, who was already in default of payment of some of the instalments, did not make any further payment and did not take possession. The purchaser did not pay any of the unpaid instalments or interests in the 40 days allowed and the agreement was treated as annulled under cl 6(3) on 30 April 1989. The vendor claimed a declaration that it was entitled to be reimbursed for property tax under cl 16 and to maintenance and service charges under cl 28 of the agreement.

Held, dismissing the application: (1) once the agreement for sale is annulled under cl 6(3), the parties' rights under the agreement are not saved unless these are preserved under some saving provision. In contrast, the standard form of agreement under the 1985 Rules in the clause equivalent to cl 6(3) contains the words 'without prejudice to any other rights available to [the vendor] at law or in equity' and para (c) of cl 6(3) of the old form has been omitted; (2) by reason of the agreement having been annulled by notice given by the vendor under cl 6(3), the purchaser is not liable to the vendor in respect of property tax and other outgoings under cl 16 or for maintenance or service charge under cl 28.

Gold Pine Land Development Pte Ltd v Lee Poi Sam [1993] 2 SLR 366 High Court, Singapore (Lim Teong Qwee JC).

The plaintiff as the commercial manager of the defendants claimed damages for breach of contract as a result of a notice of termination given to him by a letter dated 16 February 1973 by the defendants. The said letter read as follows: 'As required under cl 1 of your service agreement with the company, I hereby give notice in writing on behalf of Container Warehousing & Transportation (Pte) Ltd that the said agreement will be terminated in three months time on 15 May 1973'. The plaintiff contended that the notice of termination was in violation of the terms of the said service agreement as a result of which he suffered loss and damage which he had mitigated by obtaining employment elsewhere commencing on 12 March 1973 at a salary lower than that drawn with the defendants. The relevant clauses of the service agreement herein made between the parties dated 17 July 1971, read as follows: 'I. CWT shall employ the commercial manager and the commercial manager shall serve CWT as commercial manager for a term of three years from the date hereof and thereafter until this agreement shall be terminated by either party by giving three months' notice in writing to the other. II. Upon expiry of this agreement either CWT or the commercial manager may request a renewal of the said agreement or enter into a fresh agreement under such terms and for such purposes as may be determined, by giving to the other three calendar months notice in writing'. The plaintiff contended that cl I provided for three years' engagement determinable 'thereafter', meaning after the three-year period, by either party giving three months' notice and that it was wrong for the defendants to claim that they could terminate the agreement by service of the requisite notice when the agreement still had 18 months to run.

Held, dismissing the plaintiff's claim: (1) the meaning of an instrument or document must be sought for in the document itself and the intention of the parties must be ascertained from the expression they have used in the document itself. What parties intend may differ from what they have expressed. It is only when the words they have used are not clear that recourse may be had to the expressions of intention contained in the document as a whole; (2) common sense and business efficacy require cl I to be read as 'for a term of three years from and after the date of this agreement until terminated' in the light of the intentions of the parties as expressed in the agreement as a whole including cl II.

Yeo Kee How v Container Warehousing & Transportation (Pte) Ltd 1975 High Court, Singapore (Winslow J).

On 7 April 1960, the appellant board entered into a contract with the respondent for the clearing of 1,400 acres of land. The contract was in the English language and cl 40 provided that in the event of any dispute or difference between the parties such dispute or difference would, subject to certain conditions be 'referred to the arbitration and final decision of a person nominated and appointed by agreement between the chairman (of the board) and the contractor'. The respondent proceeded to carry out a certain amount of work but ultimately disputes arose as to the extent of work and amount of payment. Preliminary steps, as provided in the agreement, were taken and letters in Malay were exchanged between the parties before the arbitrator entered upon his reference and made his award in favour of the defendant for a sum of $162,398.30 for work done under the contract. As payment of the said sum was not forthcoming the respondent issued an originating summons against the board asking for leave to enforce the award as a judgment of the court. Hepworth J made an order as prayed. The board appealed. It was argued for the appellant that the appointments of all persons appointed to constitute the board in 1959 expired on 27 November 1960 and that no order had yet been made appointing another chairman and other members to constitute the board and in consequence there was no validly appointed chairman who could appoint an arbitrator. It was also argued that the trial judge erred in law in holding that the service of the originating summons was good under the provisions of the Rules of the Supreme Court 1957, O 9 r 8(2) and that there was a valid award against the appellant.

Held: (1) despite the fact that no appointments were made to the board, it continued to exist after 27 November 1960 and therefore an appointment of arbitrator made by the board's chairman was a valid appointment; (2) O 9 r 8(2) clearly covered the service in the present case; (3) the arbitrator was named by the chairman on 27 November that is the last day of the chairman's tenure of office. As the board continued in existence after 27 November it cannot be said any further act is necessary to make the appointment of the arbitrator effective.

Trengganu Land Development Board, Kuala Trengganu v Talib [1962] MLJ 82 Court of Appeal, Kuala Trengganu (Thomson CJ, Syed Sheh Barakbah and Azmi JJ).

This was an appeal against the order of the High Court appointing an arbitrator under the terms of an insurance policy. The insurance policy which related to a horse was due for renewal. The insurance company required a veterinary certificate before the renewal of the insurance. The respondent sent the amount required for the renewal but did not send the veterinary certificate. The horse died. On a claim by the respondent the appellants argued that there was no policy in force and, therefore, there was no right to arbitration.

Held: the issue between the parties was whether the contract of insurance was in force at the time of the death of the horse and it is settled law that such an issue cannot go to arbitration under an arbitration clause in the contract.

New India Assurance Co Ltd v Lewis 1965 Federal Court, Singapore (Wee Chong Jin CJ (Singapore).

Chew Sin Leng Construction Co v Cosy Housing Development Pte Ltd [1987] SLR 160 Court of Appeal, Singapore (Sinnathuray, Chua and Rajah JJ).

In this case, the appellants had agreed to buy land belonging to the respondent and had paid a deposit of $20,000. There was a restriction in the document of title that the land could not be transferred without the consent of the Ruler in Council. No such consent was obtained but the respondent applied for the rescission of the contract and the forfeiture of the deposit on the ground that the appellants had failed to complete the transaction and that time was of the essence of the contract. The learned trial judge at first heard the application in chambers and dismissed it. However, after hearing further arguments in open court, he reversed the decision and allowed the application. He formed the view that time was the essence of the contract and therefore the respondent had properly terminated the agreement and forfeited the deposit. The appellants appealed.

Held: (1) the central question that arose for determination in this case is whether the respondent did orally promise that he would obtain the consent of the Ruler in Council necessary for the transfer. There was therefore an issue to be tried; (2) evidence relating to the separate oral agreement is admissible under proviso (c) of s 92 of the Evidence Act 1950 (Act 56) and the appellants should have been permitted to adduce evidence to prove the existence of such a promise; (3) there were issues which must be resolved at the trial and therefore the appeal should be allowed.

Ganesan & Anor v Baskaran [1986] 2 MLJ 26 Supreme Court, Kuala Lumpur (Abdul Hamid CJ (Malaya).

P was granted an option to purchase a piece of land from D. It was a term of the option agreement that P would obtain planning permission to construct three bungalows on the land. Clause 13 of the option provided that if permission was not obtained within eight weeks from the date of the option, P could abort the sale by giving D seven days' notice. If P did not give seven days' notice to abort the sale, D had a choice of either aborting the sale or allowing it to proceed. P wrote to D, informing them that planning permission for three houses had not been obtained. They offered on a without prejudice basis to enter into fresh negotiations to purchase the land at a reduced price on the basis of planning permission for two houses. D wrote to P asking for confirmation that P's letter amounted to notice to abort the sale. When P did not reply, D aborted the sale under cl 13. P applied for a declaration, inter alia, that D was not entitled to abort the sale. Held, dismissing the action: on its true construction, cl 13 gave D the right to abort the sale upon the conditions stated. They had done so. P's action was accordingly dismissed.

Chye Seng Huat Construction Pte Ltd v Goh Chin Soon & Ors [1990] SLR 869 High Court, Singapore (Wee Chong Jin CJ).

In this case, the respondent, the registered owner of a piece of land, agreed to transfer a half-share in the land to the appellant, if he could obtain approval of the conversion and sub-division of the land from the State Authority of Negri Sembilan by 31 December 1977. Such approval was not obtained before that date and the respondent relied on the provision in the agreement that 'thereupon the agreement shall become null and void and of no effect'. The approval was only obtained on 18 July 1980. The appellant claimed specific performance of the agreement and other ancillary reliefs. The learned trial judge dismissed the appellant's claim as he held that the agreement was a conditional or contingent contract and as the deadline for performance of the contingent condition had lapsed, the agreement was null and void and the appellant had no claim against the respondent. The appellant appealed.

Held: (1) this was a case where time was not merely of the essence of the contract but fulfilment of the promise by the appellant to obtain the approval on or before 31 December 1977 was a condition precedent of the whole contract; (2) the respondent promised to transfer her half-share in the land to the appellant if the approval was obtained on or before 31 December 1977. The event had not happened by the deadline and therefore under s 36(1) of the Contracts Act 1950 (Act 136), the contract became void.

Jaafar bin Ibrahim v Gan Kim Kin [1985] 2 MLJ 24 Supreme Court, Kuala Lumpur (Seah, Mohamed Azmi and Syed Agil Barakbah SCJJ).

In this case, the first appellant had agreed to buy shares in the Perforated Plates Sdn Bhd for $780,890 from the respondents. A sum of $78,089 was paid as deposit. The balance of the purchase price was to be paid in six monthly instalments and full payment of the purchase price was guaranteed by the second appellant. Apart from the deposit no other payment was made. The respondents thereupon sued the first appellant for specific performance and the second appellant for payment of the balance of the purchase price, that is $702,801. The respondents applied for summary judgment. The appellants opposed the application and argued that there were triable issues. It was alleged that the contract was a conditional one, as the appellants had agreed to procure the release of the respondents from certain guarantees by the completion date. Counsel for the appellants argued that so long as the condition precedent was not fulfilled there could be no specific performance. It was also argued that there was no mutuality in the contract and that with the appointment of receivership over the company it was not equitable to order specific performance. The learned trial judge rejected the arguments for the appellants and gave judgment for the respondents. The appellants appealed to the Federal Court.

Held, dismissing the appeal: (1) the contract in this case was not a conditional contract. The procuring of release from the guarantees was not a condition precedent but merely a term of the contract; (2) there was mutuality in this case, as, if the first appellant obtained the release of the guarantees he could compel the respondents to deliver the shares on payment; (3) the company was not a party to the contract which was between two shareholders and therefore the contract did not affect the receivers.

Ho Kok Cheong Sdn Bhd & Anor v Lim Kay Tiong & Ors [1979] 2 MLJ 224 Federal Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

Metro (Pte) Ltd & Anor v Wormald Security (SEA) Pte Ltd 1980 High Court, Singapore (Kulasekaram J).

In these two consolidated suits, the plaintiff (Ismail bin Mohamad) seeks a declaration that he is the beneficial owner of 1/4 undivided share in a piece of land held under EMR 6130 for Lot 652, Mukim of Setapak, Daerah Wilayah Persekutuan, measuring 1 acre 0 rood 0.75 pole ('the said interest') and that in Civil Suit No F 315 of 1983 the registration of the transfer by the three defendants (the three sisters Mayah, Siti and Rafeah) of their respective shares as beneficiaries of the estate of Undang bin Mangkuta to the nine defendants in Civil Suit No F 313 of 1983 be cancelled. In Civil Suit No F 315 of 1983, the plaintiff also seeks specific performance and damages for breach of contract against the three defendants pursuant to the sale and purchase agreement which he had entered into with them. The three ladies sold their respective shares in the said interest to the plaintiff for valuable consideration. On 23 November 1982, the plaintiff entered a private caveat against the said interest. On 18 April 1983, the respective shares of the three ladies were registered in favour of the nine defendants. The five questions for determination are: (a) Is there a subsisting sale and purchase agreement between Ismail and Mayah, Siti and Rafeah? (b) Was the private caveat lodged by Ismail capable of binding the said interest in the light of its being registered specifically in the name of Undang bin Mangkuta (deceased) when at the material time the said interest had been extinguished by virtue of the transmission of the deceased's estate to the three ladies? (c) Was there a mistake made by the Collector of Land Revenue when he registered the transfer effected by the three ladies in the light of the private caveat? (d) Can the indefeasibility of title conferred upon registration be set aside in the event of the mistake made by the Collector of Land? (e) In the event that the registration is wrong and can be set aside on the ground of mistake, which of the two competing parties has priority?

Held: (1) the answer to (a) is in the affirmative; (2) on (b), the caveat bound the said interest; (3) the Assistant Collector was in error when he registered the transfer on 18 April 1983 in the face of the subsisting caveat; (4) the answer to (d) is in the negative; (5) (e) calls for no consideration; (6) the declaration is granted that the plaintiff is not the beneficial owner of the said interest; (7) the learned judge found that the three ladies were liable to the plaintiff for breach of contract and damages which are to be assessed; (8) in respect of Civil Suit No F 313 of 1983, each party was to bear his/their own costs. In respect of Civil Suit No F 315 of 1983, the costs were awarded against the three ladies. The injunction originally granted to the nine defendants was discharged.

Ismail bin Mohamad v Haji Yahya & Ors; Ismail bin Mohamad v Mayah & Ors [1988] 2 MLJ 185 High Court, Kuala Lumpur (LC Vohrah J).

This case turned on the construction of certain terms of a joint-venture agreement between the parties. The plaintiff sought to terminate the agreement on the basis that the defendant had breached cll 3.3, 3.4.1 and 3.4.2 of the contract and sought damages. These clauses required the parties to establish an escrow account upon signing the agreement, and required the defendant to submit a list on the analysis of purchasers and issue irrevocable instructions to end financiers, etc, to disburse all payments directly into the escrow account. The defence was that the plaintiff had failed to make capital contributions as promised in the schedule of the agreement and had therefore lost its right to repudiate the contract and claim damages.

Held: (1) a basic rule for the construction of contracts was that the terms would lend themselves to a literal interpretation on the assumption that the parties knew what they had agreed to and it was not reasonable for the court to replace those terms with terms that the court thought were suitable. The context and the use of language was relevant in interpreting the agreement; (2) only where there was some ambiguity about a proviso could other principles like the contra proferentum rule be applied in construing a term. Even so, it was necessary to construe the terms of the contract from the words of the contract itself, and not consider external factors like negotiations that were not included in the agreement; (3) on the facts, the defendant in this case had obviously breached the clear terms of the contract; (4) cl 3.1 only stated that the defendant would be reimbursed the amounts stated therein by the plaintiff without mentioning any specific time. In such a case, every party that was responsible for any expenditure was obliged to make the payment as and when it became necessary so as to allow the agreement and the project to proceed smoothly; (5) both parties however had failed to understand how to apply the funds from the escrow account as stated in cl 3.4.6; (6) as such the defendant was to reimburse the plaintiff for all amounts spent which was not disputed or proved and no more. Since there was error on both parties in interpreting the contract and both parties had thereby incurred losses, no general damages were allowed.

Muzqi Holdings (M) Sdn Bhd v Ibrah (M) Sdn Bhd CS 22-522-92—High Court, Shah Alam (Abdul Wahab J).

Kang Yoon Mook Xavier v Insun Development Sdn Bhd [1995] 2 MLJ 91 High Court, Johor Bahru (Abdul Malik Ishak J).

In this case, the appellants appealed against the order of specific performance of a written contract of sale and purchase of all the issued shares of a company. Clause 6 of the contract relating to the entitlement to specific performance referred to cl 2 of the contract, which dealt with the application for approval of the Foreign Investment Committee. The learned trial judge held that there was a typographical error and that the reference should be cl 3 instead, which dealt with the payment of the balance of the purchase price. No application had been made to the Foreign Investment Committee but the balance of the purchase price had been paid in full. The learned trial judge therefore made the order for specific performance. The appellants appealed contending that there was no typographical error in cl 6 and that the application to the Foreign Investment Committee was a condition precedent.

Held: the learned trial judge was correct in holding that what the parties had agreed to was to provide by cl 6 for specific performance in the event of the whole of the purchase price having been paid and not as contended by the appellants to provide for specific performance in the event that approval to the Foreign Investment Committee had been applied for. The learned judge was correct in his conclusion that as a matter of construction there was an obvious typographical error in cl 6 and in construing the agreement 'clause 2' therein should read 'clause 3'.

Ng Siew Wah & Ors v MAA Holdings Sdn Bhd & Anor [1985] 2 MLJ 322 Supreme Court, Kuala Lumpur (Salleh Abas LP, Mohamed Azmi and Abdoolcader SCJJ).

The plaintiffs, men's wear retailers and tailors, paid the sum of $120,647.25 and obtained an option to buy two shop units Nos G36 and G37 in a multi-storey building called Peninsular Plaza from the defendants, builders and developers. The building was then under construction by the defendants, who were owners of the land at the junction of North Bridge Road and Coleman Street in Singapore. The option was subject to certain terms and conditions, including the condition that the sale and purchase agreement attached to the option must be entered into by the parties within two weeks from the date of the exercise of the option. On 1 March 1978, the plaintiffs duly exercised the option by payment of the sum of $120,647.25. However, the sale and purchase agreement was not entered into within the two-week period. On 13 June 1978, the defendants notified the plaintiffs that since the plaintiffs failed to sign the sale and purchase agreement, the defendants would forfeit the 10% amounting to $241,294.50 paid by the plaintiffs, thereby giving rise to the claim for the said sum by the plaintiffs.

Held, dismissing the plaintiffs' claim with costs: (1) the defendants were at all material times ready and willing to comply with the terms of the option to purchase and of the terms of the agreement for sale and purchase; (2) the defendants have not committed any breach of the option to purchase; (3) the plaintiffs have failed to enter into the agreement for the purchase of units G36 and G37 as required by the option to purchase; (4) on a true construction of cl 4 of the option to purchase the defendants are entitled to forfeit the 10% deposit money, namely the sum of $241,294.50 and sell the units G36 and G37 to any other party.

JT Chanrai (S) Pte Ltd v Consolidated Hotels Ltd 1984 High Court, Singapore (Rajah J).

The appellants were the shareholders and directors of their family company, Siah Teong Loo & Sons Sdn Bhd ('the company'). The company obtained a loan of RM250,000 from Interfinance Bhd ('the lender'). As security, a third party charge was created over a piece of land belonging to the respondents ('the land') in favour of the lender. As the respondents required security in return for the charge, the appellants executed a document described as a guarantee ('the document') in favour of the respondents to guarantee the payment of the loan to the lender in the event of the company's default. The guarantee was described as being enforceable 'at any time'. In 1985, the company defaulted. The lender foreclosed on the land, and on 9 August 1993, the land was sold in a public auction for RM274,000. The appellants however continued to make payments until 1992. The lender's solicitors then wrote to the respondents demanding payment of RM616,745.57 being the outstanding sum due from the company. In 1994, the respondents obtained summary judgment against the appellants in the High Court for RM250,000, ie the sum for which the appellants were liable under the terms of the document. The judicial commissioner entered judgment against the appellants on the ground that the respondent's action accrued on May 1992, when the company stopped making payments, and rejected the appellants' defence that the respondents' claim was barred by limitation. The appellants have appealed to the Court of Appeal.

Held, dismissing the appeal: (1) in the construction of contracts, the court is not bound by the labels affixed onto a contract, but has the duty to construe it as a whole to determine its true nature. The document when read as a whole appeared to be an indemnity within s 77 of the Contracts Act 1950, although it was termed a guarantee. Having regard to its language and aim, it appeared that the appellants agreed to undertake the liability of a principal debtor to indemnify the respondents in the event of a default by the company. Also, there was no obligation upon the respondents to make a formal demand of the appellants for the sum in question; (2) as a general rule, in actions for breach of contract, time begins to run from the date of its breach. In this case however, the general rule has been excluded by the true nature of the contract. Since the main object of the document was that the appellants should indemnify the respondents against the loss of the latter's land, time began to run only from the date the respondents suffered the loss of the land, and not before that; (3) pursuant to s 266 of the National Land Code 1965, the respondents lost their right to redeem the land at the conclusion of the sale of the land, ie when the hammer fell at the public auction conducted on 9 August 1993. It follows that time began to run from 9 August 1993, and as the respondents filed their writ within six years from that date, the respondents' action was not barred by limitation; (4) the judicial commissioner was right in holding that the respondents' action had been commenced within the time specified by statute and in entering summary judgment against the appellants, although the conclusion that time began to run against the respondents from May 1992 was fatally flawed. As the appeal was by way of a rehearing, the court was entitled to arrive at the same conclusion as the High Court but on different grounds; (5) (obiter) under the doctrine of estoppel, it would be unjust and inequitable to permit the appellants to raise the defence of limitation as the appellants had agreed that the respondents could enforce the guarantee 'at any time'. In regard to written law, the maxim can also be stated as 'equity will not permit statute to be use as an engine of fraud' to preclude the appellants who were guilty of unconscionable conduct from relying upon the Limitation Act 1953.

Sia Siew Hong & Ors v Lim Gim Chian & Anor [1995] 3 MLJ 141 Court of Appeal, Kuala Lumpur (Shaik Daud, Gopal Sri Ram and Siti Norma Yaakob JJCA).

Wong Ah Fook v State of Johore [1937] MLJ 128 High Court, Johore (MH Whitley J).

Yeo Kee How v Container Warehousing & Transportation (Pte) Ltd [1977] 1 MLJ 219 High Court, Singapore (Winslow J).

United Overseas Land Ltd v Loke Hong Kee (S) Pte Ltd 1978 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Chua JJ).

The appellant in this case was by a written agreement of 31 May 1971 engaged by the respondent as an executive officer from 1 June 1971. He was to be on probation for three years. He was, however, confirmed in his post from 1 June 1972 and continued to serve as such executive officer. On 24 June 1976, he received from the respondent a letter dated 23 June 1976 alleging he was in breach of r 111 of the terms and conditions of service of the respondent in that he had taken up part-time employment by becoming an active partner of a hotel and also a partner of a restaurant. He was immediately suspended from service. In his reply, the appellant explained that he had merely inherited his late father's shares in the two businesses and was not an active partner as alleged. The appellant did not attend a hearing by the disciplinary inquiry committee on 15 September 1976 although he was informed on 7 September 1976. He later received a letter dated 5 November 1976 from the respondent, informing him that he had been found guilty of violating r 111 and that his service was terminated with effect from 23 June 1976. This prompted the appellant to file the present action seeking a declaration that the dismissal was null and void and a declaration that he had continued and was in the employment of the respondent in the position he held before 23 June 1976 and was entitled to remuneration as such. Alternatively, he sought damages. The respondent conceded the dismissal was wrongful and that the appellant was entitled to damages but not the declarations. The issue was one of appropriate relief. The learned trial judge refused the declarations. He awarded to the appellant his salary for the period from 1 June 1976 to 5 November 1976 and a sum equivalent to three months' salary as damages. The appellant appealed.

Held, dismissing the appeal: (1) the terms of service under which the appellant was employed did not confer on him a permanent employment by the respondent until his retirement; (2) there were no circumstances which made it just or proper to grant the declarations. The appellant's remedy lay in a claim for damages; (3) on the basis of assessment in Gunton's case [1981] 1 Ch 448, the appellant was not entitled to damages in excess of three months' salary.

Chiam Heng Hsien v Jurong Town Corp 1984 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Thean JJ).

The plaintiffs were a Swiss engineering company which manufactured machinery and equipment and provided services for erection and installation of machinery and equipment for the manufacture of cocoa and chocolate. The defendants were the receivers and managers of Allied Cocoa Industries Pte Ltd ('the company') appointed on 27 February 1984 by Bank of America National Trust & Savings Association ('the bank') under the deeds of debenture dated 9 April 1980 and 2 September 1981. The company was incorporated in Singapore and was engaged in the business of making cocoa butter and cocoa powder. It erected a factory on a piece of land which was leased from Jurong Town Corp for a term of 30 years commencing from 1 January 1980. On 9 April 1980, the company executed a deed of debenture in favour of the bank, whereby the company, among other things, charged by way of fixed charge 'all the freehold and leasehold property of the company both present and future and the fixed plant and machinery (including trade fixtures) from time to time thereon' and by way of floating charge 'the undertaking and all other property and assets of the company both present and future' to secure the payment of all moneys and liabilities agreed to be paid under the deed of debenture. About one and a half years later, on 2 September 1981, a further deed of debenture of a similar nature as the first deed of debenture was executed. Since the beginning of 1981, the company had purchased from the plaintiffs under six separate contracts various machinery and equipment including spare parts for installation at the company's factory. It also purchased machinery and equipment from other sources. The machinery and equipment purchased from the plaintiffs were assembled and installed together with machinery and equipment purchased from other sources, including some fabricated locally, to make up one entire processing and manufacturing plant for the making of cocoa butter and cocoa powder. From time to time spare parts for the machinery and equipment were also ordered from the plaintiffs and were delivered. All the machinery and equipment delivered by the plaintiffs to the company were sold subject to a provision reserving to the plaintiffs their title thereto until full payment was made. The company subsequently fell into financial difficulties and on 27 February 1984, the defendants were appointed receivers and managers of the company by the bank under the two deeds of debenture. In exercise of the powers contained in the deeds of debenture the defendants took possession of the factory and all the property and assets of the company, including the machinery and equipment and spare parts supplied by the plaintiffs (such machinery, equipment and spare parts being hereinafter collectively called 'the equipment'). The plaintiffs have not been paid the full purchase price of the equipment and were creditors of the company. Relying on the retention of title clause the plaintiffs claimed that they were the owners of the equipment which the defendants had sold to a third party and were therefore entitled to be paid out of the proceeds of sale the balance of the purchase price of the equipment. The defendants contended, however, that the plaintiffs did not have any title to the equipment at the time when they took possession of the company's factory and in consequence at the time when all the property and assets of the company including the equipment were sold.

Held, dismissing the plaintiffs' claim: (1) in the present case, the equipment though installed and incorporated into the processing plant have not lost their identity and are identifiable, machinery by machinery and equipment by equipment, as supplied by the plaintiffs; (2) the question whether the equipment had become fixtures and therefore part of the land depends on the intention of the company at the time they were installed in the factory. If it was intended that the equipment should form a permanent part of the factory then in law they became fixtures upon annexation thereof to the factory and such intention is to be gathered mainly from: (i) the degree of annexation and (ii) the object or purpose of annexation; (3) all or substantially all parts of the plant were fixed either directly to the factory or indirectly thereto, ie affixed to other equipment or structures which were themselves affixed directly to the factory; (4) the cocoa processing plant in the present case was installed in the factory as 'an adjunct' to the factory and to improve its usefulness as a factory for manufacturing cocoa butter and cocoa powder; (5) therefore there was physical annexation of the equipment to the land and the annexation was for the better enjoyment of the factory. In law they had become fixtures and formed part of the land to which they were affixed; (6) the equipment had become part of the land long ago, at least since October 1982. Therefore the plaintiffs had lost their title to the equipment long before the sale to the third party and what they had lost they could not and did not regain.

Gebrueder Buehler AG v Peter Chi Man Kwong & Ors [1986] SLR 344 High Court, Singapore (Thean J).

In this case, the Chief Architect of the Ministry of Education had issued a notice inviting tenders for the erection of a school. The applicant tendered for the work and his tender was accepted. A contract was entered into which recited the drawings and specifications according to which the work was to be done. The applicant discovered that the specification for electrical service was at variance with the layout drawings and thereupon wrote to the Chief Architect. He received a letter from a Mr Hewish for the Chief Architect that extra payment would be paid for fittings, other than those mentioned in the specifications. Mr Hewish was an architect appointed to supervise the work. Subsequently the government refused to pay any extra payment and the matter was referred to arbitration. Clause 40 of the contract provided for arbitration and stated that the arbitrator should have power to review and revise any certificate, opinion, decision, requisition or notice and to determine all matters in dispute submitted to him in the same manner as if no such certificate, opinion, decision, requisition or notice had been given. The arbitrator found that the applicant was justified in assuming that Mr Hewish had authority to act for the government but held that he could go behind the letter of Hewish and hold that the applicant was not entitled to extra payment. The arbitrator referred the following two questions to the court: (1) whether the letter signed by Mr Hewish is binding on the respondents and/or gives rise to an estoppel whereby the respondents are precluded from disputing the authority of Mr Hewish; (2) in the event that question (1) be answered in the affirmative whether the arbitrator was entitled under cl 40 of the contract to review the letter itself and to hold that the decision contained in the letter was wrong in principle and that no extra payment should be made to the applicant for the fittings in question.

Held: (1) therefore in the circumstances the respondents were estopped from disputing the authority of Mr Hewish; (2) the arbitrator had power to review the letter under cl 40 of the contract and in the circumstances of this case the arbitrator was justified in going behind the letter and holding that the decision to pay the extra payment for the electrical fittings was wrong; (3) although Mr Hewish had no authority to sign the letter for the Chief Architect, the respondents had by their conduct represented or permitted to be represented to the applicant that Mr Hewish had the authority to act on their behalf and consequently the respondents were bound by their acts to the same extent as if he had the authority;there was no custom as alleged that if any work was done according to the drawings which was not set out in the specification, extra payment would be made, as such usage would be inconsistent with the contract, which consists of the tender, acceptance and other relevant documents.

Cheng Keng Hong v Government of the Federation of Malaya [1966] 2 MLJ 33 High Court, Kuala Lumpur (Raja Azlan Shah J).

The claimants sued the respondents for work done under a sub-contract. The arbitrator and the parties consented to refer several questions in dispute to the court for its determination under the Arbitration Act (Cap 16, 1970 Ed). The facts appear in the judgment.

Held: (1) unless it is clearly stated in the sub-contract one must not assume that the sub-contractor agreed to undertake the risks the contractor accepted under the main contract. Even greater caution should be exercised when it is apparent that the sub-contractor has indicated in writing that he wishes to avoid such risks, as in this case, by requiring to be paid by pontoon loads; (2) the quantities stated in cl 1 of the sub-contract were varied by the 'shop drawings' issued by the respondents' engineers, and with which the claimants had to comply, and such variations of the work which the respondents required the claimants to do must be paid for at the unit rate prices.

Kian Hong Holdings Pte Ltd v Ohbayashi-Gumi Ltd 1982 High Court, Singapore (Abdul Wahab Ghows J).

P insured owners of a Norwegian fish farm against loss. 90% of the risk was reinsured with London underwriters of whom d was the nominated representative. It was a term of the contract that a 24-hour watch was to be kept on the farm. This term was not complied with. The fish were destroyed, but not as a result of the failure to keep a 24-hour watch. Under English law, failure to comply with the term rendered the contract of reinsurance void. Under Norwegian law, a breach of warranty which did not cause the loss did not avoid the contract. The contract specifically provided that 'failure to comply with any of the warranties outlined hereunder will render the policy null and void'. P claimed an indemnity from the reinsurers, who denied liability on the ground that a 24-hour watch had not been kept on the fish. The High Court and Court of Appeal found in favour of P (see [1987-88] BLD Yearbook 279). D appealed.

Held, dismissing D's appeal: (1) reinsurance is a contract of indemnity and it was clearly the intention of the parties to provide an indemnity for P. Effect should be given to the intention of the parties if legally possible; (2) the problem was not one of imputing a choice of law but of construing the terms of the contract. In giving effect to the intention of the the parties, the words 'failure to comply with any of the warranties' had to be construed from the point of view of Norwegian law, which governed the contract of insurance. The 'failure' referred to accordingly meant a failure to comply which caused the damage. This being so, the failure to keep a 24-hour watch did not render the contract void as this did not cause the damage.

Forsikringsaktieselskapet Vesta v Butcher & Ors (No1) [1989] 1 All ER 402 House of Lords, England (Lords Bridge, Templeman, Griffiths, Ackner and Lowry).

P applied for, inter alia, an order that he be at liberty to enter judgment against D for a declaration that he be indemnified by D against the claim by Lloyds Bank in High Court No KG 487 of 1987 and/or under the letter of guarantee issued by him in favour of the bank in respect of credit facilities granted to H Sdn Bhd. The only issue for determination of the court was whether under the terms of an agreement entered into between P and D the payment of M$500,000 was due once D had sold all his shares in H Sdn Bhd or whether the payment was only due after all the shares in H Sdn Bhd are sold.

Held, allowing P's application: (1) in the instant case, the whole contract must be considered to ascertain the true intention of the parties. The cardinal presumption is that the parties have intended what they have in fact said so that their words must be construed as they stand; (2) in the circumstances, the only proper and reasonable construction to be given to the terms of the agreement having, regard to the object and the whole context of the agreement, is that the sum becomes due and payable to P by D upon the sale of D's shares and not all the shares in H Sdn Bhd. If there was an ambiguity, the contra proferentum rule should be applied here; (3) as there was no triable issue raised, the court ordered D to pay forthwith the said sum to P as provided for in the agreement.

Leonard Lee Poi Lim v Wilfred Mah Min Poh Suit No KG 204 of 1988 High Court, Kuching (Haidar J).

This was an appeal from the judgment of the Federal Court (see [1979] 2 MLJ 109) reversing the decision of the High Court. The plaintiff/appellant was in occupation of restaurant premises at No 43 Penang Street, Penang. He claimed to be in possession as tenant, and therefore to be within the protection afforded by the Control of Rent Act 1966 (Act 56/1966). The defendant/respondent claimed that the plaintiff was only a licensee, whose licence had been determined. The learned trial judge held that there was a tenancy. The learned trial judge found, based on his view of the credibility of witnesses, that the plaintiff/appellant pursuant to an oral agreement made in March 1970 went into occupation of the ground floor of the said premises in April and thereafter carried on the business of an eating shop on his own account. On 30 July 1970, there came into existence a document (the July document) which the defendant claimed to be a licence, and which the plaintiff asserted had no legal effect or alternatively was a lease. The learned trial judge held that the plaintiff, an illiterate, was induced by the defendant to sign the July document which 'did not contain all the terms which the parties had negotiated previously and agreed upon and was not intended to be binding upon them'. The learned trial judge held that 'the true relationship between the parties as revealed by their conduct and the surrounding circumstances was that of the landlord and tenant and not that of a licensor and licensee'. This decision was reversed by the Federal Court. The plaintiff appealed.

Held, allowing the appeal: pre-eminent weight must be attributed to a trial judge's finding of fact based upon the credibility of witnesses whom he had seen and heard under examination and cross-examination, particularly in relation to a question of fact the answer to which was wholly dependent on the testimony of such witnesses. In this case the Federal Court was not justified in rejecting the finding of the trial judge that the July document was not intended by the plaintiff and the defendant to be binding upon them.

Kandasami v Mohamed Mustafa [1983] 2 MLJ 85 Privy Council Appeal from Malaysia (Lord Diplock, Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Brightman and Sir John Megaw).

A contract for 'market stalls' is a contract for the supplying of the stalls to the market and not merely of the market square, or a space in which stalls might be entered. Where tenders were called for three distinct subjects, a bath, a market and a public latrine, the terms of holding of which differed according to the particular subject matter, it is improper to include them all in one subsequent lease; and the person sending the tender, is not bound to accept such lease. Where it appeared that the tenders provided that the person sending it would enter into a formal lease 'with similar conditions to those at present in existence' and it appeared that as regards the bath, there was a previous lease in existence, but as regarded the market and latrine there never had been such lease or conditions,

Held: one lease of the three subjects containing convenants and conditions which were in existence only as to the bath, was not a lease as regarded the market and latrine which the person making the tender was bound to accept.

Mootoo v Municipal Commissioners [1889] 4 Ky 446 High Court, Straits Settlements (Wood J).

The plaintiffs as indenting agents claimed $5,622.18 under contracts for the supply of textiles to the defendants by three Japanese firms. Payments under these contracts were to be made by establishing letters of credit in favour of the Japanese suppliers. The plaintiffs claimed that the failure of the defendants to open these letters of credit in favour of the Japanese suppliers resulted in the goods being sold elsewhere and the defendants being debited with the loss on resale plus interest, storage charges and return commission. The defendants contended that the claim was bad in law as the plaintiffs had no locus standi because they acted as agents. They also contended that the letters of credit were established but not availed of by the Japanese suppliers.

Held: taking into consideration the form of these contracts, the words used and the surrounding circumstances the plaintiffs who signed these contracts were not making themselves personally liable, and this conclusion was not rebutted by the presumption based on mercantile custom that a home agent who contracted on behalf of a foreign principal had no authority and was personally liable because the plaintiffs clearly had the authority of their foreign principals.

Khemanico Textiles v Gian Singh & Co Ltd [1963] MLJ 360 High Court, Singapore (Buttrose J).

When a share broker buys shares for a client the whole of the contract between them must be examined in order to see whether personal responsibility has been incurred by the broker. He can only be held bound if it appears from the contract itself that he has contracted to be personally bound if a presumption has been raised by s 230 of the Contract Enactment 1899, and not rebutted. The effect of the words 'as brokers' is as laid down in Gadd v Houghton (1876) 1 ExD 357, and is the same as 'bought of our principals'. A broker dealing as such is neither buyer nor seller. When he is employed by the buyer to buy and the seller to sell, he arranges terms as common agent for both parties, but is primarily agent to the principal by whom he was originally employed. If he proceeds to fulfil the order according to the usual course of business that fact is sufficient to rebut the presumption created by s 230.

Low Leong Huat v Planters' Stores & Agency Co Ltd [1911] 2 FMSLR 46 Court of Appeal, Federated Malay States (Law CJC and Ebden JC).

In this case, the respondent, a licensed housing developer, had entered into a contract for the purchase of a shop house to be erected on a housing estate for $175,000 payable by stage payments as the building proceeded. Clause 17 of the contract provided: 'Subject to cl 32 hereof and/or to any extension or extensions of time as may be allowed by the Controller the said building shall be completed and ready for delivery of possession to the purchaser within eighteen (18) calendar months from the date of this agreement. Provided always that if the said building is not completed and ready for delivery of possession to the purchaser within the aforesaid period then the vendor shall pay to the purchaser agreed liquidated damages calculated from day to day at the rate of eight per centum (8%) per annum on the purchase price of the said property from such aforesaid date to the date of actual completion and delivery of possession of the said building to the purchaser.' In fact the building was not completed on the due date, ie 18 September 1975. Possession was not finally delivered until 7 November 1977. On 21 April 1980, the appellant demanded payment of the sum of $29,972.01, a sum equivalent to 8% on the full price $175,000 calculated for a period of 25 months and 21 days. On 9 September 1982, the appellant applied for summary judgment. Judgment was given by the senior assistant registrar for the appellant. The respondent appealed to the High Court, where the appeal was allowed, the learned judge holding that it was statute barred as he held that the action had accrued on 18 September 1975 when the period of 18 months prescribed by the contract expired. A further appeal to the Federal Court was dismissed Ð see [1984] 2 MLJ 280 Ð and the appellant appealed to the Privy Council.

Held: (1) the whole tenure of cl 17 of the contract is that the vendor is assuming as a matter of contract and subject to the occurrence of the condition provided that the building remains uncompleted on the stipulated date, an express contractual obligation to pay a single sum which cannot become due, because it cannot be ascertained, until the building has been completed and possession can be delivered; (2) the only sensible construction of cl 17 is that it imposes an obligation to pay in substitution for any other right to damages which the purchaser might otherwise have, a single sum to be calculated and ascertained at a particular date and that until that sum has been ascertained it does not become due and cannot be sued for; (3) the appeal should be allowed and the order of the senior assistant registrar restored.

Loh Wai Lian v SEA Housing Corp Sdn Bhd [1987] 2 MLJ 1 Privy Council Appeal from Malaysia (Lord Bridge of Harwich, Lord Templeman, Lord Griffiths, Lord Mackay of Clashfern and Lord Oliver of Aylmerton).

The first plaintiffs ('ZTC') entered into a contract with the defendants' agents to carry six containers of computer goods ('the goods') from Keelung, Taiwan, to Dublin, Ireland. The contract of carriage incorporated the provisions contained in the defendants' standard combined transport bill of lading. Clause 5 of the bill of lading provided that the defendants would be liable for damage to goods occurring between the time of receipt of the goods to the time of delivery, but cl 5(ii)(h) provided that they would be relieved of liability if they could show that the damage arose from any cause or event that they could not have avoided and the consequences whereof they could not have prevented by the exercise of reasonable diligence. The containers loaded with the goods were delivered to a container terminal owned by the defendants' agents, Worldwide Freight Terminal Ltd ('WFT'). The WFT terminal was located on the banks of the river Keelung in Taiwan. The containers were left on open grounds of the terminal awaiting customs clearance. In the ensuing three days, the combined effect of typhoon Lynn and the northeast monsoon resulted in increasingly heavy rainfall which caused the Keelung river to break its banks and flood the WFT terminal. The flood water entered the containers to a height of a metre and some of the goods in the containers were damaged. At that time, the only measures taken by WFT and its staff were to guard against high winds and not flooding. The plaintiffs accordingly claimed for the damage to the goods. The defendants contended that the plaintiffs had no title to sue, relying on a notation at the bottom of ZTC's invoices which purported to represent that Zenith USA (not a party to the proceedings) sold the goods to ZTC; but as the goods were unascertained, property in the goods and the right to sue for their damage did not pass to ZTC and remained with Zenith USA. Secondly, the defendants submitted that they could not, by the exercise of reasonable diligence, have prevented the plaintiff's goods from being damaged by the flood waters. Lastly, the defendants contended that even if they were liable, they were entitled to rely on a clause in the bill of lading limiting their liability to US$2 per kilo of gross weight of the damaged goods or, alternatively, that the applicable limit was prescribed by the Hague Rules. Held, dismissing the plaintiffs' claim: (1) the transactions purportedly noted on ZTC's invoices were not entirely susceptible of analysis on conventional sale of goods law terms. It was not possible to consider how far what was stated in the invoices represented reality. Moreover, the documents on the face of them and the evidence did not bear out the defendants' contention that only Zenith USA had title to sue. At the lowest, ZTC was in possession of the goods before they were handed over to the defen-dants' agents, WFT, and, in the absence of anything to the contrary, ZTC could be assumed to be the owner of the goods; (2) in any event, a consignor of the goods can recover substantial damages against the carrier if there is privity of contract between him and the carrier for the carriage of the goods; although if the goods are not his property or at his risk, he will be accountable to the true owner. Accordingly, ZTC had the right to sue for substantial damages as the consignor in the present case; (3) in deciding whether WFT had acted reasonably in guarding only against high winds but not flooding, the matter had to viewed in the circumstances then prevailing rather than with the wisdom of hindsight. In this regard, there was nothing in the history of the region to indicate a reasonable probability of a flood at the terminal. At the time when it would have been practicable to rearrange the containers, there was no reasonable foreseeability of a flood and by the time a flood became something like a real possibility, it was already too late to restack the containers so as to prevent flood damage to the loaded containers. Furthermore, as the containers had been secured to guard against the high winds, it would have been dangerous to try to dismantle them in high winds and restack them; (4) (per curiam) a distinction should be drawn between clauses of exemption and clauses of limitation. The principles governing the survivability of clauses of exemption are not applicable in their full rigour to clauses of limitation. Although limitation clauses should be construed contra proferentem, if they are clear and unambiguous they are effective. In the present case, mere negligence on the defen-dants' part was insufficient to render the unit limitation inapplicable; (5) (per curiam) the limitation provisions of the Hague Rules imported by cl 7(2) of the bill of lading were inapplicable in the instant case as neither the WFT terminal nor the port of discharge at Dublin was 'in or immediately adjacent' to the sea terminal of the port, as required by the clause.

The 'Neptune Agate' et al; Zenith Taiwan Corp & Ors v Owners of and Other Persons Interested in the Ships or Vessels 'Neptune Agate' et al [1994] 3 SLR 786 High Court, Singapore (Warren LH Khoo J).

In 1944, while Malaya was under Japanese occupation, one Lee being in need of money approached Ooi through a third party for a loan of $25,000. Lee gave an IOU for that amount and endorsed on it: 'In British or Allied currency'. On a suit brought by the personal representative of Ooi against the personal representative of Lee the defence raised that: (1) under s 92 of the Evidence Ordinance 1950, as the IOU was tendered in evidence, no evidence could be given of any agreement that the loan was to be repaid dollar for dollar after the occupation; (2) if the loan was in fact made it must be revalued under s 6 of the Debtor and Creditor (Occupation Period) Ordinance 1948; (3) the agreement was void for uncertainty in the phrase 'In British or Allied currency'; (4) in any case the whole transaction was illegal being prohibited under reg 3 of the Emergency (Finance) Regulations 1939.

Held: (1) an IOU though neither a promissory note nor a written agreement may be a sufficient note or memorandum in writing to prove the existence of an agreement; (2) as the debt was expressly made payable otherwise than in occupation currency no revaluation was necessary; (3) 'in British or Allied currency' means in such currency as might be established in Malaya after the period of occupation was ended, whether the reoccupying power be British or an ally of Great Britain; (4) the Emergency (Finance) Regulations were special regulations made by the British authorities in time of war to assist the British Empire and her allies in the war against the enemies and it cannot be said that such regulations can be held to have been in force during the period of occupation by an enemy power.

Ooi Phee Keat v Kok Yoon San [1952] MLJ 88 High Court, Kuala Lumpur (Wilson J).

In this case, it appeared that during the Japanese occupation one Lee Tuck Onn (since deceased) borrowed money from the plaintiff and signed IOUs wherein he agreed to repay 'in British or Allied currency'. The plaintiff brought an action against the executor of Lee Tuck Onn (deceased) to claim payment of the moneys lent.

Held: (1) evidence was admissible under s 98 of the Evidence Ordinance to explain the meaning of the words used; (2) on the facts the agreement in this case was to pay the money in the equivalent of British or Allied currency in use after the liberation and therefore there ought to be an inquiry to ascertain the amount repayable.

Ooi Phee Cheng v Kok Yoon San [1950] MLJ 187 High Court, Kuala Lumpur (Taylor J).

The club (the defendant) was registered under the Societies Act 1966. It was granted exemption from the provisions of the Gaming Ordinance (Cap 50), allowing it to carry out gaming activities. It was also given a licence 'to promote and organize public lotteries'. As it was financially unable to construct a modern race course, the club entered into an agreement with the plaintiffs, the preamble of which stated, inter alia, that they had agreed to co-operate in the construction of a race course, the management of the racing facilities and the setting up of the betting facilities. The plaintiffs proceeded to construct the race course and its related amenities. Machines for both on-course and off-course betting were also installed. The plaintiffs were to manage the races and the betting and the club was to receive 2% of the gross takings for a period of 20 years. Subsequently, the Gaming Ordinance was repealed and the club applied for, and was issued, a new licence under the Pool Betting Act 1967. The club claimed that once the licence was cancelled the plaintiffs could not carry on running the lotteries. The plaintiffs thus brought this action for a declaration, inter alia, that the licence issued by the relevant authority to the club under the Pool Betting Act 1967, and any renewals thereof, was within the scope of the agreement.

Held, granting the declaration: (1) however, this does not entitle the court to look at evidence of the parties' subjective intentions. In this case, the agreement only expressly provided that if the licence issued under the Ordinance was cancelled, the plaintiffs would still be entitled to operate and manage the races. There was no express provision providing for the present situation, ie where the licence under the Ordinance was cancelled and another one issued under the Act which enabled the same gaming activities to be continued immediately after the effluxion of the licence issued under the Ordinance; (2) the next issue was whether a term could be implied. 'A term can only be implied if it is necessary in the business sense to give efficacy to the contract.' An agreement wholly in writing cannot be construed by reference to the subsequent conduct of the parties. Although the club was not able to persuade the court that the term ought not to be implied, the onus of proof was still on the plaintiffs to satisfy the court that the term ought to be implied. Based on the objective of the transaction the court was of the view that the term should be implied that as long as the club is licensed, under whatever the legislation might be, the plaintiffs would continue to have the exclusive right to manage and conduct both the on-course and off-course betting for at least 20 years; (3) the approach to be adopted in construing an agreement has been settled. The question to be answered is 'What is the meaning of what the parties have said?' not 'What did the parties mean to say?' Thus, in construing any written agreement, the court is entitled to look at evidence of the objective factual background known to the parties at or before the date of the contract, including evidence of the 'genesis' and the objective 'aim' of the transaction;the plaintiffs also prayed for an injunction to prevent the continuing breach of contract by the club. The court refused to grant an injunction. First, the court would not do anything that could be interpreted as sanctioning gaming. Secondly, the damage to the plaintiffs was easily quantifiable. Finally, as the plaintiffs' agents did not have the prior approval of the Finance Minister, an injunction might appear to dictate to the Finance Minister how his discretion ought to be exercised, which the court would not do.

Sababumi (Sandakan) Sdn Bhd v Datuk Yap Pak Leong OS No K 24-26-95 High Court, Kota Kinabalu (Ian Chin J).

In a mercantile contract entered into in Singapore 'month' prima facie means 'calendar month' unless the contract otherwise requires.

Fresh Food & Refrigerating Co Ltd v Syme & Co & Ors [1935] MLJ 272 High Court, Straits Settlements (Terrell J).

In a mercantile contract where words are partly printed and partly typed the typed words are to be looked upon as the better indication of the intentions of the parties.

Chew Kow Hin v Wee Trading & Co [1957] MLJ 34 High Court, Penang (Spenser-Wilkinson J).

The defendants were at all material times a company incorporated in Singapore engaged in the business of manufacturing gold and diamond jewellery. The plaintiff worked as a broker for the defendants. On 17 April 1984, the parties entered into an agreement whereby the defendants would pay the plaintiff a commission of ten cents per gram for any purchase of 21K gold jewellery made by Al Romaizan Pte Ltd ('ARPL'). Under this agreement the defendants paid the plaintiff S$75,487.75 in commission over the period 5 March 1984 to 27 May 1985. On 11 September 1985 the defendants wrote to the plaintiff rescinding the agreement in the letter dated 17 April 1984. The defendants then alleged that the plaintiff had misrepresented to them that he was able to procure the custom of ARPL, and that payment by the said ARPL would be prompt. Based on these misrepresentations the defendants paid the plaintiff the aforesaid commissions. The defendants also claim that the letter of 17 April 1984 did not contain the full terms and conditions for payment of commission. The plaintiff sued for damages and prayed for an account.

Held, allowing the claim: (1) the object sought to be achieved in construing any contract was to ascertain what the mutual intentions of the parties were as to the legal obligations each assumed by the contractual words in which they sought to express them. What must be ascertained was to be taken as the intention which reasonable people would have had if placed in the situation of the parties; (2) the intention of the parties was in the meaning of the words they used. There was no intention independent of that meaning. The court must ascertain the intention from the language they have used in the light of the surrounding circumstances and the object of the contract in so far as that had been agreed and proved; (3) the letter of 11 September 1985 did not make any reference to the fact that the agreement set out in the letter dated 17 April 1984 did not contain the full terms, that the defendants were induced by misrepresentations made by the plaintiff and that money paid was due to them; (4) in the instant case, the contract was found to be wholly in writing. Where the contract was made wholly in writing, evidence was not admissible to add to, vary or contradict the written terms unless there was fraud. There was no fraud in the instant case; (5) the court in construing any written agreement was entitled to look at evidence of the objective factual document known to the paries at or before the date of the contract and objectively the aim of the transaction. But this did not entitle the court to look at the evidence of the parties' subjective intentions; (6) the rescission of the contract of 17 April 1984 by the defendants was invalid; (7) the documentary evidence made it clear that the defendants were paying the plaintiff commission of only five cents per gram; (8) there would therefore be an order for an account to be taken of the amount of commission due to the plaintiff.

Hassan bin Omar Alkhatib v Jumbo Crafts (Pte) Ltd Suit No 1380 of 1986 High Court, Singapore (KS Rajah JC).

Hiap Hong & Co Pte Ltd v Hong Huat Co (Pte) Ltd 1984 High Court, Singapore (Wee Chong Jin CJ).

The plaintiff had agreed by an agreement of sale that he 'shall repay to the company such proportion of the total of such outgoings paid by the company in respect of the said land as the area or value of the said lot bears to the total area or value of the said land excluding the areas thereof reserved for roads, open spaces etc'. The plaintiff contended that he should not be asked to pay the proportion that relates to the area of land which has been reserved for roads, open spaces, electrical substations and other communal amenities. The defendant claimed on the other hand that the outgoings should be shared between the defendant, the plaintiff and others who purchased lots from the defendant in that area. The plaintiff claimed that he had been made to pay more than his share and asked for repayment.

Held: the construction given by the plaintiff was inconsistent with the plain and ordinary meaning of the words in the agreement and therefore the plaintiff's claim must be dismissed.

Kee Keng Mow v Setapak Garden Estate Ltd [1975] 2 MLJ 102 High Court, Kuala Lumpur (Hashim Yeop A Sani J).

All three plaintiffs ('the plaintiffs') in this case had purchased airline tickets from the defendant for a flight from Madras to Kuala Lumpur. On 1 June 1995, the plaintiffs went to Madras Airport to board their flight. During the inspection of tickets and luggage, the plaintiffs were informed by the defendant that an excess value charge of Rs4080 (RM325) would be imposed on them, because their luggage which was 80kg exceeded the weight allowed, which was 60kg. The plaintiffs paid the sum and a receipt was issued by the defendant. The flight boarded by the plaintiffs from Madras eventually arrived at Subang International Airport ('SIA') (now known as 'the Sultan Abdul Aziz Shah Airport'). However, the defendant requested that their luggage be weighed again. The defendant found that their luggage weighed 120kg. Following this, the plaintiffs were required to pay an extra sum of RM618 for the additional baggage. The plaintiffs were compelled to do so, as they would not be allowed to reclaim their luggage if they failed to pay up. In this originating summons, the plaintiffs applied for a declaration that the defendant was not entitled to impose the excess value charge of RM618 on them at SIA, and that the defendant's action was null and void. The plaintiffs then applied for an order that the money be refunded, and that damages they had suffered be assessed by the senior assistant registrar. However, the defendant contended that it had jurisdiction to reweigh the plaintiffs' luggage according to cll 8(b) and 9(b) contained in the 'General Conditions of Carriage of MAS for Passengers & Baggage & Cargo'. Clause 8(b) provides that 'É excess value charges shall be payable at the point of origin for the entire journey to final destination; provided that if at a stopover en route a passenger declares a higher excess value than that originally declared, additional excess value charges for the increased value from such stopover to final destination shall be payable', and cl 9(b) in turn states that 'Carrier shall deliver checked baggage to the bearer of the baggage check upon payment of all unpaid sums due to Carrier under the contract of carriage É'.

Held, allowing the plaintiffs' application: (1) ' was the primary clause, and the second part, ie '... provided that if at a stopover en route a passenger declares a higher excess value than that originally declared, additional excess value charges for the increased value from such stopover to final destination shall be payable' was the proviso; (2) the primary clause in cl 8(b) clearly states that excess value charges shall be payable at the point of origin for the entire journey to the final destination, ie Madras Airport. The proviso to cl 8(b) in turn states that provided that if at a stopover en route from the point of origin to the final destination a passenger declares a higher excess value than that originally declared, then additional excess value charges shall be payable. In such circumstances, cl 9(b) may be used by the defendant to collect the additional excess value charge. In this situation, the word 'payable' was used to mean 'to pay at a future time', ie before all luggage was claimed by the passenger, ie at the final destination; (3) cl 8(b) was to be divided into two parts, where the primary clause was to be read separately from the proviso. The first part, ie 'É excess value charges shall be payable at the point of origin for the entire journey to final destination;in this case, the facts of the case showed that there was no stopover made by the plaintiffs and there was no declaration by the plaintiffs regarding the excess luggage during the journey from Madras Airport (the point of origin) to SIA (the final destination). Hence, the proviso in cll 8(b) and 9(b) was not applicable. The only clause applicable was the primary clause in cl 8(b) which states that excess value charges shall be payable at the point of origin. Therefore, the defendant was not entitled to request that the plaintiffs reweighed their luggage at the final destination and claim excess value charges.

Subramaniam a/l Paramasivam & Lain-lain lwn Malaysian Airline System Bhd [1996] 3 MLJ 64 High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

[Annotation: This judgment was delivered in Bahasa Malaysia.]

The plaintiff entered into an agreement with the defendant, a stockbroker, whereby the plaintiff became the defendant's remisier ('the agreement'). The defendant was a member of the Kuala Lumpur Stock Exchange ('KLSE'). In February 1990 the KLSE introduced a new system whereby a person selling shares, should only be paid on the sixth market day following the date of the contract ('the system'). The KLSE also issued, from time to time, circulars to its members ('members' circulars') informing them of missing or stolen share certificates. The plaintiff introduced one Cheong Seng Tatt ('Cheong') to be a customer of the defendant. Cheong instructed the plaintiff to sell certain shares on 14 August 1990. On 16 August 1990 Cheong delivered the share certificates to the defendant and he was paid by the defendant on the same day despite a members' circular issued on 14 August 1990 stating that a large number of share certificates delivered by Cheong had been reported stolen or missing. Consequently the defendant incurred losses because it could not deliver the share certificates, which were reported stolen or missing, to the buyers. The defendant used the plaintiff's deposit placed under the agreement, to pay part of its losses. The defendant also suspended the plaintiff from trading but on appeal, the plaintiff was allowed to continue trading under certain conditions. The plaintiff applied for declarations, inter alia, that his suspension was invalid and that he was not liable to the defendant for the accumulated potential loss incurred by the defendant. The plaintiff also claimed for damages for wrongful suspension. The defendant argued that irrespective of its negligence, the plaintiff had agreed in the agreement to indemnify the defendant 'against all claims, losses and liabilities whatsoever and howsoever arising' ('cl 5(ix)'). Clause 5(i) of the agreement provided for the defendant to do all things reasonably necessary to enable the plaintiff to earn his due commission ('cl 5(i)'). The defendant also alleged that the plaintiff was responsible for its loss because he had recommended Cheong to be a client of the defendant. The plaintiff contended that the licence issued by the Registrar of Companies under s 13 of the Securities Industry Act 1983 only authorized him to be the defendant's representative and he could not find employment with any other stockbroking firm. The plaintiff therefore claimed for reinstatement by the defendant.

Held, allowing the claim: (1) cl 5(ix) must be read subject to clause 5(i). Clause 5(ix) had also to be read with cl 5(v) of the agreement which imposed a duty on the defendant to exercise all reasonable diligence to ensure that what needed to be done, was done to enable the plaintiff to earn his commission. Reading cll 5(v) and (ix) together, the indemnity in cl 5(ix) should only be applied to cases where there was no negligence on the defendant's part; (2) the defendant had failed to follow the system when it paid Cheong on the date of delivery of the share certificates. The losses suffered by the defendant arose out of its own negligence and it should not be allowed to rely on cl 5(ix); (3) Cheong was required by the defendant to fill in an application form, giving all his particulars before he was approved to be the defendant's client. The defendant had the right to reject Cheong as its client and the plaintiff could not compel the defendant to accept Cheong. The plaintiff had therefore exercised all reasonable care and skill in the performance of his duties as the defendant's remisier; (4) the defendant had instead breached cl 5(v) of the agreement by failing to do all things reasonably necessary to enable the plaintiff to earn his commission; (5) the defendant had the right under the agreement to suspend the plaintiff without assigning any reason whatsoever but in this case the defendant had intentionally or voluntarily abandoned that right when it gave its reasons for suspending the plaintiff; (6) since the defendant had waived its right by choosing to give reasons for the plaintiff's suspension, the court was entitled to examine the reasons given. Having found that the defendant had suffered the losses through its negligence, it was not justified for the defendant to blame and suspend the plaintiff from trading. Nor was it just for the defendant to recover part of its losses from the plaintiff's deposit under the agreement; (7) the plaintiff was not the defendant's employee but was only its agent. Even if the plaintiff was the defendant's employee, at common law it was impossible for him to obtain reinstatement because the common law only knew one remedy, namely, an award for damages. Although the plaintiff had been wrongfully suspended, it was improper for the court to order the defendant to re-employ him on the principle that one man will not be compelled to employ another against his will. The plaintiff's remedy lay in damages.

Mohamed Selan v PB Securities Sdn Bhd [1992] 1 MLJ 762 High Court, Kuala Lumpur (Eusoff Chin J).

In this case, the plaintiff, an insurance agent, claimed against the defendants, insurance brokers, a 5% commission of the total insurance premiums collected by them from the Bangladesh Shipping Corp ('BSC'). Sometime in 1973 the plaintiff met his client, one Suresh, who informed him that BSC was looking for a suitable and reliable insurance company to insure its vessels, which were under some form of financing by a bank. Through the introduction of the plaintiff and Suresh, the defendants became acquainted with the bank, which appointed the defendants as insurance brokers regarding insurance on ships owned by BSC and financed by the bank. Following these arrangements, Baxter, the defendants' managing director, wrote a letter dated 19 December 1973 to Suresh summarizing the commissions payable to Suresh (10%) and the plaintiff (5%). This letter was the basis of the plaintiff's claim and was disputed by the defendants, who contended that he was not entitled to the commission. Two issues came before the court: (1) the interpretation of the letter (AB3) signed by Baxter and (2) whether the commission contract had been frustrated because another insurance company insured the vessels that were the subject of the commission contract. The defendants argued that the matter turned on the word 'remuneration'.

Held: (1) it is a rule of construction, unless otherwise indicated in the document, that the word 'remuneration' should be given the same meaning throughout the whole document. The word means what is earned based on a percentage of the premiums collected. Therefore what document AB3 says is that 10% remuneration or 10% brokerage is to be paid to Suresh, 5% brokerage to the defendant company and 5% brokerage to the plaintiff, and each of the three parties is entitled to the said percentage; (2) the plaintiff's claim is simply one based on the premiums collected. It is common ground that the defendants did collect premiums on insurance and re-insurance concerned. In the circumstances, judgment must be given for the plaintiff in the sum of US$24,290.32 with interest at 10% from date of issue of writ to date of judgment on 21 March 1985 and with costs.

Peter Gomez v Brentnall Beard & Co (S) Pte Ltd 1984 High Court, Singapore (Rajah J).

By a written agreement of 6 May 1983, the appellant was the purchaser of two plots of land ('the said property') at Telok Kurau Road forming the residue of the estate of Chan Ah Leck, deceased. The respondent was the vendor of the said property and was the beneficiary of the said estate and was entitled to one half share of its residue. The said property was vested in the trustees of the will of the deceased and negotiations with the trustees had not been smoothgoing for the respondent for the purchase of the said property from them. The appellant and the respondent had therefore varied their agreement of 6 May 1983 by a supplementary agreement, a new agreed clause (cl 7) which reads as follows: '7. In the event of a certain portion of subject properties being required by the competent authority or by any other government authorities as a road reserve on or before completion of purchase by the purchaser, the cost of the purchase of the said portion so reserved shall be deducted from the balance of the purchase price according to the gross area so affected by road reserve.' It is this clause which has given rise to the present litigation between the parties. At the request of the appellant's solicitors, the Public Works Department issued a road interpretation plan ('RIP') showing, inter alia, (i) a line on the said property as 'line of road reserve' and (ii) a shaded portion (241.9 sq m or 2,604 sq ft) demarcated as 'land required for road widening'. The appellant claimed under cl 7 that an area of 241.9 sq m should be deducted from the total area of the said property and accordingly there should be an abatement of the purchase price payable to the respondent who did not agree to the abatement. In the High Court, Abdul Wahab Ghows J held that the appellant was not entitled to the abatement of the purchase price and declared that the appellant should reimburse the respondent interest amounting to $5,237.96 for late completion. The appellant appealed against that decision.

Held: (1) in the context of cl 7 the word 'required' means 'demand' or 'called for'. Clause 7 means that if a portion of the said property is required by the competent authority or any other government authority as a road reserve on or before completion of the purchase by the appellant, such portion is to be deducted from the total area of the said property in completing the purchase price; (2) none of the circumstances in cl 7 have occurred. There was no notice, step or action from any authority on its own motion to the owners of the said property or any interested party requiring a portion of the said property for a road reserve. The RIP plainly is not sufficient for the purpose of cl 7. Accordingly no abatement on the purchase should be allowed; (3) the appellant is not legally liable for the interest of $5,237.96 paid by the respondent to the trustee; (4) the appeal is dismissed (with 3/4 of the costs to the respondent).

Ng Khong Lim v Nancy Teo 1984 Court of Appeal, Singapore (Wee Chong Jin CJ, Sinnathuray and Thean JJ).

The plaintiffs applied to court for the determination of 12 matters revolving around two main issues: first, the payment of service charges stipulated in a sale and purchase agreement entered into by the plaintiffs and Wisma Punca Emas Sdn Bhd ('Wisma'), the predecessor in title to the first defendant, and secondly, the purchaser's right to a transfer of title. The term 'service charges' was defined by s 1.01(p) in the agreement to mean 'the amount of money to be solely determined from time to time subject to the fluctuating costs of labour and material by the company or the management corporation or their nominees to be paid by the purchaser to the company in respect of services rendered ...'. The agreement further provided in s 6.11 that the service charges were to be calculated at the minimum rate of 34 cents per square foot. When the certificate for occupation was issued in April 1982, the second defendant increased the rate to 72 cents per square foot. The plaintiffs had paid the increased charges from April 1982 to May 1985 but thereafter, from June 1985, the plaintiffs reverted to paying service charges at the previous rate. One of the matters for determination in the plaintiffs' application was for a declaration that the second defendant could not increase the rate of service charges from 34 cents per square foot as provided in the agreement to 72 cents per square foot in an arbitrary manner and without consideration. On the issue of the purchaser's right to a transfer of title, it was stipulated in s 7.02 of the agreement that 'provided that the purchaser shall have paid to the company the full purchase price and all other moneys (if any) payable hereunder, ... the company shall ... execute a valid and registrable transfer of the same in favour of the purchaser or the purchaser's nominee'. The plaintiffs sought from the court a declaration that upon their paying the full purchase price for the property to Wisma, they had the liberty to assign the right, title and interest in the agreement and the property to any party without the first defendant's consent. The defendants had been willing to give their consent to such an assignment subject to certain conditions stated in the first defendant's solicitors' letter dated 12 February 1992 to the plaintiffs' solicitors, in particular, the payment of service charges and interest in the sum of RM12,630.69 which the plaintiffs objected to. Other matters raised included the plaintiffs seeking the court's acceptance of the custom practised by the banks and financial institutions relating to assignments of property, and the defendants' initial contention that the plaintiffs' application by way of originating summons was not the proper procedure to resolve a dispute of facts as they contended that the issue regarding service charges raised a dispute of facts on the power and right of the defendants to increase the rate of service charges.

Held, dismissing the plaintiff's application: (1) by virtue of s 1.01(p) of the agreement, it was clear that the defendants could increase the rate of service charges without consulting the plaintiffs. In this case, the service charges had been increased and the first plaintiff had paid the service charges at the increased rate from April 1982 to May 1985 without any objection during that period of time. The plaintiffs' conduct could not be taken lightly as he was an educated man and a professional and he knew the contents of the agreement; (2) on the issue of the transfer of title, it was observed that the matter of payment of service charges was mentioned by way of inference in s 7.02 of the agreement in the words '... and all other moneys (if any) payable hereunder ...'. Thus the plaintiffs had first to fulfil the conditions imposed in the first defendant's solicitors' letter dated 12 February 1992 to the plaintiff's solicitors; (3) the need to follow the custom in relation to assignments as practised by banks and financial institutions did not arise at all in this case as the question of assignment was provided for in the agreement; (4) the court disagreed with the defendants on the procedural issue as it was clear that whether the defendants could increase the rate of service charges from 34 cents per square foot to 72 cents per square foot under the agreement, ie as contained in ss 6.11 and 1.01(p) was a central issue involving the construction of the said sections under the agreement, and thus it was appropriate to institute the action by way of originating summons under O 5 r 4(2)(a) of the Rules of the High Court 1980. The dispute of facts stated by the defendants was not relevant to the central issue to be decided upon by the court and did not prevent the plaintiffs' application by way of originating summons.

Dr Shergill Dalbir Singh & Anor v Goldenville Corp Sdn Bhd & Anor [1993] 2 CLJ 599 High Court, Negeri Sembilan (Faiza Tamby Chik J).

[Annotation: The judgment was delivered in Bahasa Malaysia.]

On 11 May 1981, the plaintiffs entered into a written agreement with the defendants for the purchase of all the shares belonging to the defendants in Loke Kee Development Sdn Bhd. The plaintiffs paid M$1,000,000 as deposit under cl 1 of the agreement. However, the plaintiffs failed to pay the first instalment of M$4,000,000 as prescribed and the defendants' solicitors by a letter dated 5 October 1981 repudiated the agreement and forfeited the deposit. The defendants exercised their rights under cl 4 of the said agreement. The plaintiffs contended, inter alia, that the forfeiture of M$1,000,000 was illegal and null and void on the ground that cl 4 of the agreement was inoperative as being in contravention of s 75 of the Contracts Act 1950 (Act 136) under which the defendants were only entitled to reasonable compensation for damages suffered, if any, as a result of the non-completion of the transaction. The defendants contended that the sum of M$1,000,000 was paid as a deposit and could be forfeited pursuant either to the express words 'all sums thencetofore paid by the purchaser to the vendors' under cl 4 or to an implied term in the agreement.

Held: (1) the forfeiture was carried out and the agreement terminated under cl 4 of the agreement. Accordingly, it was not open to counsel for the defendants to argue that the right to forfeit could also be considered to have been an implied term in the agreement; (2) the sum of $1,000,000 as stipulated in cl 1 of the agreement did not represent a deposit simpliciter but formed in fact part and parcel of a very much larger sum of $5,000,000 in another provision which was really a general forfeiture provision in the agreement in terrorem; (3) this provision was thus per se the kind of stipulation by way of penalty envisaged by s 75 of the Contracts Act 1950; (4) therefore, the defendants were only entitled to obtain reasonable compensation within the limitations of this section.

Happy Shopping Plaza Sdn Bhd v Sun Properties Sdn Bhd & Ors [1987] 1 MLJ 319 High Court, Kuala Lumpur (LC Vohrah J).

On 8 February 1993, the appellant owners agreed to sell their Housing and Development Board flat ('the flat') to the respondent purchasers for the sum of S$262,000. On the same day, they signed a sale and purchase agreement ('first document') which provided under cl 7 that the sale and purchase was subject to consent from the Housing and Development Board ('HDB'). Clause 10 further provided that if either party failed to complete the sale and purchase for any reason other than the HDB's refusal to give consent, the party at fault shall be liable for payment of 10% of the purchase price as liquidated damages after which the Agreement was to be treated as null and void. Vacant possession was to be given by 31 October 1993. On the same day, the parties also signed another document ('the second document') entitled 'Sale of Furnishing/Furniture/Fixture and Fitting' which set out the dates when certain instalments were to be paid. Pursuant to this, a final deposit of S$10,000 was to be paid on 9 February 1993, followed by a cash payment of S$30,000 on the first HDB resale appointment, S$21,500 upon obtaining HDB approval and a final S$20,000 upon completion of resale. This document also provided that the parties would apply for HDB's approval for resale on 30 June 1993. On 6 June 1993, the appellants requested the respondents to make an advance of S$20,000 as the appellants were in need of funds. This request was acceded to although pursuant to the terms of the second document, the next payment of S$30,000 was not due until 30 June 1993. On 4 August 1993, the appellants decided to withdraw from the sale. Relying on cl 10 of the first document, they tendered a cheque for S$56,700 comprising 10% of the purchase price and a refund of the moneys paid. The respondents refused to accept the withdrawal, returned the cheque and indicated that they would claim for specific performance giving the usual 21 days' notice to complete. In the court below, on an originating summons, the appellants requested a declaration that the respondents were not entitled to make any claims other than the 10% liquidated damages provided for under the agreement. The learned Judicial Commissioner ruled that the second agreement changed the terms of the first agreement in such a way that neither party could go back to the first agreement as if it existed in isolation. He felt that because of the second agreement, the parties had intended not to invoke cl 10 'if there was no neglect or failure to comply with the terms and conditions'. The application was accordingly dismissed with costs agreed at S$1,500. The appellants appealed.

Held, allowing the appeal: (1) the two documents should be considered together and effect be given to them. They were really one agreement, though set out in two documents. It was clear that the terms of the second document plainly complemented the first and contained further terms agreed to between the parties; (2) the meaning of cl 10 is clear. If either party wishes to withdraw from the transaction, he is to pay the other party liquidated damages at 10% of the purchase price and thereafter the agreement is to be treated as at an end. This was exactly what happened. The vendors wished to withdraw and tendered the 10% liquidated damages plus all previous payments received from the purchasers; (3) a mere request by the vendors for an advance, and which request was acceded to, could not be construed to constitute a representation which was intended to waive the rights of the vendors under cl 10 or which could give rise to an estoppel. Putting it at its highest, the case put forward by the purchasers was just too vague. Neither could it constitute a variation.

Foo Seh Jear & Anor v Woo Chan Loi & Anor [1994] 3 SLR 707 Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Chao Hick Tin J).

Govindaraju & Anor v Ganasen & Anor [1995] 1 SLR 365 Court of Appeal, Singapore (Karthigesu and LP Thean JJA and Chao Hick Tin J).

The plaintiffs were a Singapore registered company carrying on, inter alia, the business of shipowners, charters and shipping operators. The defendants were an international drilling company and worked as drilling contractors for several major oil companies in South East Asia. At the relevant time, that is in 1979 and 1980, they were drilling for Union Oil and then British Petroleum (BP) in Indonesian waters, more particularly at Sulawesi and Kalimantan, respectively. In February 1980, the defendants had a contract with BP to transport their rig (the Rig) from Sulawesi to Kalimantan. They were about to complete their drilling contract for BP at Sulawesi and were desirous of moving the Rig on a barge from Sulawesi to Kalimantan to fulfil the contract with BP and there to drill for Union Oil. The Rig would be free and ready for removal on 15 March 1980. The defendants therefore on 19 February 1980 invited the plaintiffs and others to bid for the removal of the Rig. On 28 February 1980, the plaintiffs and defendants agreed that the plaintiffs would provide a tug and a barge to tow the Rig from its position in South Sulawesi. On 5 March 1980, the plaintiffs informed the defendants that the tug 'Expert' and the barge 'Orchird XI' were ready. On receipt of the information as to the name of the tug and barge, the defendants got in touch with their surveyors, the Salvage Association as to the suitability of the vessel Orchid XI for the operation. The Salvage Association gave an unfavourable report whereupon the defendants telexed to the plaintiffs on 10 March not to sail the barge and tug. On the same day, the plaintiffs informed the defendants that they were replacing the tug 'Maytug 1' for the tug 'Expert' which according to them has arrived late in Singapore with mechanical faults on the main engines. After a request for an alternative barge on 11 March, the defendants by a telex dated 17 March discharged themselves from the contract. The repudiation of this contract was accepted by the plaintiffs by a telex dated the same day and they reserved their 'right to claim reimbursement permits and demurrage'. At the outset of the trial it was agreed by the parties that the court was to determine liability only and that the quantification of damage, if any, was to be referred to the registrar. The plaintiffs contended that they were at all material times ready, willing and able to carry out the contract with 'Maytug 1' and 'Orchid XI'. The defendants did not allege that the tug Maytug 1 was unfit for the job taken but they contended that the barge Orchid XI was due to its unrepaired and damaged condition unseaworthy and unfit to carry out the agreed task of transporting the Rig.

Held, dismissing the claim: because of its damaged and unrepaired condition the barge 'Orchid XI' was unseaworthy to the extent that during the first half of 1980 it was not capable of carrying the Rig as set out in the contract of 28 February 1980. Therefore in the circumstances, the plaintiffs were not at all material times ready, willing and able to carry out the contract with 'Maytug 1' and 'Orchid XI'.

Pac-Asian Service Pte Ltd v Westburne International Drilling Ltd [1986] SLR 390 High Court, Singapore (Rajah J).